<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _________ TO __________
COMMISSION FILE NUMBER 000-28160
WESTERN WIRELESS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 91-1638901
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3650 131ST AVENUE S.E.,
BELLEVUE, WASHINGTON 98006
- ------------------------------- ---------------------------------
(Address of principal executive (Zip Code)
offices)
(425) 586-8700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title Shares Outstanding as of May 3, 2000
- -------------------------------------------------------------------------------
Class A Common Stock, no par value 70,734,907
Class B Common Stock, no par value 7,085,689
<PAGE> 2
WESTERN WIRELESS CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999............3
Condensed Consolidated Statements of Operations and Comprehensive Loss
for the Three Months Ended March 31, 2000, and March 31, 1999...............................4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2000, and March 31, 1999...............................5
Notes to Condensed Consolidated Financial Statements........................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..........................................................................16
ITEM 2. CHANGES IN SECURITIES......................................................................16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................................................16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................16
ITEM 5. OTHER INFORMATION..........................................................................16
ITEM 6. EXHIBITS AND REPORTS FROM FORM 8-K.........................................................16
</TABLE>
2
<PAGE> 3
WESTERN WIRELESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,068 $ 42,735
Accounts receivable, net of allowance for doubtful accounts of
$10,229 and $11,199, respectively 72,267 75,846
Inventory 7,983 9,680
Prepaid expenses and other current assets 34,009 27,358
Receivable from VoiceStream Wireless 2,984
----------- -----------
Total current assets 130,327 158,603
Property and equipment, net of accumulated depreciation
of $301,641 and $277,167, respectively 397,239 369,543
Licensing costs and other intangible assets, net of accumulated
amortization of $105,121 and $99,051, respectively 798,942 771,510
Investments in and advances to unconsolidated affiliates 56,784 55,918
----------- -----------
$ 1,383,292 $ 1,355,574
=========== ===========
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Accounts payable $ 3,630 $ 11,930
Accrued liabilities 68,183 68,069
Construction accounts payable 13,352 8,825
----------- -----------
Total current liabilities 85,165 88,824
----------- -----------
Long-term debt 1,480,000 1,450,000
----------- -----------
Minority interest in consolidated subsidiaries 4,006 1,435
----------- -----------
Commitments and contingencies (Note 4)
Net capital deficiency:
Preferred stock, no par value, 50,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value, 300,000,000 shares authorized;
Class A, 70,720,344 and 70,431,554 shares issued and outstanding,
respectively, and; Class B, 7,086,564 and 7,177,302 shares issued
and outstanding, respectively 690,298 690,953
Deferred compensation (13,894) (17,389)
Accumulated other comprehensive loss (9,810) (4,644)
Deficit (852,473) (853,605)
----------- -----------
Total net capital deficiency (185,879) (184,685)
----------- -----------
$ 1,383,292 $ 1,355,574
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE> 4
WESTERN WIRELESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenues:
Subscriber revenues $ 106,723 $ 86,934
Roamer revenues 44,649 23,250
Equipment sales and other revenues 7,939 5,679
------------ ------------
Total revenues 159,311 115,863
------------ ------------
Operating expenses:
Cost of service 18,666 15,504
Cost of equipment sales 9,923 7,763
General and administrative 37,434 26,704
Sales and marketing 28,148 21,460
Depreciation and amortization 29,743 22,441
Stock based compensation 3,030
------------ ------------
Total operating expenses 126,944 93,872
------------ ------------
Operating income 32,367 21,991
------------ ------------
Other income (expense):
Interest and financing expense, net (31,713) (23,296)
Equity in net income (loss) of
unconsolidated affiliates 205 (4,761)
Other, net 123 647
------------ ------------
Total other expense (31,385) (27,410)
------------ ------------
Minority interest in consolidated subsidiaries 150 192
------------ ------------
Net income (loss) from continuing operations 1,132 (5,227)
------------
Net loss from discontinued operations (89,861)
Cost of discontinuance (18,500)
------------
Total discontinued operations (108,361)
------------ ------------
Net income (loss) $ 1,132 $ (113,588)
============ ============
Basic income (loss) per share:
Continuing operations $ 0.01 $ (0.07)
Discontinued operations (1.42)
------------ ------------
Basic income (loss) per share $ 0.01 $ (1.49)
============ ============
Diluted income (loss) per share:
Continuing operations $ 0.01 $ (0.07)
Discontinued operations (1.42)
------------ ------------
Diluted income (loss) per share $ 0.01 $ (1.49)
============ ============
Weighted average shares outstanding:
Basic 77,731,000 76,252,000
============ ============
Diluted 80,342,000 76,252,000
============ ============
Comprehensive loss:
Net income (loss) $ 1,132 $ (113,588)
Other comprehensive loss:
Foreign currency translation (5,166) (152)
------------ ------------
Total comprehensive loss $ (4,034) $ (113,436)
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE> 5
WESTERN WIRELESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
2000 1999
-------- ---------
<S> <C> <C>
Operating activities:
Net income (loss) $ 1,132 $(113,588)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Net loss from discontinued operations 89,861
Depreciation and amortization 30,703 23,396
Stock based compensation 3,030 1,152
Equity in net (income) loss of unconsolidated affiliates (205) 4,761
Minority interest in net loss of consolidated subsidiary (150) (192)
Changes in operating assets and liabilities, net of effects
from consolidating acquired interests (7,833) 7,374
-------- ---------
Net cash provided by operating activities 26,677 12,764
-------- ---------
Investing activities:
Purchase of property and equipment (48,853) (21,367)
Acquisition of wireless properties, net of cash acquired (30,031) (19,025)
Investments in and advances to unconsolidated affiliates (8,986) (1,522)
Proceeds from repayment of (advances to) discontinued subsidiary 3,565 (9,444)
Other (98) (358)
-------- ---------
Net cash used in investing activities (84,403) (51,716)
-------- ---------
Financing activities:
Proceeds from issuance of common stock, net 1,059 2,485
Additions to long-term debt 55,000 50,000
Repayment of debt (25,000)
-------- ---------
Net cash provided by financing activities 31,059 52,485
-------- ---------
Change in cash and cash equivalents (26,667) 13,533
Cash and cash equivalents, beginning of period 42,735 2,192
-------- ---------
Cash and cash equivalents, end of period $ 16,068 $ 15,725
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE> 6
WESTERN WIRELESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION:
Western Wireless Corporation ("the Company") provides wireless
communications services in the United States principally through the ownership
and operation of cellular systems. The Company provides cellular operations
primarily in rural areas in 19 western states under the Cellular One (R)
("Cellular One") brand name.
A wholly owned subsidiary of the Company, WWC Holding Co, Inc., ("Holding
Co.") owns 96% of Western Wireless International ("WWI") who, through operating
joint ventures, is a provider of wireless communications services worldwide.
The condensed consolidated balance sheets as of December 31, 1999, have
been derived from audited financial statements. The unaudited interim condensed
financial statements dated March 31, 2000, are presented herein, but reflect all
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the periods presented. All such adjustments are of a normal recurring nature.
Results of operations for interim periods presented herein are not necessarily
indicative of results of operations for the entire year. For further
information, refer to the Company's annual audited financial statements and
footnotes thereto for the year ended December 31, 1999, contained in the
Company's Form 10-K dated March 20, 2000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Supplemental cash flow disclosure:
Cash paid for interest was $31.1 million and $23.1 million for the three
months ended March 31, 2000 and 1999, respectively.
Reclassifications:
Certain amounts in prior years' financial statements have been
reclassified to conform to the 2000 presentation.
Recently issued accounting standards:
In March 2000, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions
involving Stock Compensation - an interpretation of APB Opinion No. 25." This
interpretation provides for the clarification of the application of APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") on certain issues,
such as (i) the definition of an `employee' for purposes of applying the APB 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequence of various modifications to the terms of
a previously fixed stock option or award and (iv) the accounting for an exchange
of stock compensation awards in a business combination. The Company accounts for
its Management Incentive Stock Option Plan and Employee Stock Purchase Plan
following the guidelines of APB 25 and related interpretations. The
interpretation is not expected to have a material impact on the Company's
financial position or results of operations.
In December 1999, the SEC released Staff Accounting Bulletin Number
101("SAB 101"), "Revenue Recognition in Financial Statements." This bulletin
establishes more clearly defined revenue recognition criteria, than previously
existing accounting pronouncements, and specifically addresses revenue
recognition requirements for nonrefundable fees, such as activation fees,
collected by a company upon entering into an arrangement with a customer, such
as an arrangement to provide telecommunications services. On March 24, 2000,
Staff Accounting Bulletin No. 101A - Amendment ("SAB 101A") was released to
effectively delay the implementation of SAB 101 until second fiscal quarter of
the fiscal year beginning after December 15, 1999. We are currently evaluating
the impact of this bulletin on our financial position and results of operations.
6
<PAGE> 7
WESTERN WIRELESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. LONG-TERM DEBT:
<TABLE>
<CAPTION>
(Dollars in thousands) MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
Credit Facility:
Revolver $ 750,000 $ 750,000
Term Loan 200,000 200,000
Additional Facility 125,000 100,000
10-1/2% Senior Subordinated Notes Due 2006 200,000 200,000
10-1/2% Senior Subordinated Notes Due 2007 200,000 200,000
Seller Subordinated Debt 5,000
---------- ----------
$1,480,000 $1,450,000
========== ==========
</TABLE>
Credit Facility:
At March 31, 2000, the Company had a $1.2 billion credit facility with a
consortium of lenders (the "Credit Facility"), in the form of a $750 million
revolving credit loan and a $450 million in term loans.
On April 25, 2000 (the "Agreement Date"), the Company refinanced the
Credit Facility with a new credit facility (the "New Credit Facility"). The
aggregate amount available under the New Credit Facility is $2.1 billion
consisting of: (i) a $500 million term loan ("Term Loan A"); (ii) a $600 million
term loan ("Term Loan B"); and (iii) two $500 million revolving loans ("Revolver
A" and "Revolver B"). Proceeds from the New Credit Facility were used to repay
the Company's existing Credit Facility. On the Agreement Date, the Company had
outstanding $1.1 billion under the New Credit Facility. The Company will
recognize an extraordinary loss for the quarter ending June 30, 2000, of
approximately $13 million to $15 million for the impairment of existing deferred
financing costs relating to the Company's current debt structure.
Under the terms of Revolver A, Revolver B and Term Loan A, the Company is
required to make quarterly payments on the outstanding principal balance
beginning March 31, 2003. These payments typically tend to increase on the
anniversary date of the initial payment, until paid in full on March 31, 2008.
Any unused portion of Revolver B expires one year from the Agreement Date. Under
the terms of Term Loan B, the Company is required to make small quarterly
payments on the outstanding principal balance beginning March 31, 2003, with a
balloon payment payable September 30, 2008. The New Credit Facility contains
certain financial covenants, including limitations on the amount of
indebtedness, certain investments and restricted payments.
Under the New Credit Facility, interest is payable at an applicable margin
in excess of a prevailing base rate. The prevailing rate is based on the prime
rate or the Eurodollar rate. The applicable margin for Revolver A, Revolver B
and Term Loan A is determined quarterly based on the leverage ratio of the
Company. The applicable margin on Term Loan B is 2.75% for Eurodollar advances.
The Company typically borrows under the Eurodollar rate. The New Credit Facility
also provides for an annual fee ranging from 0.25% to 0.50% on any undrawn
commitment of Revolver A and Revolver B, payable quarterly.
The New Credit Facility requires the Company to enter into interest rate
hedge agreements to manage its exposure to interest rate fluctuations.
10-1/2% Senior Subordinated Notes Due 2006:
In May 1996, the Company issued at par $200 million of 10-1/2% Senior
Subordinated Notes that mature on June 1, 2006 (the "2006 Notes"). Interest is
payable semi-annually. The 2006 Notes may be redeemed at any time at the option
of the Company, in whole or from time to time in part, at varying redemption
prices. The 2006 Notes contain certain restrictive covenants which impose
limitations on the operations and activities of the Company and certain of its
subsidiaries, including the incurrence of other indebtedness, the creation of
liens, the sale of assets, issuance of preferred stock of subsidiaries, and
certain investments and acquisitions. The 2006 Notes are subordinate in right of
payment to the New Credit Facility.
7
<PAGE> 8
WESTERN WIRELESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10-1/2% Senior Subordinated Notes Due 2007:
In October 1996, the Company issued at par $200 million of 10-1/2% Senior
Subordinated Notes that mature on February 1, 2007 (the "2007 Notes"). Interest
is payable semi-annually. The 2007 Notes were issued pari passu to the 2006
Notes. As such, the 2007 Notes may be redeemed at any time at the option of the
Company, in whole or from time to time in part, at varying redemption prices.
The 2007 Notes contain certain restrictive covenants that are consistent with
that of the 2006 Notes. The 2007 Notes are subordinate in right of payment to
the New Credit Facility.
The aggregate amounts of principal maturities as of the Agreement Date are
as follows (dollars in thousands):
<TABLE>
<S> <C>
Nine months ending December 31, 2000 $ 0
Year ending December 31,
2001 0
2002 0
2003 56,000
2004 81,000
Thereafter 1,368,000
----------
$1,505,000
==========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES:
In order to ensure an adequate supply and availability of certain wireless
system equipment requirements and service needs, the Company has committed to
purchase from a supplier certain wireless communications equipment and services
for $200 million in aggregate. This agreement expires in July 2002. At March 31,
2000, the Company has ordered approximately $50 million under this agreement, of
which approximately $17 million is outstanding.
The Company has entered into purchase agreements to buy hardware,
software, and consulting services in the aggregate of $18.5 million relating to
the implementation of a new billing system. As of March 31, 2000, approximately
$9 million has been paid toward these commitments.
During the fourth quarter of 1999, the Irish High Court remanded to the
Office of the Director of Telecommunication Regulation ("ODTR") its decision
that ranked Meteor Mobile Communications Ltd ("MMC") number one in a bid for a
third mobile phone license in Ireland. The court found that the ODTR may have
shown bias in its decision to rank MMC number one in the bid process and
therefore the decision of the regulator may have been unreasonable. MMC and the
ODTR have appealed this ruling to the Irish Supreme Court. If the ruling is
upheld on appeal, then it is most likely that: (i) the previous bids will be
reviewed and re-ranked; or (ii) a new bidding process will be implemented.
Management remains committed to the Irish market and believes that the
attributes of its original bid that resulted in the initial number one ranking
will continue to be recognized as the best plan. However, pending the outcome of
the appeal, there is no assurance that the Company will retain its current
ranking.
During the period from which the Company's bid was ranked number one up
through the date of the recent court decision, WWI continued to invest in MMC.
However, since MMC may not be awarded the license, it is possible that the
investment underlying MMC may not be realized. If MMC were not successful in its
bid for this license, the estimated range of a potential loss to be recorded by
WWI would range from $10 million to $14 million.
5. EARNINGS (LOSS) PER COMMON SHARE:
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
requires two presentations of earnings per share - "basic" and "diluted." Basic
earnings per share are computed by dividing income available to shareholders
(the numerator) by the weighted-average number of shares (the denominator) for
the period. The computation of diluted earnings per share is similar to basic
earnings per share, except that the denominator is increased to include the
number of additional shares that would have been outstanding if the potentially
dilutive shares, such as options, had been issued. The treasury stock method is
used to calculate dilutive shares that reduce the gross number of dilutive
shares by the number of shares purchasable from the proceeds of the options
assumed to be exercised.
Earnings (loss) per share is calculated using the weighted average number
of shares of outstanding stock during the period. For those periods presented
with a net loss, the options outstanding are anti-dilutive, thus basic and
diluted loss per share are equal.
8
<PAGE> 9
WESTERN WIRELESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of basic and diluted income (loss) per share are as
follows:
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Numerator:
Net income (loss) from
continuing operations $ 1,132 $ (5,227)
Total discontinued operations (108,361)
----------- -----------
Net income (loss) $ 1,132 $ (113,588)
=========== ===========
Denominator:
Weighted-average shares
Basic 77,731,000 76,252,000
Effect of dilutive securities:
Dilutive options 2,611,000
----------- -----------
Weighted-average shares
Diluted 80,342,000 76,252,000
=========== ===========
Basic income (loss) per share:
Continuing operations $ 0.01 $ (0.07)
Discontinued operations (1.42)
----------- -----------
Basic income (loss) per share $ 0.01 $ (1.49)
=========== ===========
Diluted income (loss) per share:
Continuing operations $ 0.01 $ (0.07)
Discontinued operations (1.42)
----------- -----------
Diluted income (loss) per share $ 0.01 $ (1.49)
=========== ===========
</TABLE>
6. ACQUISITIONS:
All of the following acquisitions were, or will be, accounted for using
the purchase method of accounting. Substantially the entire purchase price of
each of the acquisitions was, or will be, allocated to licensing costs.
In January 2000, the Company completed the purchase of the Utah 5 Rural
Service Area ("RSA") for approximately $25 million in cash and $5 million in
seller subordinate debt.
In January 2000, the Company signed an agreement to acquire the assets
associated with the Arizona 6 and Wyoming 1 RSAs for an aggregate amount of
approximately $67 million in cash. The purchases are pending approval from the
FCC, and are expected to close in the second quarter of 2000.
In April 2000, the Company announced an agreement to acquire the Oklahoma
4 RSA for approximately $60 million. The purchase is pending approval from the
FCC, and is expected to close in the fourth quarter of 2000.
7. RELATED PARTY TRANSACTIONS:
The financial statements include an allocation of certain centralized
costs to VoiceStream Wireless Corporation ("VoiceStream") and its affiliates,
prior to and subsequent to the spin-off of VoiceStream. Such centralized items
include the costs of shared senior management, customer care operations and
certain back office functions. These costs have been allocated to VoiceStream
and its affiliates in a manner that reflects the relative time devoted to each.
For the three months ended March 31, 2000 and 1999, the Company allocated to
VoiceStream and its affiliates costs of $0.2 million and $4.8 million,
respectively.
9
<PAGE> 10
WESTERN WIRELESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. SEGMENT INFORMATION:
The Company's operations consist of both domestic and international
operations. The Company mainly provides cellular services in rural markets in
the western United States. The Company's international operations mainly consist
of unconsolidated joint ventures. Certain centralized back office costs and
assets benefit all of the Company's operations. These costs are allocated to
both segments in a manner, which reflects the relative time devoted to each of
the segments.
The domestic cellular operations comprise all of the Company's
consolidated revenues and the majority of the Company's expenses and total
assets, as outlined in the table below:
<TABLE>
<CAPTION>
DOMESTIC INT'L
(Dollars in thousands) OPERATIONS OPERATIONS CONSOLIDATED
---------- ---------- ------------
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000
Operating income (loss) $ 36,325 $(3,958) $ 32,367
Interest expense 29,625 2,088 31,713
Equity in net income (loss) of
unconsolidated affiliates (504) 709 205
Total assets 1,293,407 89,885 1,383,292
THREE MONTHS ENDED MARCH 31, 1999
Operating income (loss) $ 27,737 $(5,746) $ 21,991
Interest expense 22,657 639 23,296
Equity in net loss of
unconsolidated affiliates (4,761) (4,761)
Total assets 1,122,367 46,453 1,168,820
</TABLE>
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
LITIGATION REFORM ACT OF 1995. Statements contained herein that are not based on
historical fact, including without limitation statements containing the words
"believes," "may," "will," "estimate," "continue," "anticipates," "intends,"
"expects" and words of similar import, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, events or developments to be
materially different from any future results, events or developments expressed
or implied by such forward-looking statements. Such factors include, among
others, the following: general economic and business conditions, both nationally
and in the regions in which Western Wireless Corporation (the "Company")
operates; technology changes; competition; changes in business strategy or
development plans; the high leverage of the Company; the ability to attract and
retain qualified personnel; existing governmental regulations and changes in, or
the failure to comply with, governmental regulations; liability and other claims
asserted against the Company; the Company's and its third-party suppliers'
ability to take corrective action in a timely manner with respect to the year
2000 issue; and other factors referenced in the Company's filings with the
Securities and Exchange Commission. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future results, events or developments.
The following is a discussion and analysis of the consolidated financial
condition and results of operations of the Company and should be read in
conjunction with the Company's condensed consolidated financial statements and
notes thereto and other financial information included herein and in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
OVERVIEW
Western Wireless ("the Company") provides cellular communications services
in 19 western states under the Cellular One (R) ("Cellular One") brand name
principally through the ownership and operation of cellular wireless systems.
The operations are primarily in rural areas due the Company's belief that there
are certain strategic advantages to operating in these areas. The Company owns
FCC licenses to provide such services in 101 Rural Service Areas and
Metropolitan Statistical Areas in the United States.
A wholly owned subsidiary of the Company, WWC Holding Co., Inc. owns 96%
of Western Wireless International Corporation ("WWI') which holds
non-controlling interests in entities which own wireless licenses in nine
foreign countries. As of March 31, 2000, WWI interests covered a proportional
population of approximately 28.6 million and had approximately 88,000
proportional subscribers. An operational status by country follows:
<TABLE>
<S> <C> <C>
Country Status
----------- ----------------------
Latvia Operating
Georgia Operating
Ghana Operating
Croatia Operating
Haiti Operating
Iceland Operating
Ireland Under Construction (1)
Bolivia Under Construction
Ivory Coast Under Construction
</TABLE>
(1) WWI holds approximately 67% of Meteor Mobile Communications Ltd ("MMC").
On October 3, 1999, the Irish High Court remanded to the Office of the Director
of Telecommunication Regulation ("ODTR") its decision that ranked MMC number one
in a bid for a third mobile phone license in Ireland. The court found that the
ODTR may have shown bias in its decision to rank MMC number one in the bid
process and therefore the decision of the regulator may have been unreasonable.
MMC and the ODTR have appealed this ruling to the Irish Supreme Court. If the
ruling is upheld on appeal, then it is most likely that: (i) the previous bids
will be reviewed and re-ranked; or (ii) a new bidding process will be
implemented. Management remains committed to the Irish market and believes that
the attributes of its original bid that resulted in the initial number one
ranking will continue to be recognized as the best plan. However, pending the
outcome of the appeal, there is no assurance that the Company will retain its
current ranking. During the period from which the Company's bid was ranked
number one up through the date of the recent court decision, WWI continued to
invest in MMC. However, since MMC may not be awarded the license, it is possible
that the investment underlying MMC may not be realized. If MMC were not
successful in its bid for this license, the estimated range of a potential loss
to be recorded by WWI would range from $10 million to $14 million.
11
<PAGE> 12
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
The Company had 874,700 subscribers at March 31, 2000, representing an
increase of 40,000 or 4.8% from December 31, 1999. The Company had 695,500
subscribers at March 31, 1999, representing an increase of 35,100 or 5.3% from
December 31, 1998.
The following table sets forth certain financial data as it relates to the
Company's operations:
<TABLE>
<CAPTION>
(Dollars in thousands) THREE MONTHS ENDED MARCH 31,
----------------------------------
2000 % CHANGE 1999
--------- -------- ---------
<S> <C> <C> <C>
Revenues:
Subscriber revenues $ 106,723 22.8% $ 86,934
Roamer revenues 44,649 92.0% 23,250
Equipment sales and other
revenues 7,939 39.8% 5,679
--------- ---------
Total revenues $ 159,311 $ 115,863
Operating expenses:
Cost of service $ 18,666 20.4% $ 15,504
Cost of equipment sales 9,923 27.8% 7,763
General and administrative 37,434 40.2% 26,704
Sales and marketing 28,148 31.2% 21,460
Depreciation and amortization 29,743 32.5% 22,441
Stock based compensation 3,030 N.M.
--------- ---------
Total operating expenses $ 126,944 $ 93,872
Other expense $ (31,385) (14.5%) $ (27,410)
Net income (loss) from
continuing operations $ 1,132 N.M. $ (5,227)
Other data:
EBITDA - Domestic $ 66,415 48.3% $ 44,774
EBITDA - International (1,275) (272.8%) (342)
--------- ---------
Total EBITDA $ 65,140 $ 44,432
Cash flows provided by (used in):
Operating activities $ 26,677 109.0% $ 12,764
========= =========
Investing activities $ (84,403) (63.2%) $ (51,716)
========= =========
Financing activities $ 31,059 (40.8%) $ 52,485
========= =========
</TABLE>
REVENUES
The increase in subscriber revenues is primarily due to the 26% growth in
the number of the Company's average subscribers for the quarter ended March 31,
2000, compared to the quarter ended March 31, 1999, offset by a slight decrease
in the average monthly subscriber revenue per average subscriber ("ARPU"). ARPU
was $41.62 for the three months ended March 31, 2000, a 2.6% decline from $42.74
for the three months ended March 31, 1999. The Company continues to focus on
attracting new customers with rate plans that provide more value to the customer
at a higher average access charge. Management feels this strategy will provide
relative stability in ARPU in future periods. Further, over the past few
years the cellular industry as a whole has also shown a decline in ARPU.
The increase in roamer revenues is attributed to an increase in roaming
traffic on the Company's network and partially offset by a decrease in the rates
charged between carriers. A significant portion of the increase is driven by the
growth in roamer minutes with digital carriers as a result of the Company's
strategy, implemented in 1998, to become the roaming partner of choice for other
carriers. Roamer revenue as a percentage of total revenues for the quarter ended
March 31, 2000, increased to 28.0%, compared to 20.1% for the quarter ended
March 31, 1999. While the Company expects total roamer minutes and revenue to
continue to increase, the year-over-year growth in roamer revenues is expected
to increase at a slower rate throughout the remainder of 2000.
12
<PAGE> 13
Equipment sales for the three months ended March 31, 2000, which consists
primarily of wireless handset and accessory sales to customers, increased
primarily due to an increase in gross subscriber additions. In addition, average
phone and accessory revenue per item sold increased compared to the same quarter
one year ago. The mix of high-end handsets with more features comprised a larger
portion of overall handset revenue during the first quarter of 2000 compared to
the first quarter of 1999.
OPERATING EXPENSES
The increase in cost of service is primarily attributable to the increased
costs of maintaining the Company's expanding wireless network to support an
increase in the number of subscriber minutes of use. Cost of service per minute
of use ("MOU") decreased to $0.03 per MOU for the three months ended March 31,
2000, from $0.05 per MOU for the three months ended March 31, 1999. The decrease
in cost of service per MOU is due mainly to fixed cost components increasing at
a slower rate than per minute costs. The Company expects cost of service dollars
to continue to increase in future periods as a result of the growing subscriber
base and the increase in other carriers' customers roaming on its network.
However, the cost of service per MOU is expected to decline slightly as greater
economies of scale continue to be realized.
The increase in the Company's general and administrative costs is due
partly to the increase in costs associated with supporting a larger subscriber
base. For the three months ended March 31, 2000, the Company's general and
administrative monthly cost per average subscriber increased to $14.60 from
$13.13 for the same period in 1999. The increase is due partly to additional
headquarter costs resulting from lost cost efficiencies as a result of the
spin-off of VoiceStream Wireless Corporation ("VoiceStream"). In addition, the
Company opened an additional call center in Manhattan, Kansas during the fourth
quarter of 1999 and a bilingual call center in McAllen, Texas during the first
quarter of 2000. Management anticipates improved cost efficiencies to be
realized on a per subscriber basis in future periods due to cost reductions
expected with the implementation of a new billing system later in the fiscal
year.
The increase in sales and marketing costs is primarily due to the increase
in gross subscriber additions. Sales and marketing cost per net subscriber
added, including the loss on equipment sales, increased to $866 for the three
months ended March 31, 2000, compared to $708 for the same period in 1999. This
increase is primarily due to a growth in disconnected subscribers causing the
increase in costs to be spread over a similar amount of net subscriber
additions. The growth in disconnected subscribers is a result of a similar churn
rate (representing customer attrition) applied to a larger subscriber base.
Cost of equipment sales to the Company increased mainly to the increase in
handsets sold, offset by a slight decrease in the average cost of handsets, for
the three months ended March 31, 2000, compared to the same period in 1999. The
Company expects that the cost for its handsets, will decrease at a slower rate
or begin to level off in future periods.
The increase in depreciation and amortization expenses is mainly
attributable to the acquisition of additional wireless communication system
assets. As the Company continues to expand and upgrade its wireless footprint
and systems, management anticipates depreciation and amortization expense will
increase in future periods.
The stock based compensation results mainly from the amortization of
deferred compensation due to the cancellation and reissuance of employee stock
options as a result of the spin-off of VoiceStream in the second quarter of
1999. In addition, stock appreciation rights ("SARs") issued by WWI contributed
approximately $1.2 million to the overall charge for the three months ended
March 31, 2000.
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
The change from a net loss during the three months ended March 31, 1999,
to net income during the three months ended March 31, 2000, is mainly due to
increased operating income, partially offset by increases in other expenses. The
Company had no tax liability for the current quarter due to net operating loss
carryforwards ("NOLs") from prior years.
OTHER EXPENSE
Interest and financing expense increased to $31.7 million for the three
months ended March 31, 2000, compared to $23.3 million for the same period in
1999, due to an increase in average long-term debt. Long-term debt was incurred
primarily to fund the Company's acquisition of wireless properties and to fund
international projects through WWI. The weighted average interest rate remained
flat at 8.6% for the three months ended March 31, 2000, compared to the same
period in 1999.
13
<PAGE> 14
EBITDA
EBITDA represents operating income before depreciation, amortization and
stock based compensation for the Company's operations. Management believes
EBITDA provides meaningful additional information on the Company's operating
results and on its ability to service its long-term debt and other fixed
obligations, and to fund the Company's continued growth. EBITDA is considered by
many financial analysts to be a meaningful indicator of an entity's ability to
meet its future financial obligations, and growth in EBITDA is considered to be
an indicator of future profitability, especially in a capital-intensive industry
such as wireless telecommunications. EBITDA should not be construed as an
alternative to operating income (loss) as determined in accordance with United
States GAAP, as an alternate to cash flows from operating activities (as
determined in accordance with GAAP), or as a measure of liquidity. Because
EBITDA is not calculated in the same manner by all companies, the Company's
presentation may not be comparable to other similarly titled measures of other
companies.
Domestic EBITDA for the Company increased to $66.4 million for the three
months ended March 31, 2000, from $44.8 million for the same period in 1999. The
increase in domestic EBITDA is primarily a result of increased revenues due to
the increased subscriber base and related cost efficiencies gained.
International EBITDA for the Company's consolidated subsidiaries, which
mainly represents the Ireland start-up operations and headquarter functions,
increased to a negative $1.3 million for the three months ended March 31, 2000,
from a negative $0.3 million for the same period in 1999. This increase results
mainly from additional costs to support the expansion of WWI.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had a credit facility (the "Credit
Facility") with a consortium of lenders providing for $750 million of revolving
credit and $450 million in term loans. As of March 31, 2000, $1,075 million was
outstanding under the Credit Facility.
On April 25, 2000, the Company refinanced the Credit Facility with a new
credit facility (the "New Credit Facility"). The New Credit Facility provides
for $1.0 billion in revolving loans and $1.1 billion in term loans. Proceeds
from the New Credit Facility were used to repay the Company's existing Credit
Facility. The Company will recognize an extraordinary loss for the quarter ended
June 30, 2000 of approximately $13 to $15 million for the impairment of existing
deferred financing costs relating to the Company's current debt structure. Based
on certain covenants, the Company, at April 25, 2000, had approximately $600
million available under the New Credit Facility.
The Company has issued $200 million principal amount of 10 1/2% Senior
Subordinated Notes Due 2006 (the "2006 Notes") at par and $200 million principal
amount of 10 1/2% Senior Subordinated Notes Due 2007 (the "2007" Notes") at par.
Indebtedness under the 2006 Notes and the 2007 Notes matures June 1, 2006 and
February 1, 2007, respectively. The 2006 and 2007 Notes contain certain
restrictive covenants which impose limitations on the operations and activities
of the Company and certain of its subsidiaries, including the issuance of other
indebtedness, the creation of liens, the sale of assets, issuance of preferred
stock of subsidiaries and certain investments and acquisitions.
For the remainder of 2000, the Company expects to spend approximately $120
million for the continued expansion of its cellular infrastructure and
approximately $130 million for the purchase of cellular licenses and operations
of Arizona 6 Wyoming 7 and Oklahoma 4 RSAs. The Company will utilize cash on
hand, the New Credit Facility and other sources of funding, for purposes of
funding its cellular and other activities.
Net cash provided by operating activities was $26.7 million for the three
months ended March 31, 2000. Adjustments to the $1.1 million net income to
reconcile to net cash provided by operating activities included $30.7 million of
depreciation and amortization and $3.0 million for stock based compensation. Net
cash provided by operating activities was $12.8 million for the three months
ended March 31, 1999.
Net cash used in investing activities was $84.4 million for the three
months ended March 31, 2000. Investing activities for such period consisted
primarily of $30.0 million in acquisitions of wireless properties, primarily
attributable to the purchase of the Utah 5 RSA. In addition, the Company
purchased property and equipment in the amount of $48.9 million. Net cash used
in investing activities was $51.7 million for the three months ended March 31,
1999.
Net cash provided by financing activities was $31.1 million for the three
months ended March 31, 2000. Financing activities for such period consisted
primarily of a net addition to long-term debt of $30 million to finance the
acquisition of wireless properties. Net cash provided by financing activities
was $52.5 million for the three months ended March 31, 1999.
In the ordinary course of business, the Company continues to evaluate
acquisition opportunities, joint ventures and other potential business
transactions. Such acquisitions, joint ventures and business transactions may be
material. Such transactions may also require the Company to seek additional
sources of funding through the issuance of additional debt and/or additional
equity at the parent or subsidiary level. There can be no assurance that such
funds will be available to the Company on acceptable or favorable terms.
14
<PAGE> 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings are affected by changes in short-term interest
rates as a result of its borrowings under the New Credit Facility. New Credit
Facility interest payments are determined by the outstanding indebtedness and
the Eurodollar rate at the beginning of the period in which interest is
computed. The Eurodollar rate is adjusted for an applicable margin based on the
Company's financial ratios. The Company also has fixed rate debt under the
Senior Notes at 10.5%. As part of its risk management program, the Company
utilizes interest rate caps, swaps and collar agreements to hedge variable rate
interest risk on the New Credit Facility. The following table provides
information about the Company's long-term debt and derivative financial
instruments that are sensitive to changes in interest rates (in millions):
<TABLE>
<CAPTION>
Expected maturity date
2000 2001 2002 2003 2004 Thereafter Total Fair Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities:
Maturities of long- term debt:
Variable rate, April 25, 2000 $ 56.0 $ 81.0 $1,368.0 $1,505.0 $1,505.0
Fixed rate, March 31, 2000 400.0 400.0 416.0
Interest Rate Derivatives, March 31, 2000:
Interest rate derivative
financial instruments
related to debt
Interest rate caps:
Notional amounts outstanding at
the beginning of the year $ 210.0 $ 100.0 $ 25.0 $ 335.0 $0.2
The interest rate caps effectively lock $335 million of the Company's New Credit Facility borrowings between 7.5% and 7.8%.
Interest rate collars:
Notional amounts outstanding at
the beginning of the year $145.0 $ 55.0 $ 200.0 $1.3
The interest rate collars effectively lock $200 million of the Company's New Credit Facility borrowings between 7.0% and 7.8%.
Interest rate swaps:
Notional amounts
outstanding at the
beginning of the year $ 45.0 $ 45.0 $0.6
The interest rate swaps effectively lock $45 million of the Company's New Credit Facility borrowings between 6.1% and 6.5%.
</TABLE>
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material, pending legal proceedings to which the Company or
any of its subsidiaries or affiliates is a party or of which any of their
property is subject which, if adversely decided, would have a material adverse
effect on the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibit Description
------- -----------
<S> <C>
10.60 Asset Purchase Agreement by and between Zephyr Tele-link
and WWC License LLC dated April 24, 2000
10.61 Western Wireless Corporation 1994 Management Incentive
Stock Option Plan, as adopted and amended November 16,
1995, May 20, 1999, and February 3, 2000
10.62 Loan Agreement among Western Wireless Corporation, as
Borrower, TD Securities (USA) Inc., as Arranger, Bank of
America, N.A., The Chase Manhattan Bank, and Barclays
Bank PLC, as Co-Documentation Agents and Co-Syndication
Agents, Dresdner Bank, AG, New York and Grand Cayman
Branches, First Union National Bank, Fleet National
Bank, Goldman Sachs Credit Partners LP, Cooperatieve
Centrale-Raiffeisen Boerenleenbank B.A. "Rabobank
International", New York Branch, and Union Bank of
California, N.A., as Managing Agents, Skandinaviska
Enskilda Banken AB and U.S. Bank National Association,
as Co-Agents, and Toronto Dominion (Texas), Inc., as
Administrative Agent, dated as of April 25, 2000.
10.63 Master Purchase Agreement between Western Wireless
Corporation and Nortel Networks, Inc. dated March 10,
2000
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
A Form 8-K was filed on February 11, 2000, reporting Western
Wireless' financial and operating results for the fourth quarter
ended 1999.
16
<PAGE> 17
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.
Western Wireless Corporation
By: /s/ THERESA E. GILLESPIE By: /s/ SCOTT SOLEY
---------------------------------- ----------------------------------
Theresa E. Gillespie Scott Soley
Executive Vice President Executive Director of Accounting
(Chief Accounting Officer)
Dated: May 12, 2000
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
10.60 Asset Purchase Agreement by and between Zephyr Tele-link and WWC
License LLC dated April 24, 2000
10.61 Western Wireless Corporation 1994 Management Incentive Stock Option
Plan, as adopted and amended November 16, 1995, May 20, 1999, and
February 3, 2000
10.62 Loan Agreement among Western Wireless Corporation, as Borrower, TD
Securities (USA) Inc., as Arranger, Bank of America, N.A., The Chase
Manhattan Bank, and Barclays Bank PLC, as Co-Documentation Agents
and Co-Syndication Agents, Dresdner Bank, AG, New York and Grand
Cayman Branches, First Union National Bank, Fleet National Bank,
Goldman Sachs Credit Partners LP, Cooperatieve Centrale-Raiffeisen
Boerenleenbank B.A. "Rabobank International", New York Branch, and
Union Bank of California, N.A., as Managing Agents, Skandinaviska
Enskilda Banken AB and U.S. Bank National Association, as Co-Agents,
and Toronto Dominion (Texas), Inc., as Administrative Agent, dated
as of April 25, 2000.
10.63 Master Purchase Agreement between Western Wireless Corporation and
Nortel Networks, Inc. dated March 10, 2000
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.60
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
April 24, 2000 by and between WWC License L.L.C., a Delaware limited liability
company, or its assigns ("Purchaser"), and Zephyr Tele-Link, a New Jersey
general partnership ("Seller"). Purchaser and Seller are sometimes referred to
herein collectively as the "Parties" and each as a "Party."
RECITALS
WHEREAS, Seller is the holder of the non-wireline cellular radio
telephone license (call sign WPOM485) granted by the Federal Communications
Commission (the "FCC" or the "Commission") for the Oklahoma 4 Rural Service Area
(the "System");
WHEREAS, the Parties desire that Purchaser acquire from Seller all of
the Authorizations in accordance with the terms and conditions set forth in this
Agreement; and
WHEREAS, the Parties have determined that it would further the
development of competitive, non-wireline cellular systems in the United States
to consummate the transactions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the terms below shall have the following meanings:
"Action" shall have the meaning set forth in Section 5.6.
"Affiliate" of a Person shall mean any Person which directly or
indirectly controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power 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.
"Assignment Application" shall mean that joint application filed with
the FCC relating to the assignment of the Authorizations to Purchaser in the
manner contemplated by this Agreement.
"Authorizations" shall mean the authorizations, permits and licenses
issued by the FCC and any other governmental authority to Seller relating to the
System.
1
<PAGE> 2
"Closing Date" shall mean the date that is five business days after the
date on which the FCC Consent becomes a Final Order.
"Closing" shall mean the consummation of the assignment, transfer,
conveyance and delivery of the Authorizations and the Purchase Price as
contemplated hereunder.
"FCC Consent" shall mean the action of the FCC granting its consent to
the assignment of the FCC Authorizations from Seller to Purchaser.
"FCC Authorizations" shall mean the Authorizations from the FCC relating
to the operation of the System.
"Final Order" means an action or decision by the FCC or any federal or
state court or agency as to which: (i) no request for stay of the action is
pending, no such stay is in effect, and, if any deadline for filing any such
request is designated by statute or regulation, it has passed; (ii) no petition
for rehearing or reconsideration of the action or decision is pending and the
time for filing any such petition has passed; (iii) the decision making entity
does not have the action or decision under reconsideration on its own motion and
the time for such reconsideration has passed; and (iv) no appeal is pending or
in effect, and if any deadline for filing any such appeal is designated by
statute or rule, it has passed.
"Representative" shall mean any officer, director, principal, attorney,
agent, employee or other representative of any Person.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including without limitation, income, excise, use, transfer,
payroll, occupancy, property, sales, franchise, unemployment and withholding
taxes, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof.
"To the best knowledge" or "knowledge" of a party (or similar phrases)
shall mean to the actual knowledge of such party.
ARTICLE 2
ASSIGNMENT OF AUTHORIZATIONS
2.1 Assignment of Authorizations
Subject to the terms and upon satisfaction of the conditions contained
in this Agreement, at the Closing, Seller shall sell, convey, transfer, assign
and deliver to Purchaser, and Purchaser will acquire, the Authorizations. The
Closing shall, subject to the terms and conditions hereof, take place by the
exchange of overnight deliveries and by facsimile, with the Purchase Price to be
paid as provided in Section 2.2, or at such place as may be mutually agreed upon
by Purchaser and Seller.
2.2 Purchase Price.
The purchase price for the Authorizations shall be Sixty Million and One
Dollars
2
<PAGE> 3
($60,000,001) (the "Purchase Price"), which shall be paid by Purchaser to Seller
on the Closing Date by wire transfer of immediately available funds.
ARTICLE 3
ASSUMED OBLIGATIONS
On the Closing Date, Purchaser shall assume and agree to discharge and
perform, as and when due, all obligations of Seller pursuant to the
Authorizations that may arise on or after the Closing Date. Except as set forth
in the previous sentence, Purchaser expressly does not, and shall not, assume or
be deemed to have assumed under this Agreement or by reason of any transactions
contemplated hereunder any debts, liabilities (contingent or otherwise) or
obligations of Seller, or any of its partners, of any nature whatsoever, or any
debts, liabilities (contingent or otherwise) or obligations relating to the
System.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.1 Covenants of Seller
Seller covenants and agrees from and after the execution and delivery of
this Agreement to and including the Closing Date as follows:
4.1.1 Consummate Transactions.
Seller shall use commercially reasonable efforts to cause the
transactions contemplated by this Agreement to be consummated in accordance with
the terms hereof, and, without limiting the generality of the foregoing, use
commercially reasonable efforts to obtain all necessary approvals and consents
required in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, consents from all governmental
authorities and agencies, and to make all filings with and to give all notices
to third parties which may be necessary or reasonably required of Seller in
order to consummate the transactions contemplated hereby.
4.1.2 Compliance with Law.
Seller shall comply in all material respects with all applicable
laws, rules, ordinances, regulations, codes, orders, decrees, licenses and
permits of all applicable jurisdictions and governmental authorities or agencies
relating to Seller or the Authorizations.
4.1.3 Approvals; Consents.
Seller shall obtain and maintain in full force and effect all
approvals, consents, permits, licenses and other authorizations, from all
appropriate Federal, state and local governmental agencies or authorities
necessary or required for the ownership, retention and use of the
Authorizations. Seller shall maintain the Authorizations in full force and
effect, and shall not take any action which might have a material adverse effect
on such Authorizations.
4.1.4 No Sale.
3
<PAGE> 4
Seller shall not enter into any other contract to sell or
encumber any of its Authorizations.
4.2 Covenant of Purchaser.
Purchaser covenants and agrees that from and after the execution and
delivery of this Agreement to and including the Closing Date, Purchaser shall
use commercially reasonable efforts to cause the transactions contemplated by
this Agreement to be consummated in accordance with the terms hereof, and,
without limiting the generality of the foregoing, to assist Seller in obtaining
all necessary consents and authorizations of third parties, including, without
limitation, the approval of this Agreement and the transactions contemplated
hereby by all governmental authorities and agencies, including the FCC and any
state public utilities or public service commission, and to make all filings
with and to give all notices to third parties which may be necessary or
reasonably required of Purchaser in order to consummate the transactions
contemplated hereby. Purchaser shall not take any action which would result in a
breach of any of its representations and warranties hereunder.
4.3 Governmental Filings.
Each of Seller and Purchaser covenant and agree from and after the
execution and delivery of this Agreement to and including the Closing Date that
the parties have filed or will file with the FCC, and, if necessary, will file
with any applicable state agency or agencies, as soon as practicable following
the date hereof, joint applications requesting the approval of the assignment of
the Authorizations to Purchaser, and, if applicable, will file all necessary
applications with the Department of Justice and the Federal Trade Commission
pursuant to the Antitrust Improvement Acts of 1976, as amended ("HSR Act"). Each
of the Parties hereto shall diligently take or cooperate in the taking of all
steps which are necessary or appropriate to expedite the prosecution and
favorable consideration of such applications. The Parties covenant and agree to
undertake all actions and file such material as shall be necessary or required
to obtain any necessary waivers or other authority in connection with the
foregoing applications.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to
Purchaser, all of which have been relied upon by Purchaser in entering into this
Agreement and the truth and accuracy of which shall constitute a condition
precedent to the obligations of Purchaser hereunder:
5.1 Organization and Standing.
Seller (a) is a general partnership duly organized, validly existing and
in good standing under the laws of the State of New Jersey, and (b) has full
power and authority to enter into and perform this Agreement, and to own the
Authorizations.
5.2 Authorization and Binding Obligations.
The execution, delivery and performance of this Agreement by Seller have
been duly and validly authorized by all necessary partnership action, including
approval of the entire transaction by the requisite vote of the partners of
Seller. This Agreement has been duly
4
<PAGE> 5
executed and delivered by Seller and constitutes a valid and binding agreement
of Seller, enforceable against it in accordance with its terms, except as its
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws relating to or affecting creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles.
5.3 No Contravention.
Except as otherwise contemplated hereunder, the execution, delivery and
performance of this Agreement, the consummation of the transactions contemplated
hereby and the compliance with the provisions hereof by Seller will not (a)
violate any provisions of the partnership agreement or other operational
agreement of Seller, (b) result in the breach of, or constitute a default under,
or result in the creation of any lien, charge or encumbrance upon any of the
Authorizations under the provisions of any agreement or other instrument to
which Seller or its partners are a party or by which the property of Seller is
bound or affected or (c) violate any laws, regulations, orders or judgments
applicable to Seller.
5.4 Compliance with Law.
Seller shall comply in all material respects with all applicable laws,
rules, ordinances, regulations, codes, orders, decrees, licenses and permits of
all applicable jurisdictions and governmental authorities or agencies relating
to the Authorizations.
5.5 Authorizations.
The Authorizations listed on Schedule 5.5 are all of the licenses,
permits, and other authorizations owned by Seller or Seller's partners relating
to the System. The Authorizations are validly issued in the name of Seller and
are in full force and effect. The System has been operated in compliance with
all laws, rules and regulations applicable to the Authorizations, and the
Authorizations are free and clear of any restrictions which might limit the full
operation of the System (other than those routinely imposed in conjunction with
such Authorizations).
5.6 Litigation.
There is no action, order, writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, or labor dispute ("Action"),
other than rule-making proceedings affecting the cellular telephone industry
generally, pending or, to the knowledge of Seller, threatened against, relating
to or affecting (a) Seller, (b) the Authorizations, or (c) the transactions
contemplated by this Agreement. Seller is not in default with respect to any
judgment, order, writ, injunction or decree of any court or governmental agency,
and there are no unsatisfied judgments against Seller or the Authorizations.
There is not a reasonable likelihood of an adverse determination of any pending
Action which would, individually or in the aggregate, have a material adverse
effect on the Authorizations or the financial condition of Seller.
5.7 Complaints.
There is not, to the best of Seller's knowledge, any Commission
investigation, notice of apparent liability or order of forfeiture pending or
outstanding against Seller or the System respecting any violation, or allegation
thereof, of any Commission rule, regulation or policy, or, to the best of
Seller's knowledge, any complaint before the Commission as a result of which an
investigation, notice of apparent liability or order of forfeiture may issue
from the
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Commission relating to the Authorizations or the System.
5.8 Reports.
All returns, reports and statements currently required to be filed by
Seller with the Commission or with any other governmental agency with respect to
the System have been filed and are complete and correct in all material
respects, and shall continue to be filed on a current basis until the Closing
Date. All such reports, returns and statements are (and will be, in the case of
future reports) complete and correct in all material respects as filed.
5.9 Taxes.
Seller has filed, or caused to be filed, with the appropriate federal,
state and local governmental agencies all required tax and information returns,
and Seller has paid, caused to be paid or accrued all Taxes shown to be due and
payable or claimed to be due and payable thereon.
5.10 No Other Agreements to Sell the Authorizations.
Seller has no legal obligation, absolute or contingent, to any other
person or firm to sell the Authorizations or to sell any interest in Seller or
to effect any reorganization of Seller or to enter into any agreement with
respect thereto.
5.11 Brokers.
Seller has entered into an arrangement with Falkenberg Capital to assist
with the sale of the Authorizations. Seller acknowledges that it shall be solely
responsible for any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
5.12 Miscellaneous.
No representation or warranty made by Seller in this Agreement, and no
statement made in any schedule, exhibit, certificate or other document furnished
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or knowingly omits or fails to state, or will omit or fail to
state, any material fact or information necessary to make such representation or
warranty or any such statement not materially misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
Seller, all of which have been relied upon by Seller in entering into this
Agreement and the truth and accuracy of which shall constitute a condition
precedent to the obligations of Seller hereunder:
6.1 Organization and Standing
Purchaser (a) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its formation, and (b) has full
limited liability company power and authority to enter into and perform this
Agreement.
6.2 Authorization and Binding Obligations
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The execution, delivery and performance by Purchaser of this Agreement
has been duly and validly authorized by all necessary limited liability company
action, including any necessary approval of the entire transaction by the
managers of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms except as its
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws relating to or affecting creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles.
6.3 No Contravention
Except as otherwise contemplated hereunder, the execution, delivery and
performance of this Agreement, the consummation of the transactions contemplated
hereby and the compliance with the provisions hereof by Purchaser will not (a)
violate any provisions of the certificate of formation and operating agreement
of Purchaser, (b) result in the breach of, or constitute a default under the
provisions of any agreement or other instrument to which Purchaser is a party or
by which the property of Purchaser is bound or affected or (c) violate any laws,
regulations, orders or judgments applicable to Purchaser.
6.4 No Brokers
Neither Purchaser nor any of its Affiliates has entered into or will
enter into any contract, agreement, arrangement or understanding with any person
or firm which will result in the obligation of Seller to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
6.5 Miscellaneous
No representation or warranty made by Purchaser in this Agreement, and
no statement made in any schedule, exhibit, certificate or other document
furnished pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or knowingly omits or fails to state, or will omit
or fail to state, any material fact or information necessary to make such
representation or warranty or any such statement not materially misleading.
6.6 Alien Ownership
Purchaser is in compliance with Section 310(b) of the Communications
Act, and all rules, regulations and policies of the FCC promulgated thereunder.
6.7 FCC Matters
Purchaser is fully qualified under the Communications Act of 1934, as
amended, to be an FCC licensee and to be approved as the assignee of the
Authorizations.
6.8 Availability of Funds
Purchaser has available to it, and Purchaser will have available on the
Closing
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Date, sufficient funds to enable it to consummate the transactions contemplated
by this Agreement.
ARTICLE 7
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Authorizations and to otherwise
consummate the transactions contemplated by this Agreement are subject, in the
discretion of Seller, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions:
7.1 Representations, Warranties and Covenants
All representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date, and Purchaser shall have performed in all material respects
all agreements and covenants required hereby to be performed by it prior to or
at the Closing Date. There shall be delivered to Seller a certificate (signed by
an officer of Purchaser) to the foregoing effect ("Purchaser's Closing
Certificate").
7.2 Purchase Price
Seller shall have received payment of the Purchase Price in accordance
with ARTICLE 2 hereof.
7.3 HSR Waiting Period
Any waiting period required by the HSR Act shall have lapsed or been
terminated, and any investigation of the transactions contemplated by this
Agreement commenced by the Department of Justice and/or the Federal Trade
Commission pursuant to the HSR Act shall have been terminated.
7.4 Closing Documents
Seller shall have received from Purchaser the documents and other items
to be delivered by Purchaser pursuant to Section 9.2 hereof.
ARTICLE 8
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to purchase the Authorizations and to
otherwise consummate the transactions contemplated by this Agreement are
subject, in the discretion of Purchaser, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:
8.1 Representations, Warranties and Covenants
All representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects at and as of the Closing Date
as if such representations
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and warranties were made at and as of the Closing Date, and Seller shall have
performed in all material respects all agreements and covenants required hereby
to be performed by Seller prior to or at the Closing Date. There shall be
delivered to Purchaser a certificate (signed by an officer of Seller) to the
ongoing effect ("Seller's Closing Certificate").
8.2 Consent
The FCC and any other applicable governmental entity shall have
consented to the assignment of the Authorizations to Purchaser and such consents
shall have become Final Orders.
8.3 Closing Documents
Purchaser shall have received from Seller the documents and other items
to be delivered by Seller pursuant to Section 9.1 hereof.
8.4 Opinion of Seller's FCC Counsel
Seller shall have delivered to Purchaser an opinion of FCC counsel for
Seller in substantially the form attached hereto as Schedule 8.4.
8.5 HSR Waiting Period
Any waiting period required by the HSR Act shall have lapsed or been
terminated, and any investigation of the transactions contemplated by this
Agreement commenced by the Department of Justice and/or the Federal Trade
Commission pursuant to the HSR Act shall have been terminated.
ARTICLE 9
THE CLOSING
On the Closing Date:
9.1 Deliveries by Seller to Purchaser.
Seller shall deliver to Purchaser:
9.1.1 one or more assignments transferring to Purchaser (or its
designee) all of Seller's interest in and to the Authorizations;
9.1.2 the opinion of Seller's FCC counsel referenced in Sections
8.4 hereof;
9.1.3 Seller's Closing Certificate.
9.2 Deliveries by Purchaser to Seller
Purchaser shall deliver to Seller (or its designee):
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<PAGE> 10
9.2.1 Purchaser's Closing Certificate;
9.2.2 payment of the Purchase Price; and
9.2.3 one or more assumption agreements pursuant to which
Purchaser (or its designee) agrees to assume all of Seller's interest in and to
the Authorizations on and after the Closing Date.
ARTICLE 10
INDEMNIFICATION
10.1 Survival
The several representations, warranties, covenants, and agreements of
the Parties contained in this Agreement (or in any document delivered in
connection herewith) shall be deemed to have been made on the date of this
Agreement and on the Closing Date, shall be deemed to have been relied upon by
the Parties notwithstanding any investigation made by the Parties, shall survive
the Closing Date, and shall remain operative and in full force and effect for a
period of one (1) year following the Closing Date (the "indemnification
period").
10.2 Seller's Indemnity
10.2.1 During the indemnification period (or thereafter solely
with respect to any claim for which indemnification has been made prior to the
expiration of the indemnification period), Seller shall indemnify and hold
harmless Purchaser and its Affiliates from and against any and all demands,
claims, losses, liabilities, actions or causes of action, assessments, actual
damages, penalties, reasonable costs and expenses (including, without
limitation, interest, reasonable expenses of investigation, reasonable fees and
disbursements of counsel, accountants and other experts (whether such reasonable
fees and disbursements of counsel, accountants and other experts relate to
claims, actions or causes of action asserted by Purchaser against Seller or
asserted by third parties)) (collectively "Losses") incurred or suffered by
Purchaser, its Affiliates, and their respective officers, directors, employees,
agents and representatives, arising out of, resulting from, or relating to:
(a) Any breach of any of the representations or
warranties made by Seller in this Agreement or in any agreement, certificate,
exhibit or other instrument delivered by the Seller pursuant to this Agreement;
and
(b) Any failure by Seller to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by the Seller pursuant to this
Agreement.
10.3 Purchaser's Indemnity
10.3.1 During the indemnification period (or thereafter solely
with respect to any claim for which indemnification has been made prior to
expiration of the indemnification period), from and after
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the Closing Date, Purchaser shall indemnify and hold harmless Seller and its
Affiliates from and against any and all Losses incurred or suffered by Seller,
its Affiliates, and their respective officers, directors, employees, agents and
representatives, arising out of, resulting from, or relating to:
(a) Any breach of any of the representations or
warranties made by Purchaser in this Agreement or in any agreement, certificate
or other instrument delivered by Purchaser pursuant to this Agreement; and
(b) Any failure by Purchaser to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Purchaser pursuant to this
Agreement.
10.4 Procedure
In the event that any party hereto shall sustain or incur any
Losses in respect of which indemnification may be sought by such party pursuant
to this Article, the party seeking such indemnification (the "Indemnitee") shall
assert a claim for indemnification by giving prompt written notice thereof (the
"Notice") which shall describe in reasonable detail the facts and circumstances
upon which the asserted claim for indemnification is based along with a copy of
the claim or complaint, if any, to the party providing indemnification (the
"Indemnitor") and shall thereafter keep the Indemnitor reasonably informed with
respect thereto; provided that failure of the Indemnitee to give the Indemnitor
prompt notice as provided herein shall not relieve the Indemnitor of any of its
obligations hereunder, except to the extent that the Indemnitor is materially
prejudiced by such failure. For purposes of this paragraph, any notice which is
sent within 15 days of the date upon which the Indemnitee learned of such Loss
shall be deemed to have been a "prompt notice."
If the Indemnitor wishes to defend any claim for any Losses for
which such Indemnitor is or may be liable, and such Indemnitor first establishes
(to the reasonable satisfaction of the Indemnitee) the Indemnitor's financial
ability to pay for any such Losses, then such Indemnitor may, at its own
expense, defend such claim; provided that the Indemnitee may retain counsel (at
the Indemnitee's expense) to monitor the defense of such claim, and may take
over such defense if, during the course thereof, it reasonably appears that the
Indemnitor has lost its ability to pay for any Losses threatened by such claim.
If an Indemnitor assumes the defense of such an action, no compromise or
settlement thereof may be effected by the Indemnitor without the Indemnitee's
consent, which consent shall not be unreasonably withheld. If an Indemnitor
fails, within thirty (30) days after the date of the Notice, to give notice to
the Indemnitee of said Indemnitor's election to assume the defense thereof, said
Indemnitor shall be bound by any determination made in such action or any
compromise or settlement thereof effected by the Indemnitee.
10.5 Investigations: Waivers
The survival periods and rights to indemnification provided for in this
Article shall remain in effect notwithstanding any investigation at any time by
or on behalf of any party hereto or any waiver by any party hereto of any
condition to such party's obligations to
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consummate the transactions contemplated hereby.
ARTICLE 11
DEFAULT AND REMEDIES
11.1 Opportunity to Cure
If any Party believes another to be in material default hereunder, such
Party shall provide the other with written notice specifying in reasonable
detail the nature of such material default. If the material default has not been
cured by the earlier of: (a) the Closing Date, or (b) the later of (i) thirty
(30) days after delivery of that notice or (ii) a reasonable period of time if
such default cannot be cured within thirty (30) days after delivery of that
notice, then the Party giving such notice may terminate this Agreement and/or
exercise the remedies available to such Party pursuant to this Article, subject
to the right of the other Party to contest such action through appropriate
proceedings.
11.2 Remedies
The Parties hereto shall have the right to pursue any remedy that each
may have at law or in equity. Without limiting the foregoing, the parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
ARTICLE 12
TERMINATION
This Agreement may be terminated at the option of Seller or Purchaser
upon written notice to the other if the Assignment Application has not been
granted by Final Order within eighteen (18) months after the date of this
Agreement, or if Closing is prohibited by a change in the law. Neither party may
terminate this Agreement pursuant to this Section if such party is in material
default hereunder, or if a delay in any decision or determination by the
Commission respecting the Assignment Application has been caused or materially
contributed to by such party's action or inaction with respect to such
Assignment Application.
ARTICLE 13
MISCELLANEOUS
13.1 Assignment
Neither this Agreement nor any of the rights or obligations hereunder
may be assigned by Seller or Purchaser without the prior written consent of the
others, except that
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Purchaser may, without such consent, assign its right, title and interest in, to
and under this Agreement to an Affiliate so long as Purchaser remains obligated
to fulfill the requirements of this Agreement in the event such assignee does
not so perform. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors
and assigns, and no other person shall have any right, benefit or obligation
hereunder.
13.2 Notices; Transfer of Funds
Unless otherwise provided herein, any notice, request, instruction or
other document to be given hereunder by any Party to the other shall be in
writing and delivered in person or by courier, by facsimile transmission, or
mailed by registered or certified mail, postage prepaid, return receipt
requested (such mailed notice to before the date of such receipt is
acknowledged), as follows:
If to Purchaser:
Western Wireless Corporation
3650 - 131st Avenue S.E., Suite 400
Bellevue, Washington 98006
Attention: Scott A. Hopper
Fax No. (425) 586-8135
With a copy to:
Stokes Lawrence, P.S.
800 Fifth Avenue, Suite 4000
Seattle, WA 98104
Attention: Douglas C. Lawrence
Fax No: (206) 464-1496
If to Seller:
Zephyr Tele-Link
54 Broad Avenue
Palisades Park, N.J. 07650
Attention: Guy Lanza, Jr.
Fax No. (201) 945-5813
With a copy to:
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W., Suite 600
Washington, D.C. 20037
Attention: Seth M. Warner
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Fax No. (202) 265-5706
And a copy to:
Falkenberg Capital
600 South Cherry, Suite 808
Denver, CO 80222
Attention: Bruce Falkenberg
Fax No. (303) 322-5796
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others. All such notices and
communications shall be deemed to have been duly given at the time delivered by
hand, if personally delivered; five business days after being deposited in the
mail, first class postage prepaid, return receipt requested, if mailed; when
receipt confirmed, if sent by facsimile; and the next business day after timely
delivery to the courier, if sent by an over-night air courier service
guaranteeing next day delivery.
13.3 Choice of Law
This Agreement shall be construed, interpreted and the rights of the
Parties determined in accordance with the laws of the State of Delaware without
reference to its choice of law rules, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity which is a
party to or the subject of this Agreement, and as to those matters the law of
the jurisdiction under which the respective entity derives its powers shall
govern.
13.4 Entire Agreement; Amendments and Waivers
This Agreement, together with all exhibits and schedules hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
13.5 Counterparts
This Agreement may be executed by facsimile and in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 Invalidity
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or
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unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument.
13.7 Headings
The headings of the Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
13.8 Expenses
Except as otherwise expressly provided herein, Seller shall be solely
responsible for any sales and transfer Taxes arising from the purchase and sale
of the Authorizations pursuant to this Agreement. Seller and Purchaser shall
equally all HSR filing fees, if any, and all FCC filing fees. In all other
respects Seller and Purchaser will each be liable for its own expenses incurred
in connection with the negotiation, preparation, execution or performance of
this Agreement.
13.9 Publicity
Except as required by law or on advice of counsel, neither party shall
issue any press release or make any public statement regarding the transactions
contemplated hereby without the prior approval of the other party.
13.10 Confidential Information
The parties acknowledge that the transaction described herein is of a
confidential nature and shall not be disclosed except to consultants, advisors
and affiliates, or as required by law, until such time as the parties make a
public announcement regarding the transaction as provided in Section 13.9.
Seller and Purchaser shall not make any public disclosure of the specific terms
of this Agreement, except as required by law. In connection with the negotiation
of this Agreement and the preparation for the consummation of the transactions
contemplated hereby, each Party acknowledges that it will have access to
confidential information relating to the other Parties. Each Party shall treat
such information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except to advisors, consultants and
Affiliates in connection with the transactions contemplated hereby provided such
advisors, consultants and Affiliates also agree to keep such information
confidential. In the event of the termination of this Agreement for any reason
whatsoever, each Party shall return to the other all documents, work papers and
other material (including all copies thereof) obtained in connection with the
transactions contemplated hereby and will use all reasonable efforts, including
instructing any of its employees and others who have had access to such
information, to keep confidential and not to use any such information, unless
such information is now, or is hereafter disclosed, through no act or omission
of such party, in any manner making it available to the general public.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed on its behalf by its representative thereunto duly authorized as
of the day and year first
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above written.
ZEPHYR TELE-LINK WWC LICENSE L.L.C.
By: /s/ Guy J. Lanza, Jr. By: /s/ Scott Hopper
------------------------------- -------------------------------
Its: Partner Its: Vice President - Corporate
Development
By: /s/ Howard Sosna
------------------------------
Its: Partner
By: /s/ John A. Journalist
------------------------------
Its: Partner
GUARANTY
Western Wireless Corporation ("Guarantor") hereby unconditionally
guarantees the full and timely payment and performance by Purchaser of
Purchaser's obligations as set forth in this Agreement. The guarantee provided
herein is an absolute and continuing guarantee and shall not be affected by any
amendment of the Agreement or any renewal or extension of the time for payment
or performance by Purchaser of any of its obligations hereunder, or any
indulgences or waivers with respect thereto. Guarantor hereby waives any
circumstance that might constitute a defense available to, or discharge of,
Guarantor, other than such defense or discharge as would be available to
Purchaser under the terms of this Agreement.
WESTERN WIRELESS CORPORATION
By: /s/ Scott Hopper
---------------------------------
Its: Vice President - Corporate
Development
<PAGE> 1
EXHIBIT 10.61
WESTERN WIRELESS CORPORATION
1994 MANAGEMENT INCENTIVE
STOCK OPTION PLAN
(Adopted November 17, 1994; Amended September 15, 1995;
Approved, as Adopted and as Amended, by Shareholders November 16, 1995;
Amended and Approved, as Adopted and as Amended, by Shareholders May 20, 1999;
Amended February 3, 2000)
1. ESTABLISHMENT AND PURPOSE. This 1994 Management Incentive Stock
Option Plan was established to provide an important inducement for management to
generate shareholder value by giving certain key personnel of Western Wireless
Corporation and its subsidiaries a stake in the equity of the Company. The
Company believes that the key managers participating in the Plan will seek to
build personal financial security through creating and maintaining value in the
Company for all shareholders. This Plan allows the Company to grant two types of
options, namely (1) Nonstatutory Stock Options; and (2) Incentive Stock Options
as the latter are defined and governed by Section 422 of the Internal Revenue
Code of 1986, as amended.
2. DEFINITIONS. As used herein, the following definitions shall apply.
"Administrator" means the Board or any Committee designated by
the Board to administer the Plan in accordance with Section 4 hereof.
"Applicable Laws" means the legal requirements relating to the
administration and operation of stock option plans under federal and state
corporate and securities laws and the Code.
"Board" means the Board of Directors of the Company, as
constituted from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee appointed by the Board, in
accordance with Section 4 hereof. If no such committee has been appointed,
"Committee" means the full Board.
"Common Stock" means the Common Stock of the Company, no par
value per share.
"Company" means Western Wireless Corporation, a Washington
corporation.
"Consultant" shall mean any person engaged by the Company who is
not an Employee.
"Director" means a member of the Board.
"Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
"Employee" means any person, including Officers and Directors,
who is an employee (within the meaning of Section 3401(c) of the Code and the
regulations thereunder) of the Company, a Parent or a Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Page 1 of 11
<PAGE> 2
"Exercise Price" means the price at which one Share of the
Common Stock may be purchased upon exercise of an Option, as specified by the
Administrator in the applicable Option Agreement.
"Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator as required.
"Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422(b) of the Code and
the regulations promulgated thereunder.
"Nonstatutory Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code and the regulations promulgated thereunder.
"Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
"Option" means a stock option granted pursuant to the Plan.
"Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan,
but may be modified in the discretion of the Administrator.
"Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
"Optioned Stock" means the Common Stock subject to an Option.
"Optionee" means an Employee who holds an outstanding Option.
"Parent" means a "parent corporation" (other than the Company),
whether now or hereafter existing, as defined in Section 424(e) of the Code.
Page 2 of 11
<PAGE> 3
"Plan" means this 1994 Management Incentive Stock Option Plan of
Western Wireless Corporation, as it may be amended.
"Publicly Traded" means that the Common Stock is listed on an
established stock exchange or traded on the Nasdaq Stock Market.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
"Service" means service as an Employee.
"Share" means one share of the Common Stock, as adjusted in
accordance with Section 8 hereof.
"Subsidiary" means a "subsidiary corporation" (other than the
Company), whether now or hereafter existing, as defined in Section 424(f) of the
Code.
3. STOCK SUBJECT TO THE PLAN. Shares offered under the Plan shall be
authorized but unissued or reacquired Common Stock. The maximum aggregate number
of Shares issuable under the Plan shall not exceed seven million six hundred
thousand (7,600,000) Shares of the Company, subject to (i) adjustment pursuant
to Section 8 hereof, or (ii) amendment hereof approved by the shareholders of
the Company. If an outstanding Option for any reason expires or is terminated or
canceled or otherwise becomes unexercisable before being exercised in full, or
is surrendered pursuant to an Option Exchange Program, the Shares allocable to
the unexercised portion of such Option will not be charged against the
limitations of this Section and will become available for future grant or sale
under the Plan. Shares issued pursuant to the exercise of an Option that are
repurchased by the Company will not be available for subsequent Option grants
under the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
Committee appointed by the Board consisting of two or more members of the Board,
which Committee shall be constituted to comply with Applicable Laws, including
Rule 16b-3, if applicable. If no such Committee is appointed, the Plan shall be
administered by the Board. The members of a Committee will serve for such term
as the Board may determine. From time to time, the Board may increase the size
of the Committee and appoint additional members, remove members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan. Decisions of a Committee made within the
discretion delegated to it by the Board will be final and binding on all persons
who have an interest in the Plan.
(a) Administration With Respect to Directors and Officers
Subject to Section 16(b). The composition of any Committee responsible for
administration of the Plan with respect to Optionees who are subject to the
trading restrictions of Section 16(b) of the Exchange Act with respect to
securities of the Company will comply with the applicable requirements of Rule
16b-3.
(b) Authority of the Administrator. The Administrator of the
Plan will have full authority to administer the Plan within the scope of its
delegated responsibilities, including authority to interpret and construe any
relevant provision of the Plan, to adopt such rules and regulations as it may
deem necessary, and to determine the terms and conditions of Option grants made
under the Plan (which need not be identical). Without limiting the foregoing,
the Administrator will have the authority, in its discretion:
(i) to determine whether and to what extent Options are
granted hereunder;
Page 3 of 11
<PAGE> 4
(ii) to select the Employees to whom Options may be
granted hereunder;
(iii) to determine the number of Shares to be covered by
each Option granted hereunder;
(iv) to determine the Fair Market Value of the Common
Stock;
(v) to approve forms of the Option Agreement for use
under the Plan;
(vi) to determine the time period during which an Option
may be exercised, provided that the time period for an Incentive Stock Option
may not be more than ten (10) years;
(vii) to determine the terms and conditions not
inconsistent with those of the Plan, of any award of an Option granted
hereunder, including, but not limited to, the Exercise Price; the time or times
when Options may be exercised; all vesting provisions; any waiver of forfeiture
restrictions; and any restriction or limitation regarding any Option or the
Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(viii) to determine whether and to what extent the
Company should grant or permit loans or guarantee loans in connection with the
grant or the exercise of an Option by an Optionee pursuant to Section 12 hereof;
(ix) with the consent of the affected Optionee, to
effect, at any time and from time to time, the cancellation of any or all
outstanding Options under the Plan and to grant new Options in substitution
therefor, in accordance with Section 14 hereof;
(x) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(xi) to modify, amend or waive the terms, conditions and
restrictions of any outstanding Option; provided, however, no such modification,
amendment or waiver shall, without the written consent of the Optionee, impair
the Optionee's rights or increase the Optionee's obligations with respect to
such Option;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to institute an Option Exchange Program; and
(xiv) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. From time to time, the Administrator may, in its
discretion, select individuals from among the Employees, Directors and
Consultants of the Company or any of its Subsidiaries to receive Options under
the Plan.
Page 4 of 11
<PAGE> 5
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Option Agreement. Each Option granted under the Plan will be
evidenced by an Option Agreement between the Optionee and the Company. Such
Options will be subject to all applicable terms and conditions of the Plan and
such instruments may contain other terms and conditions which are not
inconsistent with the purpose of the Plan and which the Administrator deems
appropriate for inclusion in an Option Agreement. Notwithstanding the foregoing,
an Option Agreement or any other written agreement between the Company and an
Optionee may contain other terms and conditions concerning the Option
(including, without limitation, terms and conditions relating to vesting) as are
mutually agreed to by the Optionee and the Company. The provisions of the
various Option Agreements or other agreements entered into under the Plan need
not be identical.
(b) Number of Shares. Each Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8 hereof.
(c) Character of Options. Each Option granted under the Plan
shall be designated in the Option Agreement as either a Nonstatutory Stock
Option or an Incentive Stock Option, as the case may be.
(d) Exercise Price. Each Option Agreement shall specify the
Exercise Price. Subject to the discretion of the Administrator, the Exercise
Price of an Option shall be the Fair Market Value per Share on the date of
grant.
(e) Payment. The Exercise Price of each Option will be payable
immediately and in full upon exercise; provided, however, that the Administrator
may, either at the time the Option is granted or at the time it is exercised and
subject to such limitations as it may determine, authorize payment of all or a
portion of the Exercise Price in one or a combination of the following forms:
(i) cash;
(ii) check;
(iii) a promissory note (but only if authorized or
allowed pursuant to Sections 12 and 22(e) hereof);
(iv) other Shares of Common Stock which have a Fair
Market Value on the date of surrender equal to the aggregate Exercise Price of
the Shares as to which the Option will be exercised;
(v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds to pay the Exercise Price;
(vi) utilization of the cashless exercise method
described in Section 6(h) hereof;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws.
Page 5 of 11
<PAGE> 6
In the event that the Company's Common Stock is Publicly Traded,
unless otherwise provided in the Option Agreement, the methods of payment set
forth in subparagraphs (iii) and (vi) above shall not be permitted hereunder.
(f) Exercisability. Each Option Agreement shall specify the date
when all or any portion of the Option will become exercisable, any conditions
which must be satisfied before the Option may be exercised and the term of the
Option.
(g) Nontransferability of Options. An Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
(h) Termination of Employment. In the event that an Optionee's
employment by the Company or a Parent or Subsidiary terminates (other than upon
the Optionee's death or Disability), or a Subsidiary ceases to be a Subsidiary
(in which event the employment of such company's employees will be deemed to be
terminated under this Plan), the Optionee may exercise his or her Option, but
only within such applicable period of time as is set forth below, and, except as
otherwise provided by written agreement between the Optionee and the Company,
only to the extent that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, after termination, the
Optionee does not exercise his or her Option within the applicable time period
specified below, the Option shall terminate. For purposes of this Subsection
6(h), the Optionee's employment shall not be considered to have been terminated
in the case of any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave. For Incentive Stock Options,
Optionee shall have a period of three (3) months from the date of termination of
employment. For Nonstatutory Stock Options, in the event that the Common Stock
of the Company is then Publicly Traded, Optionee shall have a period of six (6)
months and one day from the date of termination of employment, and in the event
that the Common Stock of the Company is not then Publicly Traded, Optionee shall
have a period of twelve (12) months and one day from the date of termination of
employment. During the applicable period the Optionee may either (i) exercise
his or her Option by delivery of the Exercise Price pursuant to Section 7 hereof
or, if the Common Stock of the Company is not then Publicly Traded and if
provided for in Optionee's Option Agreement, (ii) deliver the requisite Exercise
Price by utilizing a cashless election procedure at a price per share equal to
the Fair Market Value of a Share of Common Stock as of the date of termination
of employment (provided that the Administrator is not otherwise prohibited by
Company loan agreements or related contractual obligations from permitting such
cashless election procedure.) The cashless election procedure is also available
to Optionee, at anytime prior to termination of employment, if provided for as a
designated method in the Option Agreement and subject to the other terms and
conditions of the Plan and the Option Agreement. If the Company is publicly
traded, the Company, working with the brokerage firm, if any, designated by the
Company to facilitate exercises of options and sales of shares under this Plan,
may from time to time amend the procedures set forth herein and may specify
additional or different procedures for a cashless exercise for any or all
Optionees. Optionee shall be responsible for satisfying all applicable federal,
state, local and employment tax withholding requirements associated with such
exercise and must evidence the ability to satisfy such withholding requirements
prior to such exercise.
(i) Disability of Optionee. In the event that an Optionee's
employment terminates as a result of the Optionee's Disability, the Optionee may
exercise his or her Option at any time within twelve (12) months from the date
of such termination, but, except as otherwise provided by written agreement
between the Optionee and the Company, only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). If, after termination of employment, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall terminate.
Page 6 of 11
<PAGE> 7
(j) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twenty-four (24) months following
the date of death (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but, except as otherwise provided by written agreement between the Optionee and
the Company, only to the extent that the Optionee was entitled to exercise the
Option at the date of death. If, after death, the Optionee's estate or a person
who acquired the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate.
7. PROCEDURE FOR EXERCISE. Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted in the Option Agreement and the Plan. If the Company is publicly
traded, the Company, working with the brokerage firm, if any, designated by the
Company to facilitate exercises of options and sales of shares under this Plan,
may from time to time amend the procedures set forth herein and may specify
additional or different procedures.
Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the stock certificate evidencing such Shares is issued
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company will issue or
cause to be issued such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 8 hereof.
8. ADJUSTMENTS.
(a) Changes in Capitalization. In the event of a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company, the
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock. Any conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
Page 7 of 11
<PAGE> 8
(b) Corporate Structure. In the event of a merger,
consolidation, acquisition of property or stock, separation, reorganization or
other change to the capital or business structure of the Company (including,
without limitation, by means of an exchange offer or other transaction)
(collectively, a "Reorganization" ) the effect of which is to organize a parent
company of the Company which will own not less than 50% of the capital stock of
the Company (such parent company is hereinafter referred to as "Company
Holdings" ), the Administrator shall have the authority to effect, without the
consent of the Optionees, (x) the cancellation of all outstanding Options
granted under the Plan and substitute therefor options to purchase shares of
Company Holdings ("New Options"), or (y) the assumption by Company Holdings of
Options granted under the Plan; provided, however, that (i) immediately after
the Reorganization the excess of the aggregate fair market value of all shares
subject to New Options over the aggregate option prices of all shares subject to
New Options shall equal but not be more than the excess of the aggregate fair
market value immediately preceding the Reorganization of all shares subject to
Options granted under the Plan over the aggregate option prices of all shares
subject to Options granted under the Plan, and (ii) New Options, or the
assumption or substitution of Options granted under the Plan, do not give an
Optionee additional benefits which such Optionee did not have under Options
granted under the Plan. Such a Reorganization shall not be treated as a
Triggering Event or a Change of Control (as defined in the Option Agreement, as
applicable) for purposes of the Plan and related Option Agreement. The grant of
Options under this Plan will in no way affect the right of the Company to
adjust, reclassify, reorganize, or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or
any part of its business or assets or effect any other Reorganization.
(c) Substitutions and Assumptions. The Board shall have the
right to substitute or assume options in connection with mergers,
reorganizations, separations, or other "corporate transactions" as that term is
defined in and said substitutions and assumptions are permitted by Section 424
of the Code (as however amended or superseded) and the regulations promulgated
thereunder. Any shares or Options issued upon the assumption of or in
substitution for outstanding awards made by a corporation or other business
entity acquired by the Company shall not reduce the number of Shares or Options
issuable under the Plan (unless such shares or Options are made available to
individuals who become, upon the acquisition, an Officer or otherwise an
individual subject to Section 16 of the Exchange Act).
9. DATE OF GRANT. Subject to applicable statutory approval, the date of
the grant of an Option shall be, for all purposes, the date on which the
Administrator makes the determination to grant such Option, or such other date
as is determined by the Administrator. Notice of the determination to grant an
Option shall be provided to the Optionee within a reasonable time after the date
of such grant.
10. NO EMPLOYMENT RIGHTS. Neither the Plan nor any Option shall confer
upon any Employee any right to continue in the employ of the Company of any
affiliate or constitute a contract or agreement of employment or interfere in
any way with any right that the Company or an affiliate may have to reduce such
Employee's compensation or to terminate such Employee's employment at any time
with or without cause; however, nothing contained in the Plan or in any Option
granted under the Plan shall affect any contractual rights of an Employee
pursuant to a written employment agreement.
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan in whole or in part.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment in such a manner and to the extent necessary and
desirable to comply with Rule 16b-3 or with Section 422 of the Code (or with any
successor rule or statute or other Applicable Law, rule or
Page 8 of 11
<PAGE> 9
regulation including the requirements of any exchange or quotation system on
which the Common Stock is then listed or quoted).
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights or
increase the obligations of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing
and signed by the Optionee and the Company.
12. LOANS. In order to assist an Optionee in the acquisition of Shares
pursuant to an Option granted under the Plan, the Administrator may authorize,
at either the time of the grant of an Option or the time of the acquisition of
Shares under the Option, (i) the extension of a loan to the Optionee by the
Company, or (ii) the guarantee by the Company of a loan obtained by the Optionee
from a third party. The terms of any loans or guarantees, including the amount,
interest rate and terms of repayment, will be subject to the discretion of the
Administrator and applicable covenants contained in Company loan agreements.
Loans and guarantees may be granted without security, the maximum credit
available being the Exercise Price of the Shares acquired plus the maximum
federal and state income and employment tax liability that may be incurred in
connection with the acquisition.
13. WITHHOLDING.
(a) Obligation. The Company's obligation to deliver stock
certificates upon the exercise of an Option will be subject to the Optionee's
satisfaction, in the Administrator's sole discretion, of all applicable federal,
state and local income and employment tax withholding requirements.
(b) Payment. In the event that an Optionee is required to pay to
the Company an amount with respect to income and employment tax withholding
obligations in connection with the exercise of an Option, the Administrator may,
in its discretion and subject to such limitations and rules as it may adopt,
permit the Optionee to satisfy the obligation, in whole or in part, by
delivering shares of Common Stock already held by the Optionee or by making an
irrevocable election that a portion of the total value of the Shares subject to
the Option be paid in the form of cash in lieu of the issuance of Common Stock,
and that such cash payment be applied to the satisfaction of the withholding
obligations.
14. OPTION EXCHANGE PROGRAM. The Administrator will have the authority
to effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding Options under the Plan and
to grant in substitution therefor new Options under the Plan covering the same
or different numbers of Shares, but, in accordance with Section 6 hereof, having
an Exercise Price not less than one hundred percent (100%) of the Fair Market
Value on the new grant date, unless otherwise permitted by the Administrator.
15. COMPLIANCE WITH FEDERAL AND STATE LAWS. Shares will not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares shall comply with all relevant provisions
of law and the requirements of any stock exchange or quotation system upon which
the Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the grant or exercise of an Option, or to the issuance
of any Shares under any Option, the Administrator may require the Optionee to
provide such written representations, covenants, warranties and agreements
which, in the opinion of counsel for the Company, are required to comply with
applicable law or satisfy the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted.
Page 9 of 11
<PAGE> 10
The Company undertakes to use all reasonable efforts to either register
the Shares of Common Stock issuable upon exercise of an Option or assure that an
exemption from registration is available in connection with such exercise. In
the event that the Company shall deem it necessary or desirable to register any
shares of Common Stock with respect to which the Option shall have been or may
be exercised, or to qualify any such shares for exemptions pursuant to
applicable statutes, then the Company may take such action and may require from
the Optionee such information in writing for use in any registration statement,
supplementary registration statement, prospectus, preliminary prospectus,
offering circular or any other document that is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from the Optionee against all losses, claims, damage and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
16. RESERVATION OF SHARES. During the term of this Plan, the Company
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless approved by the Board
and shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 11
hereof.
18. EFFECTIVE DATE; SHAREHOLDER APPROVAL; TERM OF PLAN. The effective
date of the Plan shall be the date of its adoption by the Board, subject to
approval by the shareholders of the Company within 12 months after the effective
date if required under Applicable Laws. Such shareholder approval shall be
obtained in the manner and to the degree required under applicable federal and
state law. Options may be granted by the Administrator as provided herein
subject to such subsequent shareholder approval. The Plan shall continue for a
term of ten (10) years from the date of original approval by the Board unless
terminated earlier under Section 11 hereof.
19. RULE 16b-3. Notwithstanding any provision of the Plan, the Plan
shall always be administered, and Options shall always be granted and exercised,
in such a manner as to conform to the provisions of Rules 16b-3, unless the
Administrator determines that Rule 16b-3 is not applicable to the Plan.
20. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the state of Washington.
21. USE OF PROCEEDS. All cash proceeds to the Company under the Plan
shall constitute general funds of the Company.
22. TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS ONLY. In addition to,
and notwithstanding, the other provisions hereof that apply to all Options
granted pursuant to this Plan, the following paragraphs shall apply to any
options granted under this Plan which are Incentive Stock Options.
(a) Conformance with the Code:
Page 10 of 11
<PAGE> 11
Options granted under this Plan which are "Incentive Stock Options"
shall conform to, be governed by, and be interpreted in accordance with Section
422 of the Code and any regulations promulgated thereunder and amendments to the
Code and Regulations. Only Employees may be granted Incentive Stock Options
hereunder.
(b) Option Price:
The option or purchase price of each Share optioned under the Incentive
Stock Option provisions of this Plan shall be determined by the Board at the
time of the action for the granting of the option but shall not, in any event,
be less than the Fair Market Value of the Company's common stock on the date of
grant.
(c) Limitation on Amount of Incentive Stock Option:
The aggregate Fair Market Value of the Incentive Stock Options
(determined on the date of grant) with respect to which an employee has the
right to purchase vesting in any one calendar year (under all Plans of the
Company, its Subsidiaries, and any parent corporation) shall not exceed
$100,000.
(d) Limitation on Grants to Substantial Shareholders:
An Employee may not, immediately prior to the grant of an Incentive
Stock Option hereunder, own stock in the Company representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company unless the per share option price specified by the Board for the
Incentive Stock Options granted such an Employee is at least one hundred ten
percent (110%) of the Fair Market Value of the Company's stock on the date of
grant and such option, by its terms, is not exercisable after the expiration of
five (5) years from the date such option is granted.
(e) Method of Exercise of Option:
The amount to be paid by the Optionee upon exercise of an Incentive
Stock Option shall be the full purchase price thereof provided in the option.
Page 11 of 11
<PAGE> 1
EXHIBIT 10.62
LOAN AGREEMENT
AMONG
WESTERN WIRELESS CORPORATION, as Borrower,
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR AS LENDERS
ON THE SIGNATURE PAGES HEREOF, as Lenders,
TD SECURITIES (USA) INC., as Arranger,
BANK OF AMERICA, N.A., THE CHASE MANHATTAN BANK, and BARCLAYS
BANK PLC, as Co-Documentation Agents and Co-Syndication Agents,
DRESDNER BANK, AG, NEW YORK and GRAND CAYMAN BRANCHES, FIRST
UNION NATIONAL BANK, FLEET NATIONAL BANK, GOLDMAN SACHS
CREDIT PARTNERS LP, COOPERATIEVE CENTRALE-RAIFFEISEN
BOERENLEENBANK B.A. "RABOBANK INTERNATIONAL", NEW YORK
BRANCH, and UNION BANK OF CALIFORNIA, N.A., as Managing Agents,
SKANDINAVISKA ENSKILDA BANKEN AB and U.S. BANK NATIONAL
ASSOCIATION, as Co-Agents,
AND
TORONTO DOMINION (TEXAS), INC., as Administrative Agent;
DATED AS OF
APRIL 25, 2000
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS..............................................................1
ARTICLE 2. LOANS...................................................................22
Section 2. The Loans.....................................................22
(a) The Revolving A Loans.........................................22
(b) The Revolving B Loans.........................................22
(c) The Term A Loans..............................................23
(d) The Term B Loans..............................................23
(e) Incremental Facility..........................................23
Section 2.2 Manner of Borrowing and Disbursement..........................24
Section 2.3 Interest......................................................27
Section 2.4 Repayment.....................................................28
Section 2.5 Fees..........................................................31
Section 2.6 Prepayments...................................................32
Section 2.7 Borrower's Optional Cancellation of the Revolving Loan
Commitment....................................................33
Section 2.8 Mandatory Prepayments From Permitted Asset Sales..............34
Section 2.9 Notes; Loan Accounts..........................................35
Section 2.10 Manner of Payment.............................................36
Section 2.11 Reimbursement.................................................37
Section 2.12 Pro Rata Treatment............................................37
Section 2.13 Capital Adequacy..............................................38
Section 2.14 Lender Tax Forms..............................................39
ARTICLE 3. CONDITIONS PRECEDENT....................................................39
Section 3.1 Conditions Precedent to Initial Advance ......................39
Section 3.2 Conditions Precedent to Each Advance..........................42
ARTICLE 4. REPRESENTATIONS AND WARRANTIES..........................................43
Section 4.1 Representations and Warranties................................43
ARTICLE 5. GENERAL COVENANTS.......................................................50
Section 5.1 Preservation of Existence and Similar Matters.................50
Section 5.2 Business; Compliance with Applicable Law......................51
Section 5.3 Maintenance of Properties.....................................51
Section 5.4 Accounting Methods and Financial Records......................51
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 5.5 Insurance.....................................................51
Section 5.6 Payment of Taxes and Claims...................................52
Section 5.7 Visits and Inspections........................................52
Section 5.8 Payment of Indebtedness; Loans................................53
Section 5.9 Use of Proceeds...............................................53
Section 5.10 Real Estate...................................................53
Section 5.11 Indemnity.....................................................53
Section 5.12 Interest Rate Hedging.........................................54
Section 5.13 Covenants Regarding Formation of Restricted Subsidiaries
and the Making of Acquisitions................................55
Section 5.14 Designation of Unrestricted Subsidiaries as Restricted
Subsidiaries..................................................55
Section 5.15 Payment of Wages..............................................56
ARTICLE 6. INFORMATION COVENANTS...................................................56
Section 6.1 Quarterly Financial Statements and Information ...............56
Section 6.2 Annual Financial Statements and Information ..................57
Section 6.3 Performance Certificates......................................57
Section 6.4 Copies of Other Reports.......................................58
Section 6.5 Notice of Litigation and Other Matters........................58
ARTICLE 7. NEGATIVE COVENANTS......................................................59
Section 7.1 Indebtedness of the Borrower and its Restricted
Subsidiaries..................................................59
Section 7.2 Limitation on Liens...........................................60
Section 7.3 Amendment and Waiver..........................................60
Section 7.4 Liquidation, Merger, Disposition of Assets....................60
(a) Disposition of Assets.........................................60
(b) Liquidation or Merger.........................................61
Section 7.5 Limitation on Guaranties......................................61
Section 7.6 Investments and Acquisitions .................................61
(a) Cash Equivalents..............................................62
(b) Acquisitions..................................................62
(c) Employee Loans................................................63
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
(d) Seller Paper..................................................63
Section 7.7 Restricted Payments and Purchases.............................64
Section 7.8 Ratio of Operating Cash Flow to Cash Interest Expense.........64
Section 7.9 Fixed Charge Coverage Ratio...................................65
Section 7.10 Leverage Ratio................................................65
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt
Service Ratio.................................................65
Section 7.12 Affiliate Transactions........................................65
Section 7.13 Real Estate...................................................66
Section 7.14 ERISA Liabilities.............................................66
Section 7.15 New Unrestricted Subsidiaries.................................66
Section 7.16 Limitation on Preferred Stock of Restricted Subsidiaries......66
ARTICLE 8. DEFAULT.................................................................67
Section 8.1 Events of Default.............................................67
Section 8.2 Remedies......................................................70
Section 8.3 Payments Subsequent to Declaration of Event of Default........71
ARTICLE 9. THE AGENTS..............................................................71
Section 9.1 Appointment and Authorization.................................71
Section 9.2 Interest Holders..............................................72
Section 9.3 Consultation with Counsel.....................................72
Section 9.4 Documents.....................................................72
Section 9.5 Administrative Agent and Affiliates...........................72
Section 9.6 Responsibility of the Administrative Agent....................72
Section 9.7 Security Documents............................................73
Section 9.8 Action by the Administrative Agent............................73
Section 9.9 Notice of Default or Event of Default.........................73
Section 9.10 Responsibility Disclaimed.....................................74
Section 9.11 Indemnification...............................................74
Section 9.12 Credit Decision...............................................75
Section 9.13 Successor Administrative Agent................................75
(a) Resignation...................................................75
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
(b) Removal.......................................................75
Section 9.14 Delegation of Duties..........................................76
Section 9.15 Additional Agents.............................................76
ARTICLE 10. CHANGE IN CIRCUMSTANCES AFFECTING FIXED RATE ADVANCES...................76
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair...........76
Section 10.2 Illegality....................................................76
Section 10.3 Increased Costs...............................................77
Section 10.4 Effect On Other Advances......................................78
ARTICLE 11. MISCELLANEOUS...........................................................79
Section 11.1 Notices.......................................................79
Section 11.2 Expenses......................................................80
Section 11.3 Waivers.......................................................81
Section 11.4 Set-Off.......................................................81
Section 11.5 Assignment....................................................82
Section 11.6 Accounting Principles.........................................84
Section 11.7 Counterparts..................................................84
Section 11.8 Governing Law.................................................84
Section 11.9 Severability..................................................85
Section 11.10 Interest......................................................85
Section 11.11 Table of Contents and Headings................................85
Section 11.12 Amendment and Waiver..........................................85
Section 11.13 Entire Agreement..............................................86
Section 11.14 Other Relationships...........................................86
Section 11.15 Directly or Indirectly........................................86
Section 11.16 Reliance on and Survival of Various Provisions................86
Section 11.17 Senior Debt...................................................87
Section 11.18 Obligations Several...........................................87
Section 11.19 Confidentiality...............................................87
ARTICLE 12. WAIVER OF JURY TRIAL....................................................88
Section 12.1 Waiver of Jury Trial..........................................88
</TABLE>
<PAGE> 6
EXHIBITS
Exhibit A - Form of Borrower's Pledge Agreement
Exhibit B - Form of Certificate of Financial Condition
Exhibit C - Form of Performance Certificate
Exhibit D - Form of Request for Advance
Exhibit E-1 - Form of Revolving A Note
Exhibit E-2 Form of Revolving B Note
Exhibit F - Form of Security Agreement
Exhibit G - Form of Subordination Agreement
Exhibit H - Form of Subsidiary Guaranty
Exhibit I - Form of Subsidiary Pledge Agreement
Exhibit J - Form of Subsidiary Security Agreement
Exhibit K-1 - Form of Term A Note
Exhibit K-2 - Form of Term B Note
Exhibit L - Form of Use of Proceeds Letter
Exhibit M - Form of Borrower's Loan Certificate
Exhibit N - Form of Subsidiary Loan Certificate (Corporation)
Exhibit O - Form of Subsidiary Loan Certificate (Partnership)
Exhibit P - Form of Subsidiary Loan Certificate (Limited Liability
Company)
Exhibit Q - Form of Assignment and Assumption Agreement
<PAGE> 7
SCHEDULES
Schedule 1 - Subsidiaries (including designation of Subsidiaries as
Restricted Subsidiaries and Unrestricted Subsidiaries) and
Investments of the Borrower
Schedule 2 - Licenses and IOAs
Schedule 3 - Liens of Record as of the Agreement Date
Schedule 4-A - Allocation of Revolving A Commitment among certain of the
Lenders, Revolving A Commitment Ratios, and such Lenders'
Addresses for Notice
Schedule 4-B - Allocation of Revolving B Commitment among certain of the
Lenders, Revolving B Commitment Ratios, and such Lenders'
Addresses for Notice
Schedule 4-C - Allocation of Term A Loans among certain of the Lenders
and such Lenders' Addresses for Notice
Schedule 4-D - Allocation of Term B Loans among certain of the Lenders
and such Lenders' Addresses for Notice
Schedule 5 - Shareholders owning more than 5% of the Borrower as of the
Agreement Date
Schedule 6 - Compliance with Other Loan Documents and Contemplated
Transactions
Schedule 7 - Issues Pertaining to Necessary Authorizations and Licenses
Schedule 8 - Litigation
Schedule 9 - Liabilities and Losses
Schedule 10 - Agreements with Affiliates, etc.
Schedule 11 - Real Estate
Schedule 12 - Guaranties of Obligations of Unrestricted Subsidiaries in
effect on the Agreement Date
<PAGE> 8
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Loan Agreement") dated as of April __, 2000,
is entered into by and among Western Wireless Corporation, a Washington
corporation, as Borrower, Toronto Dominion (Texas), Inc., as Administrative
Agent, the financial institutions whose names appear as lenders on the signature
pages hereof, TD Securities (USA) Inc., as Arranger, Bank of America, N.A., The
Chase Manhattan Bank, and Barclays Bank Plc, as Co-Documentation Agents and
Co-Syndication Agents, Dresdner Bank, AG, New York and Grand Cayman Branches,
First Union National Bank, Fleet National Bank, Goldman Sachs Credit Partners
LP, Cooperatieve Centrale-Raiffeisen Boerenleenbank B.A. "Rabobank
International", New York Branch, and Union Bank of California, N.A., as Managing
Agents, and Skandinaviska Enskilda Banken AB and U.S. Bank National Association,
as Co-Agents.
The parties hereto hereby agree as follows as of the date first above
written:
ARTICLE 1.
Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, exchange, issuance of
stock or other equity or debt securities, merger, reorganization or any other
method) (i) any acquisition by the Borrower or any of its Subsidiaries of any
other Person, which Person shall then become consolidated with the Borrower or
any such Subsidiary in accordance with GAAP, or (ii) any acquisition by the
Borrower or any of its Subsidiaries of all or any substantial amount of the
assets of any other Person. For purposes of the preceding sentence, an amount of
assets shall be deemed to be "substantial" if such assets have a fair market
value in excess of $1,000,000; provided, however, that the purchase of equipment
and other goods and services in the ordinary course of business shall not be
deemed to be "Acquisitions."
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., as
Administrative Agent for the Lenders, together with any successor Administrative
Agent hereunder.
"Administrative Agent's Office" shall mean the office of Toronto
Dominion (Texas), Inc., as Administrative Agent hereunder, located at 909 Fannin
Street, Suite 1700, Houston, Texas 77010, or such other office as may be
designated pursuant to the provisions of Section 11.1 of this Agreement.
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<PAGE> 9
"Advance" shall mean the aggregate amount advanced by the Lenders to the
Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" shall mean, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control" when used with
respect to any Person includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person, or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
Unless otherwise specified, "Affiliate" shall mean an Affiliate of the Borrower,
and shall include the Unrestricted Subsidiaries.
"Agents" shall mean, collectively, the Administrative Agent, the
Arranger, the Co-Documentation Agents, the Co-Syndication Agents, the Managing
Agents and the Co-Agents.
"Agreement" shall mean this Loan Agreement.
"Agreement Date" shall mean the date as of which this Agreement is
dated.
"Annualized Operating Cash Flow" shall mean, as of any calculation date,
the product of Operating Cash Flow for the most recently-completed fiscal
two-quarter period, multiplied by two (2).
"Applicable Law" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including, without limiting the
foregoing, the Licenses, the Communications Act and all Environmental Laws, and
all orders, decisions, judgments and decrees of all courts and arbitrators in
proceedings or actions to which the Person in question is a party or by which it
is bound.
"Applicable Margin" shall mean the interest rate margin applicable to
Advances hereunder as determined in accordance with Section 2.3(f) hereof.
"Approved Fund" shall mean, with respect to any Lender, any fund that
invests in commercial loans and is managed or advised by such Lender or an
Affiliate of such Lender, or by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
"Arranger" shall mean TD Securities (USA) Inc, in its capacity as
arranger hereunder.
"Authorized Signatory" shall mean such senior officers of the Borrower
as may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower.
2
<PAGE> 10
"Base Rate" shall mean, at any time, the higher of (a) the rate of
interest adopted by the Administrative Agent as the reference rate for the
determination of interest rates for loans of varying maturities in Dollars to
United States residents of varying degrees of creditworthiness and being quoted
at such time by The Toronto-Dominion Bank, New York Branch as its "base rate" or
"prime rate," or (b) the Federal Funds Rate plus one-half of one percent (0.5%).
The Base Rate is not necessarily the lowest rate of interest charged to
borrowers of the Administrative Agent or its Affiliates.
"Base Rate Advance" shall mean an Advance which the Borrower requests to
be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, and
which bears interest at the Base Rate Basis, in accordance with the provisions
of Section 2.2 hereof, and which shall be in a principal amount of at least
$5,000,000 and in an integral multiple of $1,000,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of
(i) the Base Rate and (ii) the Applicable Margin. The Base Rate Basis shall be
adjusted automatically as of the opening of business on the effective date of
each change in the Base Rate to account for such change and shall also be
changed to reflect adjustments in the Applicable Margin.
"Borrower" shall mean Western Wireless Corporation, a Washington
corporation.
"Borrower's Pledge Agreement" shall mean that certain Borrower's Pledge
Agreement of even date herewith between the Borrower and the Administrative
Agent, substantially in the form of Exhibit B attached hereto, pursuant to which
the Borrower has pledged to the Administrative Agent all stock owned by it.
"BTA" means the unit of division (of which there are 493) for the United
States of America, devised by Rand McNally based upon geography, population and
other factors, which units form the basis for the auction by the FCC of a
portion of the Licenses for PCS Systems for Basic Trading Areas, as defined by
the FCC.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
London, Houston, and New York, as relevant to the determination to be made or
the action to be taken.
"Capital Expenditures" shall mean, in respect of any Person,
expenditures for the purchase of tangible assets of long-term use which are
capitalized in accordance with GAAP.
"Capitalized Lease Obligation" shall mean that portion of any obligation
of a Person as lessee under a lease which is required to be capitalized on the
balance sheet of such lessee in accordance with GAAP.
3
<PAGE> 11
"Cash Interest Expense" shall mean, for any period, for the Borrower and
its Restricted Subsidiaries, on a consolidated basis, cash interest paid or
accrued in respect of Total Debt, together with amortization of fees associated
therewith (other than fees payable prior to the Agreement Date), all as
determined in accordance with GAAP and shall also include the interest component
of payments for such period in respect of Capitalized Lease Obligations;
provided, however, that each scheduled semi-annual interest payment on Permitted
Debt shall be treated as two (2) equal quarterly payments (the first of which
shall be deemed to have been paid on the date that is three (3) months prior to
the semi-annual interest payment date on such Permitted Date).
"Cellular System" means a cellular mobile radio telephone system
constructed and operated in an MSA or an RSA (or any successor territorial
designation) pursuant to a License therefor issued by the FCC.
"Certificate of Financial Condition" shall mean a certificate,
substantially in the form of Exhibit C attached hereto, signed by the chief
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control" shall mean (i) directly or indirectly a sale,
transfer, or other conveyance of all or substantially all of the assets of the
Borrower, on a consolidated basis, to any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), excluding transfers or conveyances to or among the Borrower's
Restricted Subsidiaries, as an entirety or substantially as an entirety in one
transaction or series of related transactions, in each case with the effect that
the Person or group of Persons that, as of the date of this Agreement, are not
shareholders of the Borrower (or any Person or group of Persons that, as of the
Agreement Date, are Affiliates of such shareholders) own more than 50% of the
aggregate number of votes of all classes of capital stock of the Borrower which
ordinarily have voting power for the election of directors, managers or trustees
of the transferee entity immediately after such transaction, (ii) any "person"
or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable), other than the shareholders of the
Borrower as of the Agreement Date (or any Person or group of Persons that, as of
the Agreement Date, are Affiliates of such shareholders), is or becomes the
"beneficial owner" (as that term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the aggregate number of
votes of all classes of capital stock of the Borrower which ordinarily have
voting power for the election of directors of the Borrower, or (iii) during any
period of twenty-four (24) consecutive months, individuals who at the beginning
of such period constituted the board of directors of the Borrower, together with
any new directors whose election by such board or whose nomination for election
by the shareholders of the Borrower was approved by a vote of a majority of the
directors then still in office who were either
4
<PAGE> 12
directors at the beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the board of directors of the Borrower then in office.
"Co-Agents" shall mean Skandinaviska Enskilda Banken AB and U.S. Bank
National Association, in their respective capacities as co-agents hereunder.
"Co-Documentation Agents" shall mean Bank of America N.A., The Chase
Manhattan Bank, and Barclays Bank Plc, in their respective capacities as
co-documentation agents hereunder.
"Co-Syndication Agents" shall mean Bank of America N.A., The Chase
Manhattan Bank, and Barclays Bank Plc, in their respective capacities as
co-syndication agents hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean any property of any kind provided as collateral
for the Obligations under any of the Security Documents.
"Commitments" shall mean, collectively, the Revolving Loan Commitment
and any other commitment issued after the Agreement Date pursuant to Section
2.1(e) hereof.
"Communications Act" shall mean the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as amended and as the same may be in effect from time to time.
"Conduit Lender" shall mean any special purpose corporation organized
and administered by any Lender for the purpose of making Loans hereunder
otherwise required to be made by such Lender and designated by such Lender in a
written instrument, subject to the consent of the Administrative Agent and the
Borrower; provided that the designation by any Lender of a Conduit Lender shall
not relieve the designating Lender of any of its obligations to fund a Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any
such Loan, and the designating Lender (and not the Conduit Lender) shall have
the full rights and responsibilities to deliver all consents and waivers
required or requested under this Agreement with respect to its Conduit Lender,
and provided further that no Conduit Lender shall (a) be entitled to receive any
greater amount pursuant to Section 2.11, 2.13, or 9.11 or Article 10 than the
designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender or (b) be deemed to have any
Revolving Loan Commitment hereunder.
"Conversion Date" shall mean the date 364 days following the Agreement
Date.
5
<PAGE> 13
"Debt Service" shall mean, for any period, the amount of Cash Interest
Expense, together with scheduled principal repayments (excluding any repayments
made or required to be made in accordance with Section 2.8 hereof) in respect of
Indebtedness for Money Borrowed, of the Borrower and its Restricted Subsidiaries
on a consolidated basis. For purposes of this definition, `principal' shall
include the principal component of payments for such period in respect of
Capitalized Lease Obligations.
"Default" shall mean any Event of Default, and any of the events
specified in Section 8.1, regardless of whether there shall have occurred any
passage of time or giving of notice, or both, that would be necessary in order
to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of the otherwise applicable Interest Rate Basis plus two percent (2%). With
respect to amounts (other than principal) bearing interest at the Default Rate,
for purposes of the foregoing sentence, the words "otherwise applicable Interest
Rate Basis," shall be deemed to mean the Base Rate Basis.
"Distribution Agreement" shall mean that certain Agreement and Plan of
Distribution dated as of May 3, 1999 between the Borrower and VoiceStream
Wireless Corporation.
"Dollars" or "$" shall mean the basic unit of the lawful currency of the
United States of America.
"Environmental Laws" shall mean, with respect to any Person, all
applicable federal, state and local laws, statutes, rules, regulations and
ordinances, codes, common law, consent agreements to which such Person is a
party or by which it is bound, orders, decrees, judgments and injunctions
issued, promulgated, approved or entered thereunder affecting such Person or its
property and relating to public health, safety or the pollution or protection of
the environment, including, without limitation, those relating to releases,
discharges, emissions, spills, leaching, or disposals to, on, or in air, water,
land or ground water, to the withdrawal or use of ground water, to the use,
handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited, or regulated substances,
including, without limitation, any such provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), or the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
6
<PAGE> 14
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
Affiliate of the Borrower, that is a member of any group of organizations
(within the meaning of Code Sections 414(b), 414(c), 414(m), or 414(o)) of which
the Borrower is a member.
"Eurodollar Advance" shall mean an Advance which the Borrower requests
to be made as a Eurodollar Advance or which is reborrowed as a Eurodollar
Advance, and which bears interest at the Eurodollar Basis, in accordance with
the provisions of Section 2.2 hereof, and which shall be in a principal amount
of at least $5,000,000 and in an integral multiple of $1,000,000.
"Eurodollar Basis" shall mean a simple per annum interest rate (rounded
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent)
equal to the sum of (a) the quotient of (i) the Eurodollar Rate divided by (ii)
one minus the Eurodollar Reserve Percentage, stated as a decimal, plus (b) the
Applicable Margin. The Eurodollar Basis shall apply to Interest Periods of one
(1), two (2), three (3), six (6), and, subject to availability, nine (9) and
twelve (12) months, and, once determined, shall remain unchanged during the
applicable Interest Period, except for changes to reflect adjustments in the
Eurodollar Reserve Percentage and the Applicable Margin pursuant to Section
2.3(f) hereof. The Borrower may elect an Interest Period of nine (9) or twelve
(12) months for a Eurodollar Advance unless the Administrative Agent has been
notified by at least one Lender that (i) such Lender does not have available to
it funds for its portion of the proposed Advance which are not required for
other purposes, or (ii) such funds are not available to such Lender at a rate at
or below the Eurodollar Rate for such proposed Advance and Interest Period.
"Eurodollar Rate" shall mean, for any Interest Period, the average of
the interest rates per annum (rounded upward to the nearest one-sixteenth of one
percent (1/16%)) which appear on Telerate Page 3750 as of 11:00 a.m. (London
time), or, if unavailable, any generally accepted successor rate selected by the
Administrative Agent, two (2) Business Days before the first day of such
Interest Period, in an amount approximately equal to the principal amount of,
and for a length of time approximately equal to the Interest Period for, the
Eurodollar Advance sought by the Borrower.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
liabilities (as that term is defined in Regulation D), whether or not any Lender
has any such Eurocurrency liabilities subject to such reserve requirement at
that time. The Eurodollar Basis for any Eurodollar Advance shall be adjusted as
of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the events specified in Section
8.1, provided that any requirement for notice or lapse of time or both has been
satisfied.
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<PAGE> 15
"Exchange Act" shall mean the Securities Exchange Act of 1934, as it may
be amended, and any successor act thereto.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average of
the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent or its Affiliate from
three (3) federal funds brokers of recognized standing selected by the
Administrative Agent or its Affiliate.
"Fee Letters" shall mean, collectively, those certain agreements dated
as of the Agreement Date setting forth the applicable fees to be paid by the
Borrower to the other parties to this Agreement in connection with the Loans and
the Revolving Loan Commitment created hereunder.
"Fixed Charge Coverage Ratio" shall mean on any calculation date, for
the Borrower and its Restricted Subsidiaries on a consolidated basis, the ratio
of (a) the sum (without double-counting) of (i) Operating Cash Flow for the most
recently-completed four fiscal quarter period, plus (ii) the unused portion of
the Revolving Loan Commitment which is available for borrowing as of the
calculation date without causing a Default hereunder, plus (iii) cash on hand at
the beginning of such fiscal period, to (b) Fixed Charges.
"Fixed Charges" shall mean on any calculation date, for the Borrower and
its Restricted Subsidiaries on a consolidated basis for the most recently
completed fiscal four-quarter period, the sum of (a) Debt Service, plus (b)
Capital Expenditures paid in cash, plus (c) cash income taxes paid, plus (d)
Restricted Payments made as permitted under Section 7.7 hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to outstanding letters of credit.
8
<PAGE> 16
"Incremental Facility" shall have the meaning assigned thereto in
Section 2.1(e).
"Incremental Facility Loans" shall mean, collectively, the amount
advanced by certain of the Lenders to the Borrower under the Incremental
Facilities.
"Indebtedness" shall mean, with respect to any Person, and without
duplication, (a) all items, except items of partners' equity or capital stock or
surplus or general contingency or deferred tax reserves, which in accordance
with GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person, including, without limitation,
secured non-recourse obligations of such Person, (b) all direct or indirect
obligations of any other Person secured by any Lien to which any property or
asset owned by such Person is subject, but only to the extent of the lower of
(i) the face amount of such obligations or (ii) the higher of the fair market
value or the book value of the property or asset subject to such Lien if the
obligation secured thereby shall not have been assumed, (c) all Capitalized
Lease Obligations of such Person and all obligations of such Person with respect
to leases constituting part of a sale and lease-back arrangement, and (d) all
reimbursement obligations with respect to outstanding letters of credit, whether
drawn or undrawn.
"Indebtedness for Money Borrowed" shall mean, with respect to any
Person, Indebtedness for money borrowed and Indebtedness represented by notes
payable and drafts accepted representing extensions of credit, all obligations
evidenced by bonds, debentures, notes or other similar instruments, all
Indebtedness upon which interest charges are customarily paid, all Capitalized
Lease Obligations, all reimbursement obligations with respect to outstanding
letters of credit, all Indebtedness issued or assumed as full or partial payment
for property or services (other than trade payables arising in the ordinary
course of business, but only if and so long as such accounts are payable on
customary trade terms), whether or not any such notes, drafts, obligations or
Indebtedness represent Indebtedness for money borrowed, and, without
duplication, Guaranties of any of the foregoing. For purposes of this
definition, interest which is accrued but not paid on the scheduled due date for
such interest shall be deemed Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed to it in Section 5.11
hereof.
"Initial Maturity Date" shall mean the earlier of (a) March 31, 2008, or
(b) such earlier date on which the payment of all outstanding Obligations shall
be due (whether by acceleration or otherwise).
"Interest Hedge Agreements" shall mean any interest rate swap, cap,
collar, floor, caption or swaption agreements, or any similar arrangements
designed to hedge the risk of variable interest rate volatility or to reduce
interest costs, arising at any time between the Borrower, on the one hand, and
any one or more of the Lenders, or any other Person (other than an Affiliate of
the Borrower), on the other hand, as such agreement or arrangement may be
modified, supplemented and in effect from time to time.
9
<PAGE> 17
"Interest Period" shall mean (a) in connection with any Base Rate
Advance, the period beginning on the date such Advance is made or deemed
continued and ending on the last Business Day of the calendar quarter in which
such Advance is made or deemed continued, provided, however, that if a Base Rate
Advance is made or deemed continued on the last day of any calendar quarter, it
shall have an Interest Period ending on, and its Payment Date shall be, the last
day of the following calendar quarter, and (b) in connection with any Eurodollar
Advance, the term of such Advance selected by the Borrower or otherwise
determined in accordance with this Agreement. Notwithstanding the foregoing,
however, (i) any applicable Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless, with respect to Eurodollar Advances only, such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any applicable Interest Period, with respect to
Eurodollar Advances only, which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to clause (i) above) end on the last day of such
calendar month, and (iii) no Interest Period shall extend beyond the Initial
Maturity Date with respect to Interest Periods applicable to Revolving Loans and
Term A Loans, the Maturity Date with respect to Interest Periods applicable to
the Term B Loans or such earlier date as would interfere with the Borrower's
repayment obligations hereunder. Interest shall be due and payable with respect
to any Advance as provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the Eurodollar
Basis, as appropriate.
"Investment" shall mean, with respect to any Person, any loan, advance
or extension of credit (other than to customers in the ordinary course of
business) by such Person to, or any Guaranty or other contingent liability with
respect to the capital stock, Indebtedness or other obligations of, or any
contributions to the capital of, any other Person, or any ownership, purchase or
other acquisition by such Person of any interest in any capital stock, limited
partnership interest, general partnership interest, or other securities of any
such other Person, other than an Acquisition. "Investment" shall also include
the total cost of any future commitment or other obligation binding on any
Person to make an Investment or any subsequent Investment.
"IOA" shall mean any Interim Operations Authorization issued to the
Borrower or any of its Subsidiaries by the FCC, as listed on Schedule 2 hereto.
"Lenders" shall mean the financial institutions whose names appear as
"Lenders" on the signature pages hereof and any other Person which becomes a
"Lender" hereunder after the Agreement Date; and "Lender" shall mean any one of
the foregoing Lenders.
"Leverage Ratio" shall mean, as of the end of any fiscal quarter, the
ratio of Total Debt to Annualized Operating Cash Flow.
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"Licenses" shall mean any mobile telephone, cellular telephone,
microwave, paging, personal communications service, or other license,
authorization, certificate of compliance, franchise, approval or permit, other
than any IOA for the construction or the operation of any Cellular System
granted or issued by the FCC and held by the Borrower or any of its Restricted
Subsidiaries, or by any Person in which the Borrower or any of its Restricted
Subsidiaries has an Investment, all of which are listed (together with IOAs so
designated) as of the Agreement Date on Schedule 2 hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other similar encumbrance of any kind in respect of
such property, whether created by statute, contract, the common law or
otherwise, and whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, any Notes, the Borrower's
Pledge Agreement, the Security Agreement, the Subsidiary Security Agreement, the
Subsidiary Guaranty, the Subsidiary Pledge Agreement, any Subordination
Agreement, all legal opinions issued by counsel to the Borrower or any of its
Subsidiaries, any reliance letters issued with respect to legal opinions, the
Fee Letters, all Requests for Advance, all Interest Hedge Agreements between the
Borrower, on the one hand, and the Administrative Agent or its Affiliate and the
Lenders, or any of them, on the other hand, including any Interest Hedge
Agreements entered into prior to the Agreement Date, and all other material
documents and agreements executed or delivered in connection with or
contemplated by this Agreement.
"Loans" shall mean, collectively, the Revolving Loans and the Term Loans
and, if any Incremental Facility is effected, the Incremental Facility Loans
made under such Incremental Facility.
"Majority Lenders" shall mean (i) at any time prior to the termination
of the Commitments, Lenders the sum of whose Undrawn Commitments plus Loans
outstanding, as applicable, equals or exceeds fifty and one-hundredth of one
percent (50.01%) of the sum of the then existing Loans outstanding plus Undrawn
Commitments hereunder on the date thereof, or (ii) at any time after the
termination of the Commitments, Lenders the total of whose Loans outstanding
equals or exceeds fifty and one-hundredth of one percent (50.01%) of the total
principal amount of the Loans then outstanding hereunder.
"Managing Agents" shall mean Dresdner Bank, AG, New York and Grand
Cayman Branches, First Union National Bank, Fleet National Bank, Goldman Sachs
Credit Partners LP, Cooperatieve Centrale-Raiffeisen Boerenleenbank B.A.
"Rabobank International," New York Branch, and Union Bank of California, N.A.,
in their respective capacities as managing agents hereunder.
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"Materially Adverse Effect" shall mean (i) any material adverse effect
upon the business, assets, liabilities, financial condition, results of
operations, or properties of the Borrower and its Restricted Subsidiaries taken
as a whole, or (ii) a material adverse effect upon the binding nature, validity,
or enforceability of this Agreement, any Notes, and the other Loan Documents or
upon the ability of the Borrower and its Restricted Subsidiaries to perform the
payment obligations or other material obligations under this Agreement or any
other Loan Document, or upon the value of the Collateral, taken as a whole or
upon the rights, benefits or interests of the Lenders in and to the Loans or the
rights of the Administrative Agent and the Lenders in the Collateral taken as a
whole; in either case, whether resulting from any single act, omission,
situation, status, event or undertaking, or taken together with other such acts,
omissions, situations, statuses, events or undertakings.
"Maturity Date" shall mean the earlier of (a) September 30, 2008, or (b)
such earlier date on which the payment of all outstanding Obligations shall be
due (whether by acceleration or otherwise).
"MSA" shall mean any "metropolitan statistical area" as defined and
modified by the FCC for the purpose of licensing public cellular radio
telecommunications service systems.
"MTA" shall mean any of the 51 "major trading areas" into which the
United States of America is organized, as set forth in the Rand McNally 1992
Commercial Atlas & Marketing Guide, 123d Edition, at pages 38-39.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean all approvals and licenses from,
and all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
grants, approvals, licenses, filings and registrations under the Communications
Act, necessary in order to enable the Borrower or any of its Restricted
Subsidiaries to own, construct, maintain and operate Telecommunications Assets
and Telecommunications Businesses and to make and hold Investments in other
Persons who own, construct, maintain, and operate Telecommunications Assets and
Telecommunications Businesses.
"Net Income" shall mean, for the Borrower and its Restricted
Subsidiaries on a consolidated basis, for any period, net income determined in
accordance with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer,
swap or other disposition of assets or securities by the Borrower or any of its
Restricted Subsidiaries, the aggregate amount of cash received for such assets
or securities (including, without limitation, any payments received for
non-competition covenants, consulting or management fees, and any portion of the
amount received evidenced by a buyer
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<PAGE> 20
promissory note or other evidence of Indebtedness), net of (i) amounts reserved,
if any, for taxes payable with respect to any such sale (after application of
any available losses, credits or other offsets), (ii) reasonable and customary
transaction costs properly attributable to such transaction and payable by the
Borrower or any of its Restricted Subsidiaries (other than to an Affiliate if
not on an arms length basis) in connection with such sale, lease, transfer or
other disposition of assets or securities, and (iii) until actually received by
the Borrower or any of its Restricted Subsidiaries, any portion of the amount
received held in escrow or evidenced by a buyer promissory note, or a
non-compete agreement or covenant, management agreement or consulting agreement,
for which compensation is paid over time. Upon receipt by the Borrower or any of
its Restricted Subsidiaries of amounts referred to in item (iii) of the
preceding sentence, such amounts shall then be deemed to be "Net Proceeds."
"Net Proceeds Trust" shall have the meaning ascribed to such term in
Section 2.8(b) hereof.
"Notes" shall mean, collectively, the Revolving Notes and the Term
Notes.
"Obligations" shall mean (i) all payment and performance obligations of
every kind, nature and description of the Borrower, its Restricted Subsidiaries,
and any other obligors to the Lenders, Affiliates of the Lenders in connection
with Interest Hedge Agreements, the Administrative Agent, or any of them, under
this Agreement and the other Loan Documents (including any interest, fees and
other charges on the Loans or otherwise under the Loan Documents that would
accrue but for the filing of a bankruptcy action with respect to the Borrower,
any such Restricted Subsidiary, or any such other obligor, whether or not such
claim is allowed in such bankruptcy action), as they may be amended from time to
time, or as a result of making the Loans, whether such obligations are direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, now
existing or hereafter arising, and (ii) the obligation to pay an amount equal to
the amount of any and all damage which the Lenders, the Administrative Agent, or
any of them, may suffer by reason of a breach by the Borrower, any of its
Restricted Subsidiaries, or any other obligor, of any obligation, covenant or
undertaking with respect to this Agreement or any other Loan Document.
"Operating Cash Flow" shall mean, for any fiscal quarter, for the
Borrower and its Restricted Subsidiaries on a consolidated basis, Net Income for
such quarter (after eliminating any extraordinary gains and losses, including
gains and losses from the sale of assets, and minority interests, and equity in
earnings (losses) of non-consolidated entities), plus, to the extent deducted or
accrued in determining Net Income, the sum of each of the following for such
quarter: (i) depreciation, amortization, and other non-cash charges, (ii) income
tax expense, and (iii) interest expense. For purposes of the covenants set forth
in Sections 7.8 through 7.11 hereof, if either the Borrower or any Restricted
Subsidiary makes any Acquisition during a period in which Operating Cash
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<PAGE> 21
Flow is to be determined hereunder, such Operating Cash Flow will be determined
on a pro forma basis as if such Acquisition were consummated on the first day of
the relevant period.
"Payment Date" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCS System" shall mean a mobile communications system constructed and
operated in a BTA or an MTA (or any successor territorial designations) pursuant
to a License therefor issued by the FCC.
"Performance Certificate" shall mean a certificate of the president or
chief financial officer of the Borrower as to its financial performance, in
substantially the form attached hereto as Exhibit D.
"Permitted Asset Sale" shall mean the sale by the Borrower or any of its
Restricted Subsidiaries of all or any substantial part of its or their assets as
and to the extent permitted under Section 7.4(a) hereof.
"Permitted Debt" shall mean Indebtedness for Money Borrowed permitted to
be incurred and to remain outstanding by the Borrower and its Restricted
Subsidiaries, pursuant to Section 7.1 hereof.
"Permitted Investments" shall mean Investments described in and
permitted to be made under Section 7.6 hereof.
"Permitted Liens" shall mean, as applied to any Person:
(a) Any Lien in favor of the Administrative Agent (for itself and
for the ratable benefit of the Lenders) given to secure the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet
delinquent and (ii) Liens for taxes, assessments, judgments, governmental
charges or levies or claims the non-payment of which is being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been set aside on such Person's books, but only so long as no
foreclosure, distraint, sale or similar proceedings have been commenced with
respect thereto and remain unstayed for a period of thirty (30) days after their
commencement;
(c) Liens of landlords, carriers, warehousemen, mechanics,
laborers and materialmen incurred in the ordinary course of business for sums
not yet due or being diligently contested in good faith, if reserves or
appropriate provisions shall have been made therefor;
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(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of assets imposed by any of
the Licenses as now in effect or by the Communications Act, any state laws, and
any regulations thereunder;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness or other extensions of
credit and which do not in the aggregate materially detract from the value of
such properties or materially impair their use in the operation of the business
of such Person;
(g) Purchase money security interests, which are perfected
automatically by operation of law, only for the period (not to exceed twenty
(20) days) of automatic perfection under the law of the applicable jurisdiction,
and limited to Liens on assets so purchased;
(h) Liens reflected by Uniform Commercial Code financing
statements filed in respect of true leases; and
(i) Any Liens of record which secure Indebtedness permitted
under Section 7.1(c) and Section 7.1(d) hereof. Permitted Liens described in
this subsection (i) are listed as of the Agreement Date on Schedule 3 attached
hereto.
"Permitted Tower Transactions" shall mean one or more sale and leaseback
transactions, or any other transactions resulting in a material transfer of
economic interests, that involve solely transmission towers and related assets
used in the business of the Borrower or its Restricted Subsidiaries, provided
that (i) the cumulative aggregate value of all consideration for all such
transactions effected after the Agreement Date shall not exceed $200,000,000,
and (ii) the terms and conditions of any such transaction shall be subject to
the prior approval of the Administrative Agent, such approval not to be
unreasonably withheld or delayed.
"Person" shall mean an individual, corporation, limited liability
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, a government or any agency or political subdivision
thereof, or any other entity.
"Plan" shall mean, with respect to any Person, an employee benefit plan
within the meaning of Section 3(3) of ERISA or any other employee benefit plan
maintained for employees of such Person.
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"Pro Forma Debt Service" shall mean projected Debt Service for the
Borrower and its Restricted Subsidiaries on a consolidated basis with respect to
the next succeeding fiscal four-quarter period following the calculation date,
and after giving effect to any Interest Hedge Agreements and all Eurodollar
Advances. For purposes of this definition, (i) it shall be assumed that the
Indebtedness for Money Borrowed with respect to which Debt Service is being
calculated shall remain at the level outstanding on the calculation date for the
entire succeeding four fiscal-quarter period except to the extent of principal
repayments required during such period, and (ii) where interest payments on
Indebtedness for Money Borrowed for the fiscal four-quarter period immediately
succeeding the calculation date are not fixed by way of Interest Hedge
Agreements, Eurodollar Advances, or otherwise for the entire period, interest
shall be calculated on such Indebtedness for Money Borrowed for periods for
which interest payments are not so fixed at the lower of (y) the Base Rate Basis
on the calculation date, or (z) the Eurodollar Basis which would be in effect on
the calculation date for a Eurodollar Advance having a twelve-month Interest
Period.
"Register" shall have the meaning set forth in Section 11.5(c) hereof.
"Remaining Dollar-Years" shall mean, with respect to any Indebtedness
for Money Borrowed at any date, the sum of the products obtained by multiplying
(a) the amount of each remaining scheduled payment of principal (or in the case
of a revolving credit facility, each scheduled reduction in the revolving credit
commitment) by (b) the number of years (calculated to the nearest twelfth) which
will elapse between such date and the making of the payment (or in the case of a
revolving credit facility, such scheduled reduction in the revolving credit
commitment).
"Reportable Event" shall have the meaning set forth in Title IV of
ERISA.
"Request for Advance" shall mean a certificate designated as a "Request
for Advance," signed by an Authorized Signatory requesting an Advance hereunder,
which shall be in substantially the form of Exhibit E attached hereto and shall,
among other things, (i) specify the date of the Advance, which shall be a
Business Day, the amount of the Advance, the type of Advance, and, with respect
to a Eurodollar Advance, the Interest Period selected by the Borrower, (ii)
state that there shall not exist, on the date of the requested Advance both
before and after giving effect thereto, a Default, and (iii) as to an Advance
which will increase the principal amount of the Loans then outstanding, specify
the use of the proceeds of the Advance being requested.
"Restricted Payment" shall mean (i) any direct or indirect distribution,
dividend or other cash payment by the Borrower or any of its Restricted
Subsidiaries to any Person (other than to the Borrower or any other Restricted
Subsidiary of the Borrower) on account of any general or limited partnership
interest in, or ownership of any shares of capital stock or other securities of,
the Borrower or any of its Restricted Subsidiaries; (ii) any payment in respect
of Subordinated Debt of the Borrower or any Restricted Subsidiary; or (iii) any
payment by the Borrower or any of its Restricted Subsidiaries to a
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<PAGE> 24
Person other than the Borrower or any of its Restricted Subsidiaries under any
management or consulting agreement or other similar agreement or arrangement not
entered into in the ordinary course of business.
"Restricted Purchase" shall mean any payment by the Borrower or any of
its Restricted Subsidiaries on account of the purchase, redemption or other
acquisition or retirement of any general or limited partnership interest in, or
shares of capital stock or other securities of, the Borrower or any of the
Borrower's Restricted Subsidiaries, including, without limitation, any warrants
or other rights or options to acquire shares of capital stock or partnership
interests of the Borrower or any of the Borrower's Restricted Subsidiaries.
"Restricted Subsidiaries" shall mean the Subsidiaries of the Borrower
whose assets and capital stock are pledged as security for the Obligations which
are designated as of the Agreement Date as Restricted Subsidiaries on Schedule 1
attached hereto, each of which shall be a signatory to the Subsidiary Guaranty
and the Subsidiary Security Agreement. "Restricted Subsidiaries" shall also
include Subsidiaries of the Borrower designated by the Borrower as Restricted
Subsidiaries after the Agreement Date, pursuant to the provisions of Section
5.14(a) hereof.
"Revolving A Commitment" shall mean the several obligations of certain
of the Lenders to advance the sum of up to $500,000,000 to the Borrower on or
after the Agreement Date, in accordance with their respective Revolving A
Commitment Ratios and as such amount may be reduced from time to time, all
pursuant to the terms hereof.
"Revolving A Commitment Ratios" shall mean the percentages in which
certain of the Lenders are severally bound to make Advances to the Borrower
under the Revolving A Commitment, which percentages are set forth (together with
dollar amounts) on Schedule 4-A attached hereto as of the Agreement Date and
thereafter as set forth in the Register and shall equal, for any Lender, the
Revolving A Commitment for such Lender divided by the aggregate Revolving A
Commitments for all Lenders.
"Revolving A Loans" shall mean, collectively, the amount advanced by
certain of the Lenders to the Borrower under the Revolving A Commitment, not to
exceed the amount of the Revolving A Commitment.
"Revolving A Notes" shall mean those certain revolving promissory notes
in the aggregate original principal amount of $500,000,000, one issued by the
Borrower to each of the Lenders issuing a Revolving A Commitment that requests a
promissory note, in accordance with each such Lender's Revolving A Commitment
Ratio for the Revolving A Commitment, each one substantially in the form of
Exhibit F-1 attached hereto, and any extensions, modifications, renewals or
replacements of or amendments to any of the foregoing.
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"Revolving B Commitment" shall mean the several obligations of certain
of the Lenders to advance the sum of up to $500,000,000 to the Borrower on or
after the Agreement Date and on or prior to the Conversion Date, in accordance
with their respective Revolving B Commitment Ratios and as such amount may be
reduced from time to time, all pursuant to the terms hereof; provided, however,
that for purposes of determining the Revolving Loan Commitment in the definition
of "Majority Lenders," on any date of determination after the Conversion Date,
the Revolving B Commitment shall be deemed to be the outstanding principal
balance of Revolving B Loans as of such date of determination.
"Revolving B Commitment Ratios" shall mean the percentages in which
certain of the Lenders are severally bound to make Advances to the Borrower
under the Revolving B Commitment, which percentages are set forth (together with
dollar amounts) on Schedule 4-B attached hereto as of the Agreement Date and
thereafter as set forth in the Register and shall equal, for any Lender, the
Revolving B Commitment for such Lender divided by the aggregate Revolving B
Commitments for all Lenders.
"Revolving B Loans" shall mean, collectively, the amount advanced by
certain of the Lenders to the Borrower under the Revolving B Commitment, not to
exceed the amount of the Revolving B Commitment.
"Revolving B Notes" shall mean those certain revolving promissory notes
in the aggregate original principal amount of $500,000,000, one issued by the
Borrower to each of the Lenders issuing a Revolving B Commitment that requests a
promissory note, in accordance with each such Lender's Revolving B Commitment
Ratio for the Revolving B Commitment, each one substantially in the form of
Exhibit F-2 attached hereto, and any extensions, modifications, renewals or
replacements of or amendments to any of the foregoing.
"Revolving Loan Commitment" shall mean, collectively, the Revolving A
Commitment and the Revolving B Commitment.
"Revolving Loans" shall mean, collectively, the Revolving A Loans and
the Revolving B Loans.
"Revolving Notes" shall mean, collectively, the Revolving A Notes and
the Revolving B Notes.
"RSA" shall mean any "rural service area" as defined and modified by the
FCC for the purpose of licensing public cellular radio telecommunications
service systems.
"Security Agreement" shall mean that certain Security Agreement of even
date herewith between the Borrower and the Administrative Agent, substantially
in the form of Exhibit G attached hereto.
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"Security Documents" shall mean the Borrower's Pledge Agreement, the
Subsidiary Guaranty, the Subsidiary Pledge Agreement, the Security Agreement,
the Subsidiary Security Agreement, the Assignment of Rights by Partner, any
other agreement or instrument providing collateral for the Obligations whether
now or hereafter in existence, and any filings, instruments, agreements, and
documents related thereto or to this Agreement, and providing the Administrative
Agent, for itself and for the ratable benefit of the Lenders, with Collateral
for the Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
Agent, for itself and for the ratable benefit of the Lenders, created hereunder
or under any of the Security Documents to secure the Obligations.
"Senior Debt" shall mean for the Borrower and its Restricted
Subsidiaries on a consolidated basis, the sum (without duplication) of their
Indebtedness for Money Borrowed, other than Subordinated Debt.
"Senior Subordinated Notes" means those certain 10 1/2% Western Wireless
Corporation Senior Subordinated Notes due 2006 in the original principal amount
of $200,000,000 and those certain 10 1/2% Western Wireless Corporation Senior
Subordinated Notes due 2007 in the original principal amount of $200,000,000.
"Subordinated Debt" shall mean (a) $400,000,000 of Subordinated Debt
outstanding as of the Agreement Date consisting of the Senior Subordinated
Notes; and (b) other subordinated Indebtedness for Money Borrowed of the
Borrower, unsecured with respect to the Borrower and its Restricted
Subsidiaries, subject to the following: (i) the Borrower shall, in a certificate
provided on the date of incurrence of such subordinated Indebtedness for Money
Borrowed, demonstrate its current and projected pro forma compliance (giving
effect to the incurrence of such subordinated Indebtedness for Money Borrowed)
with Sections 7.8, 7.9, 7.10, and 7.11; (ii) there shall be no repayment of the
principal amount of such subordinated Indebtedness for Money Borrowed including
any sinking fund payments or other principal payments until at least one year
and one day after the Maturity Date; (iii) the final maturity of such
subordinated Indebtedness for Money Borrowed must be at least one year and one
day after the Maturity Date; (iv) such subordinated Indebtedness for Money
Borrowed shall contain no covenants or provisions more restrictive, taken as a
whole, on the Borrower and its Subsidiaries than those contained herein; and (v)
the terms of subordination shall be (x) as set forth in the Subordination
Agreement, (y) as in effect on the Agreement Date with respect to outstanding
Subordinated Debt, or (z) as otherwise reasonably acceptable to the Majority
Lenders.
"Subordination Agreement" shall mean any Subordination Agreement between
certain holders of Subordinated Debt, on the one hand, and the Administrative
Agent, on the other hand, such Subordination Agreement to be substantially in
the form of Exhibit H attached hereto.
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"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect its board of
directors, regardless of the existence at the time of a right of the holders of
any class or classes of securities of such corporation to exercise such voting
power by reason of the happening of any contingency, or any partnership of which
more than fifty percent (50%) of the outstanding partnership interests, is at
the time owned directly or indirectly by such Person, or by one or more
Subsidiaries of such Person, or by such Person and one or more Subsidiaries of
such Person, or (b) any other entity which is directly or indirectly controlled
or capable of being controlled by such Person, or by one or more Subsidiaries of
such Person, or by such Person and one or more Subsidiaries of such Person.
"Subsidiaries" as used herein, unless otherwise indicated, shall mean all
Subsidiaries of the Borrower, including Restricted Subsidiaries and Unrestricted
Subsidiaries. The Subsidiaries of the Borrower as of the Agreement Date are set
forth on Schedule 1 attached hereto.
"Subsidiary Guaranty" shall mean, collectively, that certain Subsidiary
Guaranty of even date herewith in favor of the Administrative Agent, for itself
and for the ratable benefit of the Lenders, given by each Restricted Subsidiary
of the Borrower, substantially in the form of Exhibit I attached hereto, and any
similar guaranty delivered pursuant to Section 5.13 hereof.
"Subsidiary Pledge Agreement" shall mean, collectively, that certain
Subsidiary Pledge Agreement of even date herewith between each Restricted
Subsidiary of the Borrower having one or more of its own corporate Restricted
Subsidiaries, on the one hand, and the Administrative Agent, on the other hand,
substantially in the form of Exhibit J attached hereto, and any similar pledge
agreement delivered pursuant to Section 5.13 hereof.
"Subsidiary Security Agreement" shall mean, collectively, that certain
Subsidiary Security Agreement of even date herewith between each of the
Borrower's Restricted Subsidiaries, on the one hand, and the Administrative
Agent, on the other hand, substantially in the form of Exhibit K attached
hereto, and any similar security agreement delivered pursuant to Section 5.13
hereof.
"Telecommunications Asset" shall mean any asset of a Telecommunications
Business, including without limitation, a partnership, membership, stock or
other equity interest in a Telecommunications Business.
"Telecommunications Business" shall mean any business engaged in (a)
transmitting, or providing services related to the transmission of, voice,
video, or data through owned or leased wireline or wireless transmission
facilities, including without limitation, a business engaged in the business of
operating a Cellular System or a PCS System, (b) creating, developing,
acquiring, constructing, installing, repairing, maintaining or marketing
communications related systems, network equipment and
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facilities, software and other products, or (c) evaluating, owning, operating,
participating in or pursuing another business related to any business described
in clause (a) or (b) above (in the case of this clause (c), however, in a manner
consistent with the Borrower's manner of business); provided, however, that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the board of directors of the Borrower.
"Term A Loans" shall mean, collectively, the amounts advanced by certain
of the Lenders to the Borrower in an aggregate amount of $500,000,000, as set
forth on Schedule 4-C attached hereto.
"Term A Notes" shall mean those certain term promissory notes in the
aggregate original principal amount of $500,000,000, one issued to each of the
Lenders listed on Schedule 4-C hereto that requests a promissory note, by the
Borrower in the amount of each of such Lender's Term A Loan to the Borrower,
each one substantially in the form of Exhibit L-1 attached hereto, and any
extensions, modifications, renewals or replacements of or amendments to any of
the foregoing.
"Term B Loans" shall mean, collectively, the amounts advanced by certain
of the Lenders to the Borrower in an aggregate amount of up to $600,000,000.
"Term B Notes" shall mean those certain term promissory notes in the
aggregate original principal amount of $600,000,000, one issued to each of the
Lenders listed on Schedule 4-D hereto that requests a promissory note, by the
Borrower in the amount of each of such Lender's Term B Loan to the Borrower,
each one substantially in the form of Exhibit L-2 attached hereto, and any
extensions, modifications, renewals or replacements of or amendments to any of
the foregoing.
"Term Loans" shall mean, collectively, the Term A Loans and the Term B
Loans.
"Term Notes" shall mean, collectively, the Term A Notes and the Term B
Notes.
"Total Debt" shall mean, for the Borrower and the Restricted
Subsidiaries of the Borrower, on a consolidated basis as of any calculation
date, the sum (without duplication) of (a) Senior Debt, plus (b) Subordinated
Debt, plus (c) without double-counting, any Guaranties of Indebtedness permitted
hereunder.
"Undrawn Commitments" shall mean the undrawn amount of the Revolving
Loan Commitment, together with the undrawn amount of all commitments issued
under any and all of the Incremental Facilities.
"Unrestricted Subsidiaries" shall mean the Subsidiaries of the Borrower
designated as Unrestricted Subsidiaries on Schedule 1 attached hereto, together
with any Subsidiaries of the Borrower created or acquired after the Agreement
Date which are not Restricted Subsidiaries.
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<PAGE> 29
"Use of Proceeds Letter" shall mean that certain Use of Proceeds Letter,
substantially in the form of Exhibit M attached hereto, delivered to the
Administrative Agent and the Lenders on the Agreement Date pursuant to Article 3
hereof.
"Weighted Average Life to Maturity" shall mean, with respect to any
Indebtedness for Money Borrowed at any date, the number of years obtained by
dividing the Remaining Dollar-Years of such Indebtedness for Money Borrowed by
the outstanding principal amount of such Indebtedness for Money Borrowed (or, in
the case of a revolving credit facility, the maximum amount of revolving credit
commitment, regardless of the amount of revolving loans then outstanding).
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Each definition of an agreement or instrument in this Article 1 shall
include such agreement or instrument as amended, modified, renewed or restated
from time to time in accordance herewith.
ARTICLE 2.
Loans
Section 2.1 The Loans.
(a) The Revolving A Loans. The Lenders who have issued a
Revolving A Commitment agree, severally in accordance with their respective
Revolving A Commitment Ratios and not jointly, upon the terms and subject to the
conditions of this Agreement, to lend and re-lend to the Borrower, on and after
the Agreement Date and prior to the Initial Maturity Date, amounts requested by
the Borrower which, in the aggregate, do not exceed at any time the amount of
the Revolving A Commitment. Advances under the Revolving A Commitment may be
repaid and reborrowed as provided in Section 2.2 hereof in order to reborrow
Eurodollar Advances for new Interest Periods or to otherwise effect changes in
the Interest Rate Bases applicable to the Advances hereunder, or otherwise.
(b) The Revolving B Loans .The Lenders who have issued a
Revolving B Commitment agree, severally in accordance with their respective
Revolving B Commitment Ratios and not jointly, upon the terms and subject to the
conditions of this Agreement, to lend and re-lend to the Borrower, on and after
the Agreement Date and prior to the Conversion Date, amounts requested by the
Borrower which, in the aggregate, do not exceed at any time the amount of the
Revolving B Commitment. Advances under the Revolving B Commitment may be repaid
and reborrowed as provided in Section 2.2 hereof in order to reborrow Eurodollar
Advances for new Interest Periods or to otherwise effect changes in the Interest
Rate Bases applicable to the Advances hereunder, or otherwise; provided,
however, that there shall be no increase in the aggregate principal amount
outstanding under the Revolving B Commitment at any time after the Conversion
Date.
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(c) The Term A Loans. The Lenders who have agreed to make Term A
Loans agree, severally in accordance with their respective Term A Loan
percentages as set forth on Schedule 4-C hereof and not jointly, upon the terms
and subject to the conditions of this Agreement, to lend to the Borrower, on the
Agreement Date, an aggregate amount not to exceed $500,000,000. After the
Agreement Date, the Term A Loans will bear interest at the Eurodollar Basis or
the Base Rate Basis as provided in Section 2.2 hereof.
(d) The Term B Loans. The Lenders who have agreed to make Term B
Loans agree, severally in accordance with their respective Term B Loan
percentages as set forth on Schedule 4-D hereof and not jointly, upon the terms
and subject to the conditions of this Agreement, to lend to the Borrower, on the
Agreement Date, an aggregate amount not to exceed $600,000,000. After the
Agreement Date, the Term B Loans will bear interest at the Eurodollar Basis or
the Base Rate Basis as provided in Section 2.2 hereof.
(e) Incremental Facility. Subject to all the terms of this
Agreement and so long as no Default exists and is then continuing, from time to
time on and after the Agreement Date, the Borrower may incur additional
Indebtedness hereunder in the form of a revolving credit or term loan facility
(an "Incremental Facility", and all such facilities, the "Incremental
Facilities") in an aggregate principal amount that, when added to the aggregate
principal amount of any previously extended Incremental Facilities, does not
exceed $500,000,000. Each Incremental Facility shall (i) share in the Collateral
to the same extent as the other Loans, (ii) be entitled to prepayments pursuant
to Section 2.8 to the same extent as the other Loans, and (iii) not be secured
by any collateral other than the Collateral or guaranteed by any Person other
than pursuant to the Loan Documents. The interest rate, commitment fee rate,
amortization schedule and maturity date for each Incremental Facility shall be
as agreed upon between any Lenders agreeing to provide such Incremental Facility
and the Borrower; provided, however, that the Weighted Average Life to Maturity
of such Incremental Facility shall in no event be shorter than the Weighted
Average Life to Maturity of, collectively, the Revolving A Loans (which for such
purposes shall be deemed outstanding in the amount of the then applicable
Revolving A Commitment), the Revolving B Loans (which for such purposes shall be
deemed outstanding in the amount of the then applicable Revolving B Commitment
until the Conversion Date and thereafter the actual amount of the Revolving B
Loans outstanding), the Term A Loans and the Term B Loans on a combined basis
(excluding any other Incremental Facility). The lenders and the loans under each
Incremental Facility will be "Lenders" and "Loans" for all purposes of this
Agreement and the other Loan Documents. The Incremental Facility will be
documented pursuant to an amendment to this Agreement and, as appropriate, the
other Loan Documents, executed by the Borrower, each Person providing a
commitment to the Incremental Facility and the Administrative Agent. Such
amendment may, without the consent of any other Lenders, effect such amendments
to this Agreement and the other Loan Documents as may be necessary in the
opinion of the Administrative Agent, to effect the provisions of this
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<PAGE> 31
Section 2.1(e). An Incremental Facility may be established at any time at the
request of the Borrower, upon notice to the Administrative Agent, and subject
only to the agreement of Persons who, in their sole discretion, choose to
participate in such Incremental Facility. No Lender shall have any obligation to
participate in any Incremental Facility unless and until it commits to do so. At
the request of the Borrower, the Administrative Agent shall provide other
lenders with an opportunity to commit to each Incremental Facility, and such
other lenders shall become Lenders hereunder pursuant to a joinder agreement
reasonably satisfactory to the Administrative Agent and the Borrower.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance under the Revolving
Loan Commitment shall, at the option of the Borrower, be made as a Base Rate
Advance, or, subject to Article 10 hereof and except for the first two (2)
Business Days after the Agreement Date, a Eurodollar Advance; provided, however,
that at such time as there shall have occurred and be continuing a Default
hereunder, the Borrower shall not have the right to borrow or to re-borrow any
Eurodollar Advances under the Revolving Loan Commitment, and all subsequent
Advances under the Revolving Loan Commitment shall be made as Base Rate
Advances. Any Advance as a Term Loan shall, at the option of the Borrower, be
made as a Base Rate Advance, or, subject to the provisions of Article 10 hereof
and except for the first two (2) Business Days after the Agreement Date, a
Eurodollar Advance; provided, however, that at such time as there shall have
occurred and be continuing a Default hereunder, the Borrower shall not have the
right to borrow or re-borrow any Eurodollar Advance and upon expiration of any
Eurodollar Advance, such Advance shall be reborrowed as a Base Rate Advance. Any
notice given to the Administrative Agent in connection with a requested Advance
hereunder shall be given to the Administrative Agent prior to 11:30 a.m.
(Houston time) in order for such Business Day to count toward the minimum number
of Business Days required.
(b) Base Rate Advances.
(i) Initial Advances. The Borrower shall give the
Administrative Agent in the case of Base Rate Advances at least
one (1) Business Day's irrevocable prior written notice in the
form of a Request for Advance, or telephonic notice followed
immediately by a Request for Advance; provided, however, that the
Borrower's failure to confirm any telephonic notice with a
Request for Advance shall not invalidate any notice so given.
(ii) Repayments and Reborrowings. Upon at least one (1),
with respect to items (A) and (C) of this sentence, or three (3),
with respect to item (B) of this sentence, Business Days'
irrevocable prior written notice to the Administrative Agent, the
Borrower may repay or prepay a Base Rate Advance without regard
to its Payment Date and (A) reborrow all or a portion of the
principal amount thereof as one or more Base Rate
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<PAGE> 32
Advances, (B) reborrow all or a portion of the principal thereof
as one or more Eurodollar Advances, or (C) not reborrow all or
any portion of such Base Rate Advance at that time. On the date
indicated by the Borrower, such Base Rate Advance shall be so
repaid and, as applicable, reborrowed.
(c) Eurodollar Advances.
(i) Initial Advances. The Borrower shall give the
Administrative Agent in the case of Eurodollar Advances at least
three (3) Business Days' irrevocable prior written notice in the
form of a Request for Advance, or telephonic notice followed
immediately by a Request for Advance; provided, however, that the
Borrower's failure to confirm any telephonic notice with a
Request for Advance shall not invalidate any notice so given. The
Administrative Agent, whose determination shall be conclusive
absent manifest error, shall determine the available Eurodollar
Bases and shall notify the Borrower of such Eurodollar Bases. The
Borrower shall promptly notify the Administrative Agent by
telephone or telecopy, and shall immediately confirm any such
telephonic notice in writing, of its selection of a Eurodollar
Basis and Interest Period for such Advance; provided, however,
that the Borrower's failure to confirm any such telephonic notice
in writing shall not invalidate any notice so given
(ii) Repayments and Reborrowings. At least three (3)
Business Days prior to the Payment Date for a Eurodollar Advance,
the Borrower shall give the Administrative Agent written notice
specifying whether all or a portion of such Eurodollar Advance
outstanding on the Payment Date (A) is to be repaid and then
reborrowed in whole or in part as a Eurodollar Advance, and the
Interest Period selected, (B) is to be repaid and then reborrowed
in whole or in part as a Base Rate Advance, or (C) is to be
repaid and not reborrowed at that time. Upon such Payment Date
such Eurodollar Advance will, subject to the provisions hereof,
be so repaid and, as applicable, reborrowed.
(d) Notification of Lenders. Upon receipt of a Request for
Advance, or a notice from the Borrower with respect to a selection of an
Interest Period, or a notice from the Borrower with respect to any outstanding
Advance prior to the Payment Date for such Advance, the Administrative Agent
shall promptly notify each Lender by telephone or telecopy of the contents
thereof and the amount of such Lender's portion of the Advance. Each Lender
shall, not later than 2:30 p.m. (Houston time) on the date of borrowing
specified in such notice, make available to the Administrative Agent at the
Administrative Agent's Office, or at such account as the Administrative Agent
shall designate, the amount of its portion of any Advance which represents an
additional borrowing hereunder in immediately available funds.
(e) Disbursement.
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<PAGE> 33
(i) Prior to 3:00 p.m. (Houston time) on the date of an
Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of any applicable conditions set forth in Article 3
hereof, disburse the amounts made available to it by the Lenders
in like funds by (a) transferring the amounts so made available
by wire transfer pursuant to the Borrower's instructions, or (b)
in the absence of such instructions, crediting the amounts so
made available to the account of the Borrower maintained with the
Administrative Agent.
(ii) Unless the Administrative Agent shall have received
notice from a Lender prior to 2:30 p.m. (Houston time) on the
date of any Advance that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such
Advance, the Administrative Agent may assume that such Lender has
made or will make such portion available to the Administrative
Agent on the date of such Advance and the Administrative Agent
may in its sole discretion and in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent the Lender does not make such
ratable portion available to the Administrative Agent, such
Lender agrees to repay to the Administrative Agent on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at
the Federal Funds Rate for the first three (3) days and
thereafter at the Federal Funds Rate plus one percent (1%).
(iii) If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount so repaid shall
constitute such Lender's portion of the applicable Advance for
purposes of this Agreement. If such Lender does not repay such
corresponding amount immediately upon the Administrative Agent's
demand therefor, the Administrative Agent shall notify the
Borrower and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent, together with
interest thereon. The failure of any Lender to fund its portion
of any Advance shall not relieve any other Lender of its
obligation hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Lender shall be
responsible for any such failure of any other Lender.
(iv) In the event that, at any time when the Borrower is
not in Default and has satisfied all applicable conditions set
forth in Article 3 hereof, a Lender for any reason fails or
refuses to fund its portion of an Advance, then, until such time
as such Lender has funded its portion of such Advance, or all
other Lenders have received payment in full (whether by repayment
or prepayment) of the principal and interest due in respect of
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<PAGE> 34
such Advance, such non-funding Lender shall not have the right
(i) to vote regarding any issue on which voting is required or
advisable under this Agreement or any other Loan Document and the
amount of the Loans outstanding and Undrawn Commitments, as
applicable, or Loans, as applicable, held by such Lender shall
not be counted as outstanding for purposes of determining
"Majority Lenders" hereunder, and (ii) to receive payments of
principal, interest or fees from the Borrower in respect of its
unfunded portion of Advances.
Section 2.3 Interest.
(a) On Base Rate Advances. Interest on each Base Rate Advance
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable at the Base Rate Basis for such Advance, in
arrears on the applicable Payment Date for the period through the date
immediately preceding such Payment Date. Interest on Base Rate Advances then
outstanding shall also be due and payable on the Initial Maturity Date with
respect to Revolving Loans and Term A Loans and the Maturity Date with respect
to the Term B Loans.
(b) On Eurodollar Advances. Interest on each Eurodollar Advance
shall be computed on the basis of a 360-day year for the actual number of days
elapsed and shall be payable at the Eurodollar Basis for such Advance, in
arrears on the applicable Payment Date for the period through the day
immediately preceding such Payment Date, and, in addition, if the Interest
Period for a Eurodollar Advance exceeds three (3) months, interest on such
Eurodollar Advance shall also be due and payable in arrears on every three-month
anniversary of the beginning of such Interest Period. Interest on Eurodollar
Advances then outstanding shall also be due and payable on the Initial Maturity
Date with respect to Revolving Loans and Term A Loans and the Maturity Date with
respect to the Term B Loans.
(c) Interest if No Notice of Selection of Interest Rate Basis.
With respect to any Advance, if the Borrower fails to give the Administrative
Agent timely notice of its selection of a Eurodollar Basis, or if for any reason
a determination of a Eurodollar Basis for any Advance is not timely concluded,
the Base Rate Basis shall apply to such Advance.
(d) Interest Upon Default. Immediately upon the occurrence of an
Event of Default hereunder, the outstanding principal balance of the Loans,
together with accrued and unpaid interest and other unpaid sums, shall bear
interest at the Default Rate. Such interest shall be payable on demand and shall
accrue until the earliest of (a) waiver or cure (to the satisfaction of the
Lenders required under Section 11.12 hereof to waive or cure) of the applicable
Event of Default, or (b) agreement by the Majority Lenders to rescind the
charging of interest at the Default Rate, or (c) payment in full of the
Obligations.
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(e) Eurodollar Advances. At no time may the number of outstanding
Eurodollar Advances exceed sixteen (16).
(f) Applicable Margin.
(i) With respect to any Advance under the Revolving Loan
Commitment and Term A Loans, the Applicable Margin shall be as of
any calculation date the interest rate margin determined by the
Administrative Agent based upon the Leverage Ratio determined for
the most recent fiscal quarter end, to be adjusted from time to
time effective as of the second Business Day after the financial
statements referred to in Section 6.1 hereof are required to be
furnished by the Borrower to the Administrative Agent and each
Lender for the fiscal quarter most recently ended, expressed as a
per annum rate of interest as follows:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Advance Advance
Applicable Applicable
Leverage Ratio Margin Margin
-------------- ---------- ----------
<S> <C> <C>
Greater than 7.50 1.250% 2.250%
Greater than 7.00 but less 1.000% 2.000%
than or equal to 7.50
Greater than 6.00 but less 0.875% 1.875%
than or equal to 7.00
Greater than 5.00 but less 0.750% 1.750%
than or equal to 6.00
Greater than 4.00 but less 0.500% 1.500%
than or equal to 5.00
Less than or equal to 4.00 0.125% 1.125%
</TABLE>
In the event that the Borrower fails to timely provide (i) the
financial statements referred to above in accordance with the
terms of Section 6.1 hereof or (ii) the Performance Certificate
referred to in Section 6.3 hereof, and without prejudice to any
additional rights under Section 8.2 hereof, no downward
adjustment of the Applicable Margin in effect for the preceding
quarter shall occur until the actual delivery of such statements.
(ii) With respect to the Term B Loans, the Applicable
Margin for Eurodollar Advances shall be 2.75% per annum and the
Applicable Margin for Base Rate Advances shall be 1.75% per
annum.
Section 2.4 Repayment.
(a) Commencing March 31, 2003 and at the end of each calendar
quarter thereafter, the outstanding Revolving A Commitment as of the opening of
business on March 31, 2003 shall be reduced by the amount set forth in the table
below as of the
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<PAGE> 36
applicable calendar quarter end and the outstanding principal balance of the
Revolving A Loans shall be repaid as of each such calendar quarter end in the
amount necessary to cause the principal balance outstanding on the Revolving A
Loans to be equal to or less than the Revolving A Commitment as so reduced:
<TABLE>
<CAPTION>
Annual Percentage of
Percentage of Revolving A Revolving A Commitment as
Commitment as of the of the opening of business
opening of business on on March 31, 2003 to be
March 31, 2003 to be Reduced Each Four-Quarter
Quarters Ending Reduced Each Quarter: Period Ending December 31:
- --------------- --------------------- --------------------------
<S> <C> <C>
March 31, 2003 through and 2.50% 10.00%
including December 31, 2003
March 31, 2004 through and 3.75% 15.00%
including December 31, 2004
March 31, 2005 through and 6.25% 25.00%
including December 31, 2005
March 31, 2006 through and 6.25% 25.00%
including December 31, 2006
March 31, 2007 through and 5.00% 20.00%
including December 31, 2007
March 31, 2008 5.00% 5.00%*
</TABLE>
* for the one quarter period ending March 31, 2008
Any unpaid principal and interest of the Revolving A Loans and any other
outstanding Obligations under the Revolving A Commitment shall be due and
payable in full on the Initial Maturity Date.
(b) Commencing March 31, 2003 and at the end of each calendar
quarter thereafter, the outstanding Revolving B Loans, if any, as of the opening
of business on March 31, 2003 shall be repaid in an amount equal to the product
of the outstanding Revolving B Loans as of the opening of business on March 31,
2003 multiplied by the percentage set forth in the table below as of the
applicable calendar quarter end:
<TABLE>
<CAPTION>
Percentage of Revolving Annual Percentage of Revolving
B Loans as of the B Loans as of the opening of
opening of business on business on March 31, 2003 to
March 31, 2003 to be be Repaid Each Four-Quarter
Quarters Ending Repaid Each Quarter: Period Ending December 31:
- --------------- --------------------- --------------------------
<S> <C> <C>
March 31, 2003 through and 2.50% 10.00%
including December 31, 2003
March 31, 2004 through and 3.75% 15.00%
including December 31, 2004
</TABLE>
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<TABLE>
<S> <C> <C>
March 31, 2005 through and 6.25% 25.00%
including December 31, 2005
March 31, 2006 through and 6.25% 25.00%
including December 31, 2006
March 31, 2007 through and 5.00% 20.00%
including December 31, 2007
March 31, 2008 5.00% 5.00%*
</TABLE>
* for the one quarter period ending March 31, 2008
Any unpaid principal and interest of the Revolving B Loans and any other
outstanding Obligations under the Revolving B Commitment shall be due and
payable in full on the Initial Maturity Date.
(c) Commencing March 31, 2003 and at the end of each calendar
quarter thereafter, the outstanding principal balance of the Term A Loans as of
the opening of business on March 31, 2003 shall be repaid in an amount equal to
the product of the outstanding principal balance of the Term A Loan as of the
opening of business on March 31, 2003 multiplied by the percentage set forth
below as of the applicable calendar quarter end:
<TABLE>
<CAPTION>
Annual Percentage of Term
Percentage of Term A Loans A Loans Outstanding as of
Outstanding as of the the opening of business on
opening of business on March 31, 2003 to be
March 31, 2003 to be Reduced Each Four-Quarter
Quarters Ending Reduced Each Quarter: Period Ending December 31:
- ------------------------------- -------------------------- ----------------------------
<S> <C> <C>
March 31, 2003 through and 2.50% 10.00%
including December 31, 2003
March 31, 2004 through and 3.75% 15.00%
including December 31, 2004
March 31, 2005 through and 6.25% 25.00%
including December 31, 2005
March 31, 2006 through and 6.25% 25.00%
including December 31, 2006
March 31, 2007 through and 5.00% 20.00%
including December 31, 2007
March 31, 2008 5.00% 5.00%*
</TABLE>
* for the one quarter period ending March 31, 2008
Any unpaid principal and interest of the Term A Loans shall be due and payable
in full on the Initial Maturity Date.
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(d) Commencing March 31, 2003 and at the end of each calendar
quarter thereafter, the outstanding principal balance of the Term B Loans as of
the opening of business on March 31, 2003 shall be repaid in an amount equal to
the outstanding principal balance of the Term B Loan as of the opening of
business on March 31, 2003 multiplied by the percentage set forth below as of
the applicable calendar quarter end:
<TABLE>
<CAPTION>
Annual Percentage of Term
Percentage of Term B Loans B Loans Outstanding as of
Outstanding as of the the opening of business on
opening of business on March 31, 2003 to be
March 31, 2003 to be Reduced Each Four-Quarter
Quarters Ending Reduced Each Quarter: Period Ending December 31:
- ------------------------------- -------------------------- ----------------------------
<S> <C> <C>
March 31, 2003 through and 0.25% 1.00%
including December 31, 2003
March 31, 2004 through and 0.25% 1.00%
including December 31, 2004
March 31, 2005 through and 0.25% 1.00%
including December 31, 2005
March 31, 2006 through and 0.25% 1.00%
including December 31, 2006
March 31, 2007 through and 0.25% 1.00%
including December 31, 2007
March 31, 2008 through and 0.25% 0.50%*
including June 30, 2008
September 30, 2008 94.50% 94.50%**
</TABLE>
* for the two quarter period ending June 30, 2008
** for the one quarter period ending September 30, 2008
Any unpaid principal and interest of the Term B Loans and any other Obligations
shall be due and payable in full on the Maturity Date.
Section 2.5 Fees.
(a) Fees Payable Under the Fee Letters. The Borrower agrees to
pay such fees as are mutually agreed upon and as are described in the Fee
Letters.
(b) Commitment Fee. In addition, (i) the Borrower agrees to pay
to the Administrative Agent, for the benefit of each of the Lenders who have
issued a Revolving A Commitment in accordance with their respective Revolving A
Commitment Ratios under the Revolving A Commitment, a commitment fee on the
aggregate unborrowed balance of the Revolving A Commitment, for each day from
the Agreement Date until the Initial Maturity Date, and (ii) the Borrower agrees
to pay to the
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<PAGE> 39
Administrative Agent, for the benefit of each of the Lenders who have issued a
Revolving B Commitment in accordance with their respective Revolving B
Commitment Ratios under the Revolving B Commitment, a commitment fee on the
aggregate unborrowed balance of the Revolving B Commitment, for each day from
the Agreement Date until the Conversion Date, which in each case of clause (i)
and clause (ii) above shall be, as of any calculation date, the applicable rate
determined by the Administrative Agent based upon the Leverage Ratio, determined
for the most recent fiscal quarter end, to be adjusted from time to time
effective as of the second Business Day after the financial statements referred
to in Section 6.1 hereof are required to be furnished by the Borrower to the
Administrative Agent and each Lender for the fiscal quarter most recently ended,
expressed as a per annum rate as follows:
<TABLE>
<CAPTION>
Commitment Fee Commitment Fee
Rate with Rate with
respect to the respect to the
Revolving A Revolving B
Leverage Ratio Commitment Commitment
-------------- -------------- --------------
<S> <C> <C>
Greater than 6.50 0.500% 0.375%
Equal to or less than 6.50 0.375% 0.250%
but greater than 5.00
Equal to or less than 5.00 0.250% 0.250%
</TABLE>
In the event that the Borrower fails to timely provide (i) the financial
statements referred to above in accordance with the terms of Section 6.1 hereof
or (ii) the Performance Certificate referred to in Section 6.3 hereof, and
without prejudice to any additional rights under Section 8.2 hereof, no downward
adjustment of the commitment fee rate in effect for the preceding quarter shall
occur until the actual delivery of such statements. Such commitment fee shall be
computed on the basis of a year of 365/366 days for the actual number of days
elapsed, shall be payable quarterly in arrears on the last Business Day of each
calendar quarter, commencing June 30, 2000, shall be fully earned when due, and
shall be non-refundable when paid.
Section 2.6 Prepayments.
(a) Prepayment of Advances. The principal amount of any Base Rate
Advance may be prepaid in full or in part at any time, without penalty or
premium and without regard to the Payment Date for such Advance, upon not less
than one (1) Business Days' prior written notice to the Administrative Agent of
such prepayment. Eurodollar Advances may be prepaid prior to the applicable
Payment Date, upon not less than three (3) Business Days' prior written notice
to the Administrative Agent, provided that the Borrower shall reimburse the
Lenders and the Administrative Agent, on demand, for any loss or out-of-pocket
expense incurred by any Lender or the Administrative Agent in connection with
such prepayment, as set forth in Section 2.11 hereof. Partial prepayments shall
be in a principal amount of not less than $5,000,000, and in an integral
multiple of $1,000,000.
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(b) Prepayment of Loans. Voluntary permanent prepayments of the
Loans shall be allocated to the Revolving Loan Commitment and the outstanding
Term Loans on a pro rata basis. Prepayments under this Section 2.6(b) shall
reduce (i) the remaining required reductions in the Revolving A Commitment and
(ii) the remaining required repayments due on the Revolving B Loans and the Term
Loans under Section 2.4, in each case on a pro rata basis. Amounts permanently
prepaid on the Term Loans whether by way of refinancing or prepayment of
Advances under the Term Loans shall, unless otherwise specified herein, be
applied to interest then outstanding hereunder on account of the Term Loans, and
then to principal. A notice of prepayment shall be irrevocable. Upon receipt of
any notice of prepayment or reduction, the Administrative Agent shall promptly
notify each Lender of the contents thereof by telephone or telecopy and of such
Lender's portion of the prepayment. Any portion of the Loans which is
permanently prepaid may not be reborrowed. Prepayments of the Revolving A Loans
made after March 31, 2003 shall be applied to the repayment schedule set forth
in Section 2.4(a) hereof on a pro rata basis. Prepayments of the Revolving B
Loans made after the Conversion Date shall be applied to the repayment schedule
set forth in Section 2.4(b) hereof on a pro rata basis. Prepayments of the Term
A Loans made after March 31, 2003 shall be applied to the repayment schedule set
forth in Section 2.4(c) hereof on a pro rata basis. Prepayments of the Term B
Loans made after March 31, 2003 shall be applied to the repayment schedule set
forth in Section 2.4(d) hereof on a pro rata basis. Notwithstanding the
foregoing, so long as Revolving B Loans or Term A Loans are outstanding, holders
of the Term B Loans shall have the right to decline any mandatory or voluntary
partial prepayment of the Term B Loans, in which case the amount of such
prepayment shall be applied pro rata to prepay the Revolving B Loans and the
Term A Loans.
Section 2.7 Borrower's Optional Cancellation of the Revolving Loan
Commitment. The Borrower shall have the right, on three (3) Business Days'
irrevocable notice to the Administrative Agent, to cancel all or a portion of
the Revolving A Commitment, on a pro rata basis among the Lenders issuing
Revolving A Commitments, provided that (i) any such cancellation shall be made
in a principal amount of not less than $5,000,000, and in an integral multiple
of $1,000,000; (ii) as of the effective date of such notice, the Revolving A
Commitment shall be permanently reduced to the amount stated in the Borrower's
notice for all purposes herein; and (iii) payment shall be made on or prior to
the effective date of such notice of any amount necessary to reduce the amount
of the Revolving A Loans outstanding under the Revolving A Commitment to not
more than the amount of the Revolving A Commitment as reduced, together with any
amount required to be paid by the Borrower under Section 2.11 hereof. In
addition, the Borrower shall have the right, on three (3) Business Days'
irrevocable notice to the Administrative Agent, to cancel all or a portion of
the Revolving B Commitment, on a pro rata basis among the Lenders issuing a
Revolving B Commitment, provided that (i) any such cancellation shall be made in
a principal amount of not less than $5,000,000, and in an integral multiple of
$1,000,000; (ii) as of the effective date of such notice, the Revolving B
Commitment shall be permanently reduced to the amount stated in the Borrower's
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notice for all purposes herein; and (iii) payment shall be made on or prior to
the effective date of such notice of any amount necessary to reduce the amount
of the Revolving B Loans outstanding under the Revolving B Commitment to not
more than the amount of the Revolving B Commitment as reduced, together with any
amount required to be paid by the Borrower under Section 2.11 hereof.
Section 2.8 Mandatory Prepayments From Permitted Asset Sales . In
addition to the scheduled repayments provided for in Section 2.4 hereof, the
Borrower shall prepay the Loans in an amount equal to the Net Proceeds from
Permitted Asset Sales of Telecommunications Assets (including Permitted Tower
Transactions) in excess of $50,000,000 in the aggregate during the term of this
Agreement (other than (x) the initial $10,000,000 of Net Proceeds from each
Permitted Asset Sale, (y) Net Proceeds from sales, leases or other dispositions
of used or surplus equipment in the ordinary course of business and (z) up to
$50,000,000 in Net Proceeds from Permitted Tower Transactions in the aggregate
during the term of this Agreement). Such excess Net Proceeds shall be applied,
on the Business Day of receipt thereof by the Borrower or the affected
Restricted Subsidiary, as follows:
(a) Except as otherwise permitted in Section 2.8(b)
hereof, to permanently prepay the outstanding principal amount of
the Loans in order of maturity and shall be allocated pro rata
between the Revolving B Loans and the Term Loans, with any excess
thereof after prepayment in full of the Revolving B Loans and the
Term Loans being applied to the Revolving A Loans, provided that,
prior to the Conversion Date, as otherwise permitted hereunder,
such amounts prepaid with Net Proceeds and allocated to Revolving
B Loans may be reborrowed by the Borrower in an amount not to
exceed, in the aggregate, the amount of the Revolving B
Commitment. Notwithstanding the foregoing, so long as Revolving B
Loans or Term A Loans are outstanding, holders of the Term B
Loans shall have the right to decline any mandatory partial
prepayment of the Term B Loans, in which case the amount of such
prepayment shall be applied pro rata to prepay the Revolving B
Loans and the Term A Loans; or
(b) At the Borrower's election, so long as no Default then
exists or would be caused thereby, by the Borrower or any
Restricted Subsidiary to purchase Telecommunications Assets or
Telecommunications Businesses, the aggregate purchase price of
which does not exceed such Net Proceeds, or the sum of such Net
Proceeds plus Advances otherwise available for Acquisitions
hereunder plus other funds available to the Borrower, so long as
the Borrower shall have (i) entered into a definitive contract
for purchase within twelve (12) months from the date of such
Permitted Asset Sale, and (ii) concluded such purchase within
eighteen (18) months from the date of such Permitted Asset Sale.
In the event the Borrower elects to
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exercise its right under this Section 2.8(b), the Borrower shall
so notify the Administrative Agent not less than five (5)
Business Days prior to the proposed date of the closing of the
Permitted Asset Sale and shall, upon its or any Restricted
Subsidiary's receipt of any Net Proceeds with respect to such
Permitted Asset Sale, remit such Net Proceeds to the
Administrative Agent to reduce the outstanding principal balance
of the Revolving A Loans and then (prior to the Conversion Date)
the outstanding principal balance of the Revolving B Loans (but
not the Term Loans nor the amount of the Revolving Loan
Commitment). Subsequent to the Conversion Date, any such amount,
after payment in full of the Revolving A Loans, shall be held in
trust in an interest-bearing account with the Administrative
Agent or an Affiliate thereof (the "Net Proceeds Trust") for the
benefit of the Borrower, to be applied to the ultimate purchase
of the Telecommunications Assets, Telecommunications Business or
Telecommunications Businesses, as hereinafter provided. Amounts
in any Net Proceeds Trust shall also be subject to a valid and
perfected first priority Lien in favor of the Administrative
Agent (for itself and for the ratable benefit of the Lenders) to
secure the Obligations, pursuant to a deposit pledge agreement or
other security agreement in form and substance reasonably
satisfactory to the Administrative Agent. The Borrower shall
consummate such purchase of the Telecommunications Assets,
Telecommunications Business or Telecommunications Businesses not
later than eighteen (18) months after the date of the applicable
Permitted Asset Sale. To the extent that the Borrower shall not
have entered into a definitive contract for purchase within
twelve (12) months after the date of the Permitted Asset Sale, or
consummated any such purchase as of the date eighteen (18) months
after the date of such Permitted Asset Sale (for whatever reason,
including the occurrence of a Default hereunder), or the purchase
price of such purchase shall be less than the Net Proceeds of the
Permitted Asset Sale, any funds held in the Net Proceeds Trust
relating to such sale shall be applied in the manner set forth in
Section 2.8(a) hereof.
Section 2.9 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein. Upon the request of any Lender, Notes shall be
issued by the Borrower and payable to the order of such Lender reflecting such
Lender's Revolving Commitment and Term Loans. The Notes issued by the Borrower
to the Lenders shall be duly executed and delivered by one or more Authorized
Signatories.
(b) Each Lender may open and maintain on its books in the name of
the Borrower a loan account with respect to such Lender's portion of the Loans
and interest thereon. Each Lender which opens such a loan account shall debit
such loan account for
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the principal amount of its portion of each Advance made and accrued interest
thereon and shall credit such loan account for each payment on account of
principal of or interest on its Loan. The records of a Lender with respect to
the loan account maintained by it shall be prima facie evidence of the Loans and
accrued interest thereon, absent manifest error, but the failure of any Lender
to make any such notations or any error or mistake in such notations shall not
affect the Borrower's repayment obligations with respect to the Loans.
Section 2.10 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, commitment fees and any
other amount owed to the Lenders, the Administrative Agent or any of them under
this Agreement shall be made not later than 2:00 p.m. (Houston time) on the date
specified for payment under this Agreement to the Administrative Agent at the
Administrative Agent's Office, for the account of the Lenders, or the
Administrative Agent, as the case may be, in lawful money of the United States
of America in immediately available funds. Any payment received by the
Administrative Agent after 2:00 p.m. (Houston time) shall be deemed received on
the next Business Day. Receipt by the Administrative Agent of any payment
hereunder at or prior to 2:00 p.m. (Houston time) on any Business Day shall be
deemed to constitute receipt on such Business Day. In the case of a payment for
the account of a Lender, the Administrative Agent will promptly thereafter (and,
if such amount is received before 2:00 p.m. (Houston time), on the same day)
distribute the amount so received in like funds to such Lender. If the
Administrative Agent shall not have received any payment from the Borrower as
and when due, the Administrative Agent will promptly notify the Lenders
accordingly.
(b) The Borrower agrees to pay principal, interest, fees and all
other Obligations due hereunder, under the Fee Letters, under any Notes, or
under the other Loan Documents without set-off or counterclaim or any deduction
whatsoever.
(c) Prior to the acceleration of the Loans under Section 8.2
hereof, if some but less than all amounts due from the Borrower are received by
the Administrative Agent with respect to the Obligations, the Administrative
Agent shall distribute such amounts in the following order of priority, all on a
pro rata basis to the Lenders: (i) to the payment on a pro rata basis of any
fees or expenses then due and payable to the Administrative Agent, the Lenders,
or any of them; (ii) to the payment of interest then due and payable on the
Loans; (iii) to the payment of all other amounts not otherwise referred to in
this Section 2.10(c) then due and payable to the Administrative Agent or the
Lenders, or any of them, hereunder; and (iv) to the payment of principal then
due and payable in respect of the Loans.
(d) Subject to any contrary provisions in the definition of
Interest Period, if any payment under this Agreement or any of the other Loan
Documents is specified to be made on a day which is not a Business Day, it shall
be made on the next Business
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Day, and such extension of time shall in such case be included in computing
interest and fees, if any, in connection with such payment.
Section 2.11 Reimbursement.
(a) Whenever any Lender shall sustain or incur any losses or
out-of-pocket expenses in connection with (i) failure by the Borrower to borrow
any Eurodollar Advance after having given notice of its intention to borrow in
accordance with Section 2.2 hereof (whether by reason of the Borrower's election
not to proceed or the non-fulfillment of any of the conditions set forth in
Article 3), or (ii) prepayment of any Eurodollar Advance in whole or in part for
any reason, the Borrower agrees to pay to such Lender, upon demand, an amount
sufficient to compensate such Lender for all such losses and reasonable
out-of-pocket expenses. Such Lender's good faith determination of the amount of
such losses or out-of-pocket expenses, as set forth in writing pursuant to
Section 2.11(b) hereof, and accompanied by calculations in reasonable detail
demonstrating the basis for its demand, shall be presumptively correct.
(b) Losses subject to reimbursement hereunder shall be (i) any
loss incurred by any Lender in connection with the re-employment of funds
prepaid, repaid, not borrowed, or paid, as the case may be, and the amount of
such loss shall be the excess, if any, of (1) the interest or other cost to such
Lender of the deposit or other source of funding used to make any such
Eurodollar Advance for the remainder of its Interest Period, over (2) the
interest earned (or to be earned) by such Lender upon the re-lending or other
redeployment of the amount of such Eurodollar Advance for the remainder of its
putative Interest Period or (ii) any other expenses incurred by any Lender or
any participant of such Lender permitted hereunder in connection with the
re-employment of funds prepaid, repaid, not borrowed, or paid, as the case may
be.
Section 2.12 Pro Rata Treatment.
(a) Advances. Each Advance from the Lenders shall be made pro
rata on the basis of the respective Revolving A Commitment Ratios of certain of
the Lenders with respect to the Revolving A Commitment, Revolving B Commitment
Ratios of certain of the Lenders with respect to the Revolving B Commitment, on
the basis of the Term A Loan percentage as set forth on Schedule 4-C hereof with
respect to the Lenders making Term A Loans hereunder, and on the basis of the
Term B Loan percentage as set forth on Schedule 4-D hereof with respect to the
Lenders making Term B Loans hereunder.
(b) Payments. Except as specifically provided in Section
2.2(e)(iv) or Article 10 hereof or elsewhere in this Agreement, each payment and
prepayment of principal of the Loans, and each payment of interest on the Loans,
shall be made to the Lenders pro rata on the basis of their respective unpaid
principal amounts outstanding immediately prior to such payment or prepayment.
If any Lender shall obtain any payment (whether involuntary, through the
exercise of any right of set-off, or otherwise)
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on account of the Loans made by it in excess of its ratable share of the Term
Loans or the Revolving Loans, as the case may be, such Lender shall forthwith
purchase from the other Lenders such interests (whether by purchasing a
participation or by assignment) in the applicable Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and each such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery. The
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.12(b) may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
(c) Delayed Permitted Asset Sale Prepayment. In the event
proceeds from a Permitted Asset Sale are used to reduce the outstanding
principal balance of the Revolving Loans (but not the Revolving Loan Commitment)
in accordance with Section 2.8(b) hereof and the Borrower fails to enter into a
definitive contract for purchase of Telecommunications Assets, a
Telecommunications Business or Telecommunications Businesses within twelve (12)
months from the date of the Permitted Asset Sale or the Borrower shall not have
consummated any such purchase as of eighteen (18) months after the date of such
Permitted Asset Sale (for whatever reason, including a Default hereunder), or
the purchase price of such purchase shall be less than the Net Proceeds of the
Permitted Asset Sale, the proceeds of such Permitted Asset Sale, or applicable
portion thereof, shall on the date twelve (12) months or eighteen (18) months
after the Permitted Asset Sale (as applicable) be reborrowed under the then
undrawn portion of the Revolving A Commitment (regardless of whether the
Revolving A Commitment has been terminated) and then applied on a pro rata basis
in the manner set forth in Section 2.8(a) hereof as if such proceeds had been
used to permanently reduce the Revolving Loans and the Term Loans upon receipt
thereof by the Borrower.
Section 2.13 Capital Adequacy . If, after the date hereof, the adoption
of any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender with any
directive issued or adopted after the date hereof regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on any Lender's capital as a consequence of its obligations
hereunder with respect to the Loans and the Revolving Loan Commitment to a level
below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that such
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Lender's capital was fully utilized prior to such adoption, change or
compliance) by an amount reasonably deemed by such Lender to be material, then
such Lender shall promptly notify the Borrower of such adoption, compliance, or
change. Upon demand by such Lender, the Borrower shall promptly pay to such
Lender such additional amounts as shall be sufficient to compensate such Lender
for such reduced return, together with interest on such amount from the fourth
(4th) day after the date of demand until payment in full thereof at the Default
Rate. A certificate of such Lender setting forth the amount to be paid to such
Lender by the Borrower as a result of any event referred to in this paragraph
and supporting calculations in reasonable detail shall be conclusive, absent
manifest error.
Section 2.14 Lender Tax Forms . On or prior to the first Payment Date
hereunder and on or prior to the first Business Day of each calendar year
thereafter, each Lender which is organized in a jurisdiction other than the
United States or a political subdivision thereof shall provide each of the
Administrative Agent and the Borrower with either (a) two (2) properly executed
originals of Form W-8ECI or Form W-8BEN (or any successor forms) prescribed by
the Internal Revenue Service or other documents satisfactory to the Borrower and
the Administrative Agent, or if delivered on or before December 31, 2000, Form
4224 or Form 1001 prescribed by the Internal Revenue Service and properly
executed Internal Revenue Service Form W-8 or Form W-9, as the case may be,
certifying (i) as to such Lender's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such Lender hereunder and under any Notes or (ii) that all payments to be made
to such Lender hereunder and under any Notes are subject to such taxes at a rate
reduced to zero by an applicable tax treaty, or (b)(i) a certificate executed by
such Lender certifying that such Lender is not a "bank" and that such Lender
qualifies for the portfolio interest exemption under Section 881(c) of the Code,
and (ii) two (2) properly executed originals of Internal Revenue Service Form
W-8BEN (or any successor form) or if delivered on or before December 31, 2000,
Internal Revenue Service Form W-8, in each case certifying such Lender's
entitlement to an exemption from United States withholding tax with respect to
payments of interest to be made under this Agreement. Each such Lender agrees to
provide the Administrative Agent and the Borrower with new forms prescribed by
the Internal Revenue Service upon the expiration or obsolescence of any
previously delivered form, or after the occurrence of any event requiring a
change in the most recent forms delivered by it to the Administrative Agent and
the Borrower.
ARTICLE 3.
Conditions Precedent
Section 3.1 Conditions Precedent to Initial Advance . The obligation of
the Lenders to make the initial Advance hereunder is subject to the prior
fulfillment of each of the following conditions:
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(a) The Administrative Agent shall have received each of the
following (with sufficient copies for each of the Lenders), in form and
substance satisfactory to the Administrative Agent and each of the Lenders:
(i) the loan certificate of the Borrower, in substantially
the form attached hereto as Exhibit N, including a certificate of
incumbency with respect to each Authorized Signatory, together
with appropriate attachments which shall include without
limitation, the following items: (A) a copy of the certificate of
incorporation of the Borrower, certified to be true, complete and
correct by the Secretary of State of Washington, and a true,
complete and correct copy of the by-laws of the Borrower, (B)
certificates of good standing for the Borrower issued by the
Secretary of State or similar state official for each state in
which the Borrower is required to qualify or has qualified to do
business, (C) a true, complete and correct copy of the
appropriate authorizing resolutions of the Borrower, authorizing
the Borrower to execute, deliver and perform this Agreement and
the other Loan Documents to which it is a party, and (D) a true,
complete and correct copy of any agreement in effect with respect
to the voting rights, ownership interests, or management of the
Borrower;
(ii) duly executed Notes (to the extent requested by any
Lenders);
(iii) duly executed Borrower's Pledge Agreement, together
with appropriate stock certificates and undated stock powers
executed in blank and appropriate acknowledgements by the pledged
limited liability companies and pledged partnerships;
(iv) duly executed Security Agreement, together with
evidence of the filing of appropriate UCC-1 financing statement
forms;
(v) the Subsidiary Guaranty;
(vi) the Subsidiary Pledge Agreement, together with
appropriate stock certificates and undated stock powers executed
in blank;
(vii) duly executed Subsidiary Security Agreement,
executed and delivered by each Restricted Subsidiary of the
Borrower, together with evidence of the filing of appropriate
UCC-l financing statement forms;
(viii) the Fee Letters;
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(ix) copies of insurance binders or certificates covering
the assets of the Borrower and its Restricted Subsidiaries, and
otherwise meeting the requirements of Section 5.5 hereof;
(x) legal opinions of (i) Friedman Kaplan & Seiler LLP,
general counsel to the Borrower, and (ii) Morrison & Foerster
LLP, FCC counsel to the Borrower and its Subsidiaries; each as
counsel to the Borrower and its Subsidiaries, addressed to each
Lender and the Administrative Agent, in form and substance
satisfactory to the Administrative Agent and its special counsel,
and dated as of the Agreement Date;
(xi) duly executed Request for Advance for the initial
Advance of the Loans, which Request for Advance shall include
calculations demonstrating, as of the Agreement Date after giving
effect to the borrowings hereunder on the Agreement Date, the
Borrower's compliance with Section 2.1 and Sections 7.8, 7.9,
7.10, and 7.11 hereof;
(xii) duly executed Use of Proceeds Letter;
(xiii) duly executed Certificate of Financial Condition
for the Borrower and its Subsidiaries on a consolidated basis,
given by the chief financial officer of the Borrower which shall
include a certification that no event has occurred which could
have a Materially Adverse Effect since December 31, 1999;
(xiv) any required FCC consents, Necessary Authorizations
(except as may be referred to in any Schedules hereto), or other
required consents to the closing of this Agreement or to the
execution, delivery and performance of this Agreement and the
other Loan Documents;
(xv) a loan certificate from each Restricted Subsidiary of
the Borrower, in substantially the form attached hereto as
Exhibit N, with respect to corporations, Exhibit O, with respect
to partnerships, and Exhibit P with respect to limited liability
companies, including a certificate of incumbency with respect to
each officer or partner authorized to execute Loan Documents on
behalf of such Subsidiary, together with appropriate attachments
which shall include, without limitation, the following items: (A)
a copy of the certificate or articles of incorporation of such
Subsidiary or certificate of formation of such Subsidiary, as
applicable, certified to be true, complete and correct by the
Secretary of State from the jurisdiction of incorporation of such
Subsidiary, (B) certificates of good standing for such Subsidiary
issued by the Secretary of State or similar state official for
each state in which such Subsidiary is incorporated or required
to qualify to do business, (C) a true, complete and
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correct copy of the By-Laws or partnership agreement, as
applicable, of such Subsidiary, and (D) a true, complete and
correct copy of the resolutions of such Subsidiary authorizing it
to execute, deliver and perform the Loan Documents to which it is
a party; and
(xvi) all such other documents as either the
Administrative Agent or any Lender may reasonably request,
certified by an appropriate governmental official or an
Authorized Signatory if so requested.
(b) The Administrative Agent shall have received evidence
satisfactory to it that all Necessary Authorizations, including all necessary
consents to the execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to which it is a party and by the
Restricted Subsidiaries of the Loan Documents to which they are parties, have
been obtained or made, are in full force and effect and are not subject to any
pending or threatened reversal or cancellation, and the Administrative Agent
shall have received a certificate of an Authorized Signatory so stating.
(c) The Administrative Agent and the Lenders shall have received
financial projections for the Borrower and its Restricted Subsidiaries on a
consolidated basis on an annual basis from the Agreement Date to the date nine
(9) years following the Agreement Date, in form and substance satisfactory to
the Administrative Agent and the Lenders.
(d) The Lenders, the Administrative Agent, and Paul, Hastings,
Janofsky & Walker LLP, special counsel to the Administrative Agent, shall
receive payment of all fees and expenses due and payable on the Agreement Date
in respect of the transactions contemplated hereby.
(e) The Administrative Agent and the Lenders shall have received
evidence satisfactory to them that, after funding the initial Advance of the
Loans, the Borrower shall have no outstanding Indebtedness for Money Borrowed
other than Permitted Debt.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Lenders to make each Advance (including the initial Advance hereunder) is
subject to the fulfillment of each of the following conditions immediately prior
to or contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower and
the Restricted Subsidiaries under this Agreement and the other Loan Documents
(including, without limitation, all representations and warranties with respect
to the Borrower's Subsidiaries), which, pursuant to Section 4.2 hereof, are made
at and as of the time of such Advance, shall be true and correct at such time in
all material respects, both before and after giving effect to the application of
the proceeds of such Advance, and after
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giving effect to any updates to information provided to the Lenders in
accordance with the terms of such representations and warranties, and no Default
hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase the
aggregate principal amount of Loans outstanding hereunder, the Administrative
Agent shall have received a duly executed Request for Advance and in the case of
other Advances, notice as required by Article 2 hereof;
(c) Each of the Administrative Agent and the Lenders shall have
received all such other certificates, reports, statements, opinions of counsel
or other documents as the Administrative Agent or any Lender may reasonably
request;
(d) With respect to any Advance relating to any Acquisition,
Investment or the formation of any Restricted Subsidiary which is permitted
hereunder, the Administrative Agent and the Lenders shall have received such
documents and instruments relating to such Acquisition, Investment, or formation
of a new Restricted Subsidiary as are described in Section 5.13 hereof or
otherwise required herein; and
(e) There shall have occurred no event which could reasonably be
expected to have a Materially Adverse Effect.
ARTICLE 4.
Representations and Warranties
Section 4.1 Representations and Warranties . The Borrower hereby agrees,
represents and warrants in favor of the Administrative Agent and each Lender
that:
(a) Organization; Ownership; Power; Qualification. The Borrower
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, having the shareholders shown on
Schedule 5 attached hereto as its only shareholders of record as of the
Agreement Date who own five percent (5%) or more of the stock of the Borrower.
The Borrower has the corporate power and authority to own its properties and to
carry on its business as now being and hereafter proposed to be conducted. Each
Subsidiary of the Borrower is a corporation or a partnership duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or formation, and has the corporate or partnership power and
authority, as the case may be, to own its properties and to carry on its
business as now being and hereafter proposed to be conducted. The Borrower and
each of its Subsidiaries are duly qualified, in good standing and authorized to
do business in each jurisdiction in which the character of their respective
properties or the nature of their respective businesses makes such qualification
or authorization prudent.
(b) Authorization; Enforceability. The Borrower has the corporate
power and has taken all necessary action to authorize it to borrow hereunder, to
execute, deliver
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and perform this Agreement and each of the other Loan Documents to which it is a
party in accordance with their respective terms, and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Borrower and is, and each of the other Loan
Documents to which the Borrower is party is, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, subject, as to enforcement of remedies, to the following
qualifications: (i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law, (ii) enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Borrower), and (iii) enforcement may be subject to general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and may be limited by public policies which may affect the
enforcement of certain rights or remedies provided for in this Agreement or the
Security Documents.
(c) Subsidiaries; Authorization; Enforceability. The Borrower's
Subsidiaries (including its Unrestricted Subsidiaries) and Investments and its
direct and indirect ownership thereof are set forth as of the Agreement Date on
Schedule 1 attached hereto, and the Borrower has the unrestricted right to vote
the issued and outstanding shares of the corporate Subsidiaries, and the right
to vote its partnership interests in the partnership Subsidiaries in accordance
with the terms of the applicable partnership agreement, shown thereon; such
shares of such corporate Subsidiaries have been duly authorized and issued and
are fully paid and nonassessable. Each Subsidiary of the Borrower has the
corporate or partnership power and authority, as the case may be, and has taken
all necessary corporate or partnership action to authorize it to execute,
deliver and perform each of the Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated by this Agreement and by such Loan Documents. Each of the Loan
Documents to which any Subsidiary of the Borrower is party is a legal, valid and
binding obligation of such Subsidiary enforceable against such Subsidiary in
accordance with its terms, subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an injunction
are discretionary remedies and, in particular, may not be available where
damages are considered an adequate remedy at law, (ii) enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of such Subsidiary), and (iii) enforcement may be subject to general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law) and may be limited by public policies which may affect the
enforcement of certain rights or remedies provided for in such Loan Documents.
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(d) Compliance with Other Loan Documents and Contemplated
Transactions. Except as set forth on Schedule 6 hereto, the execution, delivery
and performance, in accordance with their respective terms, by the Borrower of
this Agreement and any Notes, and by the Borrower and its Subsidiaries of each
of the other Loan Documents to which they are respectively party, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not (i) require any consent or approval, governmental or otherwise, not
already obtained, (ii) violate any Applicable Law respecting the Borrower or any
Subsidiary of the Borrower, (iii) conflict with, result in a breach of, or
constitute a default under the certificate or articles of incorporation or
by-laws, or the partnership agreement, as the case may be, as such documents are
amended, of the Borrower or of any Subsidiary of the Borrower, or under any
material indenture, agreement, or other instrument, to which the Borrower or any
of its Subsidiaries is a party or by which any of them or their respective
properties may be bound, (iv) conflict with, result in a breach of, or
constitute a default or violation of, the terms and conditions of any of the
material Licenses, or (v) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by the
Borrower or any of its Subsidiaries, except for Permitted Liens.
(e) Business. The Borrower is a holding company for all its
Subsidiaries and the Borrower, together with its Restricted Subsidiaries, is
engaged in the business of owning, operating, and investing in
Telecommunications Assets and Telecommunications Businesses or otherwise
providing wireless communications or telecommunications services and in related
business activities.
(f) Licenses, Etc. The Licenses and all IOAs have been duly
authorized by the grantors thereof and are in full force and effect. The
Borrower and its Restricted Subsidiaries are in compliance in all material
respects with all of the provisions thereof. Except as set forth on Schedule 7
attached hereto, the Borrower and its Restricted Subsidiaries have secured all
material Licenses and Necessary Authorizations and all such material Licenses
and Necessary Authorizations are in full force and effect. Except as set forth
on Schedule 7 attached hereto, neither any material License nor any material
Necessary Authorization is the subject of any pending or, to the best of the
Borrower's knowledge, threatened revocation.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
substantial compliance with all material Applicable Law.
(h) Title to Assets. The Borrower has good, legal and marketable
title to, or a valid leasehold interest in, all of the assets material to its
business. Each of the Borrower's Restricted Subsidiaries has good, legal and
marketable title to, or a valid leasehold interest in, all of its assets. None
of such properties or assets held by the Borrower or any of its Restricted
Subsidiaries is subject to any Liens, except for Permitted Liens. Except for
financing statements evidencing Permitted Liens, no financing statement under
the Uniform Commercial Code as in effect in any jurisdiction
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and no other filing which names the Borrower or any of its Restricted
Subsidiaries as debtor or which covers or purports to cover any of the assets of
the Borrower or any of its Restricted Subsidiaries is currently effective and on
file in any state or other jurisdiction, and neither the Borrower nor any of its
Restricted Subsidiaries has signed any such financing statement or filing or any
security agreement authorizing any secured party thereunder to file any such
financing statement or filing.
(i) Litigation. There is no action, suit, revocation, proceeding
or investigation pending against, or, to the best of the Borrower's knowledge,
threatened against or in any other manner relating adversely to, the Borrower or
any of its Subsidiaries or any of their respective properties, including without
limitation any License or Necessary Authorization, in any court or before any
arbitrator of any kind or before or by any governmental body (including without
limitation the FCC), except as described on Schedule 8 attached hereto as of the
Agreement Date or as subsequently disclosed to the Administrative Agent and the
Lenders pursuant to Section 6.5 hereof; and, except as expressly set forth on
Schedule 8 (or if disclosed pursuant to Section 6.5), no such action, suit,
proceeding or investigation could reasonably be expected to have an adverse
outcome which (i) calls into question the validity of this Agreement or any
other Loan Document, (ii) challenges the continued possession and use of any
License granted by the FCC, by the Borrower, any of its Restricted Subsidiaries,
or any Person in which the Borrower has, directly or indirectly, an Investment
and such challenge could result in a Default pursuant to Section 8.1(l) or
Section 8.1(m) hereof, or (iii) could have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns (including
information returns) of the Borrower and each of its Subsidiaries required by
law to be filed have been duly filed and all federal, state and other taxes,
including, without limitation, withholding taxes, assessments and other
governmental charges or levies required to be paid by the Borrower or any of its
Subsidiaries or imposed upon the Borrower or any of its Subsidiaries or any of
their respective properties, income, profits or assets, which are due and
payable, have been paid, except any such taxes (i) the payment of which the
Borrower or any of its Subsidiaries is diligently contesting in good faith by
appropriate proceedings, (ii) for which adequate reserves have been provided on
the books of the Borrower or the Subsidiary of the Borrower involved, and (iii)
as to which no Lien other than a Permitted Lien has attached and no foreclosure,
distraint, sale or similar proceedings have been commenced. The charges,
accruals and reserves on the books of the Borrower and each of its Subsidiaries
in respect of taxes are, in the judgment of the Borrower, adequate.
(k) Financial Statements. The Borrower has furnished or caused to
be furnished to the Administrative Agent and the Lenders its audited financial
statements on a consolidated basis with its Subsidiaries for the fiscal year
ended December 31, 1999, which, together with other financial statements
furnished to the Administrative Agent and the Lenders subsequent to the
Agreement Date, are complete and correct in all material
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respects and present fairly in accordance with GAAP the financial position of
the Borrower and its Subsidiaries on a consolidated basis on and as at such
dates and the results of operations for the periods then ended. Except as
provided on Schedule 9 attached hereto, neither the Borrower nor any of its
Subsidiaries has any material liabilities, contingent or otherwise, other than
as disclosed in the financial statements referred to in the preceding sentence
or as set forth or referred to in this Agreement, and there are no material
unrealized losses of the Borrower or any of its Subsidiaries and no anticipated
losses of the Borrower or any of its Subsidiaries other than those which have
been disclosed in writing to the Administrative Agent and the Lenders prior to
the Agreement Date and identified as such.
(l) No Adverse Change. Since December 31, 1999, there has
occurred no event which has had or which could reasonably be expected to have a
Materially Adverse Effect.
(m) ERISA. The Borrower and each Subsidiary of the Borrower and
each of their respective Plans are in compliance in all material respects with
ERISA and the Code and neither the Borrower nor any of its Subsidiaries has
incurred any accumulated funding deficiency with respect to any such Plan within
the meaning of ERISA or the Code. The Borrower, each of its Subsidiaries, and
each other ERISA Affiliate have complied in all material respects with all
requirements of Sections 10001 and 10002 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law No. 99-272), Section 4980B of the
Internal Revenue Code. Neither the Borrower nor any of its Subsidiaries has made
any promises of retirement or other benefits to employees, except as set forth
in their respective Plans, in written agreements with such employees, or in the
Borrower's employee handbook and memoranda to employees. No Plan is subject to
Title IV of ERISA. No Reportable Event has occurred and is continuing with
respect to any such Plan. No such Plan or trust created thereunder, or party in
interest (as defined in Section 3(14) of ERISA), or any fiduciary (as defined in
Section 3(21) of ERISA), has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject such Plan or any other Plan of the Borrower or any of its Subsidiaries,
any trust created thereunder, or any such party in interest or fiduciary, or any
party dealing with any such Plan or any such trust, to the tax or penalty in any
material amount on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. Neither the Borrower nor any of its Subsidiaries is a
participant in or is obligated to make any payment to a Multiemployer Plan.
Neither the Borrower nor any of its Subsidiaries (1) has had either a complete
withdrawal or a partial withdrawal under Section 4201 et. seq. of ERISA from a
Multiemployer Plan which had "unfunded vested benefits" within the meaning of
Section 4211 of ERISA or (2) has ever received a notice and demand from the plan
sponsor of a Multiemployer Plan under Section 4219(b)(1) of ERISA.
(n) Compliance with Regulations T, U, and X. Neither the Borrower
nor any Subsidiary of the Borrower is engaged principally in or has as one of
its important
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activities the business of purchasing or carrying, or extending credit for the
purpose of purchasing or carrying, any margin stock within the meaning of
Regulations T, U, and X of the Board of Governors of the Federal Reserve System;
nor will any proceeds of the Loans be used for such purpose.
(o) Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is required to register under the provisions of the Investment
Company Act of 1940, as amended, and neither the entering into or performance by
the Borrower and its Subsidiaries of this Agreement nor the issuance of any
Notes violates any provision of such Act or requires any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
or any other governmental or public body or authority pursuant to any provisions
of such Act.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authority in connection with the execution and delivery of this
Agreement. Neither the Borrower nor any of its Subsidiaries is required to
obtain any consent, approval, authorization, permit or license which has not
already been obtained from, or effect any filing or registration which has not
already been effected with, any federal, state or local regulatory authority in
connection with the performance, in accordance with their respective terms, of
this Agreement or any other Loan Document.
(q) Absence of Default, Etc. The Borrower and its Restricted
Subsidiaries are in compliance in all respects with all of the provisions of
their respective certificates or articles of incorporation and by-laws, or their
partnership agreements, as the case may be, and no event has occurred or failed
to occur (including, without limitation, any matter which could create a Default
hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or with the passage of time
or giving of notice or both would constitute, (i) an Event of Default or (ii) a
material default by the Borrower or any of its Restricted Subsidiaries under any
material indenture, agreement or other instrument relating to Indebtedness of
the Borrower or any of its Restricted Subsidiaries in the amount of $1,000,000
or more, any License, or any judgment, decree or order in the amount of
$1,000,000 or more to which the Borrower or any of its Restricted Subsidiaries
is a party or by which the Borrower or any of its Restricted Subsidiaries or any
of their respective properties may be bound or affected. Neither the Borrower
nor any of its Restricted Subsidiaries is a party to or bound by any contract or
agreement continuing after the Agreement Date, or bound by any Applicable Law,
that could have a Materially Adverse Effect or result in the loss of any License
issued by the FCC.
(r) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower or any
of its Subsidiaries
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and furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Administrative Agent or the Lenders were, at the time furnished, true, complete
and correct in all material respects to the extent necessary to give the
Administrative Agent and the Lenders true and accurate knowledge of the subject
matter. No fact or situation is currently known to the Borrower which has had or
could have a Materially Adverse Effect other than any fact or situation known to
and affecting the cellular telephone or telecommunications industry generally.
(s) Agreements with Affiliates and Management Agreements. Except
as set forth on Schedule 10 attached hereto, neither the Borrower nor any of its
Subsidiaries has (i) to the best of its knowledge, any written agreements or
binding arrangements of any kind with any Affiliate or (ii) any material
management or consulting agreements of any kind, not entered into in the
ordinary course of business.
(t) Payment of Wages. The Borrower and each of its Restricted
Subsidiaries are in compliance with the Fair Labor Standards Act, as amended, in
all material respects, and the Borrower and each of its Restricted Subsidiaries
have paid all minimum and overtime wages required by law to be paid to their
respective employees.
(u) Priority. The Security Interest is a valid and perfected
first priority security interest in the Collateral in favor of the
Administrative Agent, for itself and for the ratable benefit of the Lenders,
securing, in accordance with the terms of the Security Documents, the
outstanding Obligations, and the Collateral is subject to no Liens other than
Permitted Liens. The Liens created by the Security Documents are enforceable as
security for the outstanding Obligations in accordance with their terms with
respect to the Collateral subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an injunction
are discretionary remedies and, in particular, may not be available where
damages are considered an adequate remedy at law, (ii) enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Borrower or any of its Restricted Subsidiaries, as the case may be), and
(iii) enforcement may be subject to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law) and
may be limited by public policies which may affect the enforcement of certain
rights or remedies provided for in such Loan Documents.
(v) Indebtedness. Except as permitted pursuant to Section 7.1
hereof, neither the Borrower nor any of its Restricted Subsidiaries has
outstanding, as of the Agreement Date, and after giving effect to the initial
Advance hereunder on the Agreement Date, any Indebtedness for Money Borrowed.
(w) Investments. All Investments of the Borrower and its
Restricted Subsidiaries are shown as of the Agreement Date on Schedule 1
attached hereto.
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(x) Real Estate. Other than as listed and described on Schedule
11 attached hereto, (i) neither the Borrower nor any of its Restricted
Subsidiaries owns any real property, and (ii) no single parcel of such real
estate has a fair market value on the Agreement Date in excess of $500,000.
(y) Intellectual Property. The Borrower and each of the
Restricted Subsidiaries own, possess or have the right to use all material
licenses and rights to all patents, trademarks, trademark rights, trade names,
trade name rights, service marks and copyrights necessary to conduct their
business in all material respects as now conducted, without known conflict with
any patent, trademark, trade name, service mark, license or copyright of any
other Person, and such intellectual property of the Borrower and the Restricted
Subsidiaries is not subject to any Lien, other than any Permitted Liens. All
such material licenses and rights with respect to patents, trademarks, trademark
rights, trade names, trade name rights, service marks and copyrights are in full
force and effect in all material respects, and are not subject to any pending
or, to the best knowledge of the Borrower, threatened attack or revocation.
Section 4.2 Survival of Representations and Warranties, etc . All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made, and shall be true and correct, at and as
of the Agreement Date and on the date of each Advance except to the extent
expressly applicable only to the Agreement Date or previously fulfilled in
accordance with the terms hereof. All representations and warranties made under
this Agreement shall survive, and not be waived by, the execution hereof by the
Lenders and the Administrative Agent, any investigation or inquiry by any Lender
or the Administrative Agent, or the making of any Advance under this Agreement.
ARTICLE 5.
General Covenants
So long as any of the Obligations is outstanding and unpaid or the
Borrower shall have the right to borrow hereunder (whether or not the conditions
to borrowing have been or can be fulfilled), and unless the Majority Lenders, or
such greater number of Lenders as may be expressly provided herein, shall
otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters . The Borrower
will, and will cause each of its Restricted Subsidiaries to:
(a) preserve and maintain its existence, rights, franchises,
licenses and privileges in the state of its incorporation and in each other
state in which it operates a material part of its business, including, without
limitation, the Licenses, all IOAs (in accordance with their respective terms)
and all other Necessary Authorizations (other than any such the loss of which
would not be materially disadvantageous to (i) the Lenders or (ii) the Borrower
and its Subsidiaries, taken as a whole); and
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(b) qualify and remain qualified and authorized to do business in
each jurisdiction in which the character of its properties or the nature of its
business makes such qualification or authorization prudent.
Section 5.2 Business; Compliance with Applicable Law. The Borrower will,
and will cause each of its Restricted Subsidiaries to, (a) engage in the
business of owning, operating and investing in Telecommunications Assets and
Telecommunications Businesses or otherwise providing telecommunications services
and in related business activities, and (b) substantially comply with the
requirements of all material Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will cause
each of its Restricted Subsidiaries to, maintain or cause to be maintained in
the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), and from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements,
additions, betterments and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower will,
and will cause each of its Subsidiaries on a consolidated basis to, maintain a
system of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made in
accordance with GAAP and reflecting all transactions required to be reflected by
GAAP and keep accurate and complete records in all material respects of their
respective properties and assets. The Borrower and its Subsidiaries will
maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each of its
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrower and each of its
Restricted Subsidiaries as is prudent and reasonably satisfactory to the
Administrative Agent (including, without limitation, larceny, embezzlement,
employee fidelity, and other criminal misappropriation insurance).
(b) Keep their respective assets insured by responsible companies
on terms and in a manner reasonably acceptable to the Administrative Agent
against loss or damage by fire, theft, burglary, pilferage, loss in transit,
explosions and hazards insured against by extended coverage, in amounts which
are prudent for the cellular telephone industry and other wireless or
telecommunications service industry, in accordance with industry standards, and
reasonably satisfactory to the Administrative Agent, all premiums thereon to be
paid by the Borrower and its Restricted Subsidiaries.
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(c) Require that each insurance policy for the Borrower and its
Restricted Subsidiaries provide for at least thirty (30) days' prior written
notice to the Administrative Agent of any termination of or proposed
cancellation or nonrenewal of such policy, or material reduction in coverage,
and name the Administrative Agent (for itself and for the ratable benefit of the
Lenders) as additional named loss payee to the extent of the Obligations and
additional named insured.
(d) Subject to subsection (e), below, proceeds of insurance for
the Borrower and its Restricted Subsidiaries paid to the Administrative Agent
shall be applied to the payment or prepayment of the Obligations as provided
under Section 2.10(c) or Section 8.3 hereof, as applicable. Any balance thereof
remaining after payment in full of the Obligations shall be paid to the Borrower
or as otherwise required by law.
(e) If the Borrower or any one or more of its Restricted
Subsidiaries shall be entitled to receive proceeds from any policy for insurance
less than the lesser of $10,000,000 or ten percent (10%) of the gross revenues
of the Borrower and its Restricted Subsidiaries for the prior fiscal year, then
the Borrower or any one or more of its Restricted Subsidiaries shall have the
right to elect either to use such proceeds to repair or rebuild the affected
Telecommunications Assets or to remit such proceeds to the Administrative Agent
as provided under Section 5.5(d) hereof. In the event such insurance proceeds
exceed such threshold, the Administrative Agent shall hold such proceeds pending
its receipt from the Borrower of a plan for the use of such proceeds and the
approval of such plan by the Majority Lenders.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each of its Restricted Subsidiaries to, pay and discharge all taxes,
including, without limitation, withholding taxes, assessments and governmental
charges or levies required to be paid by them or imposed upon them or their
income or profits or upon any properties belonging to them, prior to the date on
which penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; except that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
The Borrower will, and will cause each of its Restricted Subsidiaries to, timely
file all information returns required by federal, state or local tax
authorities.
Section 5.7 Visits and Inspections. The Borrower will, and will cause
each of its Restricted Subsidiaries to, permit representatives of the
Administrative Agent and any of the Lenders, upon reasonable notice to the
Borrower or such Restricted Subsidiary and during normal business hours (i)
visit and inspect the properties of the Borrower or such
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Restricted Subsidiary, (ii) inspect and make extracts from and copies of their
respective books and records, and (iii) discuss with their respective principal
officers their respective businesses, assets, liabilities, financial positions,
results of operations and business prospects. The Borrower and each of its
Restricted Subsidiaries will also permit representatives of the Administrative
Agent and any of the Lenders to discuss with their respective auditors their
respective businesses, assets, liabilities, financial positions, results of
operations and business prospects.
Section 5.8 Payment of Indebtedness; Loans. Subject to any provisions
regarding subordination herein or as set forth in any other Loan Document, the
Borrower will, and will cause each of its Restricted Subsidiaries to, pay any
and all of their respective Indebtedness when and as it becomes due, other than
amounts diligently disputed in good faith and for which adequate reserves have
been set aside in accordance with GAAP.
Section 5.9 Use of Proceeds. The Borrower will use the aggregate
proceeds of all Advances (i) to refinance certain Indebtedness outstanding under
that certain Second Amended and Restated Loan Agreement dated as of February 17,
1998, as amended, including payment of all principal, interest and fees due and
owing thereunder, (ii) at the Borrower's election, to repay all principal,
accrued and unpaid interest, prepayment fees and other amounts due on the Senior
Subordinated Notes, (iii) to finance Permitted Investments, (iv) to fund Capital
Expenditures, (v) to (directly or indirectly through Restricted Subsidiaries)
acquire Telecommunications Assets and Telecommunications Businesses as permitted
hereunder, (vi) to make Restricted Payments and Restricted Purchases that are
permitted under Section 7.7 hereof, and (vii) for working capital and other
general corporate purposes. No proceeds of Advances hereunder shall be used for
the purchase or carrying or the extension of credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulations T, U,
and X of the Board of Governors of the Federal Reserve System.
Section 5.10 Real Estate. The Borrower will, and will cause its
Restricted Subsidiaries to, grant a mortgage securing the Obligations to the
Administrative Agent, for itself and for the ratable benefit of the Lenders, in
form and substance satisfactory to the Administrative Agent, covering each
parcel of real estate having a fair market value, exclusive of equipment, in
excess of $500,000 acquired by the Borrower or any of its Restricted
Subsidiaries after the Agreement Date. The Borrower will, and will cause its
Restricted Subsidiaries to, deliver to the Administrative Agent all
documentation, including opinions of counsel and policies of title insurance,
which in the opinion of the Administrative Agent is appropriate with each such
grant, including any Phase I environmental audit requested by the Administrative
Agent or any Lender.
Section 5.11 Indemnity. The Borrower, for itself and on behalf of each
of its Restricted Subsidiaries agrees, jointly and severally, to indemnify and
hold harmless each Lender and the Administrative Agent and each of their
respective affiliates, employees,
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representatives, officers, trustees and directors (any of the foregoing shall be
an "Indemnitee") from and against any and all claims, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable
attorneys', experts', agents', consultants' fees and expenses (as such fees and
expenses are incurred) and demands by any party, including the costs of
investigating and defending such claims, whether or not the Borrower, any
Restricted Subsidiary of the Borrower, or the Person seeking indemnification is
the prevailing party (a) resulting from any breach or alleged breach by the
Borrower or any Restricted Subsidiary of the Borrower of any representation,
warranty, or covenant made hereunder or under any other Loan Document; (b)
arising out of or in connection with (i) the Revolving Loan Commitment, the
Loans or otherwise under this Agreement or any other Loan Document (including
the taking of Collateral for the Obligations), including the use of the proceeds
of Loans hereunder in any fashion by the Borrower or any of its Restricted
Subsidiaries or the performance of their respective obligations under the Loan
Documents by the Borrower or any of its Restricted Subsidiaries, (ii)
allegations of any participation by the Lenders or the Administrative Agent, or
any of them, in the affairs of the Borrower or any of its Restricted
Subsidiaries, or allegations that any of them has any joint liability with the
Borrower or any of its Restricted Subsidiaries for any reason, or (iii) any
claims against the Lenders or the Administrative Agent, or any of them, by any
shareholder, partner, or other investor in or lender to the Borrower or any
Restricted Subsidiary, by any brokers or finders or investment advisers or
investment bankers retained by the Borrower or by any other third party, arising
out of the Revolving Loan Commitment, the Loans or otherwise under this
Agreement or any other Loan Document; or (c) in connection with taxes (other
than income taxes), fees, and other charges payable in connection with the
Loans, or the execution, delivery, and enforcement of this Agreement, the
Security Documents, the other Loan Documents, and any amendments thereto or
waivers of any of the provisions thereof; unless the Person seeking
indemnification hereunder is determined in such case to have acted with gross
negligence or willful misconduct, in any case by a final, non-appealable
judicial order. The obligations of the Borrower and the Restricted Subsidiaries
under this Section 5.11 are in addition to, and shall not otherwise limit, any
liabilities which the Borrower or any Restricted Subsidiary might otherwise have
in connection with any warranties or similar obligations of the Borrower or such
Restricted Subsidiary in any other agreement or instrument or for any other
reason.
Section 5.12 Interest Rate Hedging. Within ninety (90) days from the
Agreement Date, and at the end of each fiscal quarter thereafter, the Borrower
shall have entered into one or more Interest Hedge Agreements which result in
the fixing of a limit on the Borrower's interest obligations on an aggregate
principal amount of not less than fifty percent (50%) of the then outstanding
Total Debt. Such Interest Hedge Agreements shall provide interest rate
protection on terms reasonably acceptable to the Administrative Agent for an
average period of the lesser of three (3) years from the date of such Interest
Hedge Agreement or Agreements or the period remaining until the Initial Maturity
Date with respect to any Interest Hedge Agreement or Interest Hedge Agreements
entered into in connection with the Revolving Loans and the Term A Loans and the
Maturity Date
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with respect to any Interest Hedge Agreement or Interest Hedge Agreements
entered into in connection with the Term B Loans, such terms to include
consideration of the creditworthiness of the other party to the proposed
Interest Hedge Agreement. All Obligations of the Borrower to any of the Lenders
pursuant to any Interest Hedge Agreement shall rank pari passu with all other
Obligations.
Section 5.13 Covenants Regarding Formation of Restricted Subsidiaries
and the Making of Acquisitions. At the time of any Acquisition permitted
hereunder by the Borrower or any Restricted Subsidiary, or the formation of any
new Restricted Subsidiary of the Borrower or any of its Restricted Subsidiaries
(except for Restricted Subsidiaries which are then inactive and which have no
assets) which is permitted under this Agreement, the Borrower will, and will
cause its Restricted Subsidiaries, as appropriate, to (a) in the case of the
formation or Acquisition of a new Restricted Subsidiary, provide to the
Administrative Agent an executed Subsidiary Security Agreement for such new
Restricted Subsidiary, in substantially the form of Exhibit K attached hereto,
together with appropriate UCC-1 financing statements, as well as an executed
Subsidiary Guaranty for such new Restricted Subsidiary, in substantially the
form of Exhibit I attached hereto, which shall constitute both Security
Documents and Loan Documents for purposes of this Agreement, as well as a loan
certificate for such new Restricted Subsidiary, substantially in the form of
Exhibit O or Exhibit P attached hereto, as appropriate, together with
appropriate attachments; (b) in the case of any Acquisition by the Borrower or
any Restricted Subsidiary or the formation of any new Restricted Subsidiary,
pledge to the Administrative Agent all of the stock (or other instruments or
securities evidencing ownership) of such Restricted Subsidiary or Person which
is acquired or formed, beneficially owned by the Borrower or any of the
Borrower's Restricted Subsidiaries, as the case may be, as additional Collateral
for the Obligations to be held by the Administrative Agent in accordance with
the terms of the Borrower's Pledge Agreement, Subsidiary Pledge Agreement, or a
new Subsidiary Pledge Agreement in substantially the form of Exhibit J attached
hereto, and execute and deliver to the Administrative Agent all such
documentation for such pledge as, in the reasonable opinion of the
Administrative Agent, is appropriate; and (c) in any case, provide all other
documentation, including one or more opinions of counsel satisfactory to the
Administrative Agent which in the opinion of the Administrative Agent is
appropriate with respect to such Acquisition or the formation of such Restricted
Subsidiary. Investments made by the Borrower or any of its Restricted
Subsidiaries after the Agreement Date shall also be treated as additional
Collateral (other than as provided in Section 7.6(d)) and shall be subject to
the provisions of appropriate Security Documents. Any document, agreement or
instrument executed or issued pursuant to this Section 5.13 shall be a "Loan
Document" for purposes of this Agreement.
Section 5.14 Designation of Unrestricted Subsidiaries as Restricted
Subsidiaries.
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(a) Unrestricted to Restricted. Upon not less than three (3)
Business Days' prior written notice by the Borrower to the Administrative Agent,
any Unrestricted Subsidiary of the Borrower may be designated as a Restricted
Subsidiary hereunder provided that (i) no Default then exists or would be caused
thereby, (ii) any such Subsidiary does not (at the time of such designation)
have outstanding any Indebtedness for Money Borrowed other than Permitted Debt,
or any Liens on its assets or properties other than Permitted Liens, (iii) the
Borrower shall have demonstrated its continued compliance on a pro forma basis
through the Maturity Date with the financial covenants contained in Section 7.8,
7.9, 7.10 and 7.11 hereof , and (iv) such Subsidiary shall provide to the
Administrative Agent an executed Subsidiary Security Agreement, in substantially
the form of Exhibit K attached hereto, together with appropriate UCC-1 financing
statements, an executed Subsidiary Guaranty in substantially the form of Exhibit
I attached hereto, and a Subsidiary Pledge Agreement (given by itself if
appropriate and, if its stock or other securities are not then Collateral, given
by its parent company), in substantially the form attached hereto, as Exhibit J,
together with appropriate stock certificates and stock powers therefor, as well
as an appropriate loan certificate for such new Restricted Subsidiary,
substantially in the form of Exhibit O or Exhibit P, attached hereto, as
appropriate. Such new Restricted Subsidiary shall also provide all other
documentation which in the opinion of the Administrative Agent is appropriate
with respect to the designation of such Unrestricted Subsidiary as a Restricted
Subsidiary, including legal opinions if advisable, all of which documents shall
constitute Security Documents and Loan Documents for purposes of this Agreement.
(b) Other. The Borrower may not designate a Restricted Subsidiary
as an Unrestricted Subsidiary.
Section 5.15 Payment of Wages . The Borrower and each of its Restricted
Subsidiaries shall at all times comply, in all material respects, with the
requirements of the Fair Labor Standards Act, as amended, including, without
limitation, the provisions of such Act relating to the payment of minimum and
overtime wages as the same may become due from time to time.
ARTICLE 6.
Information Covenants
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled), and unless the Majority Lenders, or
such greater number of Lenders as may be expressly provided herein, shall
otherwise consent in writing, the Borrower will furnish or cause to be furnished
to each Lender and the Administrative Agent, at their respective offices:
Section 6.1 Quarterly Financial Statements and Information . Within
sixty (60) days after the last day of each quarter of each fiscal year of the
Borrower, unaudited balance sheets of the Borrower on a consolidated basis with
its Restricted Subsidiaries,
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and on a consolidated basis with all of its Subsidiaries, as at the end of such
quarter and as of the end of the preceding fiscal year, and the related
statements of operations and the related statements of cash flows of the
Borrower on a consolidated basis with its Restricted Subsidiaries, and on a
consolidated basis with all of its Subsidiaries, for such quarter and for the
elapsed portion of the year ended with the last day of such quarter, which shall
set forth in comparative form such figures as at the end of and for such quarter
and the appropriate prior period (but only for such quarter and other periods
for which such comparative figures are available) and shall be certified by the
chief financial officer of the Borrower, to be, in his or her opinion, complete
and correct in all material respects and to present fairly, in accordance with
GAAP (except as to the exclusion of certain Subsidiaries which should be
consolidated with the Borrower under GAAP), the financial position of the
Borrower on a consolidated basis with its Restricted Subsidiaries and on a
consolidated basis with all of its Subsidiaries, as at the end of such period
and the results of operations for such period, and for the elapsed portion of
the year ended with the last day of such period, subject only to normal year-end
adjustments.
Section 6.2 Annual Financial Statements and Information . Within one
hundred twenty (120) days after the end of each fiscal year of the Borrower, the
audited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such fiscal year and the related audited consolidated statements of
operations for such fiscal year and, to the extent available, for the previous
two (2) fiscal years, the related audited consolidated statements of changes in
shareholders' equity for such fiscal year and, to the extent available, for the
previous two (2) fiscal years, and related audited consolidated statements of
cash flows of such fiscal year and, to the extent available, for the previous
two (2) fiscal years, which shall be accompanied by an opinion of Arthur
Andersen LLP or other independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent, together
with a statement of such accountants that in connection with their audit,
nothing came to their attention that caused them to believe that the Borrower
was not in compliance with the terms, covenants, provisions or conditions of
Article 7 hereof.
Section 6.3 Performance Certificates . At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, the
Performance Certificate:
(a) setting forth as at the end of such quarterly period or
fiscal year, as the case may be, the arithmetical calculations required to
establish (i) any interest rate adjustment, as provided for in Section 2.3(f)
hereof, and (ii) whether or not the Borrower was in compliance with the
requirements of Sections 7.8, 7.9, 7.10 and 7.11 hereof;
(b) setting forth on a consolidated basis for the Borrower and
its Restricted Subsidiaries, for each such fiscal quarter or fiscal year, as the
case may be, (i) the number of Cellular System subscribers and subscribers to
other material Telecommunications Businesses at the beginning of such period,
(ii) the number of gross new Cellular System subscribers and subscribers to
other material Telecommunications
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Businesses added and deactivated Cellular System subscribers and subscribers to
other material Telecommunications Businesses lost during such period, and (iii)
the number of Cellular System subscribers and subscribers to other material
Telecommunications Businesses at the end of such period; and
(c) stating that, to the best of his or her knowledge, no Default
or Event of Default has occurred as at the end of such quarterly period or year,
as the case may be, or, if a Default or an Event of Default has occurred,
disclosing each such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Borrower
with respect to such Default or Event of Default.
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all material
reports, if any, submitted to the Borrower by the Borrower's independent public
accountants regarding the Borrower, including, without limitation, any
management report prepared in connection with the annual audit referred to in
Section 6.2.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License held by the Borrower or any Restricted
Subsidiary from the FCC.
(c) In connection with any proposed Acquisition by the Borrower
or any Restricted Subsidiary and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel prepared for the
Administrative Agent and the Lenders, or any of them, documents or further
information regarding the business, assets, liabilities, financial position,
projections, results of operations or business prospects of the Borrower or any
of its Restricted Subsidiaries as the Administrative Agent or any Lender may
reasonably request.
(d) Annually, a certificate of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year.
(e) Annually, and in no event later than January 31 of any year,
a copy of the Borrower's annual financial projections for itself and its
Restricted Subsidiaries for such fiscal year.
Section 6.5 Notice of Litigation and Other Matters . Notice specifying
the nature and status of any of the following events, promptly, but in any event
not later than ten (10) days after any officer of the Borrower becomes aware of
the occurrence of any of the following events:
(a) the commencement of all material proceedings and
investigations by or before any governmental body and all actions and
proceedings in any court or before any arbitrator against, or to the extent
known to the Borrower, in any other way relating
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materially adversely to the Borrower or any Restricted Subsidiary of the
Borrower, or any of their respective properties, assets or businesses or any
License;
(b) any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations or business
prospects of the Borrower or any Restricted Subsidiary of the Borrower, other
than changes in the ordinary course of business which have not had and could not
have a Materially Adverse Effect;
(c) any Default or the occurrence or non-occurrence of any event
(A) which constitutes, or which with the passage of time or giving of notice or
both would constitute a material default by the Borrower or any Restricted
Subsidiary of the Borrower under any material agreement other than this
Agreement to which the Borrower or any Restricted Subsidiary of the Borrower is
a party or by which any of their respective properties may be bound, or (B)
which could have a Materially Adverse Effect, giving in each case the details
thereof and specifying the action proposed to be taken with respect thereto;
(d) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any of its Subsidiaries or
the institution or threatened institution by PBGC of proceedings under ERISA to
terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan; and
(e) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(m) of
this Agreement.
ARTICLE 7.
Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow from the Lenders hereunder (whether or not the
conditions to borrowing have been or can be fulfilled), and unless the Majority
Lenders, or such greater number of Lenders as may be expressly provided herein,
shall otherwise consent in writing:
Section 7.1 Indebtedness of the Borrower and its Restricted
Subsidiaries. The Borrower shall not, and shall cause each of its Restricted
Subsidiaries not to, create, assume, incur or otherwise become or remain
obligated in respect of, or permit to be outstanding, any Indebtedness except:
(a) The Obligations;
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(b) Current accounts payable, accrued expenses and customer
advance payments incurred in the ordinary course of business;
(c) Indebtedness in an aggregate amount not to exceed
$100,000,000 at any time outstanding secured or unsecured on a pari passu basis
with or subordinated to the Obligations (it being understood that such
Indebtedness that is subordinated shall not constitute Subordinated Debt for
purposes of Section 7.7 hereunder);
(d) Capitalized Lease Obligations and unsecured Indebtedness for
Money Borrowed in addition to other Indebtedness permitted under this Section
7.1 in an aggregate amount not to exceed $50,000,000;
(e) Subordinated Debt;
(f) Indebtedness secured by Permitted Liens (other than those
described in items (a) and (i) of the definition of Permitted Liens);
(g) Obligations under Interest Hedge Agreements;
(h) Indebtedness of the Borrower or any of its Restricted
Subsidiaries to the Borrower or any other Restricted Subsidiary, and
Indebtedness expressly permitted under Section 7.5 hereof; and
(i) Indebtedness representing extensions, renewals, refinancings
or replacements (but not increases in principal amounts) of the foregoing.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall cause
each of its Restricted Subsidiaries not to, create, assume, incur or permit to
exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall
cause each of its Restricted Subsidiaries not to, except in connection with a
transaction otherwise permitted hereunder, enter into any amendment of, or agree
to or accept or consent to any waiver of any of the material provisions of, its
articles or certificate of incorporation or partnership agreement, as
appropriate.
Section 7.4 Liquidation, Merger, Disposition of Assets.
(a) Disposition of Assets. The Borrower shall not, and shall
cause each of its Restricted Subsidiaries not to, at any time sell, lease,
abandon, transfer, assign, or otherwise dispose of any of its or their
Telecommunications Assets unless any (i) Net Proceeds therefrom are applied as
provided in Section 2.8 hereof, (ii) Section 7.6(d) hereof is complied with (if
applicable), (iii) any such sale, lease or disposition is made for
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fair market value as determined by the Board of Directors of the Borrower, (iv)
any swap of Telecommunications Assets or Telecommunications Businesses is
otherwise permitted in Section 7.6(b)(i) hereof, (v) any sale and leaseback
transactions involving transmission towers must be a Permitted Tower
Transaction, and (vi) no Default then exists or would be caused thereby (unless
such sale, lease, abandonment or other disposal would cure any such Default). At
the time of any such Permitted Asset Sale hereunder in which the aggregate
consideration therefor exceeds $10,000,000, the Borrower shall provide the
Administrative Agent and the Lenders with projections assuming the consummation
of the Permitted Asset Sale and demonstrating pro forma compliance with Sections
7.8, 7.9, 7.10 and 7.11 hereof for the remaining term of this Agreement.
(b) Liquidation or Merger. The Borrower shall not, and shall
cause each of its Restricted Subsidiaries not to, at any time liquidate or
dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up,
or enter into any merger, provided that if no Default then exists or would be
caused thereby, the following such transactions are permitted: (i) a merger
among the Borrower and one or more Restricted Subsidiaries, provided the
Borrower is the surviving corporation; (ii) a merger between or among two or
more Restricted Subsidiaries; (iii) an Acquisition permitted hereunder effected
by a merger in which the Borrower or a Restricted Subsidiary of the Borrower is
the surviving Person; and (iv) a liquidation or dissolution of one or more
Restricted Subsidiaries into its or their parent entity (provided the Borrower
or one of its Restricted Subsidiaries is such parent entity).
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
cause each of its Restricted Subsidiaries not to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a Guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
obligations under agreements of the Borrower or any of its Restricted
Subsidiaries entered into in connection with leases of real property or the
acquisition of services, supplies and equipment in the ordinary course of
business of the Borrower or any of its Restricted Subsidiaries, or (c) as may be
contained in any Loan Document including, without limitation, the Subsidiary
Guaranty, or (d) a Guaranty of any obligation of any employee of the Borrower or
any of its Restricted Subsidiaries, provided that the aggregate amount
guaranteed under all such Guaranties shall not exceed $1,000,000 at any time, or
(e) Guaranties in existence on the Agreement Date, as described on Schedule 12
attached hereto, of obligations of certain Unrestricted Subsidiaries under
certain cell site, retail outlet, and other real estate leases, provided that
(i) the maximum amount of rent and other obligations so guaranteed shall not
exceed $3,500,000, and (ii) no such lease shall have its term extended without
termination of the related Borrower or Restricted Subsidiary Guaranty or (f)
Guaranties of obligations of Unrestricted Subsidiaries so long as such
Guaranties are included as part of Total Debt.
Section 7.6 Investments and Acquisitions . The Borrower shall not, and
shall cause each of its Restricted Subsidiaries not to, make any loan or
advance, or make any
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Investment or otherwise acquire for consideration evidences of Indebtedness,
capital stock or other securities of any Person, or make any Acquisition, except
that the Borrower may make Investments in its own Restricted Subsidiaries, and
that, so long as no Default then exists or would be caused thereby:
(a) Cash Equivalents. The Borrower and its Restricted
Subsidiaries may, directly or through a brokerage account (i) purchase
marketable, direct obligations of the United States of America, its agencies and
instrumentalities maturing within three hundred sixty-five (365) days of the
date of purchase, (ii) purchase commercial paper issued by corporations, each of
which shall have a combined net worth of at least $100 million and each of which
conducts a substantial part of its business in the United States of America,
maturing within two hundred seventy (270) days from the date of the original
issue thereof, and rated "P-2" or better by Moody's Investors Service, Inc. or
"A-2" or better by Standard and Poor's Ratings Group, (iii) purchase repurchase
agreements, bankers' acceptances, and certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase which are issued by,
or time deposits maintained with, a United States national bank the deposits of
which are insured by the Federal Deposit Insurance Corporation and having
capital, surplus and undivided profits totaling more than $100 million and rated
"A" or better by Moody's Investors Service, Inc. or Standard and Poor's Ratings
Group and (iv) purchase shares of any open-end investment company registered
under the Investment Company Act of 1940, that invests all or substantially all
of its funds in the items described in clauses (i) through (iii) above, which
meets the requirements set forth in Rule 2a-7, Money Market Funds, under that
Act, made available by any Lender or its Affiliate;
(b) Acquisitions.
(i) Subject to compliance with subsection (ii) of this
Section 7.6(b), (A) the Borrower and its Restricted Subsidiaries
may make Acquisitions of Telecommunications Assets and
Telecommunications Businesses (including swaps of
Telecommunications Assets and Telecommunications Businesses), (B)
the Borrower, solely through the issuance of its common stock,
may make Acquisitions of or Investments in additional
Subsidiaries which are engaged in a Telecommunications Business,
and (C) the Borrower and its Restricted Subsidiaries may make
Investments in Unrestricted Subsidiaries in an amount not to
exceed (x) $500,000,000 plus (y) an amount equal to the cash
proceeds from sales or issuances of public or private capital
stock or Subordinated Debt of the Borrower plus (z) amounts
Invested pursuant to clause (x) above in an Unrestricted
Subsidiary, upon (A) such Unrestricted Subsidiary being
subsequently designated as a Restricted Subsidiary, or (B) any
such Investment being subsequently returned to the Borrower by
such Unrestricted Subsidiary.
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(ii) No Acquisitions or Investments otherwise permitted
under Section 7.6(b) hereof may be consummated unless:
(A) the Borrower shall have demonstrated
through revised projections assuming the
consummation of the Acquisition or Investment its
pro forma compliance with Sections 7.8, 7.9, 7.10,
and 7.11 hereof, after giving effect to such
Acquisition or Investment, as the case may be, and
shall have certified to the Administrative Agent
and the Lenders that such Acquisition or
Investment, as the case may be, shall not have a
Materially Adverse Effect;
(B) with respect to any Acquisition or
Investment of more than $10,000,000, the Borrower
shall provide the Administrative Agent and the
Lenders with notice thereof, not less than thirty
(30) days prior to the proposed closing thereof,
and with copies of all material information
pertaining to such Acquisition or Investment, as
the case may be, and a certificate signed by the
chief financial officer of the Borrower, certifying
the Borrower's pro forma compliance with the
covenants listed in item (A) of this subsection,
together with any calculations necessary to
demonstrate such compliance;
(C) Section 5.13 of this Agreement has been
complied with except for Investments in
Unrestricted Subsidiaries; and
(D) Any swap of Telecommunications Assets or
Telecommunications Businesses must be exchanged for
fair market value, as determined by the board of
directors of the Borrower or the applicable
Restricted Subsidiary making such exchange.
(c) Employee Loans. The Borrower and its Restricted Subsidiaries
may make loans to employees, (i) in connection with stock option plans, provided
(x) such loans do not involve cash payments by the Borrower and (y) the Borrower
and its Restricted Subsidiaries incur no obligations at any time to repurchase
the stock so purchased, and (ii) for all other purposes in an amount not to
exceed, in the aggregate outstanding at any time, $2,000,000.
(d) Seller Paper. The Borrower and its Restricted Subsidiaries,
in connection with its receipt of Net Proceeds, may receive and hold one or more
promissory notes or other evidences of Indebtedness for Money Borrowed, provided
that (i) such promissory notes or other evidences of Indebtedness for Money
Borrowed shall
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be endorsed to the order of the Administrative Agent as additional Collateral
for the Obligations, and (ii) at no time shall the aggregate amount of such
outstanding Indebtedness held by the Borrower and its Restricted Subsidiaries
exceed $50,000,000.
Section 7.7 Restricted Payments and Purchases. The Borrower shall not,
and shall cause each of its Restricted Subsidiaries not to, directly or
indirectly declare or make any Restricted Payment or Restricted Purchase, except
that so long as no Default hereunder then exists or would be caused thereby:
(a) At any time that the Leverage Ratio as of the immediately
preceding fiscal quarter is less than 6.50 to 1.00 as reported to the
Administrative Agent and the Lenders pursuant to Section 6.3, the Borrower may
make any Restricted Payment or Restricted Purchase, provided that the Borrower
shall provide the Lenders with a certificate of the chief financial officer of
the Borrower, demonstrating pro forma compliance with Sections 7.8, 7.9, 7.10
and 7.11 hereof, after giving effect to such Restricted Payment or Restricted
Purchase;
(b) At any time that the Leverage Ratio as of the immediately
preceding fiscal quarter is equal to or greater than 6.50 to 1.00 as reported to
the Administrative Agent and the Lenders pursuant to Section 6.3, the Borrower
may make Restricted Payments and Restricted Purchases in the aggregate amount
not to exceed $200,000,000, provided that the Borrower shall provide the Lenders
with a certificate of the chief financial officer of the Borrower, demonstrating
pro forma compliance with Sections 7.8, 7.9, 7.10 and 7.11 hereof, after giving
effect to each such Restricted Payment or Restricted Purchase; and
(c) The Borrower may make scheduled payments of interest on its
Subordinated Debt;
(d) The Borrower may make payments required under the
Distribution Agreement;
(e) The Borrower and its Restricted Subsidiaries may make
Restricted Payments and Restricted Purchases which are permitted to be made
under Section 7.6 hereof; and
(f) The Borrower and its Restricted Subsidiaries may make
Restricted Purchases of minority ownership interests in the Borrower and its
Restricted Subsidiaries from Persons who are not Affiliates of the Borrower,
provided that such minority ownership interests so purchased shall become
additional Collateral for the Obligations pursuant to the terms of one or more
of the Security Documents.
Section 7.8 Ratio of Operating Cash Flow to Cash Interest Expense. The
Borrower shall not permit the ratio as of the end of any fiscal quarter of (i)
its Operating Cash Flow for the two (2) fiscal quarter period then ended, to
(ii) its Cash Interest
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Expense for such two (2) fiscal quarter period, to be less than the ratio set
forth below opposite the period during which the last day of such two-quarter
period ends:
<TABLE>
<CAPTION>
Quarter Ended: Ratio:
-------------- ------
<S> <C>
March 31, 2000 through 1.50 to 1.00
December 31, 2000
March 31, 2001 through 2.00 to 1.00
December 31, 2002
March 31, 2003 and thereafter 2.25 to 1.00
</TABLE>
Section 7.9 Fixed Charge Coverage Ratio. The Borrower shall not permit
the Fixed Charge Coverage Ratio for any fiscal quarter to be less than 1.10 to
1.00.
Section 7.10 Leverage Ratio. The Borrower shall not at any time permit
the Leverage Ratio to exceed the ratio set forth below for any fiscal quarter
ending during the periods indicated below:
<TABLE>
<CAPTION>
Period: Leverage Ratio:
------- ---------------
<S> <C>
Agreement Date through
March 31, 2001 8.00 to 1.00
April 1, 2001 through 7.50 to 1.00
March 31, 2002
April 1, 2002 through 7.00 to 1.00
December 31, 2002
January 1, 2003 through 6.00 to 1.00
December 31, 2004
Thereafter 5.50 to 1.00
</TABLE>
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt Service
Ratio. The Borrower shall not permit the ratio of its Annualized Operating Cash
Flow to its Pro Forma Debt Service to be less than the ratio set forth below for
any fiscal quarter ending during the periods indicated below:
<TABLE>
<CAPTION>
Annualized Operating Cash Flow
Period: to Pro Forma Debt Service Ratio:
------- --------------------------------
<S> <C>
March 31, 2000 through 1.00 to 1.00
December 31, 2000
March 31, 2001 through 1.25 to 1.00
December 31, 2002
March 31, 2003 and thereafter 1.50 to 1.00
</TABLE>
Section 7.12 Affiliate Transactions. Except as specifically provided
herein (including, without limitation, Section 7.7 hereof) and as may be
described on Schedule
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10 attached hereto, the Borrower shall not, and shall cause each of its
Restricted Subsidiaries not to, at any time engage in any material transaction
with an Affiliate, or make an assignment or other transfer of any of its
properties or assets to any Affiliate, unless such transaction (i) is determined
by the board of directors of the Borrower or such Restricted Subsidiary to be in
the best interests of the Borrower or such Restricted Subsidiary, and (ii) such
transaction is on terms no less advantageous to the Borrower or such Restricted
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate.
Section 7.13 Real Estate. Neither the Borrower nor any of its Restricted
Subsidiaries shall purchase or become obligated to purchase any single parcel of
real estate having a purchase price in excess of $500,000 except in compliance
with Section 5.10 hereof.
Section 7.14 ERISA Liabilities. The Borrower shall not, and shall cause
each of its Subsidiaries not to, (i) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans on an ongoing basis, or (ii) enter into any
Multiemployer Plan.
Section 7.15 New Unrestricted Subsidiaries. The Borrower shall cause all
of the stock of any new Unrestricted Subsidiary (which is a direct Subsidiary of
the Borrower, or a direct subsidiary of a Restricted Subsidiary) to be pledged
to the Administrative Agent pursuant to the terms of the Borrower Pledge
Agreement or the Subsidiary Pledge Agreement, as additional Collateral for the
Obligations.
Section 7.16 Limitation on Preferred Stock of Restricted Subsidiaries.
The Borrower shall not permit any Restricted Subsidiary to create or issue any
preferred stock except for (i) preferred stock outstanding on the Agreement
Date, (ii) preferred stock issued to and held by the Borrower or any other
Restricted Subsidiary, (iii) preferred stock issued by a Person prior to the
time such Person became a direct or indirect Restricted Subsidiary, (iv)
preferred stock issued by a Restricted Subsidiary, the proceeds of which are
used to refinance any outstanding preferred stock of such Restricted Subsidiary,
with an aggregate liquidation preference not to exceed the liquidation
preference of the preferred stock so refinanced, plus the amount of any
financing fees and other expenses incurred in connection with such refinancing,
and provided such refinancing preferred stock by its terms, or by the terms of
the agreement or instrument pursuant to which such preferred stock is issued,
does not provide for payments of liquidation values at its stated maturity or by
way of a sinking fund or by way of any mandatory redemption, defeasance,
retirement or repurchase, prior to the stated maturity of the preferred stock
being refinanced, or (v) preferred stock issued by a Restricted Subsidiary with
a cumulative liquidation preference in an amount which would be permitted
hereunder to be incurred as Indebtedness.
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ARTICLE 8.
Default
Section 8.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement or
any other Loan Document shall prove to be incorrect or misleading in any
material respect when made or deemed to be made pursuant to Section 4.2 hereof;
(b) (i) The Borrower shall default in the payment of any
principal amount of the Loans, or (ii) the Borrower shall default in the payment
of any interest, fees or other amounts payable to the Lenders, the
Administrative Agent, or any of them, when due, and such Default shall not be
cured by payment in full within three (3) Business Days;
(c) The Borrower shall default in the performance or observance
of any agreement or covenant contained in Article 7 hereof;
(d) The Borrower shall default in the performance or observance
of any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
within a period of thirty (30) days from the date of occurrence of such default,
or, if later, the date on which an officer of the Borrower knew or should have
known of the occurrence of such default;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or breach of any representation or
warranty contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in this Section 8.1) by the Borrower, any of its
Subsidiaries, or any other obligor thereunder, which shall not be cured within a
period of thirty (30) days from the occurrence of such default, or, if later,
the date on which an officer of the Borrower knew or should have known of the
occurrence of such default;
(f) There shall be entered and remain unstayed a decree or order
for relief in respect of the Borrower or any of its Restricted Subsidiaries
under Title 11 of the United States Code as now constituted or hereafter
amended, or any other applicable Federal or state bankruptcy law or other
similar law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official of the Borrower or any of its Restricted
Subsidiaries, or of any substantial part of their respective properties, or
ordering the winding-up or liquidation of the affairs of the Borrower or any of
its Restricted Subsidiaries; or an involuntary petition shall be filed against
the Borrower or any of its Restricted Subsidiaries and a temporary stay entered,
and (i) such petition and
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stay shall not be diligently contested, or (ii) such petition and stay shall
continue undismissed for a period of forty-five (45) consecutive days;
(g) The Borrower or any of its Restricted Subsidiaries shall file
a petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or the Borrower or any of its
Restricted Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or shall seek or consent to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of its Restricted Subsidiaries, or of any substantial part of their
respective properties, or the Borrower or any its Restricted Subsidiaries shall
fail generally to pay their respective debts as they become due, or the Borrower
or any of its Restricted Subsidiaries shall take any action in furtherance of
any such action;
(h) A judgment shall be entered by any court against the Borrower
or any of its Subsidiaries for the payment of money which exceeds singly or in
the aggregate with other such judgments, $10,000,000, or a warrant of attachment
or execution or similar process shall be issued or levied against property of
the Borrower or any of its Subsidiaries which, together with all other such
property of the Borrower or any of its Subsidiaries subject to other such
process, exceeds in value $10,000,000 in the aggregate, and if, within thirty
(30) days after the entry, issue or levy thereof, such judgment, warrant or
process shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant or process shall
not have been paid or discharged;
(i) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan maintained by the Borrower or any of its Subsidiaries, or to which the
Borrower or any of its Subsidiaries has any liabilities, or any trust created
thereunder; or a trustee shall be appointed by a United States District Court to
administer any such Plan; or PBGC shall institute proceedings to terminate any
such Plan; or the Borrower or any of its Subsidiaries shall incur any liability
to PBGC in connection with the termination of any such Plan; or any Plan or
trust created under any Plan of the Borrower or any of its Subsidiaries shall
engage in a "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) which would subject any such Plan, any trust
created thereunder, any trustee or administrator thereof, or any party dealing
with any such Plan or trust to the tax or penalty in any material amount on
"prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the
Code and, in each case, such event or condition, together with other such events
or conditions, if any, would subject the Borrower and its Subsidiaries to any
tax, liability or penalty in excess of $1,000,000;
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(j) There shall occur (i) any default under any Indebtedness
(other than the Loans) of the Borrower or any of its Restricted Subsidiaries in
an aggregate principal amount exceeding $5,000,000 at maturity or which default
allows the holder of such Indebtedness to accelerate the maturity of such
Indebtedness; (ii) any default under any Indebtedness of any Unrestricted
Subsidiary, which Indebtedness is in an aggregate principal amount exceeding
$100,000,000, at maturity or which default has resulted in acceleration of such
Indebtedness; (iii) any default under any Interest Hedge Agreement having a
notional principal amount $5,000,000 or more; or (iv) any defeasance or any
other action the result of which is to defease or repay any Subordinated Debt
(other than the Senior Subordinated Notes) without payment in full of the
Obligations;
(k) The FCC shall deliver to the Borrower or any of its
Subsidiaries an order to show cause why an order of revocation should not be
issued based upon any alleged attribution of alien ownership (within the meaning
of 47 U.S.C. Section 310(b) and any interpretation of the FCC thereunder) to the
Borrower or any of its Subsidiaries and such order shall not have been rescinded
within sixty (60) days after such delivery, with respect to any material
License;
(l) One or more Licenses shall be terminated or revoked such that
the Borrower and its Restricted Subsidiaries are no longer able to operate the
related Telecommunication Business or any portion thereof and retain the revenue
received therefrom or any such License shall fail to be renewed at the stated
expiration thereof such that the Borrower and its Restricted Subsidiaries are no
longer able to operate the related Telecommunication Business or any portion
thereof and retain the revenue received therefrom, except in the event that the
termination or revocation could not reasonably be expected to have a Materially
Adverse Effect;
(m) Any Security Document or any Note or any other Loan Document
or any material provision thereof shall at any time and for any reason be
declared by a court of competent jurisdiction to be null and void, or a
proceeding shall be commenced by the Borrower or any of its Subsidiaries, or by
any governmental authority having jurisdiction over the Borrower or any of its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof
(exclusive of questions of interpretation of any provision thereof), or the
Borrower or any of its Subsidiaries shall deny that it has any liability or
obligation for the payment of principal or interest or other obligations
purported to be created under any Loan Document;
(n) Any Security Document shall for any reason fail or cease to
create a valid and first-priority Lien on or Security Interest in any material
portion of the Collateral purported to be covered thereby, subject to any
Permitted Lien, or any such Lien or Security Interest shall cease to be
perfected, except if such failure results from the Administrative Agent's
failure to file any UCC-3 continuation statement in the appropriate
jurisdiction; or
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(o) (i) John Stanton ceases, for any reason, to serve as Chairman
of the Borrower and a successor Chairman acceptable to the Majority Lenders is
not appointed or does not commence to serve within sixty (60) days from the date
Mr. Stanton ceases to serve as Chairman, or (ii) there shall be a Change of
Control, together with the affirmative vote of the Majority Lenders that such
Change in Control, together with any results thereof, constitutes an Event of
Default.
Section 8.2 Remedies.
(a) If an Event of Default specified in Section 8.1 (other than
an Event of Default under Section 8.1(f) or Section 8.1(g)) shall have occurred
and shall be continuing, the Administrative Agent, at the request of the
Majority Lenders, shall formally declare that an Event of Default has occurred
and (i) terminate the Revolving Loan Commitment and (ii) declare the principal
of and interest on the Loans and any Notes and all other amounts owed to the
Lenders and the Administrative Agent under this Agreement and any Notes and any
other Obligations to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or in the Notes or any other Loan Document to the
contrary notwithstanding, and the Revolving Loan Commitment shall thereupon
forthwith terminate and all such amounts shall be immediately due and payable.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g), all principal, interest and other
amounts due hereunder and under any Notes, and all other Obligations, shall
thereupon and concurrently therewith become due and payable and the Revolving
Loan Commitment shall forthwith terminate and the principal amount of the Loans
outstanding hereunder shall bear interest at the Default Rate, all without any
action by the Administrative Agent, the Lenders or the Majority Lenders or any
of them and without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or in the other
Loan Documents to the contrary notwithstanding.
(c) Upon acceleration of the Obligations, as provided in
subsection (a) or (b) of this Section 8.2, the Administrative Agent and the
Lenders shall have all of the post-default rights granted to them, or any of
them, under the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Obligations, as provided in
subsection (a) or (b) of this Section 8.2, the Administrative Agent, upon
request of the Majority Lenders, shall have the right to the appointment of a
receiver for the properties and assets of the Borrower and its Restricted
Subsidiaries, both to operate and to sell such properties and assets, and the
Borrower, for itself and on behalf of its Restricted Subsidiaries, hereby
consents to such right and such appointment and hereby waives any objection the
Borrower or any Restricted Subsidiary may have thereto or the right to have a
bond or other security posted by the Administrative Agent on behalf of the
Lenders, in connection
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therewith. The rights of the Administrative Agent under this Section 8.2(d)
shall be subject to its prior compliance with the Communications Act and the FCC
rules and policies promulgated thereunder to the extent applicable to the
exercise of such rights.
(e) The rights and remedies of the Administrative Agent and the
Lenders hereunder shall be cumulative and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to any of the Administrative Agent,
the Lenders or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the reasonable costs and expenses, if any, incurred in
connection with the collection of such payment or prepayment including, without
limitation, any reasonable costs incurred by any of them in connection with the
sale or disposition of any Collateral for the Obligations; second, to the
Lenders and the Administrative Agent for any fees hereunder or under any of the
other Loan Documents then due and payable; third, to the Lenders pro rata on the
basis of their respective unpaid principal amounts (except as provided in
Section 2.2(e)(iv)), to the payment of any unpaid interest which may have
accrued on the Obligations; fourth, to the Lenders pro rata until all Advances
have been paid in full (and, for purposes of this clause, obligations under
Interest Hedge Agreements with the Lenders or any of them shall be deemed to be
Advances and shall be paid on a pro rata basis with the Advances); fifth, to the
Lenders pro rata on the basis of their respective unpaid amounts, to the payment
of any other unpaid Obligations; sixth, to damages incurred by the
Administrative Agent or any Lender by reason of any breach hereof or of any
other Loan Document; and seventh, upon satisfaction in full of all Obligations,
to the Borrower or as otherwise required by law. Notwithstanding the foregoing,
each Lender may allocate amounts received by it pursuant to this Section 8.3 in
its discretion to the various Obligations held by it.
ARTICLE 9.
The Agents
Section 9.1 Appointment and Authorization. Each Lender hereby
irrevocably appoints and authorizes, and hereby agrees that it will require any
transferee of any of its interest in its Loans irrevocably to appoint and
authorize, the Administrative Agent to take such actions as its agent on its
behalf and to exercise such powers hereunder and under the Security Documents as
are delegated by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Neither the Administrative Agent nor any of its
respective directors, officers, employees or agents shall be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
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Section 9.2 Interest Holders. The Administrative Agent may treat each
Lender, or the Person designated in the last notice filed with the
Administrative Agent, whether under Section 11.1, Section 11.5, or otherwise
hereunder, as the holder of all of the interests of such Lender in its Loans
until written notice of transfer, signed by such Lender (or the Person
designated in the last notice filed with the Administrative Agent) and by the
Person designated in such written notice of transfer, in form and substance
satisfactory to the Administrative Agent, shall have been filed with the
Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
consult with Paul, Hastings, Janofsky & Walker LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
with due care and shall not be liable for any action taken or suffered by it in
good faith in consultation with the Majority Lenders and in reasonable reliance
on such consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty
to examine, inquire into, or pass upon the validity, effectiveness or
genuineness of this Agreement, any Note, any other Loan Document, or any other
instrument, document or communication furnished pursuant hereto or in connection
herewith, and the Administrative Agent shall be entitled to assume (absent
knowledge to the contrary) that they are valid, effective and genuine, have been
signed or sent by the proper parties and are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
Revolving Loan Commitment and its Loans, Toronto Dominion (Texas), Inc. shall
have the same rights and powers hereunder and under the other Loan Documents as
any other Lender and Affiliates of the Administrative Agent may accept deposits
from, lend money to and generally engage in any kind of business with the
Borrower, any of its Subsidiaries or any Affiliates of, or Persons doing
business with, the Borrower, as if they were not affiliated with the
Administrative Agent and without any obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
obligations of the Administrative Agent under this Agreement and the Security
Documents are only those expressly set forth in this Agreement and the Security
Documents. The Administrative Agent shall be entitled to assume that no Default
has occurred and is continuing unless it has actual knowledge, or has been
notified by the Borrower, of such fact, or has been notified by a Lender in
writing that such Lender considers that a Default has occurred and is
continuing, and such Lender shall specify in detail the nature thereof in
writing. The Administrative Agent shall not be liable hereunder for any action
taken or omitted to be taken except for its own gross negligence or willful
misconduct. The Administrative Agent shall provide promptly each Lender with
copies of such documents received from the Borrower as such Lender may
reasonably request.
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Section 9.7 Security Documents. The Administrative Agent, as collateral
agent hereunder and under the Security Documents, is hereby authorized to act on
behalf of the Lenders, in its own capacity and through other agents and
sub-agents appointed by it with due care, under the Security Documents, provided
that the Administrative Agent shall not agree to the release of any Collateral,
or any property encumbered by any mortgage, pledge or security interests except
in compliance with Section 11.12 hereof. In connection with its role as secured
party with respect to the Collateral hereunder, the Administrative Agent shall
act as collateral agent, for itself and for the ratable benefit of the Lenders,
and such role as administrative agent shall be disclosed on all appropriate
accounts, certificates, filings, mortgages, and other Collateral documentation.
Section 9.8 Action by the Administrative Agent.
The Administrative Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless the Administrative Agent shall have been instructed by the Majority
Lenders to exercise or refrain from exercising such rights or to take or refrain
from taking such action; provided that the Administrative Agent shall not
exercise any rights under Section 8.2(a) of this Agreement except upon the
request of the Majority Lenders or of all the Lenders, where expressly required
by this Agreement. The Administrative Agent shall incur no liability under or in
respect of this Agreement with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment or which may seem to it to
be necessary or desirable in the circumstances for the protection of the
interests of the Lenders, except for its gross negligence or willful misconduct,
or conduct in breach of this Agreement as determined by a final, non-appealable
order of a court having jurisdiction over the subject matter.
The Administrative Agent shall not be liable to the Lenders or to any
Lender in acting or refraining from acting under this Agreement or any other
Loan Document in accordance with the instructions of the Majority Lenders or of
all the Lenders, where expressly required by this Agreement, and any action
taken or failure to act pursuant to such instructions shall be binding on all
Lenders.
Section 9.9 Notice of Default or Event of Default. In the event that the
Administrative Agent or any Lender shall acquire actual knowledge, or shall have
been notified, of any Default (other than through a notice by one party hereto
to all other parties), the Administrative Agent or such Lender shall promptly
notify the Administrative Agent, and the Administrative Agent shall take such
action and assert such rights under this Agreement as the Majority Lenders or of
all the Lenders, where expressly required by this Agreement, shall request in
writing, and the Administrative Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Lenders shall
fail to request the Administrative Agent to take action or to assert rights
under this Agreement in respect of any Default within ten (10)
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days after their receipt of the notice of any Default from the Administrative
Agent or any Lender, or shall request inconsistent action with respect to such
Default, the Administrative Agent may, but shall not be required to, take such
action and assert such rights (other than rights under Article 8 hereof) as it
deems in its discretion to be advisable for the protection of the Lenders,
except that, if the Majority Lenders have instructed the Administrative Agent
not to take such action or assert such right, in no event shall the
Administrative Agent act contrary to such instructions.
Section 9.10 Responsibility Disclaimed. The Administrative Agent shall
not be under any liability or responsibility whatsoever as Administrative Agent:
(a) To the Borrower or any other Person as a consequence of any
failure or delay in performance by or any breach by, any Lender or Lenders of
any of its or their obligations under this Agreement;
(b) To any Lender or Lenders, as a consequence of any failure or
delay in performance by, or any breach by, (i) the Borrower of any of its
obligations under this Agreement or any Notes or any other Loan Document, or
(ii) any Subsidiary of the Borrower or any other obligor under any other Loan
Document; or
(c) To any Lender or Lenders, for any statements, representations
or warranties in this Agreement, or any other document contemplated by this
Agreement or any other Loan Document, or any information provided pursuant to
this Agreement, any other Loan Document, or any other document contemplated by
this Agreement, or for the validity, effectiveness, enforceability or
sufficiency of this Agreement, any Notes, any other Loan Document, or any other
document contemplated by this Agreement.
Section 9.11 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower) pro rata
according to their percentage of the outstanding principal amount of the Loans
from and against any and all liabilities, obligations, losses (other than in the
event of a bankruptcy or out-of-court `work-out' of the Loans), damages,
penalties, actions, judgments, suits, costs, expenses (including reasonable fees
and expenses of experts, agents, consultants and counsel), or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of its
role as Administrative Agent under this Agreement, any other Loan Document, or
any other document contemplated by this Agreement or any action taken or omitted
by the Administrative Agent under this Agreement, any other Loan Document, or
any other document contemplated by this Agreement in its role as Administrative
Agent, except that no Lender shall be liable to the Administrative Agent for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements resulting from the gross
negligence or willful misconduct of the Administrative Agent as determined by a
final, non-appealable order of a court having jurisdiction over the subject
matter.
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Section 9.12 Credit Decision. Each Lender represents and warrants to
each other Lender, to each Managing Agent, and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to
make its Advances it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Borrower and
its Subsidiaries and that it has made an independent credit judgment, and that
it has not relied upon the Administrative Agent, any Managing Agent, or any
other Lender, or information provided by the Administrative Agent (other than
information provided to the Administrative Agent by the Borrower and forwarded
by the Administrative Agent to the Lenders); and
(b) So long as any portion of the Obligations remains
outstanding, it will continue to make its own independent evaluation of the
financial condition and affairs of the Borrower.
Section 9.13 Successor Administrative Agent.
(a) Resignation. Subject to the appointment and acceptance of a
successor Administrative Agent as provided below, the Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Majority Lenders shall have the right
to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be any Lender or a commercial bank organized
under the laws of the United States of America or any political subdivision
thereof which has combined capital and reserves in excess of $250,000,000. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent. The resignation of the
Administrative Agent may not take effect until a successor Administrative Agent
is appointed.
(b) Removal. The Administrative Agent may be removed as
Administrative Agent hereunder at any time by written notice given to it by
Lenders holding not less than sixty-six and two-thirds percent (66-2/3%) of the
sum of the Loans outstanding plus Undrawn Commitments. Upon any such removal,
such Lenders shall have the right to appoint a successor Administrative Agent,
subject, at any such time as there is no Default hereunder, to the prior written
consent of the Borrower, such consent not to be unreasonably withheld or
delayed. Any such successor Administrative Agent
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may be any Lender or a commercial bank organized under the laws of the United
States of America or any political subdivision thereof which has combined
capital and reserves in excess of $250,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of the
retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article shall continue in effect for its benefit in respect
of any actions taken or to be taken by it while it was acting as the
Administrative Agent.
Section 9.14 Delegation of Duties. The Administrative Agent may execute
any of its respective duties under the Loan Documents by or through agents or
attorneys selected by it using reasonable care, and shall be entitled to advice
of counsel concerning all matters pertaining to such duties.
Section 9.15 Additional Agents. None of the Lenders or other entities
identified on the facing page of, signature pages of or elsewhere in this
Agreement as a Co-Documentation Agent, Arranger, Managing Agent, or Co-Agent
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement or any other Loan Document other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders so
identified shall have or be deemed to have any fiduciary relationship with any
other Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other entities so identified in deciding to enter
into this Agreement or any other Loan Document or in taking or not taking action
hereunder or thereunder.
ARTICLE 10.
Change in Circumstances
Affecting Fixed Rate Advances
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair. If
with respect to any proposed Eurodollar Advance for any Interest Period, the
Administrative Agent determines after consultation with the Lenders that
deposits in Dollars (in the applicable amount) are not being offered to each of
the Lenders in the relevant market for such Interest Period, the Administrative
Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Administrative Agent notifies the Borrower that the
circumstances giving rise to such situation no longer exist, the obligations of
any affected Lender to make such type of Eurodollar Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the
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interpretation or administration thereof, or compliance by any Lender with any
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency, shall make it unlawful or impossible for any
Lender to make, maintain or fund Eurodollar Advances, such Lender shall so
notify the Administrative Agent, and the Administrative Agent shall forthwith
give notice thereof to the other Lenders and the Borrower. Before giving any
notice to the Administrative Agent pursuant to this Section 10.2, such Lender
shall designate a different lending office if such designation will avoid the
need for giving such notice and will not, in the sole judgment of such Lender,
be otherwise materially disadvantageous to such Lender. Upon receipt of such
notice, notwithstanding anything contained in Article 2 hereof, the Borrower
shall repay in full the then outstanding principal amount of each affected
Eurodollar Advance of such Lender, together with accrued interest thereon and
any reimbursement required under Section 2.11 hereof, on either (a) the last day
of the then current Interest Period applicable to such affected Eurodollar
Advances if such Lender may lawfully continue to maintain and fund such
Eurodollar Advances to such day or (b) immediately if such Lender may not
lawfully continue to fund and maintain such affected Eurodollar Advances to such
day. Concurrently with repaying each affected Eurodollar Advance of such Lender,
notwithstanding anything contained in Article 2 or Article 3 hereof, the
Borrower may borrow a Base Rate Advance from such Lender, and such Lender shall
make such Advance, if so requested, in an amount such that the outstanding
principal amount held by such Lender shall equal the outstanding principal
amount immediately prior to such repayment.
Section 10.3 Increased Costs.
(a) If after the date hereof, the adoption of any Applicable
Law, or any change in any Applicable Law (whether adopted before or after the
Agreement Date), or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Lender with any directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) shall subject any Lender to any tax, duty or other
charge with respect to its obligation to make Eurodollar
Advances, or its Eurodollar Advances, or shall change the basis
of taxation of payments to any Lender of the principal of or
interest on its Eurodollar Advances or in respect of any other
amounts due under this Agreement, in respect of its Eurodollar
Advances or its obligation to make Eurodollar Advances (except
for changes in the rate or method of calculation of tax on the
overall net income of such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of
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the Federal Reserve System, but excluding any included in an
applicable Eurodollar Reserve Percentage), special deposit,
capital adequacy, assessment or other requirement or condition
against assets of, deposits with or for the account of, or
commitments or credit extended by, any Lender or shall impose on
any Lender or the London interbank borrowing market or the New
York certificate of deposit market any other condition affecting
its obligation to make Eurodollar Advances or its Eurodollar
Advances;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any such Eurodollar Advances, or to reduce the amount of
any sum received or receivable by such Lender under this Agreement with respect
thereto, then, within five (5) days after demand by such Lender, the Borrower
agrees to pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased costs. Each Lender will promptly
notify the Borrower and the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 10.3 and will designate a different
lending office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole judgment of such Lender, be
otherwise disadvantageous to such Lender.
Any Lender claiming compensation under this Section 10.3 shall provide the
Borrower with a written certificate setting forth the additional amount or
amounts to be paid to it hereunder and calculations therefor in reasonable
detail. Such certificate shall be presumptively correct, absent manifest error.
In determining such amount, such Lender may use any reasonable averaging and
attribution methods. If any Lender demands compensation under this Section 10.3,
the Borrower may at any time, upon at least five (5) Business Days' prior notice
to such Lender, prepay in full the then outstanding affected Eurodollar Advances
of such Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.11 hereof.
Concurrently with prepaying such Eurodollar Advances, the Borrower may borrow a
Base Rate Advance from such Lender, and such Lender shall, if so requested, make
such Advance in an amount such that the outstanding principal amount held by
such Lender shall equal the outstanding principal amount immediately prior to
such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given pursuant
to Section 10.1, 10.2 or 10.3 suspending the obligation of any Lender to make
Eurodollar Advances, or requiring Eurodollar Advances of any Lender to be repaid
or prepaid, then, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender Eurodollar Advances affected shall, at
the option of the Borrower, be made instead as Base Rate Advances.
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ARTICLE 11.
Miscellaneous
Section 11.1 Notices.
(a) Unless otherwise specifically provided herein, all notices
and other communications under this Agreement shall be in writing and shall be
deemed to have been given three (3) days after deposit in the mail, designated
as certified mail, return receipt requested, postage-prepaid, or one (1) day
after being entrusted to a reputable commercial overnight delivery service, or
when sent by telecopy addressed to the party to which such notice is directed at
its address (and confirmed as received) determined as provided in this Section
11.1, except that notices under Article 2 shall be effective only upon receipt.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrower, to it at:
Western Wireless Corporation
3650 131st Ave., S.E., #400
Bellevue, Washington 98006
Attn: John Stanton
Chairman and Chief Executive Officer
Facsimile No.: (425) 586-8666
with a copy to:
Friedman Kaplan & Seiler LLP
875 Third Avenue
New York, New York 10022-6225
Attn: Gregg S. Lerner, Esq.
Facsimile No.: (212) 355-6401
and to:
Jeffery Christianson, Esq.
Senior Vice President and General Counsel
3650 131st Ave., S.E., #400
Bellevue, Washington 98006
Facsimile No.: (425) 586-8666
If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 900
Houston, Texas 77010
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Attn: Manager, Agency
Facsimile No.: (713) 951-0033
with a copy to:
TD Securities (USA) Inc.
31 West 52nd Street
New York, New York 10019-6101
Attn: Managing Director,
Communications Finance
Facsimile No.: (212) 827-7227
and to:
Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street, Suite 2400
Atlanta, Georgia 30308-2222
Attn: Kevin Conboy, Esq.
Facsimile No.: (404) 815-2424
(ii) If to the Lenders, to them at the addresses set
forth beside their names on Schedules 4-A, 4-B, 4-C
and 4-D.
Copies shall be provided to Persons other than parties hereto only in the case
of notices under Article 8 hereof.
(b) Any party hereto may change the address to which notices
shall be directed under this Section 11.1 by giving ten (10) days' written
notice of such change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution, delivery and
syndication of this Agreement and the other Loan Documents, and the transactions
contemplated hereunder and thereunder and the making of the initial Advance
hereunder (whether or not such Advance is made), including, but not limited to,
the fees and disbursements of Paul, Hastings, Janofsky & Walker LLP, special
counsel for the Administrative Agent and its Affiliates;
(b) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the administration of the transactions contemplated in
this Agreement or the other Loan Documents, the restructuring and "work out" of
such transactions, and the preparation, negotiation, execution and delivery of
any waiver, amendment or consent by
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the Administrative Agent and the Lenders relating to this Agreement or the other
Loan Documents, including, but not limited to, the fees and disbursements of any
experts, agents or consultants and of special counsel for the Administrative
Agent, but excluding any assignment fee pursuant to Section 11.5(b) hereof; and
(c) all out-of-pocket costs and expenses of obtaining performance
under this Agreement or the other Loan Documents and all out-of-pocket costs and
expenses of collection if an Event of Default occurs in the payment of the Loans
or the other Obligations, which in each case shall include reasonable fees and
out-of-pocket expenses of special counsel for the Administrative Agent.
Section 11.3 Waivers. The rights and remedies of the Administrative
Agent and the Lenders under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent or the Lenders,
or any of them, in exercising any right, shall operate as a waiver of such
right. The Administrative Agent and the Lenders expressly reserve the right to
require strict compliance with the terms of this Agreement in connection with
any future funding of a request for an Advance. In the event the Lenders decide
to fund an Advance at a time when the Borrower is not in strict compliance with
the terms of this Agreement, such decision by the Lenders shall not be deemed to
constitute an undertaking by the Lenders to fund any further Advances or
preclude the Lenders and the Administrative Agent from exercising any rights
available under the Loan Documents or at law or equity. Any waiver or indulgence
granted by the Administrative Agent, the Lenders or the Majority Lenders shall
not constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing at
variance with the terms of this Agreement such as to require further notice of
their intent to require strict adherence to the terms of this Agreement in the
future.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent and the Lenders are hereby authorized by the Borrower at
any time or from time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by any Lender or the Administrative Agent to or for
the credit or the account of the Borrower or any of its Restricted Subsidiaries
against and on account of the Obligations irrespective of whether (a) any Lender
or the Administrative Agent shall have made any demand hereunder or (b) the
Administrative Agent shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by
Section 8.2 and although such Obligations or any of them, shall be contingent or
unmatured. Upon direction by the
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Administrative Agent with the consent of the Majority Lenders, each Lender
holding deposits of the Borrower or any of its Restricted Subsidiaries shall
exercise its set-off rights as so directed.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of each of the Lenders.
(b) Each Lender may enter freely into participation agreements
with respect to or otherwise grant participations in its Loans to one or more
banks or other lenders or financial institutions; provided, however, that (i)
such Lender's obligations hereunder shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall not be entitled by the benefit
of its participation to vote or otherwise take action under this Agreement or
any other Loan Document, except with respect to the matters referred to in items
(a), (b), (c), (d), (e), and (f) of subsection (ii) of Section 11.12 hereof, and
(iv) the Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations hereunder. In addition,
each Lender may (x) sell or assign up to one hundred percent (100%) of its
rights hereunder and under the other Loan Documents to any Federal Reserve Bank
without limitation; and (y) sell or assign up to one hundred percent (100%) of
its rights hereunder and under the other Loan Documents to any other Person on
an assignment basis, provided that (A) (i) such assignment is to an Affiliate of
the assignor, an Approved Fund, or another Lender, or any Conduit Lender, or
(ii) the Borrower (unless there exists at the time of such assignment an Event
of Default hereunder) and the Administrative Agent have given their prior
written consent to the proposed assignee of a Lender hereunder, which consents
shall not be unreasonably delayed or withheld, provided that such consents may
be reasonably withheld if the proposed assignee is subject to withholding tax of
the sort referred to in Section 2.14 hereof, (B) in the case of assignments of
the Revolving A Commitment and the Revolving A Loans, the assignee assumes a pro
rata share of the assignor Lender's obligations thereunder determined by the
percentage of the Revolving A Commitment assigned for the period from the date
of the assignment through the Initial Maturity Date, and in the case of
assignments of the Revolving B Commitment and the Revolving B Loans, the
assignee assumes a pro rata share of the assignor Lender's obligations
thereunder determined by the percentages of the Revolving B Commitment assigned
for the period from the date of the assignment through the Initial Maturity
Date, but any such assignor Lender need not assign its Term A Loans or Term B
Loans on a pro rata basis with the Revolving A Commitment and the Revolving A
Loans or the Revolving B Commitment and Revolving B Loans, nor shall any such
Lender need to assign its Revolving A Commitment and Revolving A Loans on a pro
rata basis with the Revolving B Commitment and Revolving B Loans, and (C) each
such assignment shall be in a principal amount of not less than the lesser of
(I) the entire amount of such Lender's interest hereunder or (II) in the case of
assignments of the Revolving A Commitment,
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Revolving A Loans, Revolving B Commitment, Revolving B Loans and Term A Loans,
$5,000,000, and in the case of the Term B Loans, $1,000,000 unless an assignment
is from one Lender to another or to an Approved Fund, or an Affiliate of a
Lender, in which case there shall be no minimum assignment amount. Each Lender
who sells or assigns a portion of its Loans pursuant hereto shall pay to the
Administrative Agent an assignment fee of $3,500 with respect to each
assignment, such fee to be paid to the Administrative Agent not later than the
effective date of the assignment of the Loan relating thereto; provided,
however, that no such fee shall be payable in the case of an assignment to
another Lender or an Affiliate of a Lender; and provided, further that, in the
case of contemporaneous assignments by a Lender to more than one fund managed by
the same investment advisor (which funds are not then Lenders hereunder), only a
single such $3,500 fee shall be payable for all such contemporaneous
assignments. All assignments by any of the Lenders of any interests hereunder
shall be made pursuant to an Assignment and Assumption Agreement substantially
in the form attached hereto as Exhibit Q. Each Lender may provide any proposed
participant or assignee with confidential information provided to such Lender
regarding the Borrower and its Subsidiaries on a confidential basis, and such
participant or assignee shall agree to maintain such confidentiality in
accordance with the provisions of Section 11.19 hereof. Further, each permitted
assignee of any portion of the Loans shall be entitled to the benefits of
Sections 2.11 and 2.13 and Article 10 hereof and all other provisions hereof and
of the other Loan Documents as a `Lender' hereunder.
(c) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain a copy of each Assignment and Assumption
Agreement delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and the principal amount of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, absent
manifest error, and the Borrower, the Administrative Agent and the Lenders may
treat each person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection at the
offices of the Administrative Agent by the Borrower or any Lender, at any
reasonable time during normal business hours and from time to time upon
reasonable prior notice. Each Lender agrees to provide the Administrative Agent
and the Borrower with written notice of the assignment of all or part of its
rights hereunder. Upon the Administrative Agent's receipt of a duly completed
Assignment and Assumption Agreement executed by an assigning Lender and an
assignee Lender, the assignee's completed administrative questionnaire (unless
the assignee is already a Lender), the fee referred to in Section 11.5(b) above,
and any written consent to such assignment required by such subsection, the
Administrative Agent shall accept such Assignment and Assumption Agreement and
record the information contained therein in the Register. No assignment shall be
effected for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
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(d) Notwithstanding anything to the contrary contained in this
Section 11.5, any Lender that is a fund that invests in bank loans may (without
the consent of the Borrower or the Administrative Agent) pledge all or a portion
of its rights in connection with this Agreement to the trustee or any holder of
obligations or agents therefor owed, or securities issued, by such fund as
security for such obligations or securities, provided that any foreclosure or
other exercise of remedies by such trustee shall be subject, in all respects, to
the provisions of this Section 11.5 regarding assignments. No pledge described
in the immediately preceding sentence shall release any such Lender from its
obligations hereunder.
(e) Except as specifically set forth in Section 11.5(b) hereof,
nothing in this Agreement or any Notes, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any Notes.
(f) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Lenders pursuant to Section 2.12 hereof.
Section 11.6 Accounting Principles. Except as set forth in the following
sentence, references in this Agreement to GAAP shall be to such principles as in
effect from time to time, and all accounting terms used herein without
definition shall be used as defined under GAAP. All references to Operating Cash
Flow, Total Debt, Fixed Charges, Debt Service, and other such terms shall be
deemed to refer to such items of the Borrower and its Restricted Subsidiaries
excluding Unrestricted Subsidiaries on a consolidated basis, consistently
applied, unless otherwise indicated herein.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and any Notes shall be
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed in New York. If any
action or proceeding shall be brought by the Administrative Agent or any Lender
in order to enforce any right or remedy under this Agreement or under any Note,
the Borrower hereby consents and will, and the Borrower will cause each
Subsidiary to, submit to the jurisdiction of any state or federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement. The Borrower, for itself and on
behalf of its Subsidiaries, hereby agrees that service of the summons and
complaint and all other process which may be served in any such suit, action or
proceeding may be effected by mailing by registered mail a copy of such process
to the offices of the Borrower at the address given in Section 11.1 hereof and
that personal service of process shall not be required. Nothing herein shall be
construed to prohibit service of process by any other method permitted by law or
the bringing of any
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suit, action or proceeding in any other jurisdiction. The Borrower agrees that
final judgment in such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under any Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or inadvertently received by any Lender, then such excess sum shall be
credited as a payment of principal, unless the Borrower shall notify the
Administrative Agent or such Lender in writing that it elects to have such
excess returned forthwith. It is the express intent hereof that the Borrower not
pay and the Lenders not receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may legally be paid by the Borrower
under Applicable Law.
(b) Notwithstanding the use by the Lenders of the Base Rate, the
Federal Funds Rate, and the Eurodollar Rate as reference rates for the
determination of interest on the Loans, the Lenders shall be under no obligation
to obtain funds from any particular source in order to charge interest to the
Borrower at interest rates related to such reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any other
Loan Document nor any term hereof or thereof may be amended orally, nor may any
provision hereof or thereof be waived orally but only by an instrument in
writing signed by (or, in the case of Security Documents executed by the
Administrative Agent for itself and on behalf of the Lenders, signed by the
Administrative Agent and approved by) the Majority Lenders and, in the case of
an amendment, by the Borrower, except that (i) any amendment to this Agreement
or the other Loan Documents to effectuate the Incremental Facility as
contemplated by Section 2.1(e) shall only require the consent of the Borrower,
the Administrative Agent (to the extent required to assure that the amendments
contemplated by Section 2.1(e) are property effected) and the Lenders providing
the Incremental Facility, (ii) in the event of (a) any delay or extension in the
terms of
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repayment or change in the order of application of repayment or application in
the reduction of any Commitment of the Loans provided in Section 2.4, Section
2.7 or Section 2.8 hereof, (b) any reduction in principal, interest or fees due
hereunder or postponement of the payment thereof, (c) any release of any
substantial portion of the Collateral for the Loans other than in connection
with a sale or disposition otherwise permitted hereunder, or any failure to take
Collateral to which the Lenders are otherwise entitled pursuant to Section 5.13
or 5.14 hereof, (d) any waiver of any Default due to the failure by the Borrower
to pay any sum due to any of the Lenders hereunder, (e) any release of any
material Guarantor under any Guaranty of all or any portion of the Obligations,
except in connection with a merger, sale or other disposition otherwise
permitted hereunder, or (f) any amendment of this Section 11.12, or of the
definition of Majority Lenders, or of any portion of Sections 2.10, 2.12, 5.11
or Article 10 as they relate to the relative priority of payment among the
Obligations, or any other provision of this Agreement or any of the other Loan
Documents specifically requiring the consent or approval of each of the Lenders,
any amendment or waiver or consent may be made only by an instrument in writing
signed by (or, in the case of Security Documents executed by the Administrative
Agent for itself and on behalf of the Lenders, signed by the Administrative
Agent and approved by) each of the Lenders and, in the case of an amendment, by
the Borrower, and (iii) any increase in the Revolving Loan Commitment of any
Lender shall be made only by an instrument in writing signed by such Lender, the
Administrative Agent and the Borrower. Any amendment to any provision hereunder
governing the rights, obligations, or liabilities of the Administrative Agent in
its capacity as such, may be made only by an instrument in writing signed by the
Administrative Agent and by each of the Lenders.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the
Administrative Agent or its Affiliates and each Lender or its respective
Affiliates to enter into or maintain business relationships with the Borrower or
any of its Affiliates beyond the relationships specifically contemplated by this
Agreement and the other Loan Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
refers to any action taken or 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, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto (i) shall be deemed to have been
relied upon by the
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Administrative Agent and each of the Lenders notwithstanding any investigation
heretofore or hereafter made by them, and (ii) shall survive the execution and
delivery of this Agreement and shall continue in full force and effect so long
as any Obligation is outstanding and unpaid. Any right to indemnification
hereunder, including, without limitation, rights pursuant to Sections 2.11,
2.13, 5.11, 9.11, 10.3 and 11.2 hereof, shall survive the termination of this
Agreement and the payment and performance of all other Obligations.
Section 11.17 Senior Debt. The Indebtedness of the Borrower evidenced by
this Agreement is secured by the Security Documents and is intended by the
parties hereto to be in parity with the Interest Hedge Agreements in effect from
time to time between the Borrower and any Lender or any Affiliate of any Lender
(with respect to Obligations under Interest Hedge Agreements) and senior in
right of payment to all other Indebtedness for Money Borrowed of the Borrower.
Section 11.18 Obligations Several. The obligations of the Administrative
Agent and each of the Lenders hereunder are several, not joint.
Section 11.19 Confidentiality. The Lenders shall hold all non-public,
proprietary or confidential information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound financial service industry
practices; however, the Lenders may make disclosure of any such information to
their examiners, Affiliates, outside auditors, counsel, consultants, appraisers
and other professional advisors in connection with this Agreement or to any
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section 11.19), or to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender, or as reasonably required by any proposed syndicate member or any
proposed transferee or participant in connection with the contemplated transfer
of any Loans or participation therein or as required or requested by any
governmental authority or representative thereof or in connection with the
enforcement hereof or of any Loan Document or related document or pursuant to
legal process or with respect to any litigation between or among the Borrower
and any of the Lenders. In no event shall any Lender be obligated or required to
return any materials furnished to it by the Borrower. The foregoing provisions
shall not apply to a Lender with respect to information that (i) is or becomes
generally available to the public (other than through a breach of this Section
11.19 by such Lender), (ii) is already in the possession of such Lender on a
nonconfidential basis, or (iii) comes into the possession of such Lender in a
manner not known to such Lender to involve a breach of a duty of confidentiality
owing to the Borrower.
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ARTICLE 12.
Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF AND ON
BEHALF OF ITS SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND EACH OF THE
LENDERS, HEREBY AGREE TO WAIVE AND HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN
ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, ANY
OF THE BORROWER'S SUBSIDIARIES, ANY OF THE LENDERS, OR THE ADMINISTRATIVE AGENT,
OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, IS A PARTY, AS TO ALL MATTERS
AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF ANY
NOTES OR THE OTHER LOAN DOCUMENTS.
88
<PAGE> 96
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first appearing above.
BORROWER: WESTERN WIRELESS CORPORATION,
a Washington corporation
By: /S/ Theresa Gillespie
Title: Executive Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC.
By: /S/ Neva Nesbitt
Name: Neva Nesbitt
Title: Vice President
ARRANGER: TD SECURITIES (USA) INC.
By: /S/ Brendan J. O'Halloran
Name: Brendan J. O'Halloran
Title: Managing Director
CO-DOCUMENTATION/
CO-SYNDICATION AGENT: BANK OF AMERICA, N.A.
By: /S/ Derrick Bell
Name: Derrick Bell
Title: Vice President
CO-DOCUMENTATION/
CO-SYNDICATION AGENT: BARCLAYS BANK PLC
By: /S/ Timothy Harrington
Name: Timothy Harrington
Title: Director
89
<PAGE> 97
CO-DOCUMENTATION/
CO-SYNDICATION AGENT: THE CHASE MANHATTAN BANK
By: S/ John Huber
Name: John Huber
Title: Managing Director
MANAGING AGENT: COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK INTERNATIONAL", NEW
YORK BRANCH
By: /S/ Alan E. McLintock
Name: Alan E. McLintock
Title: Vice President
By: /S/ Nancy J. O'Connor
Name: Nancy J. O' Connor
Title: Vice President
MANAGING AGENT: DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /S/ Jane Majeski
Name: Jane Majeski
Title: First Vice President
By: /S/ Brian Schneider
Name: Brian Schneider
Title: Assistant Vice President
MANAGING AGENT: FLEET NATIONAL BANK
By: /S/ Christine Campnelli
Name: Christine Campanelli
Title: Vice President
90
<PAGE> 98
MANAGING AGENT: FIRST UNION NATIONAL BANK
By: /S/ Chris Kalmbach
Name: Chris Kalmbach
Title: Vice President
MANAGING AGENT: GOLDMAN SACHS CREDIT PARTNERS LP
By: /S/ Mark Denatale
Name: Mark Denatale
Title: Authorized Signatory
MANAGING AGENT: UNION BANK OF CALIFORNIA, N.A.
By: /S/ Keith M. Wilson
Name: Keith M. Wilson
Title: Vice President
CO-AGENT: SKANDINAVISKA ENSKILDA BANKEN AB
By: /S/ Milton C. Brady
Name: Milton C. Brady
Title: Director
By: /S/ Erland Ringblom
Name: Erland Ringblom
Title: Senior Advisor
CO-AGENT: U.S. BANK NATIONAL ASSOCIATION
By: /S/ Thomas G. Gunder
Name Thomas G. Gunder
Title: Vice President
91
<PAGE> 99
LENDER: PNC BANK, NATIONAL ASSOCIATION
By: /S/ Steven J. McGehrin
Name: Steven J. McGehrin
Title: Vice President
LENDER: THE TRAVELERS INSURANCE COMPANY
By: /S/ Allen R. Cantrell
Name: Allen R. Cantrell
Title: Investment Officer
LENDER: TRAVELERS CORPORATE LOAN FUND INC.
By: Travelers Asset Management
International Company LLC
By: /S/ Allen R. Cantrell
Name: Allen R. Cantrell
Title: Investment Officer
LENDER: KEY CORPORATE CAPITAL INC.
By: /S/ Laura E. Finlin
Name: Laura E. Finlin
Title: Corporate Banking Officer
LENDER: FIRSTAR BANK, N.A.
By: /S/ Michael J. Homeyer
Name: Michael J. Homeyer
Title: Vice President
92
<PAGE> 100
LENDER: MERITA BANK PLC
By: /S/ Anu Seppala
Name: Anu Seppala
Title: Vice President
By: /S/ Clifford Abramsky
Name: Clifford Abramsky
Title: Vice President
LENDER: NATIONAL CITY BANK
By: /S/ Liz Brosky
Name: Liz Brosky
Title: Corporate Banking Officer
LENDER: BANK OF MONTREAL, CHICAGO BRANCH
By: /S/ Ola Anderssen
Name: Ola Anderssen
Title: Director
LENDER: THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /S/ B. Ross Smead
Name: B. Ross Smead
Title: Vice President
LENDER: COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
By: /S/ Alan E. McLintock
Name: Alan E. McLintock
Title: Vice President
By: /S/ Nancy J. O'Connor
Name: Nancy J. O'Connor
Title: Vice President
93
<PAGE> 101
LENDER: THE ROYAL BANK OF SCOTLAND PLC
By: /S/ Karen L. Stefancic
Name: Karen L. Stefancic
Title: Vice President
LENDER: SKANDINAVISKA ENSKILDA BANKEN AB
By: /S/ Milton C. Brady
Name: Milton C. Brady
Title: Director
By: /S/ Erland Ringblom
Name: Erland Ringblom
Title: Senior Adviser
LENDER: THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH
By: /S/ Suraj P. Bhatia
Name: Suraj P. Bhatia
Title: Deputy General Manager
LENDER: KZH SOLEIL LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: KZH SOLEIL-2 LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
94
<PAGE> 102
LENDER: U.S. BANK NATIONAL ASSOCIATION
By: /S/ Thomas G. Gunder
Name: Thomas G. Gunder
Title: Vice President
LENDER: UNION BANK OF CALIFORNIA, N.A.
By: /S/ Keith M. Wilson
Name: Keith M. Wilson
Title: Vice President
LENDER: WEBSTER BANK
By: /S/ Elizabeth V. Piker
Name: Elizabeth V. Piker
Title: Vice President
LENDER: SUNTRUST BANK
By: /S/ J. Eric Millham
Name: J. Eric Millham
Title: Director
LENDER: ABN AMRO BANK N.V.
By: /S/ Nan Logan
Name: Nan Logan
Title: Senior Vice President
By: /S/ Thomas Byrne
Name: Thomas Byrne
Title: Senior Vice President
LENDER: TORONTO DOMINION (TEXAS), INC.
By: /S/ Neva Nesbitt
Name: Neva Nesbitt
Title: Vice President
95
<PAGE> 103
LENDER: ALLFIRST BANK
By: /S/ Christopher L. Smith
Name: Christopher L. Smith
Title: Senior Vice President
LENDER: BANK OF AMERICA, N.A.
By: /S/ Derrick Bell
Name: Derrick Bell
Title: Vice President
LENDER: BANK OF HAWAII
By: /S/ Luke Yeh
Name: Luke Yeh
Title: Assistant Vice President
LENDER: BANK OF NEW YORK
By: /S/ Gerry Granovsky
Name: Gerry Granovsky
Title: Vice President
LENDER: THE GOVERNOR AND COMPANY OF
THE BANK OF SCOTLAND
By: /S/ Stuart Gibson
Name: Stuart Gibson
Title: Director
LENDER: PARIBAS
By: /S/ Darlynn Ernst Kitcher
Name: Darlynn Ernst Kitcher
Title: Vice President
By: /S/ Thomas G. Brandt
96
<PAGE> 104
Name: Thomas G. Brandt
Title: Managing Director
LENDER: BARCLAYS BANK PLC
By: /S/ Timothy Harrington
Name: Timothy Harrington
Title: Director
LENDER: THE CHASE MANHATTAN BANK
By: /S/ John Huber
Name: John Huber
Title: Managing Director
LENDER: CITY NATIONAL BANK
By: /S/ Aaron Cohen
Name: Aaron Cohen
Title: Vice President
LENDER: COBANK, ACB
By: /S/ Anita Youngblut
Name: Anita Youngblut
Title: Vice President
LENDER: KZH CNC LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: CREDIT LYONNAIS NEW YORK BRANCH
By: /S/ Jeremy D. Horn
Name: Jeremy D. Horn
97
<PAGE> 105
Title: Vice President
LENDER: DAI-ICHI KANGYO BANK, LIMITED
By: /S/ Nancy Stengel
Name: Nancy Stengel
Title: Vice President
LENDER: DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /S/ James A. Majeski
Name: James A. Majeski
Title: First Vice President
By: /S/ Brian Schneider
Name: Brian Schneider
Title: Assistant Vice President
LENDER: FLEET NATIONAL BANK
By: /S/ Christine Campanelli
Name: Christine Campanelli
Title: Vice President
LENDER: FIRST UNION NATIONAL BANK
By: /S/ Chris Kalmbach
Name: Chris Kalmbach
Title: Vice President
LENDER: THE FUJI BANK, LIMITED
By: /S/ Masahito Fukuda
Name: Masahito Fukuda
Title: Senior Vice President &
Group Head
98
<PAGE> 106
LENDER: GOLDMAN SACHS CREDIT PARTNERS LP
By: /S/ Mark Denatale
Name: Mark Denatale
Title: Authorized Signatory
LENDER: BAYERISCHE HYPO-UND VEREINSBANK AG
By: /S/ Eric N. Pelletier
Name: Eric N. Pelletier
Title: Director
By: /S/ Patricia M. Tresnan
Name: Patricia M. Tresnan
Title: Director
LENDER: THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /S/ Vincente Timiraos
Name: Vincente Timiraos
Title: Joint General Manager
LENDER: MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST
By: /S/ Peter Gewirtz
Name: Peter Gewirtz
Title: Vice President
99
<PAGE> 107
LENDER: KZH PONDVIEW LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: KZH WATERSIDE LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: KZH STERLING LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: KZH ING-2 LLC
By: /S/ Virginia Conway
Name: Virginia Conway
Title: Authorized Agent
LENDER: THE ROYAL BANK OF SCOTLAND PLC
By: /S/ Karen L. Stefancic
Name: Karen Stefancic
Title: Vice President
LENDER: CITIZENS BANK
By: /S/ Cynthia J. Terwilliger
Name: Cynthia J. Terwilliger
Title: Vice President
100
<PAGE> 108
LENDER: THE BANK OF NOVA SCOTIA
By: /S/ Vincent J. Fitzgerald, Jr.
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Agent
LENDER: METROPOLITAN LIFE INSURANCE COMPANY
By: /S/ James R. Dingler
Name: James R. Dingler
Title: Director
LENDER: METROPOLITAN PROPERTY AND CASUALTY
INSURANCE COMPANY
By: /S/ James R. Dingler
Name: James R. Dingler
Title: Authorized Agent
LENDER: PPM AMERICA, INC., as Attorney in Fact,
on Behalf of Jackson National Life
Insurance Company
By: /S/ Michael J. Harrington
Name: Michael J. Harrington
Title: Vice President
LENDER: WINGED FOOT FUNDING TRUST
By: /S/ Ashley R. Hamilton
Name: Ashley R. Hamilton
Title: Authorized Agent
LENDER: GPSF SECURITIES INC.
By: /S/ Mark A. Bernier
Name: Mark A. Bernier
Title: Vice President
101
<PAGE> 109
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By: /S/ Thomas E. Johnstone
Name: Thomas E. Johnstone
Title: Duly Authorized Signatory
LENDER: KZH LANGDALE LLC
By: /S/ Susan Lee
Name: Susan Lee
Title: Authorized Agent
LENDER: KZH RIVERSIDE LLC
By: /S/ Susan Lee
Name: Susan Lee
Title: Authorized Agent
LENDER: PILGRIM PRIME RATE TRUST
By: /S/ Jeffrey A. Bakalar
Name: Jeffrey A. Bakalar
Title: Senior Vice President
LENDER: GALAXY CLO 1999 - 1, LTD.
by SAI Investment Adviser, Inc.
its Collateral Manager
By: /S/ James K. Hunt
Name: James K. Hunt
Title: Authorized Agent
102
<PAGE> 1
EXHIBIT 10.63
MASTER PURCHASE AGREEMENT
BETWEEN
WESTERN WIRELESS CORPORATION
AND
NORTEL NETWORKS INC.
<PAGE> 2
TABLE OF CONTENTS
ARTICLES:
Article 1 - Definitions
Article 2 - Scope of Agreement
Article 3 - Placement of Orders
Article 4 - Price and Payment
Article 5 - Shipment, Title and Risk of Loss
Article 6 - Testing, Turnover and Acceptance
Article 7 - Order Cancellation
Article 8 - Warranty
Article 9 - Nortel's Additional Obligations
Article 10 - Software License
Article 11 - Liability for Bodily Injury, Property Damage and Patent
Infringement
Article 12 - Remedies and Limitation of Liability
Article 13 - Term and Termination
Article 14 - Confidentiality
Article 15 - Cooperative Advertising
Article 16 - Continuing Availability
Article 17 - Installation Guidelines
Article 18 - Insurance
Article 19 - Dispute Resolution
Article 20 - Authority and Compliance With Laws
Article 21 - Compatibility and Interconnection
Article 22 - Additional Terms
EXHIBITS:
Exhibit A - Product Annexes including Lists of Product and Prices
Exhibit B - Software License
Exhibit C - Cooperative Advertising Program
<PAGE> 3
MASTER PURCHASE AGREEMENT
This Master Purchase Agreement ("Agreement"), effective as of the 15th day of
July, 1999, is entered into by and Western Wireless Corporation (hereinafter
"Company ") with executive offices located at 3650 131st Avenue SE, Bellevue,
Washington 98006 and Nortel Networks Inc. (hereinafter "Nortel"), with offices
located at 2221 Lakeside Boulevard, Richardson, Texas 75080.
WHEREAS, Company is engaged in providing communication services and products,
and providing and maintaining public and private communication networks; and
WHEREAS, Nortel is engaged in the design, development, manufacture and sale of
various products and offers services associated with such products, which can be
used in connection with the communication services, products and networks of
Company; and
WHEREAS, Company and Company Affiliates wish(es) to be able to purchase and/or
license various products and services for delivery and installation in the
United States from Nortel, which Company and Company Affiliates will use for its
their own internal use and not for resale or as stock in trade and Nortel is
willing to sell and/or license such products to Company, subject to the terms
and conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, the parties agree as follows:
ARTICLE 1. DEFINITIONS
The following words shall have the meanings set forth below. Words in the
singular shall be held to include the plural and vice versa and words of gender
shall be held to include the other gender as the context requires.
1.1 "Acceptance" shall mean that either (i) Company has indicated to
Nortel in writing that an ordered Product is operating substantially in
accordance with the applicable Specification; or (ii) an ordered Product has
been deemed to be accepted pursuant to criteria set forth in Article 6.
Acceptance with respect to a System shall mean Acceptance of the entire System
and not individual Products.
1.2 "Applications" shall mean any program, product, service, development
or invention developed by a party using the Building Blocks, including any
modified or created Building Blocks, created by Company.
1.3 "Building Block(s)" shall mean those Software files provided by
Nortel with Modifiable Software that are manipulatable or which may be created
by Company with such Modifiable Software and which can be used, created or
manipulated by Company to create Applications.
1
<PAGE> 4
l.4 "Company Affiliate" shall mean any entity mutually agreed to by the
parties and in which Company owns and controls and continues to own or control
more than 35% of the shares entitled to elect the board of directors of such
entity.
1.5 "Confidential Information" shall mean all information, including
technical information, specifications, drawings, documentation, know-how,
business and financial information (including costs, profits, plans for future
development, business plans, training materials, methods of operation and
marketing concepts) and pricing information, and any other proprietary
information relating to a party hereto, of every kind or description which may
be disclosed by one party to the other party in connection with this Agreement,
is obtained by the other party as a result of the working relationship between
the parties hereto, whether obtained prior to or after the date hereof.
l.6 "Contract" shall mean an agreement for the supply of Products and/or
Services between a Company Affiliate and Nortel, which comes into effect by the
acceptance of an Order pursuant to the provisions hereof, and which Contract
shall be governed solely by the terms and conditions of this Agreement and each
reference to "Company" in this Agreement shall for such Contract mean the
ordering Company Affiliate.
1.7 "Customer" shall mean entities to whom Company provides
communication services as a result of Company's internal use of the Products.
1.8 "Customer Information" or "CI" shall mean the information provided
by Company to Nortel (including specifications, interconnection information and
turnkey information) in order for Nortel to engineer and/or provide the
components of Systems.
1.9 "Documentation" shall mean all documents which Nortel generally
makes available to its customers containing descriptive, operating,
installation, engineering and maintenance information for Products, including
Specifications, as such documents may be amended from time to time. All
Documentation delivered to Company hereunder shall be delivered in hard copy
and/or CD-ROM or web based format, where available.
1.10 "Effective Date" shall mean the date this Agreement becomes
effective which shall be the date first identified above.
1.11 "Extension" shall mean Hardware and/or Software (and related
Services) which is engineered by Nortel and added to a System after the Turnover
Date of the applicable System.
1.12 "Hardware" shall mean, individually and collectively, the Nortel
equipment listed in the Product Annexes of Exhibit A, and shall be deemed to
include (i) any equipment which Nortel adds to its generally available Hardware
price lists or so identifies to Company in a Quotation, and (ii) any equipment
Nortel or a Nortel Affiliate may hereafter manufacture, or have manufactured,
and make commercially available to its customers and which is added to the
Product Annexes; provided, however, that the prices and discounts for any such
equipment added to the Product Annexes shall be as mutually agreed by the
parties, after giving due
2
<PAGE> 5
consideration to the purchase volume commitments under this Agreement. The terms
of this Agreement applicable to "Hardware" shall also be deemed to apply to
Third Party Hardware, unless otherwise expressly excluded.
1.13 "Hazardous Material" shall mean any pollutants or dangerous, toxic
or hazardous substances (including without limitation, asbestos) as defined in,
or pursuant to the OSHA Hazard Communication Standard (29 CFR Part 1910, Subpart
Z), the Resource Conservation and Recovery Act (15 USC Section 6901, et seq.),
the Toxic Substances Control Act (15 USC Section 2601, et seq.), the
Comprehensive Environmental Response Compensation and Liability Act (42 USC
Section 9601, et seq.), and any other federal, state or local environmental law,
ordinance, rule or regulation or equivalent law or regulation in the location to
which the Product is shipped by Nortel.
1.14 "Installation" shall mean the complete performance and supervision
by Nortel of all installation and testing of Products pursuant to the criteria
set forth in this Agreement.
1.15 "Installation Site" shall mean the location or facility identified
in an Order at which the applicable Products will be installed.
1.16 "Licensed Software" shall mean the Software which Company has
licensed pursuant to this Agreement.
1.17 "Merchandise" shall mean any Hardware or other parts or components
which are not ordered as part of a System and with respect to which no
engineering, installation or other Services are provided by Nortel.
1.18 "Modifiable Software" shall mean Software, or a portion of Software
that is identified as such by Nortel in its applicable Documentation, which
Company may have certain rights to modify and potentially create Applications or
Building Blocks in accordance with the applicable Documentation.
1.19 "Non-Licensed Software" shall mean Software for which Company has
not yet obtained a license nor paid applicable right-to-use fees, but which
Software may be included with Software loads delivered to Company hereunder.
1.20 "Nortel Affiliate" shall mean Nortel's parent corporation, Nortel
Networks Corporation and any corporation controlled by, controlling, or under
common control with, directly or indirectly, Nortel Networks Corporation. As
used in this definition, "control" shall mean possession, directly or
indirectly, of the power to direct or control the direction of management and
policies of a person or entity, whether through ownership of voting securities,
by contract, or otherwise.
1.21 "Order" shall mean a purchase authorization document issued by
Company or a Company Affiliate to Nortel, each of which shall have a unique
numerical identification for tracking and administrative purposes, specifying
the types and quantities of Products and
3
<PAGE> 6
Services to be furnished by Nortel or any document that the parties mutually
agree upon in writing as the vehicle for procuring Products and Services
pursuant to this Agreement.
1.22 "Product(s)" shall mean, individually and collectively, the
Hardware, Software, and Documentation.
1.23 "Product Annex" shall mean, with respect to a specific Product,
additional or modified terms and conditions as set forth in Exhibit A, inclusive
of but not limited to those that may apply to any Third Party Hardware or Third
Party Software, unique to such Product.
1.24 "Quotation" shall mean a written budgetary or firm price quotation
issued by Nortel to Company or Company Affiliate for the supply of any Products
or Services pursuant to this Agreement.
1.25 "Service(s)" shall mean, individually and collectively, any of the
services set forth in this Agreement that Company may acquire from Nortel,
including maintenance, engineering, installation, training, data management,
program management, project management, commissioning, testing, technical
assistance Service with respect to Products and installation, and consulting.
1.26 "Services Software" shall mean that Software and related
documentation made available by Nortel which may be used by Company for
estimation, planning or information purposes.
1.27 "Ship Date" shall mean the date as agreed to by the parties, on
which a Product ordered by Company is scheduled to be shipped from Nortel's
facility or in the case of Software which is downloaded, the date upon which
such Software is to be downloaded to the System; however, Ship Date shall not
mean the date on which Non-Licensed Software is activated.
1.28 "Software" shall mean all computer software necessary for the use,
operation and maintenance of Products or a System, as described in this
Agreement and includes (i) computer programs in object code form or firmware
which (a) are owned by, or licensed to, Nortel, (b) reside in Product memories,
tapes, disks or other media, and (c) provide basic logic operating instructions
and user-related application instructions; and (ii) documentation associated
with such computer programs which may be furnished by Nortel to Company from
time to time, including both Licensed Software and Non-Licensed Software, but in
no event shall Software include source code.
1.29 "Software Release" shall mean Software or revisions to Software
containing problem fixes, new features and/or enhancements.
1.30 "Specifications" shall mean with respect to any Product the
specifications, performance standards and/or practices set forth in Northern
Telecom Practices ("NTPs") or similar documents published by Nortel that set
forth performance specifications and practices for such Product; provided,
however, that no future specifications or performance standards shall
4
<PAGE> 7
reduce, diminish or otherwise adversely impact the specifications or performance
standards applied to previously delivered Products.
1.31 "System" shall mean a configuration of Hardware and Software
providing a specified functionality and includes an initial System and its
Extensions, if any. For definitional purposes, "System" as used herein includes
all configurations of a System as it may evolve throughout the Term.
1.32 "Third Party Hardware" shall mean any hardware not of Nortel's
manufacture which shall be deemed to include any such hardware which Nortel adds
to its generally available Third Party Hardware price lists or so identifies to
Company in a Quotation.
1.33 "Third Party Software" shall mean any Software not owned by Nortel
which is included within Licensed Software or Non-Licensed Software.
1.34 "Turnover" shall mean, with respect to any System installed by
Nortel, that Nortel has completed its standard manufacturing, verification
cycle, installation and/or agreed-upon test procedures, as applicable, and that
the System is ready for acceptance testing by Company in accordance with Article
6.
1.35 "Turnover Date" shall mean, with respect to any Product installed
by Nortel hereunder, the date on which Nortel provides a notice of Turnover to
Company. On the Turnover Date, Nortel shall provide to Company a certificate
setting forth the test results and stating that the applicable Products have
been installed in accordance with this Agreement and performs in accordance with
this Agreement and the Specifications.
1.36 "Volume Commitment" shall mean the amount of Nortel's Products and
Services to be purchased/licensed by the Company during the Term in an amount no
less than two hundred million dollars ($200,000,000) Net Price. "Net Price" as
used herein means the final price paid by the Company after all discounts,
reductions, rebates, volume discounts or adjustments of any kind are applied but
does not include sales tax and freight charges.
1.37 Unless the context otherwise requires, the terms defined in this
Article 1 shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
defined herein. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the construction, meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The use of any gender herein shall be deemed to include the neuter,
masculine and feminine genders wherever necessary or appropriate.
5
<PAGE> 8
ARTICLE 2. SCOPE OF AGREEMENT
2.1 Company or any Company Affiliate shall have the right to purchase,
and Nortel shall be obligated to sell, as, when and if ordered by Company or any
Company Affiliate during the Term, Products, Installation and other Services,
and the terms and conditions of this Agreement shall apply to such purchases.
Any Order placed by a Company Affiliate, under this Agreement, shall be subject
to the terms and conditions of this Agreement, as if the Company Affiliate had
entered into a separate contract with Nortel solely with respect to the items
ordered, except that a Company Affiliate that orders under this Agreement shall
not have rights to (i), any cooperative advertising funds pursuant to Section 15
(Cooperative Advertising) (ii) any late fees on liquidated damages as set forth
in Exhibit A, Article 4, or elsewhere in this Agreement and/or (iii) incentives
or credits as set forth in Section 2 through 5 of Schedule 1 in Annex A.1.
Nortel has the right to reject any Order as specified in Section 3.2 from any
Company Affiliate which is otherwise engaged with Nortel in an agreement for the
purchase and/or supply of any of the Products or Services provided under this
Agreement. All rights, claims or defenses (including the right to payment for
any System, Products or Services) Nortel has or may acquire hereunder shall be
asserted against the Company Affiliate (and may not be asserted against the
Company) which has received or is ultimately to receive the System, Products or
Services pursuant to such Order and such Company Affiliate shall have and may
enforce against Nortel all of the benefits, rights and obligations contained
herein. Company may use the Products itself, including use to provide services
to others, subject to the terms and conditions of this Agreement. Company
expressly represents that it is not buying Product for resale. All Products
shall be delivered and installed in the United States.
2.2 To the extent any terms and conditions set forth in this Agreement
are not modified by a Product Annex, the applicable terms and conditions and any
additional terms and conditions for such Product shall be set forth in a Product
Annex.
2.3 If specified in a Product Annex as a requirement, Company shall,
fifteen (15) days prior to each calendar quarter, submit to Nortel a
consolidated non-binding forecast of Products by geographic region, that Company
anticipates purchasing or licensing over the next four (4) calendar quarters. In
addition to the type, quantity and cumulative dollar amount of Products, the
parties may agree upon additional information to be included in such forecast.
2.4 All references to prices, charges, fees or other amounts herein
shall be in U.S. dollars and all documentation, correspondence and communication
shall be in the English language. All Products purchased by Company hereunder
shall be new. For purposes of this Section 2.4, "new" shall mean Products which
have not been used for commercial service or for training or extended testing.
2.5 Company shall order Nortel's Products and Services during the Term
of the Agreement in an amount equal to or exceeding the Volume Commitment. To
achieve such Volume Commitment, Company shall order Products and Services in
such amounts as to meet cumulative volume targets ("Volume Targets") of
thirty-five million dollars ($35,000,000) in orders placed from July 15, 1999
through and including July 14, 2000, one hundred five million
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<PAGE> 9
dollars ($105,000,000) in orders placed from July 15, 1999 through and including
July 14, 2001, and two hundred million dollars ($200,000,000) in orders placed
from July 15, 1999 through and including July 14, 2002. Should Company fail to
meet any of the applicable Volume Targets, then with respect to the one year
period ending on the date of the applicable Volume Target, Nortel shall:
(i) invoice Company for the difference between (A) the amount which
Company would have paid with respect to the Hardware ordered by
Company during the applicable one year period if the discounts
set forth in Chart 2.5 below had been applied to such orders
during such year in lieu of the discounts set forth in
Supplemental Terms Annex A.1, attached hereto, minus (B) the
amount actually paid by Company with respect to the Hardware
ordered by Company during the applicable one year period (which
amounts reflect the discount schedule set forth in Supplemental
Terms Annex A.1).
<TABLE>
<CAPTION>
CHART 2.5 Year 1 ($35M) Year 2 ($105M) Year 3 ($200M)
--------- ------------- -------------- --------------
<S> <C> <C> <C>
Switch Hardware (MTX) 54% 55% 56%
TDMA Hardware 54% 55% 56%
AMPS/TDMA Cell Site Hardware 49% 50% 51%
Radio/PA 62% 63% 64%
Cooperative Advertising 0% 1% 1.5%
</TABLE>
Any orders cancelled by Buyer pursuant to Section 7.1 herein shall not
accrue towards the Volume Commitment.
2.6 During the Term Nortel shall provide to Company a one half percent
(.5%) executive credit for each incremental fifty million dollars ($50,000,000)
of Nortel Products and Services which Company purchases in excess of the Volume
Commitment. Such executive credit shall be applied to each Order issued after
satisfaction of the Volume Commitment.
ARTICLE 3. PLACEMENT OF ORDERS
3.1 To order Products and/or Services, Company shall submit to such
person as Nortel shall designate, an Order which shall at a minimum specify the
following, if applicable:
(i) the types and quantities of Products and Services to be furnished
by Nortel;
(ii) the applicable prices, charges and fees with respect to such
Products and Services;
(iii) the location or facility to which the Products are to be
delivered;
(iv) the incorporation by reference of this Agreement;
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(v) the Installation Site, if known;
(vi) the requested Ship Date and Turnover Date of the System; and
(vii) any other information required under this Agreement to be
included in an Order.
3.2 All purchases pursuant to this Agreement shall be made by means of
Orders issued from time to time by Company and accepted by Nortel in writing
within fifteen business (15) days after receipt of Order; provided however that
Nortel agrees that all Orders which are within Nortel's standard delivery and
lead time intervals (if such lead times are set forth in the applicable Product
Annex), and which are otherwise in accordance with the terms of this Agreement,
shall be deemed automatically accepted by Nortel. Nortel shall extend the
pricing and discounts schedules as set out in the Product Annexes to any Company
Affiliate subject to the following: (i) a Company Affiliate with a pre-existing
Nortel contract for products similar to those to be purchased hereunder must
satisfy any purchase commitment under such pre-existing contract prior to taking
advantage of pricing and discounts in this Agreement and provided such
pre-existing agreement will be terminated prior to purchasing under this
Agreement, (ii) any Company Affiliate which is owned in whole or in part by an
entity that competes with Nortel in the manufacturing of communications
equipment or the provision of communications services shall be excluded from
purchasing Products or Services under this Agreement and (iii) if the Company
Affiliate is not deemed credit worthy by Nortel after Nortel's reasonable credit
evaluation, Company shall guarantee in writing the performance of the Company
Affiliate prior to Nortel's acceptance of such Affiliate's Order. An Order
submitted by a Company Affiliate pursuant to the terms and conditions of this
Agreement, and which Nortel has accepted, constitutes a Contract between the
Company Affiliate ordering and Nortel. On the face of the purchase Order issued
by a Company Affiliate, an identification must be provided that such entity is a
Company Affiliate. In the event Nortel fails to provide its acceptance of an
Order in writing within such fifteen (15) day period, such Order shall be deemed
to be accepted provided that no additional or special terms and conditions have
been written on the face of or otherwise incorporated into such Order by Company
Affiliate.
3.2.1 Company shall provide to Nortel good faith forecasts of
anticipated delivery levels of Wireless Products by product type, Nortel Product
identifier (including applicable Spare Parts), and maintenance personnel
requirements. Such forecasts shall be subject to acceptance by Nortel, such
acceptance not to be unreasonably withheld and with such acceptance to be only
refused based upon limitations of Nortel's production capacity and material
availability, which Nortel cannot reasonably avoid. In the event that any
forecast is not accepted, Nortel shall promptly inform Company of the quantities
of any relevant Product which Nortel expects to be able to deliver to Company.
Beginning with the first month of the Term, Company will deliver to Nortel on or
before the 20th day of each month a nonbinding forecast for the twelve (12)
month period commencing on the first day of the following month.
3.2.2 Nortel shall be obligated to deliver not less than one hundred
percent (100%) of the quantity stated for the first quarter following each
forecast, if Company has issued an Order for the Product at least ninety (90)
days in advance of the requested ship date for Products. In
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<PAGE> 11
the event Company orders more than one hundred percent (100%) of the forecast
quantity for any quarter, Nortel shall make reasonable efforts to supply the
ordered quantity. If Nortel does not have sufficient quantities to fill
Company's orders in excess of one hundred percent (100%) of the forecast
quantity and orders by Nortel's other customers, Nortel shall allocate available
supplies among its customers on an equitable basis, giving no customer a higher
priority than Company, other than those customers who have a previously executed
contract with Nortel requiring delivery of specific Products. In the event that
Nortel is unable to supply the ordered quantity in the case of Orders for more
that one hundred percent (100%) of the forecast quantity and Company obtains the
quantity which Nortel is unable to supply from a third party, such undelivered
orders shall count toward the Volume Commitment. In the event that Company shall
fail to take delivery of ninety percent (90%) or more of the forecast quantity
for any calendar quarter, Nortel shall be entitled to adjust its obligation to
deliver one hundred percent (100%) of the forecast quantity for the ensuing
quarter to some lesser percentage as the parties may mutually agree upon.
3.2.3 Should Nortel receive a forecasted Order with lead times that are
shorter than Nortel's standard lead times, Nortel shall use commercially
reasonable efforts to accommodate the lead times set forth in such Order, and
shall, within fifteen business (15) days, indicate in writing to Company whether
such shortened lead times are acceptable. If such shortened lead times are
unacceptable, the parties hereto shall endeavor to agree upon lead times that
are mutually accepted. Should Nortel not notify Company of its non-acceptance of
a shortened lead time within twenty business (20) days of its receipt of the
Order containing the shortened lead time, such Order (including the shortened
lead times) shall be deemed accepted without any further confirmatory action by
either party.
3.3 All Orders issued by Company pursuant to this Agreement shall refer
to and specifically incorporate this Agreement by reference and the terms and
conditions herein shall govern the transaction resulting from such Order
provided that such Order is accepted or deemed accepted by Nortel; provided,
however, that notwithstanding that an Order may not refer to this Agreement, any
Order for Products or Services issued during the Term by Company or a Company
Affiliate (provided such Company Affiliate has no other agreements with Nortel)
shall be deemed to have been issued pursuant to this Agreement unless the
parties expressly agree to the contrary in writing (duly signed by authorized
representatives of both parties). Preprinted terms and conditions set forth in
Orders issued by Company, or in any prior Quotations, acknowledgments or other
related documentation issued by any party, shall be considered null and void and
shall have no force or effect. However, any special terms and conditions written
on the face of or otherwise incorporated into an Order shall, upon acceptance in
writing by Nortel, for such Order only, supersede the specific terms and
conditions contained in this Agreement, including all Exhibits attached hereto,
which are in conflict, but only to the extent of such conflict.
3.4 Company may at any time request additions, alterations, deductions
or deviations to an Order subject to the condition that such changes and any
adjustments resulting from such changes including schedules and prices, shall be
mutually agreed upon and, if so agreed, subsequently detailed in a written
revision to the applicable Order ("Change Order"). Company
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<PAGE> 12
acknowledges that a premium charge, as mutually agreed by the parties, may be
applied by Nortel in the event that a Change Order requires an additional amount
of work (such as engineering) to be undertaken to comply with such changes.
Delivery locations may be changed by written notification to Nortel by Company
up to twenty (20) business days prior to Ship Date.
3.5 If Company desires to receive a budgetary or firm Quotation from
Nortel for a Product or Service, or in the event Company desires the assistance
of Nortel in determining what Products or Services are required for a System or
an Extension, Company shall submit such request in writing to Nortel's Director,
Commercial Marketing, or such other person as designated by Nortel. The request
for Quotation shall include the information listed in Section 3.1, as
applicable, and such additional information as the parties agree is necessary
for the furnishing of a Quotation.
3.6 Nortel shall respond within fourteen business (14) days thereafter
in writing to requests for budgetary Quotations and requests for firm
Quotations. Unless otherwise specified in the firm Quotation, such firm
Quotation shall be valid one hundred twenty (120) business days from the date of
such Quotation. Budgetary Quotations shall be provided for information and
planning purposes only and shall not be considered to be a final or firm
statement binding on either party. Firm Quotations may be accepted by issuance
of an confirming Order to Seller by Company referencing the applicable
quotation. The Quotations shall include the following information:
(i) Budgetary Quotations
(a) preliminary Hardware and Software lists;
(b) the estimated charges for the Products;
(c) the estimated charges for Services requested; and
(d) any other information requested by Company.
(ii) Firm Quotations
(a) the price to be paid by Company for the Products, after
applying the applicable discounts, if any;
(b) fixed charges for Services requested;
(c) complete Hardware and Software lists and project
schedules; and
(d) any other information requested by Company.
Except in the case of Switch Installation, if Company rejects a proposal for
Services submitted by Nortel under Section 3.6 above, Company may elect (i) to
perform such Services itself, or (ii) to have such Services performed on its
behalf by a sub-contractor of Company.
3.8 The Ship Date shall be based on Nortel's standard intervals for the
applicable Product (which may be set forth in the applicable Product Annex);
however, the parties shall always mutually agree on the Ship Date, provided that
the Ship Date shall not be outside the standard interval unless the parties
mutually agree otherwise.
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3.9 Orders may be issued either electronically, such as through
electronic data interchange, or via traditional manual methods, as mutually
agreed to by the parties.
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<PAGE> 14
ARTICLE 4. PRICE AND PAYMENT
4.1 Nortel shall charge Company for each Product and/or Service ordered
by Company in accordance with the prices set forth in each accepted Order, which
prices shall be the lowest of the prices set forth in (i) a Product Annex; (ii)
a Firm Quotation; (iii) Nortel's then current prices; or (iv) as specified
elsewhere in this Agreement or as otherwise mutually agreed in writing (subject
in each case to any applicable discounts made available to Company).
4.2 In the event Company orders other Nortel hardware, software and
services not identified in Exhibit A (and therefore the license fees for such
Software is not included in the existing Annual Software License Fee), Nortel
agrees to negotiate in good faith with Company in order that the Software
License Fee may be adjusted to accommodate for such additional software
right-to-use fees.
4.3 In the event there is a recognized industry-wide shortage of a
component that is incorporated in a Product, Nortel may increase the price of
such Product by a reasonable amount, following the provision of written notice
to Company not less than thirty (30) days prior to the effective date of such
increase. The price increase of such Product due to a component shortage shall
be limited to a reasonable amount under the then-current circumstances having
regard for industry conditions for the period of time during which such
recognized shortage exists. Following the implementation of a price increase due
to a component shortage, the parties shall jointly review every three (3) months
or at such other time as is mutually agreed, in good faith, whether such
component shortage still exists. If the component shortage has abated, the
parties shall jointly determine whether there still is a need for such price
increase.
4.4 Nortel shall promptly extend to Company any price reductions made by
Nortel in its generally available, then current list prices for Products and/or
Services. Such price reduction shall apply to all Orders received on or after
the effective date of such price reduction.
4.5 For all Orders, Nortel shall invoice Company for Products and
Services as follows, unless otherwise agreed to in writing:
(i) for Systems, whether or not installation has been ordered from
Nortel, one hundred percent (100%) of the price of the Products
on the Ship Date, one hundred percent (100%) of the price of any
Services upon the date of completion of such Services, except
with respect to installation Services, if any, which shall be
invoiced one hundred percent (100%) upon Turnover. Except for
installation Services, for Services that have a duration of more
than one (1) month to complete, Nortel may invoice Company
monthly for that portion of such Services which have been
performed as of such invoicing date.
(ii) for Merchandise or Documentation provided on a furnish-only
basis, one hundred percent (100%) of the price on the Ship Date;
and
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(iii) for Orders covering Services only, one hundred percent (100%) of
the price for such Services following completion of performance,
except for recurring support Services which shall be billed
quarterly in advance unless otherwise agreed. Some Services may
be subject to monthly invoicing as set out in a Product Annex or
separate Service agreement. To the extent such Services are to be
invoiced differently then set out in this paragraph (iii), such
differences shall be set forth in the applicable Product Annex or
separate Service agreement and such provisions shall take
precedence.
4.6 Each invoice shall be paid in full within thirty (30) days after the
date of such invoice. In the event that Company does not pay an invoice in full
within such thirty (30) day period, then Nortel may charge Company interest on
the outstanding portion of such invoice, from day thirty one (31) forward, at
the rate of one and one half percent (1.5%) simple compound interest per month,
or such lesser amount as may be the maximum permissible rate under applicable
law, until such time as the outstanding invoice is paid. In addition, Company
agrees to pay all collection costs and reasonable legal fees incurred by Nortel
as a result of late payment or non-payment by Company.
4.7 The unit prices of Hardware include use of the applicable Software
without additional charge, except as otherwise expressly provided herein or in
an Annex hereto. Nortel will furnish Company, at Nortel's then-current charges
and fees, all other Documentation required by Company for Products and Systems
purchased hereunder. Nortel shall also provide Company with a second set of
Documentation at no additional cost to Company. Prices for any additional sets
of Documentation (or portions thereof) shall be those set forth in Annex A.
Nortel represents that the Documentation, in conjunction with appropriate
training, is all that is reasonably necessary to allow the use, maintenance and
operation of the Products and Systems, as described in this Agreement.
ARTICLE 5. SHIPMENT, TITLE AND RISK OF LOSS
5.1 Prior to the Ship Date, Company shall have the right to reschedule
any pending Orders provided that (i) a minimum period of notice prior to such
Ship Date is given to Nortel by Company in accordance with the applicable
Product Annex; and (ii) the new Ship Date is within ninety (90) days of the
original Ship Date. However, each Order may only be rescheduled once. Nortel
shall notify Company in advance of the need to incur any storage fees, insurance
and demurrage costs and Company shall reimburse Nortel for such costs incurred
(without markup) with respect to such rescheduled Orders.
5.2 Risk of loss and damage to Products shall pass to Company upon
delivery to the loading dock at the Installation Site or other delivery location
specified by Company in an Order. Company shall keep such Products fully insured
for the total amount then due Nortel for such Products. Company shall pay
transportation charges, including insurance, associated with the shipment of
Products; however if the parties agree, Nortel shall prepay transportation
charges, and insurance for delivery of Products to the Installation Site or
other delivery location or other designated receiving point as specified in an
Order. Company shall have the right to discuss
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with Nortel shipping costs, methods, insurance and arrangements with respect to
transportation costs (including insurance) if Company in good faith believes
there is a more economical method to transport the Products (which method shall
not have any impact on delivery schedules) and the effect of which will be to
reduce costs to Company. In the event that such more cost efficient means of
shipping are available with no negative impact on delivery schedules, Nortel
shall endeavor to abide by Company's suggestions and the cost to Company shall
be reduced accordingly. The charges therefore shall be invoiced by Nortel and
paid by Company to Nortel in accordance with Article 4 above.
5.3 Good title to Hardware furnished hereunder, free and clear of all
liens and encumbrances, shall vest in Company upon full payment to Nortel of the
total amount payable by Company for such Hardware and any related Licensed
Software or Services ("Total Fee") furnished by Nortel in connection with such
Hardware. Prior to payment of the Total Fee for the Products and Services in an
Order, Company shall not sell or lease the Hardware, or allow any liens or
encumbrances to attach to the Hardware or Software, or remove the Hardware or
Software from the Installation Site without the prior written consent of Nortel,
such consent not to be unreasonably withheld.
5.4 Subject to Section 5.1, if Company notifies Nortel prior to a Ship
Date that Company does not wish to receive such Products on the Ship Date, or
the Installation Site or other delivery location is not prepared in sufficient
time for Nortel to make delivery in accordance with such date, or Company fails
to take delivery of any portion of the Products in an Order when shipped, Nortel
may place the applicable Products in storage. In that event, Company shall be
liable for all actual, reasonable out-of-pocket additional costs thereby
incurred by Nortel. Delivery by Nortel of any Products to a storage location as
provided above shall be deemed to constitute delivery of the Products to Company
for purposes of this Agreement, including, provisions for payment, invoicing,
passage of risk of loss, and commencement of the warranty period.
5.5 Until the Total Fee is paid, Company grants to Nortel a purchase
money security interest in the Products in an Order and their proceeds or such
other similar protection as may be available in the applicable jurisdiction.
Company shall cooperate with Nortel in preserving and perfecting Nortel's
security interest in the Products and Company shall promptly (i) execute and
deliver to Nortel such financing statements as Nortel may require; and (ii)
execute and deliver to Nortel such other agreements, documents and instruments
as Nortel may require to perfect and maintain the validity, effectiveness and
priority of the security interest created or intended to be created by this
Agreement. Company authorizes Nortel to file one or more financing or
continuation statements and amendments thereto, relating to all or any part of
the Products in an Order without signature of the Company where permitted by
law. A carbon, photographic or other reproduction of this Agreement or of any
financing statement covering the Products or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
5.6.1 Company shall provide Nortel or its subcontractors with reasonable
access to its Installation Sites or other Company facilities during the times
specified by Nortel and as are
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reasonably necessary for Nortel to perform its obligations hereunder. Nortel
shall comply with Company's reasonable site and security regulations of which
Nortel is informed by Company.
5.6.2 All sites at which the Products shall be delivered or installed
shall be prepared by Company in accordance with Nortel's standards, including
environmental requirements, as set forth in the applicable Product Annex. Prior
to and during installation, Company shall ensure the timely and adequate
delivery, installation and functioning of the electrical and communications
connections and other environmental requirements, including but not limited to,
HVAC systems, specified in Nortel's instructions, Specifications, Documentation
or in a Product Annex.
5.6.3 Company shall provide reasonable working space and facilities,
including heat, light, ventilation, telephones, electrical current, waste
removal and other necessary utilities for use by Nortel personnel performing
installation or other Services, and adequate secure storage space, if required
by Nortel, for Products and materials. Company shall also provide adequate
security against theft, damage or other loss for the Products while on Company's
Installation Site or other delivery location specified by Company.
5.6.4 Company shall obtain all necessary governmental permits applicable
to Company in connection with the installation, operation, and maintenance of
Products furnished hereunder, excluding any applicable permits required in the
normal course of Nortel's doing business. Any information which Nortel
reasonably requests from Company and which is necessary for Nortel to properly
install or maintain the Products shall be provided by Company to Nortel in a
timely fashion and in a form reasonably specified by Nortel.
5.6.5 Nortel represents that a Product furnished hereunder shall comply,
to the extent required, with the requirements of Part 24 of the Federal
Communication Commission's Rules and Regulations pertaining to personal
communication services in effect upon the Effective Date. In addition, Nortel
represents that a Product furnished hereunder shall comply, to the extent
required, with the requirements of Subpart J of Part 15 of the Federal
Communication Commission's Rules and Regulations in effect upon the Effective
Date, including those sections concerning the labeling of such Product and the
suppression of radio frequency and electromagnetic radiation to specified
levels. If , as a result of new or changed requirements by the Federal
Communications Commission after the Effective Date, there is a change required
in such personal communications services or Products, the prices therefore will
be adjusted equitably to reflect the added cost and expense of any such change.
Nortel makes no undertaking with respect to harmful interference caused by (i)
installation, repair, modification or change or Products or Software by other
than Nortel, its employees, subcontractors or agents; (ii) Products being
subjected to misuse, neglect, accident or abuse by other than Nortel, its
employees, subcontractors or agents; or (iii) Products or Software being used in
a manner not in accordance with operating instructions or in a suitable
installation environment or operations of the equipment in the frequency range
reserved for Company within the area of operation of such Products or Software;
or (iv) interference caused by operation of other radio systems, lightning,
motor ignition or other similar interference.
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ARTICLE 6. TESTING, TURNOVER AND ACCEPTANCE
6.1 If installation Services are ordered by Company, Nortel shall, upon
completion of such installation test the Products in accordance with Nortel's
Turnover procedures (as set forth in the applicable Product Annex) to verify
that such Products function substantially in accordance with the applicable
Specifications; provided, however, that Nortel shall notify Company as soon as
it knows, but at least five (5) business days before the date on which such
testing shall be conducted. Upon completion of such verification, Nortel shall
provide to Company a written notice of Turnover. Company shall be permitted an
opportunity to have an appropriately qualified individual in attendance to
observe the performance of such tests, however, the absence of such Company
individual for any reason shall not invalidate the tests nor be a reason for
Company to withhold Acceptance. If a Company representative is not present
during the testing, Nortel shall proceed with the tests and promptly forward the
test results (including actual test sequences, deviations, and retests
necessary, if any, to obtain successful conclusion) to Company.
6.1.1 If the tests show that the applicable Products do not meet the
Specifications, then Nortel shall, at its own expense, correct the defects as
soon as practicable. The testing (or so much of it as necessary) shall be
recommenced promptly after such correction, in accordance with this Article 6.
6.1.2 Testing that will affect service to subscribers on a System shall
occur during the hours from 11:00 PM to 5:00 AM local time, or at such other
times as are mutually agreed to by Company and Nortel.
6.2 Within fifteen (15) business days after the Turnover Date, Company
shall either accept the Product in writing by execution of a notice of
Acceptance, or notify Nortel in writing, specifying in reasonable detail those
particulars in which, in Company's opinion, the Product is not in material
conformance with the Specifications. If Acceptance does not occur within such
fifteen (15) business days after the Turnover Date and Company has not indicated
to Nortel in writing its basis for not accepting such Product, then Acceptance
shall be deemed to have occurred. Upon Acceptance, punch list items will be
identified and Nortel shall, as promptly as reasonably practicable, complete and
correct all punch list items. Nortel shall use its best efforts to complete all
such punch list items within forty-five (45) days of Acceptance.
6.3 If Nortel does not install Products furnished hereunder, Nortel
shall, prior to delivery of the Products, perform such factory tests as Nortel
determines to be appropriate in order to confirm that such Products perform
substantially in accordance with the applicable Specifications and, to the
extent available, provide a copy of any such test results to Company. Company
shall be deemed to have accepted the Products based upon such tests and
Acceptance shall be deemed to have occurred upon the Ship Date. In the event
Company or any other entity intends to perform installation of Products, (except
for installation of Switches and non-wireless Products which are not permitted
to be installed other than by Nortel, as specified in the applicable Product
Annex or Documentation) Company or such entity may be required to
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complete prerequisite training or certification in accordance with Nortel's
policies and procedures.
6.4 In the event Company is utilizing any Product in a
revenue-generating capacity, Acceptance shall be deemed to have occurred without
limitation or restriction, upon the date of placement of such Product into
revenue-generating service.
6.5 Products, such as Merchandise, which are purchased separately from a
System, shall be deemed accepted upon the Ship Date. Services which are
purchased separately from a Product shall be deemed to be accepted upon
completion of such Services or upon specific milestones as may be identified in
a Product Annex.
6.6 Company shall not unreasonably withhold Acceptance. Nortel shall
correct any deficiencies identified by Company in the manner described in this
Article whereby such Products do not materially conform to the Specifications.
When Nortel has corrected such deficiencies, Company shall accept the Products
in writing. Company's failure to either accept or provide notice of
non-conformance within the timeframe from the Turnover Date, as prescribed in
Section 6.2, shall constitute Acceptance of the Products.
6.7 Following Acceptance of Products, Company shall execute Nortel's
Acceptance notice, confirming Acceptance without any conditions, restrictions,
or limitations of any nature whatsoever.
6.8 Acceptance shall not be withheld or postponed due to:
(i) Deficiencies of such Products resulting from causes not
attributable to Nortel, such as, but not limited to (a) material
change or inaccuracy of Customer Information, (b) inadequacy or
deficiencies of any materials, information, facilities or
services provided directly or indirectly by Company and tested in
conjunction with the applicable Products, or anomalies directly
resulting from electromagnetic or other interference generated by
adjacent material not provided by Nortel, or (c) other conditions
external to the Products which are beyond the limits specified by
Nortel in the Specifications for the Products; or
(ii) Minor deficiencies or shortages with respect to such Products
which are attributable to Nortel, but of a nature that do not
adversely affect System performance, service to subscribers, data
collection with respect to billing, networking, administration or
maintenance.
6.9 With respect to any deficiencies of the type described in Section
6.8(i), Nortel shall at Company's request and expense (at Nortel's standard
rates) assist Company in the elimination or minimization of any such
deficiencies. With respect to any deficiencies or shortages as described in
Section 6.8(ii), Nortel shall, at Nortel's expense, correct any such
deficiencies or shortages within thirty (30) days of the date of Acceptance or
as otherwise agreed by the parties.
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6.10 In the event Company notifies Nortel of non-acceptance of a Product
and Nortel personnel travels to the Installation Site to remedy such
non-acceptance and such non-acceptance is due to a deficiency of the type
described in Section 6.8(i), Nortel will invoice Company for Nortel's
investigation of the matter consisting of the standard labor rate for Nortel's
personnel who travel to the Installation Site and the reasonable travel and
living expenses incurred by such personnel.
ARTICLE 7. ORDER CANCELLATION
7.1 If, prior to the Ship Date, Company cancels all or any part of an
Order, Company shall pay to Nortel a cancellation charge for the Products or
each item of Third Party Hardware or Third Party Software that has been canceled
in accordance with the schedule set forth in the applicable Product Annex.
7.2 Orders for Products that have been shipped may not be canceled.
Furthermore, Orders for Products which Nortel customizes in accordance with a
specific Company request may be canceled only if Company agrees to pay Nortel's
reasonable, out-of-pocket expenses for such customization.
ARTICLE 8. WARRANTY
8.1 Nortel warrants that for a period of eighteen (18) months from the
Ship Date of a System or an Extension the Hardware contained in such System or
Extension under reasonable use and service will be free from defective material
and faulty workmanship and shall comply with the applicable Specifications. The
warranty period for Merchandise shall be twelve (12) months from the Ship Date
of such Merchandise. The foregoing warranties shall not apply to items normally
consumed during operation of a System such as, but not limited to, lamps and
fuses.
8.2 Nortel warrants that any installation Services performed by Nortel
with respect to a System will be free from defects in workmanship for a period
of twelve (12) months from the completion date of such Services.
8.3 Nortel warrants that any Licensed Software, including any Licensed
Software that is delivered separately from Hardware, shall function for twelve
(12) months from the applicable Ship Date without any adverse, , non-conformance
to the applicable Specifications with respect to System performance, service to
subscribers, data collection with respect to billing, network administration or
maintenance. If the Licensed Software fails to so function, Company's exclusive
remedy and Nortel's sole obligation under this warranty is for Nortel to correct
such failure through, at Nortel's option, the replacement or modification of the
Licensed Software or such other actions as Nortel reasonably determines to be
appropriate, all within a reasonable time having regard to all of the
circumstances and failing which the parties agree to negotiate a commercially
reasonable solution. Any modification to the Software not performed by Nortel or
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without Nortel's approval, other than with respect to Modifiable Software, shall
void this warranty.
8.4 If Hardware is not free from defects in material or workmanship and
fails to comply with the applicable Specifications during the warranty period,
Nortel will repair, replace or modify at its sole option and expense the
defective Hardware so that it substantially complies in all material respects
with the applicable Specifications. The warranty service shall be performed at
the Installation Site or Nortel's facility as determined by Nortel. If Nortel is
unable to repair or modify the defective Hardware within a reasonable period of
time so that such Hardware conforms to the applicable Specifications, Nortel
shall replace the defective Hardware with Hardware that conforms to such
Specifications. Replacement Hardware may be new or reconditioned at Nortel's
option. Nortel's sole obligation and Company's exclusive remedy under the
warranty provisions of this Article with respect to Hardware and installation
Services shall be limited to repair, modification or replacement of the
defective Hardware or correction of the defective installation Services.
8.5 Notwithstanding the foregoing, the warranty period of Hardware which
has been subject to repair or replacement by Nortel shall commence upon the Ship
Date of the repaired or replacement Hardware to Company and shall expire on the
later of one hundred and twenty (120) days or the last day of the original
warranty period with respect to the Hardware which was repaired or replaced. The
warranty period of Licensed Software which has been corrected, due to a
material, service-affecting non-conformance found in such Licensed Software,
shall expire on the later of one hundred and twenty (120) days from the Ship
Date of the corrected Licensed Software to Company or the last day of the
original warranty period with respect to such Licensed Software.
8.6 Nortel warrants that its Products shall comply in all material
aspects with all applicable laws and regulations known to Nortel, which are in
force on the date of acceptance of the applicable Order therefore, which laws or
regulations directly impose obligations upon any manufacturer, seller or, if
applicable, installer of such Products.
8.7 The performance by Nortel of any of its obligations described in
this Article 8 shall not extend the applicable warranty period.
8.8 The warranties set forth in this Article shall not apply to any
Products where the defect or non-conformance is directly due to (i) accident,
fire, explosion, power failure, power surge or other severe power irregularity,
lightning, alteration, abuse, misuse or improperly performed repair not
performed by Nortel; (ii) improper storage; (iii) failure to comply with all
applicable environmental requirements for the Products as specified by Nortel in
the applicable Product Annex or any other applicable supplier, such as but not
limited to temperature or humidity ranges; (iv) improper performance of
installation, maintenance, operation or other service in connection with the
Products, provided such service was not performed or authorized by Nortel or on
Nortel's behalf; (v) improper use in conjunction with an incompatible product or
a product not purchased under this Agreement; (vi) any negligence by anyone
other than Nortel, its agents or subcontractors; or (vii) where written notice
of the defect has not been given to
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Nortel within the applicable warranty period. The warranties set forth in this
Article shall not apply to Third Party Software or Third Party Hardware,
provided however that Nortel shall assign to Company (to the extent of Nortel's
right to do so) the warranty rights granted to Nortel by the appropriate vendor
of such Third Party Software or Third Party Hardware. For purposes of subsection
(iv), the term "installation" shall not mean the routine plug-in of the
components done in accordance with Nortel's guidelines.
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8.9 Unless Nortel elects to repair or replace defective Hardware at
Company's facility, all Hardware to be repaired or replaced, whether in or out
of warranty, shall be de-installed and packed by Company in accordance with
Nortel's instructions. Nortel shall ship repaired or replacement Hardware within
thirty (30) days of receipt of the defective Hardware. To facilitate the
processing of the defective Hardware returned hereunder, Nortel may ship
replacement Hardware prior to Nortel receiving the defective Hardware. In the
event Company fails to return defective Hardware and Nortel has shipped such
replacement Hardware, Nortel shall invoice Company at Nortel's applicable
then-current prices for such replacement Hardware, thirty (30) days after the
Ship Date of such replacement Hardware. In the event that Nortel wishes to
replace defective Hardware and Company requests on-site repair, then, if
mutually agreed, Nortel will make repairs on-site at Nortel's then-current
charge for such repairs.
8.10 If the Hardware returned to Nortel pursuant to the immediately
preceding section is determined by Nortel to be beyond repair and is outside the
warranty period, Nortel shall notify Company and if requested Nortel shall sell
Company replacement Hardware at Nortel's then-current prices for such
replacement Hardware.
8.11 Company shall bear risk of loss or damage and shall pay for all
transportation charges for Hardware returned to Nortel, and Nortel shall bear
risk of loss or damage and pay for transportation charges for repaired or
replacement Hardware shipped to Company. Title to repaired Hardware shall pass
to Nortel upon receipt. Title to replacement Hardware shall pass to Company upon
receipt.
8.12 During the applicable warranty period, electronic circuit board
components, subassemblies and other Hardware (which other Hardware may be
deinstalled and reinstalled by Company in the ordinary course of business) will
be repaired on a repair or replace basis, with Company responsible for fault
isolation (except to the extent that Company could not have reasonably been
expected to isolate such fault without the assistance of Nortel), removal of
such defective boards, subassemblies or other Hardware, replacement from spare
stock (except to the extent that such removal and replacement requires the
specialized expertise of Nortel), and packing and shipping to Nortel's closest
repair facility. Company will maintain a reasonable stock of spare board
components, subassemblies or other Hardware as reasonably recommended by Nortel
for this purpose.
8.13 In the event that, during the applicable warranty period, Company
experiences failure of electronic circuit board components, subassemblies or
other Hardware (which other Hardware may be deinstalled and reinstalled by
Company in the ordinary course of business) which Company reasonably believes is
excessive, Company shall notify Nortel thereof, providing the details of such
failures in sufficient detail to allow investigation thereof by Nortel. Nortel
shall analyze the nature and extent of such failures in light of the Nortel
specifications for such items and provide a written response to Company
proposing a course of action to remedy such failures and (1) Nortel shall give
highest priority to the remedy of the cause of such failures, and (2) Nortel
shall, without charge to Company, supply to Company a reasonable quantity of
additional spare boards, subassemblies or such other Hardware of each type so
depleted, as reasonably necessary to maintain an adequate emergency replacement
stock, until
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implementation of a permanent remedy. In the event that the Company believes
such failure is excessive, but Nortel disagrees, such dispute shall be resolved
pursuant to Article 19.1 hereof. Upon implementation of a permanent remedy, (1)
all excess boards, subassemblies or other Hardware supplied under this Section
8.13 shall be returned to Nortel, and (2) all in-service and spare stock boards,
subassemblies and other Hardware which are the subject of the corrections
contemplated by this Section 8.13 shall be updated, at no charge to Company, to
the revision level incorporating the permanent remedy.
8.14 In the event that, during the applicable warranty period, Company
experiences failures of Hardware (other than electronic circuit board
components, subassemblies or other Hardware which may be deinstalled and
reinstalled by Company in the ordinary course of business), which the Company
believes is excessive, Company shall notify Nortel thereof, providing the
details of such failures in sufficient detail to allow investigation thereof by
Nortel. Nortel shall analyze the nature and extent of such failures in light of
the Nortel specifications for such items and provide a written response to
Company proposing a course of action to remedy such failures if it is determined
they are excessive and Nortel shall give highest priority to the remedy of the
cause of the failures. In the event that the Company believes such failure is
excessive, but Nortel disagrees, such dispute shall be resolved pursuant to
Article 19 hereof. If during the period prior to the implementation of a
permanent remedy, the supplying to Company by Nortel of additional items of such
Hardware is inappropriate, Nortel agrees during such period to negotiate in good
faith for reasonable adjustments commensurate with the effect upon Company
caused by such failures and to make such adjustments as are mutually agreed to
by Company and Nortel.
8.15 Company may, at any time reasonably following an event described in
Sections 8.13 or 8.14 above, request that Nortel make special adjustments in
warranties and freight payments relating to such event, and Nortel agrees to
negotiate in good faith for reasonable adjustments commensurate with the effect
upon Company caused by such event and to make such adjustments as are mutually
agreed to by Company and Nortel.
8.16 Nortel agrees to commence work on all Hardware, Software or
Installation defects not materially affecting System performance, service to
subscribers, billing, networking, administration or maintenance within twenty
(20) days of notification thereof and will use all reasonable efforts to cure
the same as promptly as practicable.
8.17 Notwithstanding anything to the contrary contained in any provision
of this Article 8 or any other provision of this Agreement, if as a result of
any invocation of the warranties contained herein, System performance, service
to subscribers, billing, networking, administration or maintenance are
materially and adversely affected, Nortel shall, at its sole cost and expense,
commence work to correct such defect or replace such defective Hardware or
Software as soon as practicable, but in no event shall such commencement be
later than four (4) hours after Company's notification of Nortel's technical
assistance service ("TAS") of such defect, and shall ship any required
replacement Hardware (or components thereof) or replacement Software (it being
understood and agreed that if Software modifications are required, Nortel shall,
as promptly as practicable, make such modifications) to Company as soon
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thereafter as practicable but in no event later than twenty-four (24) hours
after notice of such defect. Where the services of Nortel's service personnel at
Company's sites are required hereunder, then Nortel shall use all reasonable
efforts to, at its sole cost and expense, dispatch such service personnel as are
required to correct such defects as soon after receipt of notice as practicable
but in no event shall any shipment of emergency replacement Hardware be later
than twenty-four (24) hours after notice of such defect.
8.18 If any Hardware or Software is rendered inoperative as a result of
a natural or other disaster, Nortel will make all reasonable efforts to supply
or help locate backup or replacement Hardware or Software for Company by using
its reasonable best efforts to obtain the waiver of any delivery schedule
priorities and by making replacement Hardware or Software available from the
facility then producing such products, or from inventory.
8.19 It is the intention of the parties that any problem, defect or
failure in a System, Hardware or Software described in these warranty provisions
shall be corrected as promptly as practicable regardless of fault, and in this
regard, Nortel agrees to use all reasonable efforts to work and cooperate with
Company and any other manufacturer, contractor or vendor to correct any such
problem, defect or failure to the extent that Nortel has the capability to do
so. Nortel shall, at Company's request, provide reasonable assistance to Company
in determining the cause of such problem, defect or failure and recommend the
appropriate action. Nortel shall, upon its receipt of a request for assistance
hereunder from Company, use all reasonable efforts to correct any problem,
defect or failure in a System, Hardware or Software or any other hardware or
software (whether or not such problem, defect or failure is the responsibility
of Nortel) as promptly as practicable and bill Company for such. If Company and
Nortel disagree as to the cause of the problem, defect or failure or the action
to be taken, then, at Company's written request, Nortel shall nevertheless
correct any problem, defect or failure in the System (whether or not such
problem, defect or failure is the responsibility of Nortel) as promptly as
practicable and bill Company for such; provided, however, that Nortel shall not
be required to repair or modify any hardware purchased by Company from any third
party unless Nortel has the ability to do so. The parties shall thereafter
negotiate in good faith to determine the responsibility for such problem, defect
or failure. If the parties are unable to agree to which party bears
responsibility for such problem, defect or failure, such dispute shall be
submitted to a Third Party Engineer pursuant to Section 19.1 hereof.
8.20 Nortel represents and warrants that Nortel Software supplied to
Company under this Agreement, shall function, both on and after January 1, 2000
and February 29, 2000 and during the applicable Warranty Period of the
applicable Software under this Agreement, with respect to any date dependent
operations, without any material, service-affecting or operational
non-conformance to its applicable specifications, provided that both any
Hardware and/or any specific Software load or release designated as necessary by
Seller has been installed with respect to such Software at Company's expense. If
Nortel's Software fails to so function, Company's sole remedy and Nortel's sole
obligation under this warranty is for Nortel at the earliest practicable time,
to correct such failure through, at Nortel's option, the replacement or the
repair or modification of the applicable Nortel Software or such other actions
as Nortel reasonably determines to be appropriate.
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The foregoing does not constitute a commitment by Nortel (a) to support
the Software beyond its contractually committed Warranty Period, or (b) that the
date format used by the Nortel Software complies with any particular standard.
Some Nortel Software may continue to use year representations which do not use
four digits where such representations can be interpreted without ambiguity as
to century.
8.21 Services furnished by Nortel hereunder shall be performed with due
care and skill in a professional and workmanlike manner.
8.22 Company may at any time acquire hardware and software from a source
other that Nortel, and such hardware and software may be installed in a System
without the acquisition of such hardware and software affecting the warranties
contained in the Agreement; provided, however, that the warranties set forth in
this Article shall not apply to any defects or non-conformances in Products due
to, or caused by, the installation or use of any such hardware or software
acquired from a source other than Nortel. Company agrees that Nortel does not
warrant any hardware or software or services not provided by Nortel.
8.23 Nortel and Nortel's vendors of Third Party Hardware and Third Party
Software, as appropriate, shall not have any responsibility to Customers for
warranties offered by Company to such Customers and Company hereby indemnifies
and holds harmless Nortel and Nortel's vendors, as appropriate, from any claims,
damages or liabilities arising out of, or relating to, any warranties offered by
Company to such Customers.
8.24 THE WARRANTIES, CONDITIONS AND REMEDIES SET FORTH HEREIN CONSTITUTE
THE ONLY WARRANTIES, OBLIGATIONS OR CONDITIONS OF NORTEL WITH RESPECT TO THE
PRODUCTS AND SERVICES AND ARE COMPANY'S SOLE AND EXCLUSIVE REMEDIES IN THE EVENT
SUCH WARRANTIES OR CONDITIONS ARE BREACHED. THEY ARE IN LIEU OF ALL OTHER
WARRANTIES OR CONDITIONS, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. NORTEL SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUES OR PROFITS OR OTHER
ECONOMIC LOSS OF ANY NATURE WHATSOEVER ARISING OUT OF NORTEL'S BREACH OF
WARRANTY OR CONDITION.
ARTICLE 9. NORTEL'S ADDITIONAL OBLIGATIONS
9.1 Nortel shall make training available to representatives of Company
with respect to the operation, configuration, installation, service, maintenance
and support of the Products at Nortel's then current prices and at Nortel's
facilities, subject to course and class availability.
9.2 Upon request, Nortel shall provide Company with copies of its then
current training catalogue. Upon the request of Company, Nortel shall provide to
Company such training
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as Company requests, at a time and place mutually agreed upon and at the prices
to be quoted for such training. The cancellation fees set forth in the training
catalogues shall apply.
9.3 Nortel shall include its standard Documentation package, if any,
with each shipment of Products. Nortel shall make the Documentation available on
its choice of media, which shall include, where available, CD-ROM or other
electronic media. Nortel shall provide Company with any other Documentation that
is ordered at its then-current prices therefore. Documentation provided via
Nortel's CD-ROM media may be printed and copied and Documentation provided in
paper format may be copied, to the extent such Documentation so provides, and
only to the extent such printing or copying is necessary for the operation and
maintenance of the Products to which the Documentation pertains. However,
Company may not press or burn any copies of CD-ROM discs.
9.4 During the term of this Agreement, Company may acquire various
support Services from Nortel in connection with the Products Company acquires
from Nortel under this Agreement. These Services may include, but are not
limited to the following: technical assistance Services, installation Services,
Hardware maintenance Services, Software maintenance Services and parts repair
and replacement Services.
9.5 During the Term, of this Agreement, Nortel shall make available
post-warranty Technical Assistance Services ("TAS") at no charge to Company, as
set forth in Supplemental Terms Annex A.3 to this Agreement.
ARTICLE 10. SOFTWARE LICENSE
10.1 Company acknowledges that the Software may contain programs which
have been supplied by, and are proprietary to, Third Party Software vendors. In
addition to the terms and conditions herein, Company shall abide by any
additional terms and conditions specified in a Product Annex with respect to any
Software provided by any Third Party Software vendor.
10.2 During the Term upon Company's payment to Nortel of the applicable
fees with respect to any Software furnished to Company pursuant to this
Agreement, Nortel hereby grants to Company, subject to the applicable terms and
conditions of this Article 10, a personal, non-exclusive, perpetual,
royalty-free right and license to use the Licensed Software furnished to Company
only in conjunction with Company's use of the Hardware with respect to which
such Licensed Software was furnished for the life of that Hardware (or any
replacement Hardware provided by Nortel) as it may be repaired or modified.
Company shall be granted no title or ownership rights to the Software, which
rights shall remain in Nortel or its suppliers. The right to use Software or any
individual feature thereof may be restricted by a measure of usage and/or
applications based upon the number of devices, subscribers, or some similar
measure. Expansion beyond a specific usage level may require payment of an
additional fee.
10.3 All Software supplied by Nortel under or in implementation of this
Agreement shall be treated by Company as the exclusive property, and as
proprietary and a trade secret, of Nortel and/or its suppliers, as appropriate,
and Company shall: i) hold the Software, including, ,
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any methods or concepts utilized therein in confidence for the benefit of Nortel
and/or its suppliers, as appropriate; ii) not provide or make the Software
available to any person except to its employees on a `need to know' basis; iii)
not reproduce, copy, or modify the Software in whole or in part except as
authorized by Nortel; iv) not attempt to decompile, reverse engineer,
disassemble, reverse translate, or in any other manner decode the Software; v)
issue adequate instructions to all persons, and take all actions reasonably
necessary to satisfy Company's obligations under this license; and vi) forthwith
return to Nortel, or with Nortel's consent destroy a) upon termination of the
license as set forth herein, or b) upon receipt of replacement, modified, or
updated Software, any magnetic tape, disc, semiconductor device or other memory
device or system memory and/or Documentation or other material, including, all
printed material furnished by Nortel to Company.
10.4 Company shall not export or re-export the Licensed Software and/or
associated documentation from the fifty states of the United States and the
District of Columbia.
10.5 The obligations of Company hereunder shall not extend to any
information or data relating to the Software which is now available to the
general public or becomes available by reason of acts or failures to act not
attributable to Company or is required to be disclosed through government
regulation or court order.
10.6 Nortel may issue updates to the Software from time to time, and
upon Company's continued payment of applicable right to use fees, if any, shall
license such updates to Company. The right to use fees for updates do not
include the price of any associated Hardware that may be required.
10.7 Neither Company nor any successor to Company's title in the
applicable Hardware shall have the right to (i) assign this license as to the
applicable Licensed Software to any person who does not acquire legal title to
such Hardware; or (ii) sublicense the rights herein granted as to such Licensed
Software to any other person who subsequently acquires the right to use such
Hardware, unless agreed to in writing by both Nortel and Company. Such consent
shall not be unreasonably withheld or delayed.
10.8 Company shall indemnify and hold Nortel and its suppliers, as
appropriate, harmless from any loss or damage resulting from whose breach of
this Article 10. The obligations of Company under this Article 10 shall survive
the termination of the Agreement and shall continue if the Software is removed
from service but still within the possession of Company.
10.9 If the Software or any part thereof is lost or damaged (other than
due to the fault of Company) before Turnover, Nortel will promptly replace it at
no additional cost to Company. Any such Software lost or damaged after Turnover
or due to the fault of company shall be replaced by Nortel at a charge to
Company equal to Nortel's actual cost for delivery and implementing such
replacement Software.
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10.10 Nortel agrees to make available new Software Releases as they
become commercially available in order to facilitate the continued growth of the
Systems. Nortel further agrees, wherever possible and commercially practicable,
to exercise its reasonable efforts to develop Software Releases in a manner that
will maximize Company's ability to continue utilizing previously purchased
Software and Hardware, whenever possible.
10.11 Upon the request of Company, Nortel shall provide to Company the
most recent Documentation in the case of any Software Releases delivered to
Company. It is understood that such possession shall not constitute a transfer
of ownership or ownership rights in such Documentation. Upon a reasonable
showing by Company that additional Software documentation is required by Company
for its full understanding of the operation of the System(s) purchased
hereunder, Nortel shall use its reasonable efforts to provide such additional
documentation at no cost to Company.
10.12 If Company elects to remain on a prior Software Release, Nortel's
sole obligation hereunder shall be to make available maintenance for the
Software for the previous two consecutive releases from the then-current,
Nortel-numbered release (i.e. number Software Release).
Non-Licensed Software
10.13 Certain Software delivered by Nortel may include Non-Licensed
Software. Non-Licensed Software includes (i) any Software for which the
applicable right to use fees have not been paid; and (ii) Software for which a
periodic right to use fee has expired and the applicable additional periodic
right to use fees have not been paid. Company shall submit to Nortel an Order
for any Non-Licensed Software that Company desires to license or renew.
10.14 When Non-Licensed Software is placed into service, the applicable
right to use fees shall be payable. Company shall also have the option to pay
the applicable right to use fees for any Non-Licensed Software upon installation
of a Software load containing such Non-Licensed Software.
10.15 To ensure Company's proper activation and/or usage of only the
appropriate Software, Company shall complete the appropriate form designated by
Nortel prior to the activation and/or usage by Company of any Non-Licensed
Software. Company shall identify all Software desired to be activated and/or
used (including the number of lines or other units activated, if applicable) in
each System and shall transmit such form to Nortel.
10.16 Nortel shall promptly review any form submitted pursuant to
Section 10.10 and respond in writing, identifying whether (i) any applicable
prerequisite Hardware or Software is required by Company prior to activation
and/or usage of the applicable Software; (ii) whether the use of such Software
requires Nortel to determine whether the current System configuration will
require additional elements, such as Hardware, other hardware and/or System
memory, prior to activation and/or usage; or (iii) whether Company can use such
Software without the addition of any additional Hardware or Software.
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10.17 Nortel reserves the right to access by remote polling any site in
which Software has been installed to determine which Software has been
activated. Such polling shall be done so as not to unreasonably interfere with
Company's use of the Products.
10.18 Nortel shall issue invoices to Company, in addition to those
amounts previously invoiced, for amounts found to be payable as a result of
Company's activation and/or usage of any Software which Nortel determines as a
result of the remote polling of a site and for which Company has not previously
paid the appropriate right to use fee.
10.19 The warranty period for Software activated later than the original
Ship Date of the Software load shall be for the same period as such original
Software load and shall not be extended to provide for an additional period of
warranty based upon the date individual features or units are activated and/or
utilized by Company or the date Company pays any applicable right to use fees.
Modifiable Software
10.20.1 Notwithstanding anything to the contrary above, upon payment to
Nortel of the applicable fees, Nortel hereby grants to Company, subject to the
applicable terms and conditions of this Article 10, a personal, perpetual
(reserve), royalty-free, non-transferable, non-assignable and non-exclusive
right and license to modify Licensed Software which Nortel identifies as
Modifiable Software. Upon the modification or creation of any Applications, or
the modification or creation of any Building Blocks, Nortel shall have no
obligations with regard to warranty under Article 8 or indemnity under Article
11 for such Applications or Building Blocks.
10.20.2 Nothing contained in Sections 10.16.1 - 10.16.5 shall transfer,
or be deemed to transfer, or contemplate the transfer of, any rights in or to
the Software other than those rights specifically granted herein, and in
particular but without restricting the generality of the foregoing, Nortel does
not in any way transfer any right, title or interest in or to the Software or
any element constituting a portion thereof to Company, other than the right of
Company to modify or create Building Blocks and Applications.
10.20.3 For any Building Blocks and Applications created solely by
Company, and for all Company-modified portions of the Nortel-provided Building
Blocks with respect to such modified portion only, Company shall own all forms
of intellectual property rights (including patent, trade secret, copyright and
mask rights) pertaining to such Applications, Building Blocks or portions
thereof and shall have the right to file for or otherwise secure and protect
such rights. For all such Company created Applications or Building Blocks or
modified portions of Building Blocks, the parties shall, on a case by case
basis, negotiate in good faith to determine whether Company may desire to
license any such Applications or Building Blocks to Nortel.
10.20.4 For any Applications created solely by Nortel, and for the
Nortel-provided Building Blocks, Nortel shall own all forms of intellectual
property rights (including but not
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limited to patent, trade secret, copyright and mask rights) pertaining to such
Applications or Building Blocks and shall have the right to file for or
otherwise secure and protect such rights. For all such Nortel Applications or
Building Blocks, Company may license any such additional Nortel Products upon
Nortel making such software generally available to its customers.
10.20.5 In the event Company and Nortel intend to jointly create
Applications or Building Blocks, the parties shall mutually agree as to
applicable terms and conditions.
Services Software
10.21.1 With respect to Services Software, Company shall: i) utilize
such Services Software and the results thereof solely for the purposes described
Section 1.24; and ii) comply with additional terms, if any, applicable to such
Services Software as specified in the applicable Product Annex. Nortel may, at
any time and without liability or obligation to Company, modify the Services
Software, any computer equipment of Nortel or suppliers used in connection with
such Services Software, and identification codes, manuals or other information
or Documentation used in connection with the Services Software.
10.21.2 SERVICES SOFTWARE IS PROVIDED AS IS AND WITHOUT WARRANTY OR
CONDITION OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, , THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NORTEL DOES
NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS THAT MAY BE OBTAINED BY USING
SERVICES SOFTWARE. COMPANY ASSUMES SOLE RESPONSIBILITY FOR THE SELECTION OF THE
SERVICES SOFTWARE TO ACHIEVE COMPANY'S INTENDED RESULTS, AND FOR THE
INSTALLATION, USE, AND RESULTS OBTAINED FROM THE SERVICES SOFTWARE. IN NO EVENT
SHALL NORTEL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING , LOST REVENUES OR PROFITS OR OTHER ECONOMIC
LOSS OF ANY NATURE WHATSOEVER ARISING OUT OF COMPANY'S USE OF SERVICES SOFTWARE.
ARTICLE 11. LIABILITY FOR BODILY INJURY, PROPERTY DAMAGE AND PATENT INFRINGEMENT
11.1 A party hereto (the "Indemnifying Party") shall defend, indemnify
and hold harmless the other party (the "Indemnified Party") against any suit,
claim, cause of action, demand or proceeding brought against the Indemnified
Party due to bodily injuries (including death) or loss or damage to tangible
property which results from the negligence, intentional acts or willful
misconduct or omissions of the Indemnifying Party in the performance of this
Agreement. The defending party shall pay all litigation costs, reasonable
attorney's fees, settlement payments and such direct damages awarded or
resulting from any such suit, claim or proceeding. If the parties jointly cause
such losses, claims, demands, damages, or causes of action, the parties shall
share the liability in proportion to their respective degrees of causal
responsibility.
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11.2 Nortel shall defend and indemnify Company against any suit, claim
or proceeding brought against Company alleging that the sale to, or use by
Company of, any Products (or any component thereof), excluding Third Party
Hardware or Third Party Software, furnished hereunder infringes or violates any
patent, trademark, copyright or trade secret or other tangible or intangible
intellectual property rights of any kind or nature whatsoever ("Infringement
Claim"). Nortel shall defend, at its expense, Company against any such claims
and pay, subject to Section 11.3 below, all litigation costs, reasonable
attorney's fees, settlement payments and damages awarded or resulting from any
such suit, claim or proceeding. With respect to Third Party Hardware or Third
Party Software, Nortel shall assign any rights with respect to infringement of
patents granted to Nortel by the supplier of such items to the extent of
Nortel's right to do so.
11.3 Nortel shall have no liability, in respect of any Infringement
Claim based on the use of a Product in the event such Product: (i) is
manufactured, designed or supplied by Nortel in accordance with any design or
any special instruction furnished by Company; provided that Nortel notifies
Company that the indemnification set forth in Section 11.2 will not be
applicable to such design or instruction and, notwithstanding such forfeiture of
indemnification, Company still decides to go forward with manufacture, design or
supply in accordance with such design or instruction (ii) is used by Company in
a manner or for a purpose not contemplated by this Agreement; (iii) is used by
Company in combination with other products not provided by Nortel, including, ,
any software developed solely by Company through the permitted use of Products
furnished hereunder, provided the Infringement Claim arises from such
combination or the use thereof; or (iv) is modified by Company where such
modification is not authorized by Nortel. In the excepted cases stated above,
Company shall indemnify and hold Nortel harmless against any loss, cost,
expense, damage, settlement or other liability, including, but, attorneys' fees,
which may be incurred by Nortel with respect to any suit, claim, or proceeding
described in this Section 11.3.
11.4 Nortel shall not be liable for, and Company shall indemnify Nortel
in respect of, any damages awarded based on Company's willful, knowing or
deliberate infringement of a patent, copyright, trade secret, trademark or other
proprietary right where such infringement results in a pecuniary damage award.
11.5 If as a result of an Infringement Claim, , an injunction is
obtained against Company's use of any Product or component thereof, Nortel
shall, at Nortel's option and sole expense:
(i) procure for Company the right to continue using the alleged
infringing Product(s);
(ii) replace or modify the same (without interruption of use during
Company's peak hours) with equivalent or better Product(s) so
that Company's use is non-infringing; provided, however, that
such replacement or modification shall not adversely impair the
system or the Products from performing within the Specifications;
or
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11.6 In the event that Nortel cannot perform under Section 11.5, Company
shall have the right to return such Products or components thereof to Nortel at
Nortel's cost, upon written notice to Nortel and in the event of such return,
neither party shall have any further liabilities or obligations under this
Agreement, except that Nortel shall refund the full price of any such Products
or portion thereof, if such event occurs during the Term and, commencing upon
the first day after expiration of the Term, Nortel shall refund the Price of the
Products, or portion thereof, less depreciation of twenty percent (20%) of the
Price, or applicable portion thereof, for each year of use thereof after
expiration of the Term by Company at the time of such return. To the extent any
infringing portion of the System or Products affects the operation of other
Products, Company's right to receive a refund shall apply to such other Products
as well.
11.7 The defense of any claim which is predominantly covered by the
provisions of the Agreement shall be controlled by the party upon whom the
majority of the ultimate liability is likely to be imposed. Such controlling
party shall give the other party a reasonable opportunity to participate in
negotiation or defense of the claim so that such other Party may reasonably
protect its own interests. Neither Party shall be liable for any settlement
obligation incurred without its written consent.
11.8 Company shall waive any and all claims that Company may have
against Nortel that Company may have due to any use by Company of Modifiable
Software and any modification Company may have made to a Product as a result of
such use. Further, Company shall be responsible for the purchase of any
additional hardware, software or services required as a result of such use.
11.9 THE REMEDIES SET FORTH IN THIS ARTICLE 11 ESTABLISH THE ENTIRE
OBLIGATION OF THE PARTIES IN REGARD TO INFRINGEMENT CLAIMS. IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING, LOST REVENUES OR PROFITS OR OTHER ECONOMIC
LOSS OF ANY NATURE WHATSOEVER, ARISING FROM SUCH INFRINGEMENT CLAIMS AND/OR
RELATED MATTERS, OTHER THAN AS SPECIFICALLY SET FORTH HEREIN.
ARTICLE 12. REMEDIES AND LIMITATION OF LIABILITY
12.1 Nortel shall have the right to suspend its performance, upon
written notice to Company, and forthwith remove and take possession of all
Products that shall have been delivered to Company, if, prior to payment to
Nortel of any amounts due pursuant to this Agreement with respect to such
Products, Company shall (i) become insolvent or bankrupt or cease, be unable, or
admit in writing its inability, to pay all debts as they mature, or make a
general assignment for the benefit of, or enter into any arrangement with,
creditors; (ii) authorize, apply for, or consent to the appointment of, a
receiver, trustee, or liquidator of all or a substantial part of its assets or
have proceedings seeking such appointment commenced against it which are not
terminated within sixty (60) days of such commencement; or (iii) file a
voluntary petition under any bankruptcy or insolvency law or under the
reorganization or arrangement provisions of the United States Bankruptcy Code or
any similar law of any jurisdiction or have
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proceedings under any such law instituted against it which are not terminated
within sixty (60) days of such commencement.
12.2 Company shall have the right to suspend its performance, upon
written notice to Nortel, if, prior to delivery of any ordered Products during
the Term, Nortel shall (i) become insolvent or bankrupt or cease, be unable, or
admit in writing its inability, to pay all debts as they mature, or make a
general assignment for the benefit of, or enter into any arrangement with,
creditors; (ii) authorize, apply for, or consent to the appointment of, a
receiver, trustee, or liquidator of all or a substantial part of its assets or
have proceedings seeking such appointment commenced against it which are not
terminated within sixty (60) days of such commencement; or (iii) file a
voluntary petition under any bankruptcy or insolvency law or under the
reorganization or arrangement provisions of the United States Bankruptcy Code or
any similar law of any jurisdiction or have proceedings under any such law
instituted against it which are not terminated within sixty (60) days of such
commencement.
12.3 In the event of any material breach of this Agreement which shall
continue for thirty (30) or more days after written notice of such breach
(including a reasonably detailed statement of the nature of such breach) shall
have been given to the breaching party by the aggrieved party, the aggrieved
party shall be entitled at its option to avail itself of any and all remedies
available at law or equity, except as otherwise limited in this Agreement.
12.4 Nothing contained in Section 12.3 or elsewhere in this Agreement
shall make either party liable for any indirect, incidental, punitive, special,
or consequential damages of any nature whatsoever (including any claims arising
out of or in anyway related to the Programs or any lost profits of the other
party, whether or not such damages are foreseeable or whether a party has been
advised of the possibility of such damages) for any breach of this Agreement
(except for breaches of the provisions of Articles 10, 11 or 14) whether the
claims for such damages arise in tort (including negligence regardless of degree
of fault), contract, or otherwise.
12.5 Nortel shall not be liable for any additional costs, expenses,
losses or damages resulting from errors, acts or omissions of Company,
including, , inaccuracy, incompleteness or untimeliness in the provision of
information by Company to Nortel or fulfillment by Company of any of its
obligations under this Agreement.
12.6 Any action for breach of this Agreement or to enforce any right
hereunder shall be commenced within two (2) years after the cause of action
accrues or it shall be deemed waived and barred, except any action for
nonpayment by Company of any prices, charges, fees or other amounts payable
hereunder may be brought by Nortel at any time permitted by applicable law, and
Nortel may suspend performance of any of its obligations hereunder until all
such payments are made.
12.7 Company, without prejudice to any of Company's rights accrued prior
to the date of termination, may, at its option and upon written notice to
Nortel, signed by a person duly authorized by Company, terminate this Agreement
in whole or with respect to any System, Hardware or Software purchased by it,
without penalty to Company, if Nortel, during the Term,
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violates the provisions of Article 11 by failing or refusing to take the actions
required thereunder and either (A) has not remedied, or commenced actions to
remedy, such violation within thirty (30) days of written notice to do so, or
(B) such violation results in a judicial imposition of permanent injunctive
relief upon Company preventing Company from operating a System. In the event of
a termination as permitted under this Section 12.7, Company may, at its
election, upon written notice return to Nortel at Nortel's cost, any affected
Systems, Hardware or Software purchased by it from Nortel, and in the event of
such return, neither party shall have any further liabilities or obligations
under this Agreement, except that, if such an event occurs during the Term,
Nortel shall refund the full price of any such System, Hardware or Software, or
portion thereof.
ARTICLE 13. TERM AND TERMINATION
13.1 This Agreement will be in effect from the Effective Date for a
period of three (3) years ("Term"). Thereafter, this Agreement shall
automatically renew for one (l) year terms, unless either party provides the
other party with written notice of its intent not to renew at least sixty (60)
days prior to the end of the original term or any renewal term.
13.2 Either party may delay performance under this Agreement or
terminate this Agreement, in whole or in part, in the event of a default by the
other, provided that the non-defaulting party so advises the defaulting party in
writing of the event of alleged default and the defaulting party does not remedy
the alleged default within thirty (30) days after written notice thereof. If the
alleged default is not capable of being remedied within thirty (30) days, the
defaulting party must commence to remedy the alleged default within such thirty
(30) day period and provide to the non-defaulting party a plan for timely
remedying the alleged default in order to avoid termination. A default shall
include:
(i) a party's insolvency or initiation of bankruptcy or receivership
proceedings by or against a party or the execution of an
assignment for the benefit of creditors; or
(ii) either party's material breach of any of the terms or conditions
hereof including the failure to make any payment when due.
13.3 The expiration or termination of this Agreement for any cause shall
not release either party from:
(i) any obligations and duties remaining under any Order entered into
prior to such expiration or termination;
(ii) any liability which at the time of expiration or termination has
already accrued to the other party, or, which thereafter may
accrue in respect to any event prior to expiration or
termination; or
(iii) any liability from any obligation specified in Section l5.l8
below to survive expiration or termination.
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13.4 In the event of a termination of this Agreement by Company due to
Nortel's material breach, Company shall be released from any unfulfilled Volume
Commitment or unmet Volume Targets from and after the date of such termination;
13.5 In the event of termination of this Agreement by Nortel due to
Company's material breach, Company shall pay Nortel any amounts due pursuant to
Section 2.5 of this Agreement as of the date of such termination.
ARTICLE 14. CONFIDENTIALITY
l4.1 Each party which receives the other party's Confidential
Information shall maintain, or cause to be maintained, the confidentiality of
Confidential Information of the other party and hold such Confidential
Information in confidence and not disclose, or permit to be disclosed, or use,
or permit to be used (except in accordance with this Agreement) such
Confidential Information to anyone other than to its employees and employees of
a Company Affiliate or Nortel Affiliate, as applicable, with a need to know such
Confidential Information in the performance of their work (including the use,
operation or maintenance of a System or Products), it being understood that such
employees of a Nortel Affiliate or Company Affiliate shall be informed of the
confidential nature of the Confidential Information and shall be directed to
treat such Confidential Information confidentially and not use such Confidential
Information other than for the purpose described above. A party that receives
the other party's Confidential Information shall not reproduce such Confidential
Information, except to the extent reasonably required for the performance of its
obligations pursuant to this Agreement and in connection with any permitted use
of such Confidential Information and shall take precautions necessary or
appropriate to guard the confidentiality of such Confidential Information.
14.2 Company shall take reasonable care to use Nortel's Confidential
Information only for study, operating, or maintenance purposes in connection
with Company's use of Products furnished by Nortel pursuant to this Agreement.
Notwithstanding anything to the contrary contained herein, Company shall have
the right to disclose Confidential Information to lenders, investors, and
potential lenders and investors, subject to appropriate nondisclosure
agreements.
14.3 Notwithstanding the foregoing, either party shall be free to use
that portion of the residuals of Confidential Information which may be retained
in intangible form by those employees who have had access to the Confidential
Information, for any purpose, including use in the development, manufacture,
marketing and maintenance of its products and services. The term "residuals"
shall mean that portion of information which is mentally retained by an employee
of the receiving party who has had access to such Confidential Information, as
part of his or her ordinary stock of skill and knowledge, without need to
further reference to any material which is written, stored in magnetic,
electronic, or physical form, or otherwise fixed, provided that in no event
shall the term "residuals" include information or expression protected by
copyright, patent, or the Semiconductor Chip Protection Act of 1984 (U.S.A.).
The commitment to memory by any employee of any specific Confidential
Information shall not be considered to constitute such information as
"residuals" hereunder, and no use of any such
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portion of Confidential Information shall be allowed hereunder. The marketing of
any product or service, including the dissemination of supporting documentation,
which inherently discloses the disclosing party's Confidential Information shall
not be deemed a breach by the recipient of such obligations provided however
that ownership of the Confidential Information and all intellectual property
rights to such Confidential Information remain with the disclosing party.
14.4 The obligations of either party pursuant to this Article 14 shall
not extend to any Confidential Information which (i) was already known to the
recipient prior to its disclosure to the recipient and without confidential
obligations was known or generally available to the public at the time of
disclosure to the recipient,(ii) becomes known or generally available to the
public (other than by act of the recipient) (iii) subsequent to its disclosure
to the recipient, is disclosed or made available in writing to the recipient by
a third party having a bona fide right to do so and without similar
confidentiality obligations(iv), is independently developed by recipient without
any direct or indirect use of Confidential Information,, or (v) is required to
be disclosed by subpoena or other process of law. The recipient shall have the
burden of proving by a preponderance of the evidence the applicability of any of
the foregoing exceptions.
14.5 In the event that any party hereto (the "Receiving Party") becomes
obligated to disclose Confidential Information obtained by the Receiving Party
from the other party (the "Disclosing Party") pursuant to an order, rule or
regulation of any governmental or other authority or court, the Receiving Party
shall promptly notify the Disclosing Party, so that the Disclosing Party may
have an opportunity to seek a protective order or other appropriate remedy that
will permit the Receiving Party to avoid such disclosure. In the event that such
protective order or other remedy is not obtained, the Receiving Party will
disclose only that portion of the Confidential Information as it is obligated to
disclose pursuant to such order, and will use all reasonable efforts to obtain
assurances that confidential treatment will be accorded to any Confidential
Information so disclosed.
ARTICLE 15. COOPERATIVE ADVERTISING
15.1 Subject to the provision of Section 2.5 of the Agreement, in
consideration of Company's Volume Commitment, Nortel shall, commencing with the
Effective Date of the Agreement and for the remainder of the Term, provide
Company an amount equal to two and one half percent (2.5%) of the net amount of
Company's purchases under the Agreement, to be used for payment of Company
advertising which contains specific reference to Nortel's Products or for
"Programs" as set forth in Exhibit C of this Agreement, which advertising and/or
Programs have been approved by Nortel (which approval shall not be unreasonably
withheld or delayed) for the purposes of payment of such cooperative advertising
fees ("Cooperative Advertising Funds"); provided, however, that such amount
shall (i) be paid to Company on a quarterly basis and (ii) shall be
substantiated by invoices reasonably detailing advertising or other Program
costs paid by Buyer. As used in this Article 15, "purchases" shall be defined as
payment in full of Orders by Company pursuant to Article 4.
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15.2 Nortel shall provide an additional one-half percent (.5%) of the
net amount of Company's purchases under the Agreement which exceeds the Volume
Commitment, to be used as set forth in Section 15.1 above.
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15.3 Should Company fail to meet the Volume Targets for any applicable
year as set forth in Section 2.5 of this Agreement, Nortel shall invoice Company
for the Cooperative Advertising Funds paid to Company as described in Section
15.1 in excess of the amount of Cooperative Advertising Funds which would have
been paid if calculated based upon the percentages set forth in Section 2.5 of
this Agreement applicable to the actual purchases by Company.
15.4 Nortel shall provide to Company at the end of each quarter a
written summary describing the prior quarter's purchasing activity by Company.
Such summary shall reflect Cooperative Advertising Funds accrued and used by
Company for eligible Programs as approved by Nortel.
ARTICLE 16. CONTINUING AVAILABILITY
16.1 For the period following the Effective Date of this Agreement as
specified in the applicable Product Annex and excluding Third Party Hardware and
Third Party Software, Nortel shall make replacement parts, or their functional
equivalent, available for purchase by Company. Nortel shall also make available
to Company such information as is reasonably required in order to allow
functionally equivalent spare parts to perform with Products previously
delivered to Company. The prices charged for the spare parts shall be Nortel's
then current published list price or its then current policy.
16.2 In the event Nortel intends to discontinue the availability of, or
support Service for, a major module of a Product, Nortel shall provide Company
with at least ninety (90) days prior written notice of such event and the
applicable Product or support Service shall be considered manufacture
discontinued or discontinued, respectively, after such ninety (90) day period.
Nortel shall have no obligation to provide notice of manufacture discontinue if
only components and individual circuit packs of a Product are being discontinued
or replaced.
16.3 With respect to any major module of a Product as to which Nortel
has notified Company of cessation of manufacture or purchase pursuant to Section
16.2 above, Nortel shall, upon Company's written request, deliver to Company
such drawings, specifications, and information which are available to Nortel and
as may be necessary to manufacture or cause to be manufactured or procured such
major module of a Product together with a nonexclusive, royalty-free license to
make, use or have made for Company's intended use, any such major module of a
Product to the extent Nortel is legally able to grant such a license; provided,
however that such license and parts may be used only in conjunction with the use
of a System and Software, or any item of Hardware, and shall apply to the
production of the discontinued major module of a Product only (i.e., no license,
express or implied, is granted to produce derivative technology). Company shall
have the right to duplicate any such drawings, specifications or information,
subject to any confidentiality requirements, and shall return the originals
furnished by Nortel within sixty (60) days thereafter.
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ARTICLE 17. INSTALLATION GUIDELINES
17.1 Nortel shall Install all Hardware and Software at the sites to be
selected by Company in accordance with the time schedule set forth in the
applicable Order.
17.2 Nortel shall Install the System so as to cause no unreasonable
interference with or obstruction to lands and thoroughfares or rights of way on
or near which the Installation or other Services may be performed. Nortel shall
exercise every reasonable safeguard to avoid damage to existing facilities, and
if repairs or new construction are required in order to replace facilities
damaged by Nortel, such repairs or new construction shall be at Nortel's own
expense. Nortel agrees to notify Company of any material interference that might
occur with other communications Hardware, existing at the time of Installation,
as a result of Nortel's Installation of the System.
17.3 Nortel shall use all reasonable efforts to perform Installation,
activation of Software and any other Services ordered hereunder, with regard to
a System, so as to cause no unreasonable interference with System performance,
service to subscribers, billing, networking, administration or maintenance.
Nortel shall (i) advise Company whenever such Installation, activation of
Software or other Services will or are likely to cause such interference to a
System, and (ii) use its best efforts to work with Company to prevent or
minimize such interference.
17.4 Nortel shall provide Company with reasonable prior written notice
of its need to have access to any portion of the System, which notice shall
specify the requirements for access and the scope of the work to be performed at
such site or location. Company agrees that it will promptly review such notice
and shall not unreasonably withhold its consent to such access; provided,
however, that once a portion of a System is placed In-Service, such notice must
be given at least twenty-four (24) hours prior to the need for access to
portions of the System which have been placed In-Service.
ARTICLE 18. INSURANCE
18.1 Nortel shall maintain and keep in force all risk property insurance
in form and substance in accordance with acceptable industry standards covering
all Hardware delivered to Company the risk of loss to which has not passed to
Company, and shall furnish Company as reasonably requested, with proof in the
form of Certificates of Insurance that such insurance has been obtained and is
in force.
18.2 Upon risk of loss passing to Company, Company shall maintain and
keep in force all risk property insurance, in form and substance and with
insurers reasonably satisfactory to Nortel, covering all Hardware delivered to
Company the title to which has not passed to Company, and shall furnish Nortel
as reasonably requested, with proof in the form of certificates of insurance
that such insurance has been obtained and is in force.
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18.3 Nortel shall at all times while performing services on Company's
premises carry insurance with limits not less than the limits described as
follows:
Employer's General Liability - Limits $1,000,000 per occurrence.
Comprehensive General and Product Liability: $2,000,000 single limit
bodily injury and property damage combined per occurrence with a $5,000,000
annual aggregate; such coverage shall include broad form liability, completed
operations coverage and contractual liability.
An umbrella policy with $1,000,000 single limit bodily injury and
property damage combined.
Workers' Compensation (Statutory limits in the applicable state).
18.4 Each party shall, upon request of the other party, provide the
other with certificates of insurance (i) evidencing the insurance to be carried
under this Article 18, naming the other party as an additional insured with
respect to Comprehensive General and Product Liability insurance and as a loss
payee as their interests may appear with respect to all risk property insurance
and (ii) including provisions that such insurance policy(ies) shall not be
subject to cancellation, expiration or reduction without thirty (30) days prior
written notice to the other party.
18.5 Notwithstanding the requirements as to insurance to be carried, the
insolvency, bankruptcy or failure of any insurance company carrying insurance
for either party, or failure of any such insurance company to pay claims
accruing, shall not be held to waive any of the provisions of this Agreement or
relieve either party from any obligations under this Agreement.
ARTICLE 19. DISPUTE RESOLUTION
19.1 If there is a disagreement relating to Installation and Acceptance
of Hardware and Software, or which, under the terms of this Agreement shall be
resolved in accordance with this Section 19.1, the parties will attempt to
negotiate a solution within fourteen (14) days after receiving notice of such
disagreement. If no solution can be reached, the parties shall select a third
party engineer ("Third Party Engineer") (whose fees and expenses will be shared
equally by Company and Nortel), expert in the field in which the dispute has
arisen, who will, after conducting such examination or testing as he/she deems
necessary and within fourteen (14) days, render a decision in the matter. If the
parties are unable to agree on the selection of the Third Party Engineer, the
Third Party Engineer will be selected by the then President of the United States
Institute of Electrical & Electronics Engineers. The Third Party Engineer's
decision shall be final and binding and neither party shall appeal or otherwise
contest it; provided, however, that the Third Party Engineer shall have no
authority to determine disagreements relating to ownership of Software. Once a
Third Party Engineer is selected for resolving a dispute, he/she shall be
selected for the resolution of any further disputes hereunder relating to
Installation and Acceptance, or which, under the terms of this Agreement shall
be resolved in accordance with
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this Section 19.1, unless otherwise agreed to by both parties or unless the
Third Party Engineer refuses to continue to serve in that function.
19.2 Any controversy or claim arising out of or relating to this
Agreement for the breach hereof which cannot be settled by the parties except
for (i) disputes to be settled by a Third Party Engineer under Section 19.1,
which shall be resolved as provided therein, or (ii) disputes relating to any
patent or other claims involving the scope or validity of property rights as set
forth in Article 11, which shall be resolved by a court of competent
jurisdiction, shall be settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association as set forth herein.
19.3 Each party may select one arbitrator. Selection shall be completed
within ten (10) days of the receipt of a demand for arbitration. If either party
fails to select an arbitrator within such ten (10) day period, the one selected
shall act as sole arbitrator. If two arbitrators have been selected, the two
arbitrators selected shall select a third within fifteen (15) days after their
selection. If they fail to do so, the third arbitrator shall be selected by the
American Arbitration Association. The arbitrators shall set a date of hearing no
later than sixty (60) days from the date all arbitrators have been selected.
19.3.1 All proceedings shall be conducted in the English language.
19.3.2 The arbitration shall take place at a location to be agreed upon
by the parties. If the parties are unable to agree, the arbitrators shall select
a location in New York, New York for the arbitration.
19.3.3 In any such arbitration proceeding the arbitrators shall adopt
and apply the provisions of the Federal Rules of Civil Procedure relating to
discovery so that each party shall allow and may obtain discovery of any matter
not privileged which is relevant to the subject matter involved in the
arbitration to the same extent as if such arbitration were a civil action
pending in a United States District Court; provided, however, that each party
shall be entitled to no more than four (4) depositions upon oral examination of
no more than one (1) day in length each.
19.3.4 The award of any arbitration shall be final, conclusive and
binding on the parties hereto.
19.3.5 The arbitrators may award any legal or equitable remedy, except
that the arbitrators shall have not authority to determine or resolve any
controversy or claim relating to ownership of Software and shall have no
authority to award punitive damages or consequential damages. The arbitration
award may include an award of attorney's fees, in the amount of such fees, to
the prevailing party, if such an award is deemed by the arbitrators to be
reasonable and appropriate. Judgment upon any arbitration award may be entered
and enforced in any court of competent jurisdiction.
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19.3.6 Either party to an arbitration hereunder may bring an action for
injunctive relief against the other party if such action is necessary to
preserve jurisdiction of the arbitrators or to maintain status quo pending the
arbitrators decision. Any such action commenced pursuant to this Section 19.3.6
shall be discontinued upon assumption of jurisdiction by the arbitrators and
their opportunity to consider the request for equitable relief pending final
decision in the arbitration.
ARTICLE 20. AUTHORITY AND COMPLIANCE WITH LAWS
20.1 Company represents and warrants that (a) all necessary approvals
and authority to enter into this Agreement and bind Company have been obtained,
(b) the person executing this Agreement on behalf of Company has express
authority to do so and, in so doing, to bind Company hereto, and (c) the
execution of this Agreement by Company does not violate any provision of any
by-law, charter, regulation or any other governing document of Company.
20.2 Nortel represents and warrants that (a) all necessary approvals and
authority to enter into this Agreement and bind it have been obtained, (b) the
persons executing this Agreement on behalf of it have express authority to do so
and, in so doing, to bind it hereto, (c) the execution of this Agreement by it
and the consummation of the transactions contemplated hereby do not violate any
provisions of any by-law, charter, regulation, or any of its other governing
documents, (d) it has all necessary licenses, agreements, personal property
rights and other authorizations necessary to enter into this Agreement and
consummate the transactions contemplated hereby and to sell and Install a System
and Hardware and license Software to Company hereunder and (e) that each item of
Hardware shall, upon delivery to Company and upon Acceptance, be free and clear
of all liens, charges or encumbrances of any nature whatsoever (other than the
purchase money security interest described in Section 5.5), and upon passage of
title to Company shall provide good and marketable title to Company or its
permitted assignees.
ARTICLE 21. COMPATIBILITY AND INTERCONNECT
21.1 Compatibility Information is the technical information, including
Software interfaces (but excluding source code and internal system interfaces),
required to permit the design of hardware and/or software that is functionally
interconnectable with the Hardware and Software supplied by Nortel hereunder.
Nortel shall reasonably cooperate with such third parties as Company may
request, subject to any appropriate confidentiality or other agreements, in
order to facilitate inter-connection.
21.2 During the Term of this Agreement and for a period of two (2) years
after expiration of the Term, Nortel shall provide to Company that Compatibility
Information, if currently available and subject to such confidentiality and
other restrictions as Nortel may deem appropriate, which gives Company the
necessary technical information and inter-connection information to interface
with a System as specified in Section 21.1 above. Company shall have the right
to disclose such inter-connect information under appropriate non-disclosure
agreements as approved by Nortel, which approval will not be unreasonably
withheld or delayed, to third
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parties whose hardware and/or software will be inter-connected with the System,
Hardware or Software or who will be developing interfaces in order to accomplish
inter-connectability as specified in Section 21.1 above. Nortel agrees, at the
request of Company, to reasonably cooperate with Company or any third parties in
order to permit such inter-connection. Nortel agrees to provide Company, as
promptly as reasonably practicable, advance notice of any new, or changes in
existing interface specifications and upon completion of such new, or changed,
specification to provide this to Company, subject to the provisions hereof.
ARTICLE 22. ADDITIONAL TERMS
22.1 Publicity - Except where required by law, a party shall not release
any advertising or other publicity relating to this Agreement or the contents
hereof wherein such other party may reasonably be identified without the prior
written approval of the other party. In addition, each party shall take
reasonable precautions to keep the existence of this Agreement confidential so
long as this Agreement remains in effect and for a period of five (5) years
thereafter, except as may be otherwise expressly provided in this Agreement or
as may be reasonably required to enforce this Agreement by law.
22.2 Applicable Law - The validity, construction and performance of this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Texas, except for its rules with regard to the conflict of laws.
22.3 Effects of Headings - All headings used herein are for index and
reference purposes only, and shall not be given any substantive effect. This
Agreement has been created jointly by the parties and no rule of construction
requiring interpretation against the drafter of this Agreement shall apply in
its interpretation.
22.4.1 Assignment - Other than as explicitly stated below, neither party
may assign or transfer this Agreement or any of its rights hereunder without the
prior written consent of the other party, such consent not to be unreasonably
withheld. A change in control of Company shall be deemed an assignment
hereunder. Company's consent shall not be required for any assignment or
transfer by Nortel (i) to any Nortel Affiliate of all or any part of this
Agreement or of Nortel's rights hereunder; or (ii) to any third party of
Nortel's right to receive any monies ("Receivables") which may become due to
Nortel pursuant to this Agreement. Nortel's consent shall not be required for
any assignment by Company to any Company Affiliate in which Company owns and
controls more than fifty percent (50%) of the shares entitled to elect the board
of directors of such entity. Company agrees to provide written notice to Nortel
of such assignment.
22.4.2 Company hereby consents to the sale of Receivables by Nortel
without the necessity for any further notice and without any qualification on
such consent. Company grants permission for Nortel to disclose the provisions of
this Agreement to purchasers and prospective purchasers of Receivables, or their
affiliates and others with a present or prospective financial interest in such
Receivables, and their respective agents, attorneys, auditors, rating agencies
and other advisors.
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22.5 Subcontracting - Nortel may subcontract any of its obligations
under this Agreement, but no such subcontract shall relieve Nortel of primary
responsibility for performance of its obligations.
22.6 Non-Waiver - The failure by either party hereto at any time to
require performance by the other party or to claim a breach of any provision of
this Agreement shall not be construed as affecting any subsequent breach or the
right to require the performance with respect thereto or to claim a breach with
respect thereto.
22.7 Relationship of the Parties - The provisions of this Agreement
shall not be construed to establish any form of partnership, agency or joint
venture of any kind between Nortel and Company, nor to constitute either party
as the agent, employee or legal representative of the other. All persons
furnished by either party to accomplish the intent of this Agreement shall be
considered solely as the furnishing party's employees or agents and the
furnishing party shall be solely responsible for compliance with respect to its
employees with all laws, rules and regulations involving, but not limited to,
employment of labor, hours of labor, working conditions, workers' compensation,
payment of wages, and withholding and payment of applicable taxes, including,
but not limited to income taxes, unemployment taxes, and social security taxes.
22.8 Force Majeure - If the performance by a party of any of its
obligations under this Agreement shall be prevented, restricted or interfered
with by reason of any circumstances beyond the reasonable control of that party,
including, fire, explosion, acts of God, war, revolution, civil commotion,
unavailability of supplies or sources of energy, power failure, breakdown of
machinery, delays regarding zoning, easements or deed restrictions, or labor
difficulties, including, strikes, slowdowns, picketing or boycotts, then that
party shall upon giving prompt notice to the other party be excused from such
performance for a period equal to the delay resulting from the applicable
circumstances and such additional period as may be reasonably necessary to allow
that party to resume its performance provided that the party so affected shall
use all reasonable efforts to avoid or remove such causes of nonperformance and
both parties shall proceed to perform their obligations with dispatch whenever
such causes are removed or cease. With respect to labor difficulties as
described above, a party shall not be obligated to accede to any demands being
made by employees or other personnel; provided, however, that in the event
Nortel experiences labor difficulties, strikes, slowdowns, picketing or boycotts
with respect to a particular Nortel facility, Nortel shall use commercially
reasonable efforts to have the Products affected by such labor difficulties,
strikes, slowdowns, picketing or boycotts obtained from another Nortel facility
in the United States or Canada.
22.9 Taxes - Company shall at Nortel's direction promptly reimburse
Nortel or pay directly to the applicable government or taxing authority all
taxes and charges arising hereunder, including, penalties and interest, except
for taxes computed upon the net income of Nortel. If Company provides Nortel
with a certificate of exemption for the applicable taxes, in a timely manner,
then Nortel shall not invoice Company for such taxes.
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<PAGE> 46
22.10.1 Hazardous Materials - Prior to issuing any Order for Services to
be performed at Company's facilities, Company shall identify and notify Nortel
in writing of the existence of all Hazardous Materials of which it is aware
which Nortel may encounter during the performance of such Services, including,
any Hazardous Materials contained within any equipment to be removed by Nortel.
22.10.2 If Company breaches its obligations pursuant to the immediately
preceding paragraph, (i) Nortel may discontinue the performance of the
applicable Services until all the Hazardous Materials have been removed or
abated to Nortel's satisfaction by Company at Company's sole expense; and (ii)
Company shall defend, indemnify and hold Nortel harmless from any and all
damages, claims, losses, liabilities and expenses, including , attorney's fees,
which arise out of Company's breach of such obligations.
22.11 Notice - All notices required or permitted to be given hereunder
shall be in writing and shall be deemed given when delivered (i) by hand; or
(ii) by facsimile transmission (confirming the same by mail); or (iii) by
certified or next-day mail or overnight courier addressed as follows:
If to Company:
Western Wireless Corporation
3650 131st Avenue SE
Bellevue, Washington 98006
Attention: President
Facsimile: (425) 586-8118
cc: Legal Department
If to Nortel:
Nortel Networks Inc.
2221 Lakeside Boulevard
Richardson, Texas 75080
Attention: Contracts Department
Facsimile: (972) 685-3504
Either party hereto may change its address by a notice given to the other party
hereto in the manner set forth above.
22.12 Information and Documentation - Company shall provide any
information and/or documentation that Nortel reasonably requests from Company
and that is necessary for Nortel to properly perform any of its obligations
hereunder. Such information shall be provided in a form reasonably specified by
Nortel by the dates specified by Nortel.
22.13 Export - Company shall not export any Products or technical data
received from Nortel pursuant to this Agreement, or release any such Products or
technical data with the knowledge or intent that such will be exported or
transmitted to any country or to foreign nationals of any country, except in
accordance with applicable U.S. laws and regulations concerning exporting and
with written consent of Nortel. Company shall obtain all government
44
<PAGE> 47
authorizations, in accordance with applicable law prior to exporting or
transmitting any such Products or technical data.
22.14 Severability - If any provision of this Agreement is declared or
determined to be invalid or unenforceable under applicable law, the remaining
provisions shall continue in full force and effect and the parties shall
substitute for the invalid provision a valid provision which most closely
approximates the economic effect and intent of the invalid provision.
22.15 Modification of Agreement - No addition to or modification of this
Agreement shall be effective or binding on either of the parties hereto unless
reduced to writing and executed by the respective duly authorized
representatives of each of the parties hereto.
22.16 Regulatory Compliance - In the event of any change in the
Specifications or Nortel's manufacturing or delivery processes for any Products
as a result of the imposition of requirements by any government, Nortel may upon
notice to Company, increase its prices, charges and fees to cover the added
costs and expenses directly and indirectly incurred by Nortel as a result of
such change.
22.17 Entire Agreement - This Agreement, including the Exhibits and
Annexes which are attached hereto and incorporated herein, comprises all the
terms, conditions and agreements of the parties hereto with respect to the
subject matter hereof and supersedes all previous negotiations, proposals,
commitments, writings, publications and understandings of any nature whatsoever.
No Exhibits or Annexes modified or created subsequent to the execution of this
Agreement shall be deemed to be incorporated into this Agreement unless mutually
agreed in a writing and executed by a duly authorized representative of each
party. Company hereby acknowledges and agrees that it has not relied on any
representations or warranties other than those expressly set forth in this
Agreement.
22.18 Survivorship - Any terms of this Agreement, which by their nature
are intended to survive including but not limited to Articles 8, 10, 11, 12, 14
and Sections 4.5, 4.6, 9.3, and 13.3 shall survive the termination or expiration
of this Agreement.
22.19 Counterparts - This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
45
<PAGE> 48
IN WITNESS WHEREOF, the parties have executed this Agreement.
NORTEL NETWORKS INC. WESTERN WIRELESS
CORPORATION
By: /s/ Donn Patterson By: /s/ Mikal J. Thomsen
------------------------------- -------------------------------
Name: Donn Patterson Name: Mikal J. Thomsen
------------------------------ ------------------------------
(Type/Print) (Type/Print)
Title: Vice President Title: President
---------------------------- ----------------------------
Date: 3-10-00 Date: 3-10-00
------------------------------ ------------------------------
46
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTERN
WIRELESS CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF
AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH 10-Q.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
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<CASH> 16,068
<SECURITIES> 0
<RECEIVABLES> 82,496
<ALLOWANCES> 10,229
<INVENTORY> 7,983
<CURRENT-ASSETS> 130,327
<PP&E> 698,880
<DEPRECIATION> 301,641
<TOTAL-ASSETS> 1,383,292
<CURRENT-LIABILITIES> 85,165
<BONDS> 1,480,000
0
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<SALES> 6,722
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<CGS> 18,666
<TOTAL-COSTS> 126,944
<OTHER-EXPENSES> (31,385)
<LOSS-PROVISION> 4,605
<INTEREST-EXPENSE> 31,713
<INCOME-PRETAX> 1,132
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,132
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