EXHIBIT 4.1
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EXECUTION VERSION
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PURCHASE AGREEMENT
AMONG
NEXTWAVE WIRELESS LLC,
EACH GUARANTOR NAMED HEREIN,
AND
THE PURCHASERS NAMED HEREIN
RELATING TO:
SENIOR SECURED NOTES DUE 2010
OF
NEXTWAVE WIRELESS LLC
DATED AS OF JULY 17, 2006
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TABLE OF CONTENTS
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ARTICLE I PURCHASE, SALE AND ISSUANCE OF SECURITIES.....................1
1.1 Issuance of Notes................................................1
1.2 Sale and Purchase of the Notes; the Closing; Issuance of
Warrants.........................................................1
1.3 Purchasers' Representations and Acknowledgement..................3
1.4 Expenses.........................................................5
1.5 Indemnification..................................................6
1.6 Registration of Notes; etc.......................................8
1.7 Tax Matters......................................................9
ARTICLE II CLOSING CONDITIONS...........................................12
2.1 Completion of Due Diligence.....................................12
2.2 Opinion of Counsel..............................................12
2.3 Representations and Warranties True.............................12
2.4 Compliance with this Agreement; No Default......................13
2.5 Delivered Documents.............................................13
2.6 Issuance of the Notes...........................................13
2.7 Governmental Authorizations; No Violation.......................14
2.8 Financial Statements............................................14
2.9 Payment of Fees and Expenses....................................14
2.10 Purchase Permitted by Applicable Laws; Legal Investment.........14
2.11 Security Interests in Collateral................................14
ARTICLE III HOLDERS' SPECIAL RIGHTS......................................15
3.1 Service Charges.................................................15
3.2 Direct Payment..................................................15
3.3 Lost, etc. Notes................................................16
3.4 Inspection......................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES...............................17
4.1 Organization, Powers............................................17
4.2 Qualification and Good Standing.................................17
4.3 Company and Subsidiaries; Capitalization........................17
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TABLE OF CONTENTS
(continued)
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4.4 Due Authorization...............................................18
4.5 No Conflict.....................................................18
4.6 Governmental Consents...........................................18
4.7 Binding Obligations.............................................18
4.8 No Default; Contracts and Spectrum Leases.......................19
4.9 Use of Proceeds.................................................19
4.10 Financial Condition.............................................19
4.11 No Material Adverse Change; Absence of Undisclosed
Liabilities.....................................................20
4.12 Title to Collateral; Properties; Liens..........................20
4.13 FCC Licenses....................................................20
4.14 Intellectual Property...........................................21
4.15 Litigation; Adverse Facts.......................................22
4.16 Payment of Taxes................................................23
4.17 Compliance With Laws; Governmental Authorizations, Insurance....23
4.18 Affiliate Transactions..........................................24
4.19 Investment Company Act..........................................24
4.20 Securities Activities...........................................25
4.21 ERISA...........................................................25
4.22 Certain Fees....................................................25
4.23 Environmental Matters...........................................25
4.24 Employee Matters................................................26
4.25 Solvency........................................................26
4.26 Indebtedness....................................................26
4.27 No Violation of Regulations of Board of Governors of
Federal Reserve System..........................................26
4.28 Private Offering................................................27
4.29 Disclosure......................................................27
4.30 Representations and Warranties..................................27
4.31 Creation, Perfection and Priority of Liens......................27
4.32 Subsidiary Rights...............................................28
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TABLE OF CONTENTS
(continued)
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4.33 Ranking of Notes................................................28
4.34 Independent Auditors............................................28
4.35 Books and Records...............................................28
4.36 Money Laundering................................................28
ARTICLE V COVENANTS....................................................29
5.1 Financial Statements and Other Reports..........................29
5.2 Payment of Notes................................................31
5.3 Satisfaction of Obligations; Taxes..............................31
5.4 Maintenance of Property; Insurance..............................31
5.5 Corporate Existence.............................................32
5.6 Books and Records...............................................32
5.7 Compliance with Law, Maintenance of FCC Licenses................32
5.8 Use of Proceeds.................................................32
5.9 Issuance of Additional Guaranties; Additional Collateral........33
5.10 Spectrum Cash Account; Asset Sale Proceeds Account..............34
5.11 Limitation on Restricted Payments...............................35
5.12 Liens and Related Matters.......................................36
5.13 Indebtedness....................................................37
5.14 Asset Sales.....................................................37
5.15 Merger and Consolidation........................................38
5.16 Intentionally Omitted...........................................39
5.17 Limitation on Transactions With Affiliates......................39
5.18 Offer to Repurchase Upon Change of Control......................40
5.19 Nature of Business..............................................41
5.20 Investment Company Act..........................................42
5.21 Waiver of Stay, Extension or Usury Laws.........................42
5.22 Spectrum Holdings...............................................42
5.23 Amendments of Organizational Documents..........................42
5.24 OFAC............................................................42
5.25 Maintenance of Cash Balance/Cash Reserve Account................43
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TABLE OF CONTENTS
(continued)
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5.26 Intentionally Omitted...........................................43
5.27 License Subsidiaries............................................43
5.28 Parent..........................................................43
ARTICLE VI DEFAULTS AND REMEDIES........................................43
6.1 Event of Default................................................43
6.2 Acceleration....................................................46
6.3 Other Remedies..................................................46
6.4 Waiver of Past Defaults.........................................47
6.5 Rights of Holders of Notes to Receive Payment...................47
ARTICLE VII [INTENTIONALLY OMITTED]......................................47
ARTICLE VIII REDEMPTION AND REPURCHASE OF THE NOTES.......................47
8.1 Optional Redemption; Mandatory Redemption.......................47
8.2 Selection of Notes to Be Redeemed or Purchased..................49
8.3 Notice of Redemption............................................49
8.4 Effect of Notice of Redemption..................................49
8.5 Deposit of Redemption or Purchase Price.........................49
8.6 Notes Redeemed or Purchased in Part.............................50
ARTICLE IX DEFINITIONS..................................................50
ARTICLE X MISCELLANEOUS................................................66
10.1 Notices.........................................................66
10.2 Successors and Assigns; Assignments.............................67
10.3 Amendment and Waiver............................................68
10.4 Release of Security Interest or Guaranty; Release of
Guarantor.......................................................68
10.5 Interest Rate Limitation........................................69
10.6 Counterparts....................................................69
10.7 Headings........................................................70
10.8 Governing Law...................................................70
10.9 Consent to Jurisdiction and Service of Process..................70
10.10 Waiver of Jury Trial............................................70
10.11 Survival of Warranties and Certain Agreements...................71
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TABLE OF CONTENTS
(continued)
PAGE
10.12 Failure or Indulgence Not Waiver; Remedies Cumulative...........71
10.13 Independence of Covenants.......................................71
10.14 Marshalling; Payments Set Aside.................................71
10.15 Set-Off.........................................................72
10.16 Classification of Transaction...................................72
10.17 Exculpation.....................................................72
10.18 Entire Agreement...............................................72
10.19 Severability....................................................73
10.20 Confidentiality.................................................73
10.21 Ratable Sharing.................................................74
10.22 Independent Nature of Purchasers' Obligations and Rights........74
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SCHEDULES AND EXHIBITS
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Schedule 1.2A Purchase Price
Schedule 1.2B Purchasers
Schedule 4.3 Corporate and Capital Structure
Schedule 4.8 Material Contracts
Schedule 4.13 FCC Licenses
Schedule 4.13B Additional Existing Licenses
Schedule 4.14 Intellectual Property
Schedule 4.15 Claims and Proceedings
Schedule 4.18 Affiliate Transactions
Schedule 4.21 Qualified Plans and Multiemployer Plans
Schedule 4.22 Broker's Fees
Schedule 4.23 Environmental Matters
Schedule 4.26 Indebtedness
Schedule 5.10(a) Closing Expenses
Schedule 5.12 Liens
Schedule 5.13 Existing Indebtedness
Schedule 5.14 FCC License/Foreign Licenses/Leases and Subleases
Schedule 5.14(c) Lease or Sublease Markets
Schedule 5.22 Inquam Option
Exhibit A Form of Note
Exhibit B Form of Opinion of Company Counsel
Exhibit C Tax Matters Certificate
Exhibit D Form of Collateral Agency Agreement
Exhibit E Form of Guaranty
Exhibit F Form of Security Agreement
Exhibit G Intentionally Omitted
Exhibit H Form of Warrant Agreement
Exhibit I Form of Account Control Agreement
Exhibit J Form of Registration Rights Agreement
Exhibit K Form of Parent Guaranty
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of July 17, 2006, among NextWave Wireless
LLC, a limited liability company organized under the laws of the state of
Delaware (the "ISSUER" or the "COMPANY", which term shall include the surviving
company resulting from a merger of NextWave Wireless LLC into a wholly owned
subsidiary of the Parent as contemplated herein), and each Guarantor from time
to time party hereto (each, a "GUARANTOR" and collectively, the "GUARANTORS"),
the Purchasers set forth in Schedule 1.2B (each, a "PURCHASER" and collectively,
the "PURCHASERS"), and The Bank of New York (the "COLLATERAL AGENT"), as
Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
PURCHASE, SALE AND ISSUANCE OF SECURITIES
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1.1 ISSUANCE OF NOTES.
On or before the Closing (as defined below), the Company will have
authorized the issuance of $350,000,000 in aggregate principal amount of its 7%
Senior Secured Notes due July 14, 2010 (the "NOTES"). The Notes will be issued
in the form attached hereto as Exhibit A and at the purchase price set forth on
Schedule 1.2A, with original issue discount as further described below. The
Notes shall at all times be secured pursuant to the Collateral Documents and
guarantied by the Guarantors and the Parent in accordance with this Agreement.
Interest will accrue on the full principal amount of the Notes at a rate of 7%
per annum, payable semi-annually in arrears as further described in this
Agreement and the Notes; provided that, if the Conversion Date shall not have
occurred on or prior to the Conversion Target Date, interest shall accrue at the
rate of 12% per annum during the period from the Target Conversion Target Date
to the Conversion Date. The Notes shall be subject to optional redemption,
mandatory redemption and an obligation to make a repurchase offer upon the
occurrence of a Change of Control, in each case as further set forth in this
Agreement and the Notes.
Capitalized terms used herein without definition have the meanings
assigned to them in Article IX hereof.
1.2 SALE AND PURCHASE OF THE NOTES; THE CLOSING; ISSUANCE OF WARRANTS.
(a) In reliance upon the Purchasers' several representations made
in Section 1.3 hereof and subject to the terms and conditions set forth in the
Note Documents, the Company hereby agrees to sell to the Purchasers the Notes.
In reliance upon the representations and warranties of the Company contained in
the Note Documents, and subject to the terms and conditions set forth herein and
therein, the Purchasers hereby agree to purchase the Notes from the Company.
Having considered all facts relevant to a determination of the value of the
Notes being acquired by the Purchasers on the Closing Date, the Company and the
Purchasers have concluded and do hereby agree that, within the meaning of
Section 1273 of the Code, the issue price for each Note is as set forth in
Schedule 1.2A. The parties hereto recognize that this Agreement creates original
issue discount as set forth in Schedule 1.2A to be taken into account by each
Purchaser and the Company for United States federal income tax purposes on the
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respective Notes, and they agree to adhere to this Agreement for such purposes
and not to take any action inconsistent herewith. The inclusion of the foregoing
provisions is not an admission by any Purchaser that it is subject to United
States taxation.
(b) The sale and purchase of the Notes to be purchased by the
Purchasers will take place at a closing (the "CLOSING") at 9:00 a.m., New York
City time on July 17, 2006, at the offices of O'Melveny & ▇▇▇▇▇ LLP at ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or at such other time and place as is mutually
agreed to by the Company and the Purchasers (the "CLOSING DATE"). At the
Closing, the Company will deliver to each Purchaser the principal amount of
Notes set forth with respect to such Purchaser in Schedule 1.2B (in such
permitted denomination or denominations and registered in its name or the name
of such nominee or nominees as such Purchaser may request) against payment of
the purchase price therefor by intra-bank or federal funds wire transfer of same
day funds to the Company to be held in the Spectrum Cash Account in accordance
with the terms and conditions of the Note Documents. The purchase price for each
unit consisting of one Warrant and $1,000.00 principal amount of Notes shall be
$850.00, and the aggregate purchase price to be paid by each Purchaser shall be
as set forth with respect to such Purchaser in Schedule 1.2B.
(c) On the Conversion Date (unless the Company shall have
previously issued Purchaser Units pursuant to clause (e) below), the Company
shall cause the Parent, subject to the terms and conditions set forth in the
Note Documents, to issue the Warrants to the Purchasers (or, at the direction of
any Purchaser, to any assignee of such Purchaser's rights under this Section
1.2(c)) on such Conversion Date, and the Purchasers shall acquire the Warrants
in reliance upon the representations and warranties of the Company and the
Parent contained in the Note Documents, and subject to the terms and conditions
set forth herein and therein. As used herein, "WARRANTS" means warrants in
substantially the form of Exhibit A to the Warrant Agreement to acquire an
aggregate number of shares of Common Stock (the "WARRANT SHARES") equal to 5% of
all issued and outstanding shares of Common Stock immediately after giving
effect to the Conversion and before giving effect to the exercise of any Warrant
and the issuance of Common Stock in respect thereof. As used herein, "COMMON
STOCK" means the common stock, par value $0.001, of the Parent. Each Purchaser
shall be issued a Warrant exercisable for a number of Warrant Shares
representing such Purchaser's pro rata share of the aggregate number of Warrant
Shares, as set forth with respect to such Purchaser in Schedule 1.2B.
(d) The Conversion shall be effected in the manner described in
the Form 10, and the Company shall provide the Holders, the Collateral Agent and
their advisors with reasonable notice of the timing of the Conversion. On the
Conversion Date, the Company shall cause the Parent to deliver (x) to the
Collateral Agent, all such documents and instruments, including a certificate
representing the Capital Stock of the Company and, if applicable, a pledge
supplement or counterpart to the Security Agreement, as may be necessary or, in
the opinion of the Required Holders or the Collateral Agent, desirable to create
a valid and perfected First Priority Lien on the Capital Stock of the Company
and any other assets of the Parent that constitute Collateral and to continue
the valid and perfected First Priority Lien on the assets of the Company that
constitute Collateral or are otherwise required in connection with the Parent
Guaranty and (y) to each Holder, (i) certified copies of the Organizational
Documents of each of the Parent and the Company, as in effect upon completion of
the Conversion, together with good standing certificates from the Secretary of
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State of the jurisdiction of organization or formation of the Parent and the
Company respectively, each to be dated a recent date prior to their delivery to
the Holders, (ii) a certificate executed by the secretary or an assistant
secretary of the Parent as to (a) the incumbency and signatures of the officers
of the Parent executing the Parent Guaranty and the Security Agreement and such
other documents and instruments executed in connection therewith and (b) the
fact that the attached resolutions of the Board of Directors of the Parent
authorizing the execution, delivery and performance of the Note Documents to
which the Parent is a party and such other documents and instruments are in full
force and effect and have not been modified or rescinded, and (iii) a favorable
opinion of counsel to the Parent and the Company, in form and substance
reasonably satisfactory to the Holders, as to (a) the due organization or
formation and good standing of the Parent and the Company (after giving effect
to the Conversion) and the ownership of the Capital Stock of the Company by the
Parent, (b) the due authorization, execution and delivery by the Parent of each
Note Document to which the Parent is party and such other documents and
instruments, (c) the enforceability of each Note Document to which Parent is
party and such other documents and instruments, (d) the enforceability of the
Warrants and status of Warrant Shares when issued in accordance with the
Warrants, (e) the continued enforceability against the Company of each Note
Document to which the Company is a party and (f) the creation, and perfection
(and continued perfection) of the lien of the Collateral Agent on the assets of
the Parent and the Company that constitute Collateral.
(e) If the Conversion Date shall not have occurred on or prior to
the earlier to occur of (x) the date that is 120 days following the Closing Date
(or such later date as may be consented to in writing by the Required Holders in
their sole discretion) (the "CONVERSION TARGET DATE") and (y) a Change of
Control, the Company shall, on any Business Day that Required Holders, in their
sole discretion, shall designate for such purpose, in the case of clause (x),
and immediately preceding the date on which such Change of Control shall be
effected, in the case of clause (y), issue a number of LLC Units (the "PURCHASER
UNITS") to the Purchasers (or, at the direction of any Purchaser, to any
assignee of such Purchasers' rights under this Section 1.2(e)) such that,
immediately following the issuance thereof, the Purchaser Units would in the
aggregate represent an interest equal to 5% of all LLC Units that were issued
and outstanding immediately prior to such issuance. As used herein, "LLC UNITS"
means the limited liability interests of any class of the Company. Each Holder
acknowledges and agrees that any limited liability interests in the Company
acquired in the form of the Purchaser Units shall be subject to the terms of the
Company LLC Agreement, including without limitation, the restrictions on
transfer contained therein, and each applicable Holder shall execute a
counterpart of such agreement agreeing to be bound thereby as a "member". At the
request of Required Holders, upon the issuance of the Purchaser Units, the
Company shall deliver to the Holders a favorable opinion of counsel to the
Company as to the due authorization and valid issuance of the LLC Units.
1.3 PURCHASERS' REPRESENTATIONS AND ACKNOWLEDGEMENT.
(a) Each Purchaser represents, severally and not jointly, that it
is acquiring the Securities to be acquired by it for its own account, for
investment purposes only and not with a view to any distribution thereof within
the meaning of the Securities Act.
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Each Purchaser further represents, agrees and acknowledges, severally and
not jointly, that it:
1. is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act;
2. did not employ any broker or finder in connection with
the transactions contemplated by this Agreement (it being acknowledged that UBS,
which has been employed by the Company in connection with the Transactions, does
not constitute such a broker or finder for purposes of this representation);
3. understands that the Securities have not been registered
under the Securities Act and are being issued by the Company in transactions
exempt from the registration requirements of the Securities Act and the Company
has not undertaken to register the Securities under the Securities Act or any
state or blue sky law;
4. further understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to such Purchaser)
promulgated under the Securities Act depends on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts; and
5. other than through the Company or one of its
Subsidiaries, is not an "applicant" as that term is defined at 47 C.F.R. Section
1.2105(c)(7)(i) (2006) with respect to FCC Auction No. 66 for Advanced Wireless
Services FCC Licenses.
(b) If any Purchaser desires to sell or otherwise dispose of all
or any part of the Securities (other than pursuant to Rule 144, Rule 144A or an
effective registration statement under the Securities Act), if requested by the
Company, it will deliver to the Company an opinion of counsel, reasonably
satisfactory in form and substance to the Company, that an exemption from
registration under the Securities Act is available. Upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities (and all
securities issued in exchange therefor, upon exercise thereof or in substitution
thereof) shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE HOLDER MAY NOT OFFER, SELL, TRANSFER, ASSIGN, PLEDGE,
HYPOTHECATE, OR OTHERWISE DISPOSE OF OR ENCUMBER THE SECURITIES
REPRESENTED BY THIS CERTIFICATE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE ISSUER OF THESE SECURITIES
MAY REQUEST AN OPINION OF LEGAL COUNSEL FOR THE HOLDER REASONABLY
SATISFACTORY TO THE ISSUER THAT ANY SUCH OFFER, SALE, TRANSFER,
ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OR ENCUMBRANCE IS
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EXEMPT FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER, IF SUCH OFFER, SALE,
TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OR
ENCUMBRANCE IS NOT PURSUANT TO RULE 144, RULE 144A OR AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT."
(c) Each Holder agrees, for the benefit of the other Holders only,
that, in connection with the purchase of the Securities, it has relied on the
representations of the Company herein, information provided by the Company, its
own independent investigation of the financial condition and affairs of the
Company and its Subsidiaries, and its own appraisal of the creditworthiness of
the Company and its Subsidiaries. No individual Holder (or Affiliate or
representative of any Holder) is acting as a financial advisor or fiduciary to
any other Holder, or shall have any duty or responsibility to any other Holder,
either initially or on a continuing basis. Without limiting the foregoing, no
individual Holder (or Affiliate or representative of any Holder) shall have any
duty or responsibility to any other Holder to make any investigation on behalf
of any Holder or to provide any Holder with any credit or other information with
respect to the Company and its Subsidiaries, whether coming into its possession
before the purchase of the Securities, or at any time thereafter, and no Holder
(or Affiliate or representative of any Holder) shall have any responsibility
with respect to the accuracy or completeness of any information provided to
Holders. Holders acknowledge and agree that (i) the Holders, in such capacity,
have no right to representation on the Board of Directors of the Company, Parent
or any Subsidiary thereof, or to have an observer at meetings of any such Board,
and that (ii) any Person affiliated or associated with an individual Holder who
may serve as a member of the Board of Directors of the Company, Parent or any
Subsidiary thereof is doing so in that Person's individual capacity, not as a
representative of any Holder, and, in such capacity, shall have no duty or
responsibility to any Holder.
1.4 EXPENSES.
(a) Whether or not any of the Notes are sold, the Company will pay
all reasonable costs and expenses incurred by the Purchasers in connection with
the transactions contemplated by this Agreement, including, without limitation:
1. all reasonable out-of-pocket expenses (other than Taxes)
incurred by the Purchasers in connection with the preparation, negotiation,
execution and delivery of the Note Documents, including without limitation due
diligence and analysis (including as to FCC Licenses, Spectrum Leases and other
Spectrum Holdings), examinations and appraisals;
2. to the extent not specifically included in clause (1)
above, the reasonable fees and expenses of O'Melveny & ▇▇▇▇▇ LLP, who are acting
as counsel to one or more Purchasers in connection with the preparation,
negotiation, execution and delivery of the Note Documents; and
3. all reasonable out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by the Holders in connection with
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any amendment, modification, waiver, consent (whether or not such amendment,
waiver or consent becomes effective), or preservation or enforcement of rights
under the Note Documents or any other documents contemplated hereby or thereby.
Notwithstanding the foregoing, the Company's liability with respect to
clauses (1) and (2) shall not exceed the maximum amount set forth in the letter
agreement, dated as of June 8, 2006, between Avenue Capital Management II, L.P.
(solely in its capacity as investment advisor on behalf ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇ International, Ltd. and Avenue Special Situations Fund IV, L.P.)
and the Company.
Whether or not any of the Notes are sold, the Company will pay all
reasonable costs and expenses incurred by the Collateral Agent in connection
with the transactions contemplated by this Agreement, including, without
limitation:
(1) the costs and expenses outlined in that certain fee schedule
dated June 28, 2006;
(2) to the extent not specifically included in clause (1) above,
the reasonable fees and expenses of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.C., who are acting as counsel to the Collateral
Agent in connection with the preparation, negotiation,
execution and delivery of the Note Documents; and
(3) all reasonable out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by the Collateral Agent in
connection with any amendment, modification, waiver, consent
(whether or not such amendment, waiver or consent becomes
effective), or preservation or enforcement of rights under the
Note Documents or any other documents contemplated hereby or
thereby.
1.5 INDEMNIFICATION.
(a) In addition to all rights and remedies available to the
Purchasers at law or in equity, the Company and the Guarantors (collectively,
the "INDEMNIFYING PARTIES") shall jointly and severally indemnify and hold
harmless the Purchasers, the Collateral Agent, each subsequent Holder and their
respective affiliates, stockholders, partners, members, officers, directors,
employees, agents, representatives, controlling persons, successors, heirs and
assigns (collectively, the "INDEMNIFIED PARTIES") and save and hold each of them
harmless against and pay on behalf of or reimburse such party as and when
incurred for any loss (but not including any diminution in value of the Notes),
liability, demand, claim, action, cause of action, cost, damage, deficiency,
penalty, fine or expense, whether or not arising out of any claims by or on
behalf of the Company or any of its Subsidiaries or any third party, including
interest, penalties, and reasonable attorneys' fees and expenses of one counsel
to the Indemnified Parties (or such additional counsel as may reasonably be
required by reason of a conflict of interest among or between Indemnified
Parties) and all amounts paid in investigation, defense or settlement of any of
the foregoing (collectively, "LOSSES") which any such party may suffer, sustain
or become subject to, as a result of, in connection with, relating or incidental
to or by virtue of:
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1. any misrepresentation or breach of a representation or
warranty on the part of any Note Party under any Note Document;
2. without duplication of Section 1.5(a)(1) above, any
misrepresentation in or omission from any of the representations, warranties,
statements, schedules and exhibits hereto, certificates or other instruments or
documents furnished to the Holders by or on behalf of any Note Party made in or
pursuant to any Note Document;
3. any non-fulfillment or breach of any covenant or agreement
on the part of any Note Party under any Note Document;
4. any Environmental Claim; or
5. (except with respect to Taxes) any claim (whenever made)
relating in any way to any Note Party and any claim (whenever made) arising out
of, relating to, resulting from or caused by any transaction, status, event,
condition, occurrence or situation relating to, arising out of or in connection
with (A) the execution, delivery and performance of this Agreement, the other
Note Documents and the documents and agreements contemplated hereby or thereby
or (B) any actions taken by or omitted to be taken by any of the Indemnified
Parties in connection with any Note Document.
provided, however, that no Indemnified Party shall be entitled to such rights
and remedies to the extent that such Losses occur solely as a result of the
willful misconduct, or the gross negligence on the part of any Indemnified
Party, as finally determined by a court of competent jurisdiction.
(b) All indemnification rights hereunder shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby without limit, regardless of any investigation,
inquiry or examination made for or on behalf of, or any knowledge of the
Purchasers, their advisors and/or any of the Indemnified Parties or the
acceptance by the Company of any certificate or opinion, and shall inure to the
benefit of any purchaser of the Notes in accordance with the terms hereof
notwithstanding such Person's assignment or transfer of its Note.
(c) If for any reason the indemnity provided for in this Section
1.5 is unavailable to any Indemnified Party or is insufficient to hold each such
Indemnified Party harmless from all such Losses arising with respect to the
transactions contemplated by this Agreement, then the Company and the Guarantors
jointly and severally shall contribute to the amount paid or payable for such
Losses in such proportion as is appropriate to reflect not only the relative
benefits received by the Company and the Guarantors on the one hand and such
Indemnified Party on the other but also the relative fault of the Company and
the Guarantors and the Indemnified Party as well as any relevant equitable
considerations. In addition, the Company and the Guarantors, jointly and
severally, agree to reimburse any Indemnified Party upon demand for all
reasonable expenses (including legal counsel fees) incurred by such Indemnified
Party in connection with investigating, preparing or defending any such action
or claim; provided, however, that such Indemnified Party is entitled to be
indemnified hereunder with respect to such claim. The indemnity, contribution
and expenses reimbursement obligations that the Company and the Guarantors have
under this Section 1.5 shall be in addition to any liability that the Company
7
and the Guarantors may otherwise have at law or in equity. The Company and the
Guarantors further agree that the indemnification and reimbursement commitments
set forth in this Agreement shall apply whether or not the Indemnified Party is
a formal party to any such lawsuits, claims or other proceedings.
(d) Any indemnification or payments in respect of contribution of
any Purchaser or any other Indemnified Party by the Company or the Guarantors
pursuant to this Section 1.5 shall be effected by wire transfer of immediately
available funds from the Company or any Guarantor to an account designated by
such Purchaser or any other Indemnified Party within ten Business Days after the
incurrence of a Loss.
1.6 REGISTRATION OF NOTES; ETC.
(a) The Issuer will maintain (and make available for inspection by
the Holders upon reasonable prior notice at reasonable times) at its address
referred to in Section 10.1(c) a register for the recordation of, and shall
record, the names and addresses of Holders (and any changes thereto), the
respective amounts of the Notes of each Holder from time to time and the amount
that is due and payable, and paid, to each Holder (the "REGISTER"). Promptly
following the Closing and each subsequent change to the Register, Issuer shall
provide a copy of the Register to the Collateral Agent. The Issuer shall deem
and treat the Persons listed as Holders in the Register as the holders and
owners of the corresponding Notes listed therein for all purposes of this
Agreement; all amounts owed with respect to any Note shall be owed to the Holder
listed in the Register as the owner thereof; and any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Holder shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Notes. Each Holder shall record on its internal records the amount
of its Notes and each payment in respect hereof, and any such recordation shall
be conclusive and binding on the Issuer, absent manifest error, subject to the
entries in the Register, which shall, absent manifest error, govern in the event
of any inconsistency with any Holder's records. Failure to make any recordation
in the Register or in any Holder's records, or any error in such recordation,
shall not affect any Notes or any obligation thereunder.
(b) Subject to Section 10.2, a Holder may transfer a Note to a new
Holder only by surrendering such Note to the Company duly endorsed for transfer
or accompanied by a duly executed instrument of transfer naming the new Holder
(or the current Holder if submitted for exchange only).
(c) Upon surrender for registration of transfer of any Notes, the
Issuer, at its expense, will ▇▇▇▇ the surrendered Notes as canceled, and execute
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of the same type, and of a like aggregate principal amount. Each
such new Note shall be payable to such Person as such holder may request and
shall be substantially in the form of Exhibit A. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. Notes shall not be transferred in denominations of
less than $1,000,000; (provided that if necessary to enable the registration of
transfer by a Holder of its entire holding of Notes, one Note may be in a
denomination of less than $1,000,000). Promptly upon the transfer of any Note,
8
the Issuer shall provide written notice of such transfer to the Collateral
Agent, including the date of such transfer, the amount of Note or Notes
transferred and the name of and payment instructions for the transferee.
(d) Notes may be exchanged at the option of any Holder thereof for
Notes of a like aggregate principal amount, as applicable, but in different
denominations. Whenever any Notes are so surrendered for exchange, the Issuer,
at its expense, will ▇▇▇▇ the surrendered Notes as canceled, and execute and
deliver the Notes that the Holder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange
of such Notes will be the legal and valid obligations of the Company, evidencing
the same interests, and entitled to the same benefits, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of
transfer or exchange will (if so required) be duly endorsed or will be
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Company, duly executed by the Holder thereof or its attorney duly
authorized in writing.
(g) Upon receipt of a Note pursuant to clause (b) or (d) above and
any forms, certificates or other evidence with respect to Tax matters that the
new Holder may be required to deliver the Company pursuant to Section 1.7, the
Company will record the relevant information in the Register.
(h) Any transfer of any of the Notes is subject to Section 1.3(b)
hereof and will not be valid unless and until such transfer is recorded in the
Register.
1.7 TAX MATTERS
(a) Any and all payments by or on behalf of the Issuer hereunder
or under the Notes or other Note Documents that are made to or for the benefit
of a Holder shall be made free and clear of and without deduction or withholding
on account any Taxes. If the Issuer or any other Person on behalf of the Issuer
shall be required by law to deduct or withhold any Taxes from or in respect of
any sum payable hereunder or under any Notes or other Note Documents to a
Holder:
1. the Issuer shall notify such Holder of any such
requirement or any change in any such requirement as soon as it becomes aware of
it;
2. the Issuer shall timely pay any such Tax to the relevant
Governmental Authority when such Tax is due, in accordance with Applicable Law;
3. unless such Tax is an Excluded Tax, the sum payable
shall be increased to the extent necessary to ensure that, after making the
required deductions (including deductions applicable to additional sums payable
9
under this clause), each Holder receives on the due date a net sum equal to the
sum it would have received had no such deduction been required or made; and
4. within 30 days after the Company receives a receipt of
payment of any Tax which the Issuer is required by clause (2) above to pay,
shall deliver to the applicable Holder the original or a certified copy of an
official receipt or other satisfactory evidence of the payment and its
remittance to the relevant Governmental Authority.
(b) In addition, without limiting the provisions of paragraph (a)
above, the Issuer agrees to timely pay any Other Taxes to the relevant
Governmental Authority in accordance with Applicable Law and within thirty (30)
days after the Issuer receives a receipt for payment of any such Taxes, the
Issuer shall furnish to the applicable Holder the a copy of such receipt.
(c) The Issuer will indemnify each Holder, within 10 days after
demand therefor, for the full amount of any Covered Taxes or Other Taxes
(including for the full amount of any Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section 1.7(c)) paid by such
Holder, as the case may be, and any penalties (other than penalties imposed by
reason of such Holder's gross negligence or willful misconduct), interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Covered Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Issuer by a Holder shall be conclusive
absent manifest error.
(d) If a Holder receives a refund of any Covered Taxes or Other
Taxes as to which it has been indemnified by the Issuer or with respect to which
the Issuer paid additional amounts pursuant to this Section 1.7, it shall pay to
the Issuer an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Issuer pursuant to this
Section 1.7 with respect to the Covered Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Holder and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided, however, that the Issuer, upon the request of
such Holder, agrees to repay the amount paid over to the Issuer to such Holder
in the event that such Holder is required to repay such refund to such
Governmental Authority.
(e) Unless not legally entitled to do so:
1. each Holder shall deliver such forms or other
documentation prescribed by Applicable Law or reasonably requested by the Issuer
as will enable the Issuer to determine whether or not such Holder is subject to
backup withholding or information reporting requirements;
2. any Holder that is entitled to an exemption from or
reduction of any Tax with respect to payments hereunder or under the Notes or
any other Note Document shall deliver to the Issuer, on or prior to the date on
which such Holder becomes a Holder under this Agreement (and from time to time
thereafter, as may be necessary in the determination of the Issuer, in the
reasonable exercise of its discretion), such properly completed and duly
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executed forms or other documentation prescribed by Applicable Law as will
permit such payments to be made without withholding or at a reduced rate of
withholding;
3. without limiting the generality of the foregoing, any
Holder shall deliver to the Issuer (in such number of copies as shall be
reasonably requested by the Issuer) on or prior to the date on which such Holder
becomes a Holder under this Agreement (and from time to time thereafter, as may
be necessary in the determination of the Issuer, in the reasonable exercise of
its discretion), whichever of the following is applicable:
(A) unless such Holder has otherwise established to
the reasonable satisfaction of the Issuer that it
is an exempt recipient (as defined in Section
6049(b)(4) of the Code and the United States
Treasury Regulations thereunder) properly
completed and duly executed copies of Internal
Revenue Service Form W-9,
(B) properly completed and duly executed copies of
Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty
to which the United States is a party,
(C) properly completed and duly executed copies of
Internal Revenue Service Form W-8ECI,
(D) in the case of a Holder claiming the benefits of
the exemption for "portfolio interest" under
Section 881(c) of the Internal Revenue Code, (A) a
duly executed certificate in the form of Exhibit C
hereto to the effect that such Holder is not (i) a
"bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (ii) a ten-percent
shareholder (within the meaning of Sections
881(c)(3)(B) or 871(h)(3)(B) of the Internal
Revenue Code) of the Issuer, or (iii) a controlled
foreign corporation described in Section
881(c)(3)(C) of the Internal Revenue Code and (B)
properly completed and duly executed copies of
Internal Revenue Service Form W-8BEN, and
(E) properly completed and duly executed copies of any
other form prescribed by Applicable Law as a basis
for claiming exemption from or a reduction in any
Tax,
in each case together with such supplementary documentation as
may be prescribed by Applicable Law to permit the Issuer to
determine the withholding or deduction required to be made, if
any.
(f) Without limiting the generality of the foregoing, each Holder
hereby agrees, from time to time after the initial delivery of such forms,
whenever a lapse in time or change in circumstances renders such forms,
11
certificates or other evidence so delivered obsolete or inaccurate in any
material respect, that such Holder shall promptly (1) deliver to the Issuer two
original copies of renewals, amendments or additional or successor forms,
properly completed and duly executed by such Holder, together with any other
certificate or statement of exemption required in order to confirm or establish
that such Holder is an exemption from or reduction of any Tax with respect to
payments to such Holder under the Note Documents, or (2) notify the Issuer of
its inability to deliver any such forms, certificates or other evidence.
(g) Any Holder claiming any additional amounts payable pursuant to
this Section 1.7 shall use its reasonable best efforts to change the
jurisdiction of its lending office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts that would be
payable or may thereafter accrue and would not be otherwise materially
disadvantageous to such Holder.
(h) The obligations of the Issuer under this Section 1.7 shall
survive the payment of the Notes and the termination of this Agreement.
ARTICLE II
CLOSING CONDITIONS
------------------
The Purchasers' obligation to purchase and pay for the Notes shall be
subject to the satisfaction of each of the following conditions on or before the
Closing Date:
2.1 COMPLETION OF DUE DILIGENCE.
The Purchasers shall have completed a due diligence investigation of the
Company and its Subsidiaries (including, without limitation, business (including
with respect to Spectrum Leases and Spectrum Holdings), insurance, tax and legal
due diligence investigations) satisfactory to the Purchasers in their sole
discretion.
2.2 OPINION OF COUNSEL.
The Purchasers and the Collateral Agent shall have received opinions in
form and substance satisfactory to the Purchasers and the Collateral Agent,
dated the Closing Date from Weil, Gotshal & ▇▇▇▇▇▇ LLP or, with respect to the
FCC Licenses and related matters, ▇▇▇▇▇▇ ▇▇▇▇▇, LLP, each counsel for the
Company and the Guarantors, covering the matters set forth on Exhibit B with
respect to the Company and the Guarantors, and covering such other matters
incident to the transactions contemplated hereby as the Purchasers and the
Collateral Agent may reasonably request.
2.3 REPRESENTATIONS AND WARRANTIES TRUE
The representations and warranties of the Company and the Guarantors
contained in this Agreement are true and correct in all material respects on and
as of the date hereof and the Closing Date to the same extent as though made on
and as of that date (or, to the extent such representations and warranties
specifically relate to an earlier date, that such representations and warranties
12
were true, correct and complete on and as of such earlier date).
2.4 COMPLIANCE WITH THIS AGREEMENT; NO DEFAULT.
The Company and the Guarantors shall have performed and complied with all
agreements, covenants and conditions contained in the Note Documents or any
other document contemplated hereby or thereby to be performed or complied with
by it on or before the Closing Date, and after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default shall have
occurred and be continuing hereunder.
2.5 DELIVERED DOCUMENTS.
On or before the Closing Date, each of the Company and the Guarantors
shall deliver to the Purchasers with respect to the Company or such Guarantor,
as the case may be, each, unless otherwise noted, dated the Closing Date:
(a) Note Documents. Copies of the Note Documents, duly executed by
each party thereto.
(b) Officer's Certificate. A certificate dated the Closing Date
and signed by a Responsible Officer of the Company certifying that the
conditions set forth in this Article II have been satisfied on and as of such
date.
(c) Secretary's Certificate. A certificate, dated the Closing Date
and signed by the Secretary of the Company and each Guarantor, certifying as to
the board and other resolutions and Organizational Documents attached thereto
and as to all other corporate or other organizational proceedings relating to
the authorization, execution and delivery of the Notes and the Note Documents.
(d) Good Standing Certificates. A good standing certificate from
the Secretary of State of such Person's jurisdiction of organization and, to the
extent generally available, a certificate or other evidence of good standing as
to payment of any applicable franchise or similar taxes from the appropriate
taxing authority of such jurisdiction, each dated a recent date prior to the
Closing Date.
(e) Incumbency Certificates. Signature and incumbency certificates
of the officers of each Person executing the Note Documents, and any other
documents, instruments and certificates required to be executed by such Person
in connection herewith or therewith.
(f) Such other documents or certificates as the Purchasers or the
Collateral Agent may reasonably request.
2.6 ISSUANCE OF THE NOTES.
Pursuant to Section 1.2 hereof, the Company shall have issued and
delivered $350,000,000 in aggregate principal amount of Notes to the Purchasers.
The Collateral Agent shall have accepted for deposit the Initial Escrow Funds.
13
2.7 GOVERNMENTAL AUTHORIZATIONS; NO VIOLATION.
The Company and the Guarantors shall have received all material
Governmental Authorizations (including any required Governmental Authorizations
from the FCC) and sent or made all material notices, filings, registrations and
qualifications required to be obtained, sent or made in connection with the
consummation of the Transactions. The consummation by the Company and the
Guarantors of the Transactions shall not materially contravene, violate or
conflict with any Applicable Law.
2.8 FINANCIAL STATEMENTS.
The Company shall have delivered to the Purchasers, on the Closing Date,
the financial statements referred to in Section 4.10.
2.9 PAYMENT OF FEES AND EXPENSES.
The Company shall have paid the expenses referred to in Section 1.4
hereof.
2.10 PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT.
Each Purchaser's purchase of and payment for the Notes to be purchased by
it:
1. shall not be prohibited by any Applicable Law or
governmental regulation; and
2. shall be permitted by the laws and regulations of the
jurisdictions to which it is subject.
2.11 SECURITY INTERESTS IN COLLATERAL.
The Purchasers shall have received evidence satisfactory to the Purchasers
and the Collateral Agent that the Company and the Guarantors shall have taken or
caused to be taken all such actions, executed and delivered or caused to be
executed and delivered all such agreements, documents and instruments, and made
or caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (b) and (c) below) that may be necessary
or, in the opinion of the Purchasers or the Collateral Agent, desirable in order
to create in favor of the Collateral Agent for the benefit of the Holders of the
Notes a valid and (upon such filing and recording or other action set forth
below) perfected First Priority security interest in the entire Collateral in
accordance with the Collateral Documents . Such actions shall include, without
limitation, the following:
(a) Stock Certificates. Delivery to the Collateral Agent of
certificates (which certificates shall be accompanied by irrevocable undated
stock powers, duly endorsed in blank and otherwise satisfactory in form and
substance to the Purchasers and the Collateral Agent) representing all Capital
Stock pledged pursuant to the Security Agreement;
(b) Searches and UCC Termination Statements. Delivery to the
Collateral Agent of (a) the results of a recent search, by a Person satisfactory
to the Purchasers, of all effective UCC financing statements and fixture filings
14
and all judgment and tax lien filings which may have been made with respect to
any personal property of the Company and any of the Guarantors, together with
copies of all such filings disclosed by such search, and (b) termination
statements duly executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC financing
statements or fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement);
(c) UCC Financing Statements. Delivery to the Collateral Agent of
UCC financing statements with respect to all Collateral of the Company and each
Guarantor, for filing in all jurisdictions as may be necessary or, in the
opinion of the Purchasers, desirable to perfect the security interests created
in such Collateral pursuant to the Collateral Documents; and
(d) Accounts/Account Control Agreements. Establishment of each of
the Spectrum Cash Account, the Cash Reserve Account and the Asset Sales Proceeds
Account at a financial institution reasonably satisfactory to Holders; delivery
to the Collateral Agent of one or more Account Control Agreements covering each
such account; and funding of the Cash Reserve Account in accordance with Section
5.25 hereof.
Notwithstanding anything to the contrary in this Article 2, with respect
to the conditions precedent referenced, the Collateral Agent shall not be
responsible for determining the satisfaction of such conditions precedent, or
liable for any failure thereof.
ARTICLE III
HOLDERS' SPECIAL RIGHTS
-----------------------
The Company hereby agrees to grant to each Holder the following special
rights:
3.1 SERVICE CHARGES.
No service charge shall be made for any registration of transfer or
exchange of the Notes.
3.2 DIRECT PAYMENT.
(a) The Company will pay or cause to be paid all amounts payable
in cash with respect to any Note (without any presentment of such Note and
without any notation of such payment being made thereon) by crediting (before
3:00 p.m., New York time on the date when due in accordance with this Agreement
and the Note), by intra-bank or federal funds wire transfer to each Holder's
account in any bank in the United States as may be designated and specified in
writing by such Holder at least two Business Days prior to the applicable
payment. Each Purchaser's initial bank account for this purpose is on such
Purchaser's signature page hereto, and if no notice is given pursuant to the
previous sentence hereof, such transfer shall be made to such initial bank
account.
(b) Notwithstanding anything to the contrary contained in the
Notes, if any principal payable with respect to a Note is payable on a Legal
Holiday, then the Company will pay such amount on the next succeeding Business
15
Day, and interest will accrue on such amount up to, but excluding, the date on
which such amount is paid and payment of such accrued interest will be made
concurrently with the payment of such amount; provided that the Company may
elect to pay in full (but not in part) any such amount on the last Business Day
prior to the date such payment otherwise would be due, and no such additional
interest will accrue on such amount.
(c) Notwithstanding anything to the contrary contained in the
Notes, if any interest payable with respect to a Note is payable on a Legal
Holiday, then the Company will pay such amount on the next succeeding Business
Day. In such event, the interest amount payable will include interest calculated
from the last scheduled interest payment date up to but excluding such next
succeeding Business Day; provided that the Company may elect to pay in full (but
not in part) any such amount on the last Business Day prior to the date such
payment otherwise would be due, and no such additional interest will accrue on
such amount.
3.3 LOST, ETC. NOTES.
Notwithstanding any provision in any Note Document to the contrary, if any
Note is mutilated, destroyed, lost or stolen, then the affidavit of the Holder's
treasurer or assistant treasurer (or other authorized officer), briefly setting
forth the circumstances with respect to such mutilation, destruction, loss or
theft, will be accepted as satisfactory evidence thereof, and no indemnity,
security or payment of charges or expenses will be required as a condition to
the execution and delivery by the Company or the transfer agent, as the case may
be, with respect to such Note, of new Notes for a like amount, in substitution
therefor, other than such Purchaser's or such Holder's reasonably satisfactory
unsecured written agreement to indemnify the Company or the transfer agent, as
the case may be.
3.4 INSPECTION.
Following the Closing, the Company (a) will allow the Holders the right,
during normal business hours and upon reasonable prior notice, to visit and
inspect any of the offices, to examine all their books of account, records,
reports and other papers, to make copies and extracts therefrom and to discuss
their respective affairs, finances and accounts with the Company's designated
representative, officers (and by this provision, the Company authorizes its
officers to discuss the affairs, finances and accounts of the Company and the
Guarantors), all at such times and as often as may be reasonably requested, but
not more frequently than twice per Fiscal Year unless an Event of Default has
occurred and is continuing and (b) authorizes its public accountants to discuss
the affairs, finances and accounts of the Company and the Guarantors, in each
case, subject to any limitations imposed by law or by confidentiality agreements
binding on the Company or the relevant Guarantor and excluding materials subject
to attorney-client privilege or attorney work product. The costs and expenses of
such inspections will be paid by the Holders, provided that if an Event of
Default then exists, such costs and expenses incurred by the Holders will be
paid by the Company and the Guarantors. The Company shall be entitled to
participate in or observe all such visits, inspections, examinations and
discussions.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company and the Guarantors hereby, jointly and severally, represent
and warrant (w) on and as of the date of this Agreement and (x) on and as of the
Closing Date, and immediately after giving effect to the Transactions, that:
4.1 ORGANIZATION, POWERS.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Guarantor that is a corporation is duly incorporated, validly existing and in
good standing under the laws of its state of incorporation. Each Guarantor that
is a partnership or limited liability company is duly organized and a validly
existing partnership or limited liability company, as the case may be, under the
laws of its jurisdiction of formation and is in good standing in such
jurisdiction. Each of the Company and the Guarantors has all requisite
corporate, partnership or limited liability company power and authority, as
applicable, to own and operate its respective properties and to carry on its
respective business as now conducted and as proposed to be conducted, to enter
into this Agreement and the other Note Documents, to carry out the transactions
contemplated hereby and thereby and, in the case of the Company, to issue and
deliver the Securities and pay the obligations incurred under the Note
Documents, and, in the case of each Guarantor, to issue its respective Guaranty
and enter into the Collateral Documents to which it is a party.
4.2 QUALIFICATION AND GOOD STANDING.
The Company and each of the Guarantors is qualified or authorized to do
business and is in good standing in the jurisdiction of its organization and in
every other jurisdiction where the failure to be so qualified could reasonably
be expected to have a Material Adverse Effect.
4.3 COMPANY AND SUBSIDIARIES; CAPITALIZATION.
Schedule 4.3 sets forth a true and correct list of the holders of 5% or
more of the Capital Stock of the Company and its Subsidiaries as of the Closing
Date. Upon consummation of the Transactions to be consummated on the Closing
Date, (i) there will be 491,042,171 LLC Units issued and outstanding, (ii) the
maximum number of additional LLC Units issuable pursuant to the options,
warrants and other rights set forth on Schedule 4.3 will be59,770,125 and (iii)
all of the issued and outstanding Capital Stock of the Company shall have been
duly authorized and validly issued. Upon consummation of the Conversion and upon
issuance of the Warrants or the Purchaser Units, as applicable, all of the
issued and outstanding Capital Stock of the Company and, if applicable, the
Parent shall have been duly authorized and validly issued, fully paid and
nonassessable, and all of such Capital Stock of the Company shall be owned by
the Parent. Schedule 4.3 sets forth a true and correct list of every Subsidiary
of the Company as of the Closing Date. Each such Subsidiary is, directly or
indirectly, 100% owned by the Company except as otherwise described on Schedule
4.3. Except as set forth on Schedule 4.3, as of the Closing Date, there are no
pre-emptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, employee stock plans or other similar agreements or
17
understandings for the purchase or acquisition of any shares of Capital Stock or
other securities of the Company or any of its Subsidiaries. The Guarantors
constitute all of the License Subsidiaries and Material Subsidiaries.
4.4 DUE AUTHORIZATION.
The execution, delivery and performance of the Note Documents and the
issuance and delivery of the Securities and the Guaranties, as applicable, and
the consummation of the Transactions have been duly authorized by all necessary
corporate, limited liability company and/or partnership action, as applicable,
on the part of the Company and each of the Guarantors. The Conversion has been
duly authorized by all necessary limited liability company action on the part of
the Company and its members.
4.5 NO CONFLICT.
The execution, delivery and performance by the Company and each Guarantor
of the Note Documents, including the issuance and delivery of the Securities and
the Guaranties, as applicable, and the consummation of the Transactions do not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company or any of the Guarantors, or violate any
Organizational Documents of the Company or any of the Guarantors, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any FCC License, Spectrum Lease or other Material Contract
of any Note Party, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of any Note Party (except pursuant to
the Note Documents), (iv) require any approval of stockholders, partners or
members or any approval or consent of any Person under any Contractual
Obligation of any Note Party, except for such approvals or consents obtained on
or before the Closing Date or (v) give rise (except pursuant to the Note
Documents) to any preemptive rights, rights of first refusal or other similar
rights on behalf of any Person under any Applicable Law or any provision of the
Organizational Documents of any Note Party or any Material Contract to which any
Note Party is a party or by which any Note Party is bound.
4.6 GOVERNMENTAL CONSENTS.
The execution, delivery and performance by each Note Party of the Note
Documents, the issuance and delivery of the Securities and the Guaranties, as
applicable, and the consummation of the Transactions do not and will not require
any Governmental Authorization by any Governmental Authority (including the FCC)
except to the extent obtained on or before the Closing Date or, in respect of
Parent, the Conversion Date.
4.7 BINDING OBLIGATIONS.
(a) On and as of the date hereof, with respect to this Agreement,
and on and as of the Closing Date, with respect to all Note Documents required
to be delivered on or prior to such date, each Note Document has been, duly
executed and delivered by each Note Party party thereto and is the legally valid
and binding obligation of each Note Party party thereto, enforceable against
such Note Party in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
18
or limiting creditors' rights generally or by equitable principles relating to
enforceability, whether considered at law or equity.
(b) The Notes have been duly authorized by the Company and when
executed and authenticated, will be entitled to the benefits of this Agreement
and will constitute the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability, whether considered at law or equity.
4.8 NO DEFAULT; CONTRACTS AND SPECTRUM LEASES.
(a) Schedule 4.8 sets forth a complete list of each Material
Contract and each Spectrum Lease (including all amendments or modifications
thereto). The Company has made available to the Purchasers true and complete
copies of all Material Contracts and Spectrum Leases (including all amendments
or modifications thereto) to which the Company or any Guarantor is a party or to
which it or any of them or any of their respective properties is subject.
(b) Except as set forth on Schedule 4.15, neither the Company nor
any of the Guarantors is in default in the payment or performance of any of its
Material Contracts or Spectrum Leases or has received any notice of default
thereunder, and no such default has occurred or will occur as a result of the
execution and delivery of the Note Documents and consummation of the
Transactions. The Company has no knowledge of any event which, upon the giving
of notice or the passage of time, or both, would give rise to any default in the
performance by it or, to its knowledge, any other party thereto, of any
obligation under any Material Contract or Spectrum Lease.
(c) Subsidiaries of the Company are the sole owners and holders of
all of the leasehold or license interests granted by each Spectrum Lease. Except
as disclosed on Schedule 4.15, each Material Contract and Spectrum Lease is, and
on the Closing Date will be, in full force and effect, constituting valid and
binding obligations of the parties thereto and enforceable in accordance with
their respective terms. Except as disclosed on Schedule 4.15, neither the
Company nor any Subsidiary has received any notice that any party to any of the
Material Contracts or Spectrum Leases intends to cancel or terminate any such
Material Contract or Spectrum Lease.
4.9 USE OF PROCEEDS.
The net proceeds from the sale of the Notes hereunder will be deposited
into the Spectrum Cash Account and be applied pursuant to and in accordance with
the applicable Account Control Agreement and the provisions of Section 5.10.
4.10 FINANCIAL CONDITION.
(a) The audited consolidated balance sheet of the Company and its
Subsidiaries dated December 31, 2005, and the related audited consolidated
statements of income or operations, shareholders' equity and cash flows for the
Fiscal Year ended on that date have been delivered to the Purchasers. The
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audited consolidated balance sheet of the Company and its Subsidiaries dated
December 31, 2005, and the related audited consolidated statements of income or
operations, shareholders' equity and cash flows for the Fiscal Year ended on
that date, were prepared in accordance with GAAP consistently applied throughout
the respective periods covered thereby, fairly present, in all material
respects, the financial condition of such Persons as at the dates indicated and
the results of their operations and their cash flows for the periods indicated,
except as otherwise indicated therein.
(b) The unaudited consolidated balance sheets of the Company and
its Subsidiaries as at the end of each Fiscal Quarter ended more than 45 days
prior to the Closing Date, consisting of a consolidated balance sheet and the
related consolidated statements of income and cash flows for the periods
indicated were prepared in accordance with GAAP consistently applied throughout
the respective periods covered thereby, and certified by the chief financial
officer of the Company that they fairly present, in all material respects, the
financial condition of the Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments, except for the absence of footnotes and as otherwise expressly
noted therein.
4.11 NO MATERIAL ADVERSE CHANGE; ABSENCE OF UNDISCLOSED LIABILITIES.
Since December 31, 2005, no event or change has occurred that has had or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth in the financial statements
referred to in Section 4.10, since December 31, 2005, neither the Company nor
any of its Subsidiaries has incurred any obligations or liabilities that would
be required to be reflected on a balance sheet or the notes prepared thereto in
accordance with GAAP consistently applied, other than obligations or liabilities
incurred in the ordinary course of business.
4.12 TITLE TO COLLATERAL; PROPERTIES; LIENS.
Except as disclosed on Schedule 4.15, the Company and each of the
Guarantors have (i) good title to its Collateral, (ii) good and marketable title
in fee simple to all real property owned by it which is material to the business
of the Company and its Subsidiaries and (iii) good title to or valid leasehold
interests in all of its personal property which is material to the business of
the Company and its Subsidiaries. Upon the completion of the Transactions, the
Collateral Agent has and shall continue to have a First Priority Lien in and to
the Collateral. Except as permitted by this Agreement, all such properties and
assets are free and clear of Liens (other than Liens held by the Collateral
Agent and Permitted Liens).
4.13 FCC LICENSES.
(a) Schedule 4.13 contains a true and complete list, as of the
date of this Agreement, of (i) each FCC License which the FCC has issued to the
Company or any of its Subsidiaries, identifying the holder of each such FCC
License and (ii) all material pending applications filed with the FCC by the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has any Foreign Spectrum Holdings as of the Closing Date.
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Except as set forth on Schedule 4.13 hereto, as of the Closing Date, (i)
each of the FCC Licenses listed on Schedule 4.13 is valid, binding, in full
force and effect, and enforceable by the Company or any Subsidiary party thereto
in accordance with its terms; (ii) the Company or any Subsidiary which is the
holder of each such FCC License has performed all accrued obligations thereunder
in all material respects and has not received written notice of intention to
terminate any FCC License or written notice alleging a material default (other
than letters of default that have been rescinded or with respect to defaults
that have been cured or waived); (iii) no event caused by, relating to or
affecting the Company or any Subsidiary which is the holder of an FCC License
has occurred which (with or without the giving of notice or lapse of time, or
both) would constitute a material default or material breach by the Company or
any Subsidiary party of the terms of such FCC License, the Communications Act or
the FCC Rules, (iv) neither the Company nor any Subsidiary has modified any of
the material terms of any FCC License held by the Company or a Subsidiary and
(v) to the knowledge of the Company, no holder of an Underlying License is in
breach or default in any material respect thereunder and no event caused by,
relating to or affecting any holder of an Underlying License has occurred which
(with or without the giving of notice or lapse of time, or both) would
constitute a material default or material breach by such party of the terms of
such Underlying License, the Communications Act or the FCC Rules. True and
complete copies of the FCC Licenses listed in Schedule 4.13, including all
substantive amendments, waivers and modifications thereto in the possession of
the Company or any Subsidiary party thereto as of the date of this Agreement,
together with all material pending applications filed with the FCC, have been
made available to the Purchasers by the Company prior to the date hereof. The
Company has not entered into any agreement, written or oral, or made any
commitment to enter into any such agreement, pursuant to which the Company would
accept any interference other than such interference contemplated by the
applicable FCC Licenses, Underlying Licenses and FCC Rules, or to permit any
additional signals in the Geographic Service Area covered by such FCC Licenses
or Underlying Licenses and, to the Company's knowledge, there is not any such
interference or additional signal.
(b) Neither the Company nor any of its Subsidiaries is a party to
or has knowledge of any investigation, notice of apparent liability, violation,
forfeiture or other order or complaint issued by or before any court or
regulatory body, including the FCC, or of any other proceedings which could in
any manner threaten or adversely affect the validity or continued effectiveness
of the FCC Licenses of any such Person or give rise to any order of forfeiture
or could otherwise reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has any reason to believe that
the FCC Licenses listed and described in Schedule 4.13 will not be renewed in
the ordinary course. The Company and each Subsidiary have filed in a timely
matter all material reports, applications, documents, instruments and
information required to be filed by it pursuant to the FCC Rules. No licenses,
authorizations, permits or other rights other than the FCC Licenses are required
under the Communications Act or the FCC Rules to operate the business of the
Company in substantially the manner it is being operated as of the date hereof
and as of the Closing Date.
4.14 INTELLECTUAL PROPERTY.
(a) The Company and the Guarantors own (or have valid licenses
with respect to) all right, title and interest in and to all trademarks and
service marks, tradenames, patents, copyrights and trade secrets identified on
21
Schedule 4.14 (collectively, the "INTELLECTUAL PROPERTY") (other than pending
patent applications and any docketed disclosures), free and clear of all Liens,
other than Liens permitted pursuant to Section 5.12(a). Except for Intellectual
Property relating to WiMAX technology, as to which no representation is made
herein, the Intellectual Property constitutes all such property as is material
to the conduct of the business of the Company and the Guarantors. All material
Intellectual Property (other than pending patent applications and any docketed
disclosures) is subsisting, in full force and effect, and is valid and
enforceable. Except as set forth on Schedule 4.14, as of the Closing Date, none
of the owned or licensed Intellectual Property is subject to any outstanding
order, ruling decree, judgment or stipulation to which the Company is or has
been made a party.
(b) Except as set forth on Schedule 4.14, as of the Closing Date,
there are no agreements or arrangements (including covenants not to ▇▇▇,
non-assertion, settlement or similar agreements or consents) to which the
Company is a party (i) pursuant to which any of the owned Intellectual Property
has been licensed to or used by any Person other than the Company, or which
permits use by any such other Person; or (ii) that restrict the rights of the
Company to use or enforce any of the owned Intellectual Property.
(c) To the knowledge of the Company, the conduct of the business
of the Company and its Subsidiaries does not infringe upon, misappropriate or
otherwise violate the Intellectual Property rights of any other Person, except
that no representation or warranty is made relating to the development of the
Company's WiMAX technology and products. Except as set forth on Schedule 4.15,
as of the Closing Date, no claim or demand of any Person against the Company or
its Subsidiaries has been made, nor is there any proceeding that is pending or
to the knowledge of the Company threatened, which (in any such case) (i)
challenges the rights of the Company or its Subsidiaries in respect of any
Intellectual Property or (ii) asserts that the Company or any of its
Subsidiaries is infringing or otherwise in conflict with, or is required to pay
any royalty, license fee, charge or other amount with regard to, any
Intellectual Property.
(d) Except to the extent set forth on Schedule 4.15, to the
knowledge of the Company, no Person is infringing upon or misappropriating, or
has infringed upon or misappropriated (i) any owned Intellectual Property or the
rights of the Company in any owned Intellectual Property or (ii) any
Intellectual Property licensed to the Company or the rights of the Company
therein.
(e) Except to the extent the Company, in its commercially
reasonable judgment, has determined otherwise, the Intellectual Property capable
of such registration, filing or issuance has been duly registered with, filed in
or issued by, as the case may be, the United States Patent and Trademark Office
or the United States Copyright Office.
(f) All material licenses of Intellectual Property to the Company
are valid and enforceable.
4.15 LITIGATION; ADVERSE FACTS.
Except as set forth on Schedule 4.15, as of the Closing Date, there is no
action, suit, proceeding, arbitration or governmental investigation at law or in
22
equity or before or by any Governmental Authority pending or, to the best
knowledge of the Company, threatened, in writing against or affecting the
Company or any of its Subsidiaries or any property of the Company or any of its
Subsidiaries, which, either singly or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries is (i) in material violation of any Applicable Law or (ii)
subject to or in default with respect to any final judgment, writ, injunction,
decree, rule or regulation of any Governmental Authority binding on the Company
or any of its Subsidiaries.
4.16 PAYMENT OF TAXES.
All returns and reports of the Company and its Subsidiaries required to be
filed by any of them with respect to material Taxes have been timely filed (or
extended), and all material Taxes imposed upon the Company or its Subsidiaries
and upon their respective properties, assets, income, businesses and franchises
which are due and payable have been timely paid other than those which are being
contested by the Company or such Subsidiary in good faith and by appropriate
proceedings promptly instituted and diligently conducted and for which reserves
or other appropriate provisions, if any, as may be required in conformity with
GAAP shall have been made or provided therefor. There is no audit or assessment
of a material Tax proposed in writing against the Company or any of its
Subsidiaries as of the date of this representation other than those which are
being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and for which reserves or other appropriate provisions,
if any, as may be required in conformity with GAAP shall have been made
therefor. The Parent, from and after the Conversion Date, will not be a U.S.
real property interest within the meaning of Section 897 of the Code. Prior to
the Conversion, the Company is taxable as a partnership for Federal income tax
purposes and local income tax purposes, and not as an association taxable as a
corporation. As of the Conversion Date, the Parent will be taxable as a
corporation for Federal income tax purposes.
The reasonably estimated amount of tax distributions payable under the
Company LLC Agreement to holders of LLC Units after the date hereof in respect
of the period ended June 30, 2006, is $1,200,000.
4.17 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS; INSURANCE.
(a) Each of the Company and its Subsidiaries has obtained all
Governmental Authorizations required for the conduct of its business
substantially as described in the Form 10. Each of the Company and its
Subsidiaries is in compliance with all such Governmental Authorizations and all
Applicable Laws, and all such Governmental Authorizations are in full force and
effect, except to the extent that noncompliance, or the failure to be in full
force and effect, could not reasonably be expected to have a Material Adverse
Effect. No violations have been recorded in respect of any such Governmental
Authorization, and no proceeding is pending or, to the knowledge of the Company
and the Guarantors, threatened to revoke or limit any Governmental
Authorization. All (i) Spectrum Holdings, including all FCC Licenses, and (ii)
Spectrum Leases, by their terms and as performed and conducted by the parties
thereto, are in compliance in all material respects with all Applicable Laws,
including the Communications Act and the FCC Rules. With respect to all Spectrum
Leases that require Governmental Authorization, including the authorization of
the FCC, the Company or the holder of the applicable Underlying Licenses has
23
obtained such Governmental Authorization and such Governmental Authorization is
in full force and effect, except as disclosed on Schedules 4.8 or 4.13.
(b) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts and with such deductibles as is customary in the business in which the
Company and its Subsidiaries are engaged and which management of the Company
believes to be prudent. All policies for such insurance are in full force and
effect and all premiums due thereon have been paid. Neither the Company nor any
Subsidiary has been refused any insurance coverage that is material to the
business of the Company and that has been sought or applied for, and neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.
4.18 AFFILIATE TRANSACTIONS.
Except as specifically disclosed on Schedule 4.18, there have not been any
material transactions or loans (including guarantees of any kind) between the
Company or any of its Subsidiaries and (i) other Persons that directly or
indirectly through one or more intermediaries, control or are controlled by, or
are under common control with, the Company or any of its Subsidiaries, (ii)
individuals owning, directly or indirectly, an interest in the Company or any of
its Subsidiaries that gives them significant influence over the Company of any
of its Subsidiaries, (iii) key management personnel, that is, those persons
having authority and responsibility for planning, directing and controlling the
activities of the Company or any of its Subsidiaries, including directors and
senior management of companies and close members of such individuals' families,
and (iv) enterprises in which a substantial interest in the voting power is
owned, directly or indirectly, by any Person described in (ii) or (iii) or over
which such a Person is able to exercise significant influence (including
enterprises owned by directors or major stockholders of the Company or any of
its Subsidiaries and enterprises that have a member of key management in common
with the Company or any of its Subsidiaries). For purpose of this Section 4.18:
(i) significant influence over an enterprise is the power to control the
financial and operating policy decisions of the enterprise; and (ii)
stockholders beneficially owning a 5% interest in the voting power of the
Company or any of its Subsidiaries are presumed to have a significant influence
on the Company or any of its Subsidiaries. Except as disclosed on Schedule 4.18,
no employee, officer, stockholder or director of the Company or any of its
Subsidiaries or member of his or her immediate family is indebted to the Company
or its Subsidiaries, as the case may be, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or guarantee credit)
to any of them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company, and
(iii) for other standard employee benefits made generally available to all
employees or executives (including stock option agreements outstanding under any
stock option plan approved by the Company's board of directors).
24
4.19 INVESTMENT COMPANY ACT.
Neither the Company nor any of its Subsidiaries or, immediately after
receipt of payment for the Notes and the consummation of the Transactions, will
be an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
4.20 SECURITIES ACTIVITIES.
Neither the Company nor any of the Guarantors is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
4.21 ERISA.
(a) Schedule 4.21 lists all Qualified Plans and Multiemployer
Plans as of the Closing Date. The Company and each of its Subsidiaries are in
compliance in all material respects with all requirements of each Plan, and each
Plan materially complies, and is operated in material compliance, with all
applicable provisions of law. The Company is not aware, after due inquiry, of
any item of non-compliance which could reasonably be expected to (i) result in
the loss of Plan qualification or tax-exempt status, or (ii) give rise to a
material excise tax or other penalty imposed by a Governmental Authority. No
proceeding, claim, lawsuit and/or investigation (other than a routine claim for
benefits) is pending concerning any Plan, which proceeding, claim, lawsuit or
investigation could reasonably be expected to result in a material liability.
All required contributions have been and will be made in accordance with the
provisions of each Qualified Plan and Multiemployer Plan, and with respect to
the Company or any ERISA Affiliate, there are no, and have been no Unfunded
Pension Liabilities in excess of $1,000,000 or Withdrawal Liabilities.
(b) No ERISA Event has occurred or could reasonably be expected to
occur with respect to any Qualified Plan, Multiemployer Plan or Plan.
(c) Members of the Controlled Group currently comply and have
complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Code.
4.22 CERTAIN FEES.
Except as set forth on Schedule 4.22, neither the Company nor any Person
acting on its behalf has entered into any agreement or arrangement as a result
of which any broker's or finder's fee or commission will be payable by the
Company with respect to the Note Documents or any of the Transactions
contemplated hereby, and the Company hereby indemnifies the Purchasers against,
and agrees that it will hold the Purchasers harmless from, any claim, demand or
liability for any such broker's or finder's fees alleged to have been incurred
by the Company in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability incurred by the Company.
25
4.23 ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 4.23, neither the Company nor any of the
Guarantors nor any of their respective Facilities or operations are subject to
any outstanding written order, consent decree or settlement agreement with any
Person relating to any Environmental Law, any Environmental Claim, or the
Release or threatened Release of any Hazardous Materials that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 4.23, neither the Company nor any of the
Guarantors has received any request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
ss. 9604) or any comparable law related to a matter that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 4.23, there are and have been no violations of
Environmental Laws or Release of Hazardous Materials which could reasonably be
expected to form the basis of an Environmental Claim against the Company or any
of the Guarantors that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
4.23, neither the Company nor any of the Guarantors nor to the Company's
knowledge, any predecessor of the Company or any of the Guarantors has filed any
notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of the Company's or any of the
Guarantors' operations involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent, except for any such activity conducted in material
compliance with Environmental Laws and in a manner that individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Except as set forth on Schedule 4.23, compliance with all current
requirements pursuant to or under Environmental Laws could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as set forth on Schedule 4.23, no event or condition has occurred or is
occurring with respect to the Company or any of the Guarantors relating to any
Environmental Law, any Release or threatened Release of Hazardous Materials, or
any other Hazardous Material Activity which individually or in the aggregate has
had, or could reasonably be expected to have, a Material Adverse Effect.
4.24 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or, to the best knowledge
of Company and the Guarantors, threatened in writing involving the Company or
any of its Subsidiaries.
4.25 SOLVENCY.
The Company individually and the Company and the Guarantors, taken as a
whole on a consolidated basis, are, and after giving effect to the incurrence of
all Indebtedness and obligations being incurred in connection herewith, will be
Solvent.
4.26 INDEBTEDNESS.
The capitalization table on Schedule 4.26 sets forth and identifies in
reasonable detail all outstanding short-term and long-term Indebtedness of the
Company and its Subsidiaries, after giving effect to the Transactions and the
other transactions contemplated by this Agreement.
26
4.27 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL RESERVE
SYSTEM.
None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Notes) will
violate or result in a violation of Section 7 of the Exchange Act or any
Regulation issued pursuant thereto, including, without limitation, Regulations
T, U and X of the Board of Governors of the Federal Reserve System.
4.28 PRIVATE OFFERING.
Subject to the truth and accuracy of the representations and warranties of
the Purchasers hereunder, the sale of the Notes and the issuance of any other
Securities pursuant to this Agreement is exempt from the registration and
prospectus delivery requirements of the Securities Act. In the case of each
offer or sale of the Notes or issuance of other Securities, no form of general
solicitation or general advertising was used by the Company or its
representatives, including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
The Purchasers are the only purchasers of the Notes, and the only
acquirors of the rights to receive the Warrants or the Purchaser Units. No
similar securities have been issued and sold by the Company within the six-month
period immediately prior to the date hereof. The Company agrees that neither it,
nor anyone acting on behalf of it, will offer or sell the Securities, or any
similar securities, in the future if such offer or sale will bring the issuance
and/or sale of the Securities hereunder within the provisions of Section 5 of
the Securities Act.
4.29 DISCLOSURE.
The representations and warranties of the Company and the Guarantors
contained in this Agreement and the information contained in the other
documents, certificates and written statements furnished to any of the
Purchasers by or on behalf of the Company or the Guarantors for use in
connection with the transactions contemplated by this Agreement, including the
Form 10 and other documents filed by any Note Party with the SEC, when taken
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made.
4.30 REPRESENTATIONS AND WARRANTIES.
All statements contained in any certificate delivered to the Purchasers or
the Collateral Agent by or on behalf of any Note Party pursuant to or in
connection with this Agreement as of the Closing shall be deemed to constitute
representations and warranties under this Agreement with the same force and
effect as the representations and warranties expressly set forth herein.
27
4.31 CREATION, PERFECTION AND PRIORITY OF LIENS.
The execution and delivery of the Collateral Documents by the Company and
each of the Guarantors, together with the actions taken on or prior to the date
hereof pursuant to Section 2.11 are effective to create in favor of the
Collateral Agent, as security for the obligations under the Note Documents, a
valid First Priority Lien on all of the Collateral, and all filings and other
actions necessary or desirable to perfect and maintain the perfection and First
Priority status of such Liens have been duly made or taken and remain in full
force and effect, other than the filing of any UCC financing statements
delivered to the Collateral Agent for filing (but not yet filed), the periodic
filing of UCC continuation statements in respect of UCC financing statements
(including any fixture filings) filed by or on behalf of the Holders of the
Notes.
4.32 SUBSIDIARY RIGHTS.
The Company or, as of the Conversion Date, the Parent or one of its
Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all
capital securities of its Subsidiaries as are owned by the Company, Parent or
such Subsidiary.
4.33 RANKING OF NOTES.
No Indebtedness of the Company or any of its Subsidiaries is senior to the
Notes in right of payment, whether with respect of payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.
4.34 INDEPENDENT AUDITORS.
Ernst & Young LLP, who have certified the consolidated financial
statements of the Company as of December 31, 2005, are independent public
accountants within the meaning of the Securities Act.
4.35 BOOKS AND RECORDS.
The books of account, ledgers, order books, records and documents of the
Company and its Subsidiaries (in the case of any acquired Subsidiary, since the
date of its acquisition) accurately and completely reflect all information
relating to the respective business of the Company and its Subsidiaries, the
nature, acquisition, maintenance, and location of each of their respective
assets, and the nature of all transactions giving rise to material obligations
or accounts receivable of the Company or its Subsidiaries, as the case may be,
except where the failure to so reflect such information could not reasonably be
expected to have a Material Adverse Effect. The minute books of the Company and
its Subsidiaries (in the case of any acquired Subsidiary, since the date of its
acquisition) contain accurate records in all material respects of all meetings
and accurately reflect in all material respects all other actions taken by the
stockholders, boards of directors and all committees of the boards of directors,
and other governing Persons of the Company and its Subsidiaries, respectively.
28
4.36 MONEY LAUNDERING.
The Company and its Subsidiaries are in compliance with, and have not
previously violated, the USA PATRIOT ACT of 2001 (the "PATRIOT ACT") and all
other applicable U.S. and non-U.S. anti-money laundering laws and regulations,
including, but not limited to the laws, regulations and Executive Orders and
sanctions programs administered by OFAC, including, but not limited, to (i)
Executive Order 13224 of September 23, 2001 entitled, "Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism" (66 Fed. Reg. 49079 (2001); and (ii) any regulations contained in 31
CFR, Subtitle B, Chapter V (collectively, the "ANTI-MONEY LAUNDERING/OFAC
LAWS").
ARTICLE V
COVENANTS
---------
So long as any of the Notes remain unpaid and outstanding, the Company and
each of the Guarantors covenant to the Holders of outstanding Notes as follows:
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
The Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. The Company will deliver to the Collateral Agent and the Holders:
(a) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter of each Fiscal Year (other
than the last Fiscal Quarter of each Fiscal Year), the unaudited consolidated
balance sheet of the Company (or, following the Conversion Date, the Parent) and
its Subsidiaries as at the end of such fiscal period and the related
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal period and for the period from the beginning of the
then current Fiscal Year to the end of such fiscal period, reviewed by Ernst &
Young LLP or other independent certified public accountants of recognized
national standing selected by the Company, setting forth in each case in
comparative form (x) with respect to such statements of income, the
corresponding figures for the corresponding periods for the previous Fiscal
Year, and (y) with respect to such balance sheets, the corresponding figures as
of the end of the previous Fiscal Year, all in reasonable detail and certified
by the chief financial officer of the Company (or, following the Conversion
Date, the Parent) that they fairly present, in all material respects, the
financial condition of the Company (or, following the Conversion Date, the
Parent) and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated; provided, that the
delivery by the Company of quarterly reports on Form 10-Q of the Company or the
Parent, as applicable, and its consolidated Subsidiaries (which shall include
all material information contained in the Officer's Certificate delivered in
connection therewith pursuant to clause (c)) shall satisfy the requirements of
this Section 5.1(a);
(b) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated balance
sheet of the Company (or, following the Conversion Date, the Parent) and its
29
Subsidiaries as at the end of such Fiscal Year and the related consolidated
statements of income, stockholders' equity and cash flows of the Company (or,
following the Conversion Date, the Parent) and its Subsidiaries for such Fiscal
Year, all in reasonable detail and certified by the chief financial officer of
the Company (or, following the Conversion Date, the Parent) that they fairly
present, in all material respects, the financial condition of the Company (or,
following the Conversion Date, the Parent) and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, and (b) in the case of such consolidated financial
statements, a report thereon of Ernst & Young LLP or other independent certified
public accountants of recognized national standing selected by the Company,
which report shall be unqualified, shall express no assumptions or
qualifications concerning the ability of the Company (or, following the
Conversion Date, the Parent) and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of the
Company (or, following the Conversion Date, the Parent) and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards; provided, that the delivery by the Company of
annual reports on Form 10-K of the Company or Parent, as applicable, and its
consolidated Subsidiaries (which shall include all material information
contained in the Officer's Certificate delivered in connection therewith
pursuant to clause (c)) shall satisfy the requirements of this Section 5.1(b);
(c) Compliance Certificates: together with each delivery of
financial statements pursuant to subdivisions (a) and (b) above, an Officer's
Certificate of the Company stating that the signer has reviewed the terms of
this Agreement and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the transactions and condition of the Company
(or, following the Conversion Date, the Parent) and its Subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that the signer does not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event that constitutes a Default or
an Event of Default, or, if any such condition or event exists, specifying the
nature and period of existence thereof and what action the Company or other Note
Party has taken, is taking and proposes to take with respect thereto;
(d) Events of Default, etc.: promptly upon any officer of the
Company obtaining knowledge of (a) any condition or event that constitutes a
Default or an Event of Default, or becoming aware that any Holder has given
notice with respect to a claimed Default or Event of Default, (b) any violation
of any law, statute, rule, regulation or ordinance of any Governmental
Authority, or of any agency thereof, binding on the Company or any of the
Guarantors which has had or could reasonably be expected to have a Material
Adverse Effect, or (c) any condition or event that could reasonably be expected
to result in a violation or breach of the terms or conditions of any FCC
License, Underlying License or Spectrum Lease, or result in the termination,
invalidity or loss of any material rights under any FCC License, Underlying
License or Spectrum Lease or (d) the occurrence of any event or change that has
30
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officer's Certificate specifying the nature and period of existence
of such condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Default, Event of
Default, default, event or condition, and what action the Company or other Note
Party has taken, is taking and proposes to take with respect thereto;
(e) ERISA Events: promptly upon becoming aware of the occurrence
of or forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;
(f) ERISA Notices: with reasonable promptness, copies of (a) all
notices received by the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
ERISA Event; and (b) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as the Holders shall reasonably
request; and.
(g) Build-Out Reports: from time to time and, upon the reasonable
prior request of a Holder, provided that such information is not otherwise
available in documents filed by the Company or the Parent, as applicable, with
the SEC, reports concerning the status of the Company's (or applicable
Subsidiary's) satisfaction of its build-out and service requirements in
connection with its FCC Licenses and Spectrum Leases.
5.2 PAYMENT OF NOTES.
The Company will promptly pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes.
5.3 SATISFACTION OF OBLIGATIONS; TAXES.
(a) The Company will, and will cause each of its Subsidiaries to,
perform all obligations under any Contractual Obligation to which the Company or
any of its Subsidiaries is bound, or to which any of its properties is subject,
except where the failure to perform would not reasonably be expected to have a
Material Adverse Effect.
(b) The Company will, and will cause each of its Subsidiaries to,
pay all material Taxes imposed upon it or any of its properties or assets or in
respect of any of its income, businesses or franchises, and all material claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable before the same shall become
a Lien (other than Liens permitted pursuant to Section 5.12(a) upon any of its
properties or assets); provided that no such Tax or claims need be paid if being
contested in good faith by appropriate proceedings and if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
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5.4 MAINTENANCE OF PROPERTY; INSURANCE.
(a) The Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
in all material respects, ordinary wear and tear and accidental or unforeseen
circumstances excepted, all properties necessary in the business of the Company
and each of its Subsidiaries, and all Collateral, and from time to time will
make or cause to be made all necessary repairs, renewals and replacements
thereof, consistent with industry practice.
(b) The Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained, with financially sound and reputable
insurers, such public liability insurance, third party property damage
insurance, business interruption insurance and casualty insurance with respect
to liabilities, losses or damage in respect of the assets, properties and
businesses of the Company and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry.
5.5 CORPORATE EXISTENCE.
Except as otherwise permitted pursuant to the terms of this Agreement, the
Company will, and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect its corporate existence; provided, however,
that the Company shall not be required to, and its Subsidiaries shall not be
required to, preserve any such corporate existence of any Subsidiary, if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of its business and the business of its
Subsidiaries, taken as a whole, and that the loss thereof is not, and will not
be, adverse in any material respect to Holders of the Notes, and provided that
such Subsidiary does not hold any Spectrum Holdings, other than such Spectrum
Holdings as the Company would not be required to maintain in full force and
effect in accordance with Section 5.7(c) below.
5.6 BOOKS AND RECORDS.
The Company will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records in conformity with GAAP.
5.7 COMPLIANCE WITH LAW, MAINTENANCE OF FCC LICENSES.
The Company will, and will cause each of its Subsidiaries to:
(a) comply with all Applicable Laws except for such noncompliance
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect;
32
(b) maintain all Governmental Authorizations in compliance with
all Applicable Law except for such noncompliance that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; and
(c) maintain in full force and effect the FCC Licenses and
Spectrum Leases and any Foreign Licenses or Foreign Spectrum Leases necessary
for the operation of its business, and comply with the construction, operating
and reporting requirements of the FCC or other applicable Governmental
Authority, including the satisfaction of all FCC and other service and/or
buildout requirements, except for such noncompliance or failures to maintain,
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
5.8 USE OF PROCEEDS.
The Company will apply the proceeds from the sale of the Notes in
accordance with Sections 4.9 and 5.10 hereof.
5.9 ISSUANCE OF ADDITIONAL GUARANTIES; ADDITIONAL COLLATERAL.
(a) In the event that, after the Closing Date, (I) the Company or
any Subsidiary of the Company forms or acquires a License Subsidiary or any
other Material Subsidiary or (II) Packet Video Corporation acquires any assets
that constitute Collateral, the Company will promptly notify the Collateral
Agent (who shall notify the Holders) of that fact and cause each such License
Subsidiary and Material Subsidiary to execute and deliver to the Collateral
Agent a counterpart of the Guaranty and the Security Agreement, or, if
applicable, cause Packet Video Corporation to execute and deliver to the
Collateral Agent a counterpart of the Security Agreement and, if applicable,
shall cause the immediate parent of such Subsidiary (including any such Foreign
Subsidiary) to execute a counterpart of the Security Agreement, and, in each
case, all such further documents and instruments as may be necessary or, in the
opinion of the Required Holders, or the Collateral Agent, desirable to create a
valid and perfected First Priority Lien on all of the assets of such Subsidiary
that constitute Collateral, as well as a pledge of the Subsidiary's Capital
Stock. Notwithstanding the foregoing, (i) no Foreign Subsidiary shall be
required to execute and deliver the Guaranty or the Security Agreement and (ii)
the Capital Stock of a Foreign Subsidiary required to be pledged pursuant to the
provisions of the Security Agreement shall apply only to a Foreign Subsidiary
that is directly owned by the Company or a Domestic Subsidiary and shall be
limited to 66% of the issued and outstanding Capital Stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)). The Company shall also deliver to the Holders of
the Notes, together with such counterpart of the Guaranty and the Security
Agreement and other documents and instruments, (i) certified copies of such
Guarantor's Organizational Documents, together with a good standing certificate
from the Secretary of State of the jurisdiction of its organization or
formation, each to be dated a recent date prior to their delivery to the Holders
of the Notes, (ii) a certificate executed by the secretary or an assistant
secretary of such Guarantor as to (a) the incumbency and signatures of the
officers of such Guarantor executing the counterpart of the Guaranty and the
Security Agreement and such other documents and instruments executed in
connection therewith and (b) the fact that the attached resolutions of the
Governing Authority of such Guarantor authorizing the execution, delivery and
33
performance of the counterpart of the Guaranty and the Security Agreement and
such other documents and instruments are in full force and effect and have not
been modified or rescinded, and (iii) a favorable opinion of counsel to the
Company and such Guarantor, in form and substance reasonably satisfactory to the
Holders, as to (a) the due organization or formation and good standing of such
Guarantor, and the ownership of the Capital Stock thereof, (b) the due
authorization, execution and delivery by such Guarantor of the counterpart of
the Guaranty and the Security Agreement and such other documents and
instruments, and (c) the enforceability of the counterpart of the Guaranty and
the Security Agreement and such other documents and instruments.
(b) Each of the Company and each of the Guarantors will (i) cause
the Collateral to be subject at all times to a First Priority Lien, perfected in
favor of the Collateral Agent to secure the obligations pursuant to the terms
and conditions of the Collateral Documents or, with respect to any such property
acquired subsequent to the Closing Date, such other additional security
documents as the Holders shall reasonably request, subject in any case to Liens
permitted hereunder and (ii) deliver such other documentation as the Required
Holders or the Collateral Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC financing statements
and other items of the types required to be delivered pursuant to Section 2.11,
all in form, content and scope reasonably satisfactory to the Required Holders
or the Collateral Agent. Without limiting the generality of the above, the
Company and the Guarantors will cause (a) 100% of the issued and outstanding
Capital Stock of each Domestic Subsidiary that is a Material Subsidiary and (b)
66% of the issued and outstanding Capital Stock entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
outstanding Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary of the Company that is
directly owned by the Company or a Domestic Subsidiary and that is a Material
Subsidiary to be subject at all times to a First Priority, perfected Lien in
favor of the Collateral Agent pursuant to the terms and conditions of the
Collateral Documents or such other security documents as the Required Holders or
the Collateral Agent shall reasonably request.
5.10 SPECTRUM CASH ACCOUNT; ASSET SALE PROCEEDS ACCOUNT.
(a) The Company shall cause the proceeds from the sale of the
Notes to be deposited into the Spectrum Cash Account. Subject to Section
5.10(b), the Company shall use any amounts in the Spectrum Cash Account solely
(i) to make the payments described on Schedule 5.10(a), (ii) to make optional
prepayments of Notes in accordance with and to the extent permitted under
Section 8.1(a), (iii) to make deposits in accordance with FCC Rules to qualify
for FCC auctions as to which the Company or a wholly-owned Subsidiary of the
Company is registered to bid for Permitted Spectrum Holdings, (iv) for the
acquisition of Permitted Spectrum Holdings for a purchase price not to exceed
$0.25 per MHz-POP or for payment of lease payments under Spectrum Leases or
Foreign Spectrum Leases entered into after the date hereof in respect of
Permitted Spectrum Holdings on terms that are economically equivalent to a
purchase price not to exceed $0.25 per MHz-POP, and (v) to reimburse the Company
for amounts expended by the Company during the period from July 1, 2006 through
the Closing Date for (x) the acquisition of Permitted Spectrum Holdings for a
purchase price not to exceed $0.25 per MHz-POP, (y) payment of lease payments
under Spectrum Leases or Foreign Spectrum Leases entered into during such period
34
in respect of Permitted Spectrum Holdings on terms that are economically
equivalent to a purchase price not to exceed $0.25 per MHz-POP, or (z) deposits
described in clause (iii); provided, in the case of clauses (iii), (iv) and (v),
that no Default or Event of Default shall have occurred and be continuing after
giving effect thereto; and provided further that, in the case of deposits
described in clause (iii) (or reimbursement of such deposits pursuant to clause
(v)), any amount of such deposit that will not be applied to purchase Permitted
Spectrum Holdings on the terms set forth in clause (iv) shall be reimbursed to
the Spectrum Cash Account promptly upon completion of the auction and FCC
certification by public notice of the winning bidders, to the extent that the
Company or any of its Subsidiaries is a winning bidder, but on terms that are
not permitted under clause (iv), and otherwise promptly following return of the
deposit by the FCC. The Company shall give each Holder prompt written notice of
any such deposit, the results of any auction for which such deposit was made,
and the consummation of any such acquisition or lease transaction after the date
hereof, which notice shall include a brief description of the Permitted Spectrum
Holdings acquired or leased and the economic terms thereof.
(b) The Company shall use any amounts in or deposited in the Asset
Sale Proceeds Account solely to make redemption of Notes pursuant to Section
8.1(b) or, if prior to the second anniversary of the Closing Date, Section
8.1(a). In the case of a redemption prior to the second anniversary of the
Closing Date pursuant to Section 8.1(a), the Company shall state in the Notice
of Redemption the aggregate amount of proceeds in the Asset Sale Proceeds
Account that will be applied to effect such redemption. No later than 3 Business
Days prior to the Redemption Date specified in the Redemption Notice, the
Collateral Agent shall deliver to the Account Bank a consent to the release of
such proceeds from the Asset Sale Proceeds Account on such Redemption Date.
(c) All amounts credited to the Spectrum Cash Account and the
Asset Sale Proceeds Account shall be invested solely in Cash Equivalents of a
type described in clauses (i) through (iv) of the definition thereof, and all
such Cash Equivalents shall be held in, and credited to, such accounts.
(d) Without limiting the provisions of this Agreement, including
this Section 5.10, nothing in this Agreement shall be deemed to restrict or
otherwise limit the amounts bid, the FCC Licenses that would be the subject of
such bidding or any other bidding strategies of the Company or the Guarantors
that participate in any FCC auction, including Auction No. 66 for Advanced
Wireless Services FCC Licenses.
5.11 LIMITATION ON RESTRICTED PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided that the foregoing shall not prohibit:
(a) Restricted Payments made to the Company or any Guarantor, or
by any Subsidiary that is not a Guarantor on a pro rata basis to the holders of
its Capital Stock;
35
(b) the repurchase of Capital Stock of the Company deemed to occur
upon the exercise of options or warrants to the extent that such Capital Stock
represents all or a portion of the exercise price;
(c) Restricted Payments constituting the repurchase of Capital
Stock of the Company or, after the Conversion, the Parent, constituting
fractional shares, in an aggregate amount not exceeding $100,000 per Fiscal
Year;
(d) the repurchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company or, after the Conversion, the
Parent, held by any current or former employee, consultant or director of the
Company or, after the Conversion, the Parent, or any of its Subsidiaries
pursuant to the terms of any employee equity subscription agreement, stock
option agreement or similar agreement approved by a majority of the
disinterested members of the Board of Directors of the Company, or, after the
Conversion, the Parent, in an aggregate amount not exceeding $500,000 per Fiscal
Year;
(e) Restricted Payments, to holders of Capital Stock of the
Company prior to the Conversion Date, in an aggregate amount not to exceed 40%
of the taxable income allocable to such Holders solely with respect to their
ownership interest in the Company for the period from January 1, 2006 to the
Conversion Date and otherwise in accordance with the terms of the Company LLC
Agreement as in effect on the date hereof, and other Restricted Payments, if
any, to such holders required to be made under the terms of the Company LLC
Agreement as in effect on the date hereof; and
(f) after the Conversion Date, Restricted Payments to the Parent
in an amount not to exceed the amount required by the Parent to pay any
consolidated, combined or unitary Taxes of the Company and/or any of its
Subsidiaries that are due and payable within 10 days of the Restricted Payment.
5.12 LIENS AND RELATED MATTERS.
(a) Prohibition on Liens. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of the Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:
1. Permitted Liens;
2. Liens with respect to Capital Leases and Liens on any
asset existing at the time of acquisition of such asset by the Company or a
Subsidiary, or Liens to secure the payment of all or any part of the purchase
price of an asset upon the acquisition of such asset by the Company or a
Subsidiary or to secure any Indebtedness permitted hereby incurred by the
Company or a Subsidiary at the time of the acquisition of such asset, which
36
Indebtedness is incurred for the sole purpose of financing all or any part of
the purchase price thereof (and does not exceed such purchase price); provided,
however, that the Lien shall apply only to the asset so acquired and proceeds
thereof and shall not apply to any Collateral; and provided further, that all
such Liens do not in the aggregate secure Indebtedness in a principal amount in
excess of $25,000,000 at any time outstanding; and
3. Liens described in Schedule 5.12 annexed hereto.
(b) No Restrictions on Subsidiary Distributions to the Company or
Other Subsidiaries. The Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary's Capital Stock owned by the Company or any other
Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of the Company, (iii) make loans
or advances to the Company or any other Subsidiary of the Company, or (iv)
transfer any of its property or assets to the Company or any other Subsidiary of
the Company, except (a) as provided in the Note Documents, (b) as to transfers
of assets, as may be provided in an agreement with respect to a sale of such
assets and (c) as to any assets subject to Liens permitted under Section
5.12(a), as may be permitted in any agreement relating to Indebtedness secured
by such Lien permitted under Section 5.12(a).
(c) No Negative Pledges. Neither the Company nor any of its
Subsidiaries shall enter into any agreement or remain party to any agreement
prohibiting the creation or assumption of any Lien upon any of the Collateral,
whether now owned or hereafter acquired, to secure obligations under any Note
Documents, including this Agreement.
5.13 INDEBTEDNESS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except that:
(a) the Company and the Guarantors may become and remain liable
with respect to the Indebtedness arising or existing under this Agreement, the
Notes, the Guaranty and the other Note Documents;
(b) the Company may become and remain liable with respect to
Indebtedness to any Guarantor, any Guarantor may become and remain liable with
respect to Indebtedness to the Company or any Guarantor, and any Subsidiary that
is not a Guarantor may become and remain liable with respect to Indebtedness to
any other Subsidiary that is not a Guarantor;
(c) the Company and the Guarantors, as applicable, may become and
remain liable with respect to Indebtedness of the type described in Section
5.12(a)(2) in an aggregate principal amount not in excess of $25,000,000 at any
time outstanding;
37
(d) the Company and the Guarantors may become and remain liable
with respect to Indebtedness arising under Spectrum Leases that are Capital
Leases under GAAP;
(e) the Company and the Guarantors may incur short-term
Indebtedness to the FCC in respect of the purchase price of FCC Licenses
acquired by a License Subsidiary pursuant to FCC auctions, including FCC Auction
No. 66 for Advanced Wireless Services FCC Licenses; provided that all such
amounts are paid in full when payment is due in accordance with FCC Rules; and
(f) the Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 5.13 annexed hereto.
5.14 ASSET SALES.
The Company will not, and will not permit any of its Subsidiaries to,
consummate any Asset Sale, unless (A) the Net Proceeds thereof are (x) in the
case of any Asset Sale consummated prior to the second anniversary of the
Closing Date, delivered to the Collateral Agent for deposit in the Asset Sale
Proceeds Account pending the mandatory redemption of Notes on the second
anniversary of the Closing Date pursuant to Section 8.1(b) and (y) in the case
of any Asset Sale consummated on or after the second anniversary of the Closing
Date, applied to make a mandatory redemption of Notes pursuant to Section
8.1(b); (B) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale that yields Net Proceeds greater
than the aggregate original purchase price paid by the Company or any of its
Subsidiaries for such assets or Capital Stock; and (C) all of the consideration
received in the Asset Sale by the Company or such Subsidiary is in the form of
cash or Cash Equivalents; provided that:
(a) the Company may retain up to an aggregate of $1,500,000 in Net
Proceeds resulting from any one or more Asset Sales during the term of the Notes
each of which individually does not result in Net Proceeds greater than
$1,500,000;
(b) in the case of any Asset Sale of a New License, which sale is
consummated prior to the second anniversary of the Closing Date, an amount equal
to the Net Proceeds thereof ("NEW LICENSE PROCEEDS") shall be delivered, at the
Company's option, either to the Collateral Agent for deposit into the Spectrum
Cash Account and applied as provided in Section 5.10(a) or delivered to the
Asset Sale Proceeds Account;
(c) in the case of (i) an Asset Sale that will yield Net Proceeds
sufficient, together with any other amounts then on deposit in the Asset Sale
Proceeds Account, to redeem the Notes in whole at the purchase price provided
under Section 8.1(a) hereof, or (ii) any Asset Sale that is consummated more
than 15 Business Days after the Company has delivered an officer's certificate
in accordance with Section 5.25(c), provided that no Holder has objected to the
conclusions in such certificate, such Net Proceeds may be less than the
aggregate original purchase price; provided that, if such Asset Sale described
in clause (i) is consummated prior to the second anniversary of the Closing
Date, the Company shall deliver a Notice of Redemption in accordance with
Section 8.3 no later than the date of consummation of such Asset Sale, which
Notice of Redemption shall indicate that the Notes will be redeemed in whole on
38
the redemption date specified therein; and provided further that such Net
Proceeds shall be deposited into and maintained in the Asset Sale Proceeds
Account until the specified redemption date; and
(d) the Company shall not, and shall not permit its Subsidiaries
to lease or sublease any of its rights under or in respect of any FCC License or
Foreign License, provided that the Company and its Subsidiaries may enter into
such leases or subleases in no more than five of the markets set forth on
Schedule 5.14(c) hereof (one lease per market, for a maximum of five leases)
provided further that, solely to the extent that the Net Proceeds of such lease
or sublease are applied to pay scheduled interest on the Notes (or reserved for
such purpose, in an amount not to exceed the aggregate amount of the next
scheduled interest payment), such Net Proceeds are not required to be applied as
described in clause (x) or (y) above, as applicable.
5.15 MERGER AND CONSOLIDATION.
The Company shall not, and shall not permit its Subsidiaries to, directly
or indirectly: (i) consolidate or merge with or into another Person (whether or
not the Company is the surviving corporation) or change its form of
organization, (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its
Subsidiaries taken as a whole, in one or more related transactions, to another
Person, or (iii) consummate a stock sale or other business combination
(including without limitation, a reorganization, recapitalization, spin-off or
scheme or arrangement) with another Person, whereby such other Person acquires
more than 50% of the outstanding shares of Common Stock; except that (w) any
Subsidiary of the Company may merge into (A) any wholly-owned Subsidiary of the
Company that is a Guarantor of the Notes or (B) with or into another Person,
provided that, after giving effect to any such merger described in clause (A) or
(B), no Default or Event of Default shall have occurred and be continuing and
provided further that, in the case of clause (B), if such Subsidiary is a
Material Subsidiary (or is otherwise a Note Party), such Subsidiary shall be the
surviving entity, shall have reaffirmed all of its obligations under the Note
Documents and shall continue to be a wholly-owned Subsidiary of the Company, and
in all other cases (except a merger in connection with an Asset Sale that is
permitted by the terms hereof) the surviving entity shall be a Subsidiary of the
Company, (x) the Company may merge with or into a wholly owned Delaware
subsidiary of the Parent to effect the Conversion, (y) on or after the
Conversion Date, the Company may merge with and into the Parent, provided that
the Parent shall have assumed all of the obligations of the Company hereunder
and under the Notes and other Note Documents, and shall have delivered to each
Holder evidence satisfactory to Required Holders and Collateral Agent (including
without limitation, if requested by Required Holders, a legal opinion of Counsel
to Parent) that the Notes and other obligations of Company under the Note
Documents are enforceable against Parent and that Collateral Agent continues to
have a First Priority Lien on all Collateral of Company, and (z) subject to
Section 5.18, prior to the Conversion Date, the Company may merge with or into
another Person, provided that the surviving entity shall be a corporation
organized in a jurisdiction in the United States, shall have assumed all of the
obligations of the Company hereunder and under the Notes and other Note
Documents, and shall have delivered to each Holder evidence satisfactory to
Required Holders and Collateral Agent (including without limitation, if
requested by Required Holders, a legal opinion of Counsel to the Company) that
the obligations of the Company under the Note Documents are enforceable against
such Person and that the Collateral Agent continues to have a First Priority
39
Lien on all Collateral, and provided further that, after giving effect to such
merger, no Default or Event of Default shall have occurred and be continuing.
5.16 INTENTIONALLY OMITTED.
5.17 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company will not, and will not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guaranty with, or for the benefit of,
any Affiliate of the Company (each an "AFFILIATE TRANSACTION") except as
disclosed on Schedule 4.18, unless:
1. the Affiliate Transaction is, or series of Related
Affiliate Transactions are, on terms that are no less favorable to the Company
or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person on an arm's length basis;
2. the Company delivers to each of the Holders a resolution
of the Board of Directors of the Company set forth in an Officer's Certificate
certifying that such Affiliate Transaction complies with clause (1) of this
Section 5.17(a) and that such Affiliate Transaction has been approved by a
majority of the independent members of the Board of Directors of the Company;
provided that such Officer's Certificate shall only be required in connection
with an Affiliate Transaction or series of Related Affiliate Transactions in
excess of $5,000,000; and
3. with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10,000,000, an opinion as to the fairness to the Company or such Subsidiary of
such Affiliate Transaction from a financial point of view issued by an
accounting, valuation, appraisal or investment banking firm of national
standing.
(b) The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of Section
5.17(a) hereof:
1. transactions between or among the Company or any
Guarantor;
2. reasonable and customary salaries and fees paid to
members of the boards of directors and officers of the Company and its
Subsidiaries;
3. reasonable and customary indemnifications and insurance
arrangements for the benefit of Persons that are officers or members of the
boards of directors of the Company and its Subsidiaries on or after the Closing
Date, whether such Persons are current or former officers or members at the time
such indemnifications or arrangements are entered into;
4. salary, bonus, employee stock option, stock repurchase,
employee benefit compensation, business expense reimbursement, health care,
40
insurance and other like benefits, severance, termination and other
employment-related agreements, arrangements or plans and other compensation and
employment arrangements with directors, officers, managers and employees in the
ordinary course of business, including, without limitation, in connection with
any employment agreements or benefits arrangements between the Company and any
of its Subsidiaries with employees; or
5. transactions between or among the Company or any
Subsidiary on the one hand, and any Purchaser or Holder (or their
representatives), on the other hand, with respect to or in connection with the
Note Documents.
5.18 OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company will
make an offer (a "CHANGE OF CONTROL OFFER") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple of $1,000) of that Holder's
Notes at a purchase price in cash equal to (i) if such Change of Control shall
have occurred on or prior to the third anniversary of the Closing Date, 105% of
the aggregate principal amount of Notes repurchased and (ii) if such Change of
Control shall have occurred after the third anniversary of the Closing Date,
102% of the aggregate principal amount of Notes repurchased, plus, in each such
case, accrued and unpaid interest, if any, on the Notes repurchased to the date
of purchase, subject to the rights of Holders on the relevant record date to
receive interest due on the relevant interest payment date the "CHANGE OF
CONTROL PAYMENT"). Within 30 days following any Change of Control, the Company
will mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and stating:
1. that the Change of Control Offer is being made pursuant
to this Section 5.18 and that all Notes tendered will be accepted for payment;
2. the purchase price and the purchase date, which shall be
no earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "CHANGE OF CONTROL PAYMENT DATE");
3. that any Note (or portion thereof) not tendered will
continue to accrue interest;
4. that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes (or portion thereof) accepted for payment
pursuant to the Change of Control Offer will cease to accrue interest after the
Change of Control Payment Date;
5. that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes,
with the form entitled "Option of Holder to Elect Purchase" attached to the
Notes completed, or transfer by book-entry transfer, to the Company at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
6. that Holders will be entitled to withdraw their election
if the Company receives, not later than the close of business on the fourth
Business Day preceding the Change of Control Payment Date, a telegram, telex,
41
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and
7. that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change in Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 5.18, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Section 5.18 by virtue of such compliance.
(b) On the Change of Control Payment Date, the Company will, to
the extent lawful, accept for payment all Notes or portions of Notes properly
tendered pursuant to the Change of Control Offer.
The Company will promptly (but in any case not later than two Business
Days after the Change of Control Payment Date) make payment in accordance with
Section 3.2, to each Holder of Notes properly tendered, the Change of Control
Payment for such Notes, and the Company will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in a principal amount of $1,000 or an
integral multiple of $1,000.
5.19 NATURE OF BUSINESS.
The Company will not, and will not permit any of its Subsidiaries to,
engage in any material respect in any business substantially different from a
Permitted Business.
5.20 INVESTMENT COMPANY ACT.
The Company will not, and will not permit any of its Subsidiaries to,
become an investment company subject to registration under the Investment
Company Act of 1940, as amended.
5.21 WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company and each Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which prohibit or forgive the
Company or such Guarantor from paying all or any portion of the principal of,
premium, if any, or interest on the Notes as contemplated herein, wherever
42
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and (to the extent that it may
lawfully do so) the Company and each Guarantor hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the holders of the
Notes, but will suffer and permit the execution of every such power as though no
such law had been enacted.
5.22 SPECTRUM HOLDINGS.
All Spectrum Holdings of the Company and its Subsidiaries shall be owned
by a License Subsidiary that is a Guarantor or, in the case of Foreign Spectrum
Holdings, except as provided on Schedule 5.22 or to the extent Applicable Law or
the reasonable tax planning requirements of the Company and its Subsidiaries
require otherwise, a Foreign Subsidiary that is directly and wholly owned by the
Company or a Domestic Subsidiary that is a wholly-owned Subsidiary of the
Company. At no time shall the Company or a Guarantor lease, transfer, or
otherwise alienate any portion of the Spectrum Holdings, except in accordance
with Section 5.14. The Company and the Guarantors will take the actions required
to maintain the value and utility of the spectrum in the Spectrum Holdings
including, without limitation, exercising diligence in preventing any increased
interference or undesired signal levels in the radio frequencies specified in
the FCC Licenses, Underlying Licenses, Foreign Licenses and licenses relating to
any Foreign Spectrum Lease throughout the entirety of the Geographic Service
Area (or similar foreign area) specified in such licenses. All such actions in
respect of US Spectrum Holdings shall be consistent with the Communications Act
and the FCC Rules.
5.23 AMENDMENTS OF ORGANIZATIONAL DOCUMENTS.
Company shall not, nor shall it permit any of its Subsidiaries to amend,
supplement or otherwise change the Organizational Documents in a manner that is
adverse to the Holders.
5.24 OFAC.
Neither Company nor any Subsidiary of Company: (i) will become a person
whose property or interests in property are blocked or subject to blocking
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit or Support Terrorism (66 Fed. Reg. 49079(2001)), (ii) will engage in any
dealings or transactions prohibited by Section 2 of such executive order, or be
otherwise associated with any such person in any manner violative of Section 2,
or (iii) will otherwise become a person on the list of Specially Designated
Nationals and Blocked Persons or subject to the limitations or prohibitions
under any other OFAC regulation or executive order.
5.25 MAINTENANCE OF CASH BALANCE/CASH RESERVE ACCOUNT.
(a) On the Closing Date, the Company shall deposit $75,000,000 in cash
(which cash shall not be derived from the sale of the Notes) into the Cash
Reserve Account and shall maintain a minimum balance of $75,000,000 in such
account at all times. All amounts credited to the Cash Reserve Account shall be
invested solely in Cash Equivalents of a type described in clauses (i) through
43
(iv) of the definition thereof, and all such Cash Equivalents shall be held in,
and credited to, such account.
(b) In the event that the Company delivers a notice of optional
redemption pursuant to Section 8.3, which notice indicates that the Notes will
be redeemed in whole at the applicable redemption price and separately notifies
the Collateral Agent no later than 15 Business Days prior to the specified
Redemption Date that there are insufficient funds on deposit in the Asset Sale
Proceeds Account to fund the entire redemption price, no later than 3 Business
Days prior to the Redemption Date specified in the Redemption Notice, the
Collateral Agent shall deliver to the Account Bank a consent to the release of
all amounts on deposit in the Cash Reserve Account on such Redemption Date;
provided, that the entire principal amount of the Notes and all related interest
and applicable premium are paid or made available for payment as of such
specified Redemption Date.
(c) If the Company determines, prior to the second anniversary of the
Closing Date, that the amount on deposit in the Asset Sale Proceeds Account is
sufficient to redeem the Notes in whole on such second anniversary at the
purchase price applicable under Section 8.1(b) and to pay all interest
(including default interest) that would have accrued on such second anniversary
of the Closing Date if no interest payments were made from the date of
determination to such second anniversary, the Company may deliver to the Holders
and the Collateral Agent a certificate of the chief financial officer of the
Company certifying the aggregate amount on deposit in the Asset Sale Proceeds
Account and demonstrating that such amount is sufficient to redeem the Notes in
whole on such second anniversary of the Closing Date and to pay all such accrued
interest, and a confirmation from the Account Bank of the amount then on deposit
in the Asset Sale Proceeds Account. If no Holder shall have objected to the
conclusions in the Officer's Certificate within 15 Business Days of receipt
thereof, the Collateral Agent shall deliver to the Account Bank a consent to the
release of all amounts on deposit in the Cash Reserve Account.
5.26 INTENTIONALLY OMITTED.
5.27 LICENSE SUBSIDIARIES.
The Company covenants and agrees that from and after the Closing Date, it
shall cause each FCC License and Spectrum Lease to be held directly by a
corporation, limited liability company, or limited partnership organized under
the laws of a jurisdiction in the United States that (a) is a wholly-owned
direct or indirect Subsidiary of the Company, (b) does not engage in any
business or activity other than the ownership and use of one or more FCC
Licenses and/or Spectrum Leases and activities incidental thereto, (c) does not
own or acquire any assets other than one or more FCC Licenses and/or Spectrum
Leases and Capitol Stock of a Subsidiary with operating personnel for
FCC-related business, and (d) does not have or incur any Indebtedness or other
liabilities other than liabilities under the Note Documents, liabilities imposed
by laws, including tax liabilities, or other liabilities incidental to its
existence and permitted business and activities (any corporation, limited
liability company, or limited partnership satisfying the foregoing requirements,
a "LICENSE SUBSIDIARY").
44
5.28 PARENT.
The Parent shall be a holding company and shall not engage in any business
or other activities, other than the issuance of its Capital Stock, the ownership
of the Capital Stock of the Company, such activities as are customary for a
publicly traded holding company that is not itself an operating company, and
other activities expressly contemplated hereby.
ARTICLE VI
DEFAULTS AND REMEDIES
---------------------
6.1 EVENT OF DEFAULT.
Each of the following is an "EVENT OF DEFAULT":
(a) the Company defaults and such default continues for a period
of 5 days in the payment when due of interest or fees on the Notes or other fees
or payments under this Agreement;
(b) the Company defaults in the payment when due of the principal
of, or premium, if any, on the Notes;
(c) the Company fails to observe or perform any term or condition
contained in Sections 1.2(c), 1.2(d), 4.9, 5.4(b), 5.5, 5.7(c) and 5.10 through
5.28 of this Agreement or the Parent fails to observe or perform any term in
Section 10(d) through (l) of the Parent Guaranty;
(d) any Note Party fails to observe or perform any covenant in any
Note Document, other than as set forth in Section 6.1(c) or any other covenant a
default in the performance of which is covered elsewhere in this Section 6.1,
for 20 days after the earlier of (1) the date the such Note Party becomes aware
of the default or (2) written notice to the Company by Holders representing
twenty-five percent (25%) in aggregate principal amount of the outstanding Notes
specifying the default and demanding that such default be remedied and stating
that such notice is a "Notice of Default";
(e) (1) a payment default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company, the Parent or any
Subsidiary in excess of $7,500,000, whether such Indebtedness now exists, or is
created after the date of this Agreement, or (2) the occurrence of any other
default or event of default under any such mortgage, indenture or instrument,
if, in either such case, the effect of such default or event of default is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee on
behalf of such holder or holders) to cause, such Indebtedness to become or be
declared due and payable prior to its stated maturity or the stated maturity of
any underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise);
(f) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Company,
the Parent or any Subsidiary, which judgment or judgments are not paid,
45
discharged or stayed for a period of 30 days; provided that the aggregate of all
such undischarged judgments (exclusive of any applicable, independent third
party insurance coverage or third party indemnity, on terms and conditions and
from indemnitors reasonably acceptable to the Holders, exceeds $7,500,000;
(g) the Company, the Parent or any Subsidiary:
1. commences a voluntary bankruptcy proceeding;
2. consents to the entry of an order for relief against it
in an involuntary bankruptcy case;
3. consents to the appointment of a custodian of it or for
all or substantially all of its property;
4. makes a general assignment for the benefit of its
creditors; or
5. generally is not paying its debts as they become due;
(h) (1) a court of competent jurisdiction enters an order or
decree under any bankruptcy law that:
(A) is for relief against the Company, the Parent or any
Subsidiary;
(B) appoints a custodian for all or substantially all of the
property of the Parent, the Company or any Subsidiary;
or orders the liquidation of the Parent, the Company or
any Subsidiary; or
(C) orders the liquidation of the Company, the Parent or any
Subsidiary; and
the order or decree remains unstayed and in effect for 30
consecutive days; or
(2) a bankruptcy proceeding is commenced against the Company,
the Parent or any Subsidiary and such proceeding shall continue for 30
consecutive days without being dismissed, bonded or discharged.
(i) the Security Agreement, the Parent Guaranty or any Guaranty is
held in any judicial proceeding to be unenforceable or invalid in any material
respect or shall cease for any reason (other than the payment in full of the
obligations under this Agreement or any other termination thereof in accordance
with the terms hereof) to be in full force and effect in any material respect or
the Parent, the Company, any Guarantor, or any Person acting on behalf of any
such Person, shall deny or disaffirm in writing its obligations under its
Guaranty, Parent Guaranty or under the Security Agreement (other than in
accordance with the terms hereof);
(j) any representation, warranty, certification or other statement
made or furnished to the Holders by or on behalf of the Company, the Parent or
any Subsidiary in this Agreement, any Note Document or any instrument,
certificate or financial statement furnished (in compliance with or in reference
46
thereto) proves to be false, incorrect, breached, or misleading in any material
respect when made or furnished;
(k) one or more ERISA Events occur that individually or in the
aggregate result in or could reasonably be expected to result in liability of
the Company, the Parent, any of its Subsidiaries or any of their respective
ERISA Affiliates in excess of $7,500,000 during the term of this Agreement; or
Unfunded Pension Liabilities exist individually or in the aggregate for all
Plans (excluding for purposes of such computation any Plans with respect to
which assets exceed benefit liabilities), which exceeds $7,500,000;
(l) any FCC License or Foreign License or other Spectrum Holdings
owned or held by the Company or its Subsidiaries and required for the lawful
ownership, lease, control, use, operation, management or maintenance of any
Wireless Communications System owned by the Company or its Subsidiaries shall be
cancelled, terminated, rescinded, revoked, suspended, impaired, otherwise
finally denied renewal, or otherwise modified in any material adverse respect,
or shall be renewed on terms that materially and adversely affect the economic
or commercial value or usefulness thereof, the result of which, individually or
in the aggregate together with similar events with respect to other FCC
Licenses, Foreign Licenses or other Spectrum Holdings held by the Company or its
Subsidiaries, could reasonably be expected to have a Material Adverse Effect;
one or more of the FCC Licenses, Foreign Licenses or other Spectrum Holdings
held by the Company or its Subsidiaries, the loss of which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
shall no longer be in full force and effect; or any other proceeding shall have
been instituted by or shall have been commenced before any Governmental
Authority that more likely than not will result in the cancellation,
termination, rescission, revocation, impairment or suspension of one or more
such FCC License, Foreign License or other Spectrum Holdings or result in such
modification of one or more such FCC Licenses, Foreign Licenses or other
Spectrum Holdings that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(m) the Conversion Date shall not have occurred, or any obligation
of the Company under Section 1.2(c) or (d) hereof shall not have been fulfilled,
in either case on or prior to December 31, 2006; and
(n) the Shelf Registration Statement (as defined in the
Registration Rights Agreement) shall not have been filed with the SEC on the
date required by the Registration Rights Agreement and any such failure shall
not have been cured within 20 days after written notice thereof by any Holder.
6.2 ACCELERATION.
Upon the occurrence of an Event of Default (an "Insolvency Default")
specified in clause (g) or (h) of Section 6.1 hereof, all outstanding Notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, Holders of not less than 51% of
the outstanding principal amount of the Notes may declare all the Notes to be
due and payable by notice in writing to the Company specifying the respective
Event of Default and that it is a "Notice of Acceleration." In any such event,
the Notes will become due and payable together with, (x) if due prior to the
third anniversary of the Closing Date, an amount equal to five percent (5%) of
47
the principal amount of the Notes outstanding as of the date of such Insolvency
Default or the date such notice of acceleration is delivered, as applicable or
(y) if due on or after the third anniversary of the Closing Date, an amount
equal to two percent (2%) of the principal amount of the Notes outstanding as of
the date of such Insolvency Default or the date such notice of acceleration is
delivered, as applicable.
The Required Holders by written notice to the Company may on behalf of all
of the Holders rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal, interest or the premium that has become
due solely because of the acceleration) have been cured or waived.
6.3 OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the Holders
of the Notes or the Collateral Agent, as applicable, may pursue any available
remedy (i) to collect the payment of principal, premium, and interest on the
Notes, (ii) to enforce the performance of any provision of the Notes, this
Agreement, the Parent Guaranty or the Guaranty, or (iii) exercise remedies under
the Collateral Documents.
(b) A delay or omission by any Holder of a Note or the Collateral
Agent in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
6.4 WAIVER OF PAST DEFAULTS.
Required Holders may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences hereunder, except (i)
a continuing Default or Event of Default in the payment of the principal of,
premium or interest on, the Notes and (ii) a Default or Event of Default arising
from the failure to redeem or purchase any Note when required pursuant to the
terms of this Agreement; provided, however, that the Required Holders may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
6.5 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Agreement, the right of any
Holder of a Note to receive payment of principal, premium and interest on such
Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
48
ARTICLE VII
[INTENTIONALLY OMITTED]
-----------------------
ARTICLE VIII
REDEMPTION AND REPURCHASE OF THE NOTES
--------------------------------------
8.1 OPTIONAL REDEMPTION; MANDATORY REDEMPTION.
(a) The Company may at any time redeem all of the Notes, or any
portion of the Notes (in a minimum of $5,000,000 and integral multiples of
$1,000,000), upon not less than 30 nor more than 60 days' prior written notice,
at a redemption price equal to the sum of (i) the principal amount of the Notes
to be redeemed plus (ii) accrued and unpaid interest with respect to the
principal amount of the Notes to be redeemed as of the applicable redemption
date, plus (iii) the Applicable Premium.
(b) On (x) the second anniversary of the Closing Date, in the case
of any Net Proceeds of Asset Sales on deposit in the Asset Sale Proceeds Account
or (y) within three Business Days of the relevant Asset Sale, in the case of any
Net Proceeds of an Asset Sale consummated on or after the second anniversary of
the Closing Date, the Company shall make a redemption of Notes in an amount
equal to such Net Proceeds, at a redemption price equal to the sum of (i) the
principal amount of the Notes to be redeemed plus (ii) accrued and unpaid
interest with respect to the principal amount of the Notes to be redeemed as of
the applicable redemption date, plus (iii) the Applicable Premium; provided that
the Company shall not be required to redeem Notes hereunder until the aggregate
principal amount of Notes to be redeemed shall exceed $2,500,000.
(c) As used herein, "APPLICABLE PREMIUM" means (w) if any
redemption pursuant to clause (a) occurs prior to the second anniversary of the
Closing Date, an amount equal to five percent (5%) of the principal amount of
the Notes to be redeemed plus the Make-Whole Amount, (x) if any redemption
pursuant to clause (a) or (b) occurs on or after the second anniversary of the
Closing Date but prior to the third anniversary of the Closing Date, an amount
equal to five percent (5%) of the principal amount of the Notes to be redeemed,
(y) if such redemption pursuant to clause (a) or (b) occurs on or after the
third anniversary of the Closing Date but prior to the date that is forty-five
(45) days prior to the Maturity Date, an amount equal to two percent (2%) of the
principal amount of the Notes to be redeemed, and (z) if such redemption occurs
thereafter, zero.
(d) As used herein "MAKE-WHOLE AMOUNT" means an amount equal to
the then present value of the remaining scheduled interest payments on the Notes
avoided by such redemption), discounted at a rate equal to the sum of (a)
0.50%and (b) a rate (the "Treasury Rate") that is equal to the yield to maturity
of actively traded United States Treasury securities having a maturity equal to
the remaining life of the Notes to be redeemed; provided, however, that if no
United States Treasury security has an average life equal to the remaining life,
the yields (the "Other Yields") for the two maturities of the United States
Treasury securities having average lives most closely corresponding to such
remaining life and trading in the secondary market at the price closest to the
49
principal amount thereof shall be calculated, and the Treasury Rate shall be the
yield interpolated or extrapolated from such Other Yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month; such
yields to maturity to be determined in each case by interpolating linearly from
the yield to maturity of actively traded, currently quoted United States
Treasury securities whose maturities are closest to such remaining life, as such
yields to maturity are quoted by the ▇▇▇▇▇▇-▇▇▇▇▇▇ Financial Information
division of ▇▇▇▇▇▇-▇▇▇▇▇▇, Inc. (or such other source as may be mutually
acceptable to the Company and Required Holders) at 12:00 p.m. (noon) (New York
City time) on the date of such redemption, all as reasonably determined by
Required Holders after consultation with the Company.
(e) Any redemption pursuant to this Section 8.1 shall be made
pursuant to the provisions of Sections 8.2 through 8.6 hereof.
8.2 SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Company will select Notes for redemption or
purchase on a pro rata basis.
8.3 NOTICE OF REDEMPTION.
In the case of any optional redemption of Notes pursuant to Section 8.1(a)
hereof, at least 30 days but not more than 60 days before the applicable
redemption date, the Company will mail or cause to be mailed, by first class
mail or courier, notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.
The notice will identify the Notes to be redeemed and will state:
1. the redemption date;
2. the redemption price;
3. if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion will be issued upon cancellation of the original Note;
4. that Notes redeemed in full must be surrendered to the
Company to collect the redemption price;
5. that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date; and
6. the Section of this Agreement pursuant to which the Notes
called for redemption are being redeemed.
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8.4 EFFECT OF NOTICE OF REDEMPTION.
Once the notice of redemption is mailed in accordance with Section 8.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
8.5 DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
Payments on Notes that are to be redeemed or purchased in an offer to
purchase will be made in accordance with Section 3.2 of this Agreement.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption or purchase date, interest will cease to accrue on the
Notes or the portions of Notes called for redemption or purchase. If a Note is
redeemed or purchased on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest will be paid
to the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption or purchase is not so paid
upon surrender for redemption or purchase because of the failure of the Company
to comply with the preceding paragraph, interest will be paid on the unpaid
principal, from the redemption or purchase date until such principal is paid at
the rate provided in the Notes and in Section 5.2 hereof.
8.6 NOTES REDEEMED OR PURCHASED IN PART.
Upon surrender of a Note that is redeemed or purchased in part, the
Company will issue at the expense of the Company a new Note equal in principal
amount to the unredeemed or unpurchased portion of the Note surrendered.
ARTICLE IX
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"ACCOUNT CONTROL AGREEMENT" means one or more agreements in substantially
the form of Exhibit I executed by the financial institution or securities
intermediary at which each of the Spectrum Cash Account, the Cash Reserve
Account and the Asset Sale Proceeds Account is maintained, pursuant to which
such financial institution or securities intermediary confirms and acknowledges
the Collateral Agent's security interest in such accounts, and agrees that the
financial institution or securities intermediary, as the case may be, will
comply with instructions originated by the Collateral Agent as to the
disposition of funds in such account, without further consent by any Note Party.
"AFFILIATE" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified. For purposes
of this definition, a Person shall be deemed to "CONTROL" or be "CONTROLLED BY"
a Person if such Person possesses, directly or indirectly, power to direct or
51
cause the direction of the management and policies of such Person whether by
contract or otherwise.
"AFFILIATE TRANSACTIONS" has the meaning assigned to such term in Section
5.17.
"AGREEMENT" means this Purchase Agreement and all Schedules, Exhibits and
Annexes attached hereto.
"ANTI-MONEY LAUNDERING/OFAC LAWS" has the meaning given such term in
Section 4.36.
"APPLICABLE LAWS" means, collectively, all statutes, laws, rules,
regulations, ordinances, decisions, writs, judgments, decrees, and injunctions
of any Governmental Authority affecting the Company or any of its Subsidiaries
or any collateral or any of their other assets, whether now or hereafter enacted
and in force, and all Governmental Authorizations relating thereto.
"ASSET SALES" means the sale, lease, sale and leaseback, assignment,
conveyance, transfer or other disposition by the Company or any of its
Subsidiaries to any Person of any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, the Capital Stock of any of the
Company's Subsidiaries, provided that the sale, conveyance or other disposition
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole will be governed by the provisions of Section 5.15 and not by
the provisions of Section 5.14. In addition, the term "Asset Sale" shall
exclude:
(a) sales or other dispositions of obsolete, damaged, surplus,
worn-out, condemned, unsuitable or not required property and equipment;
(b) licensing of intellectual property in the ordinary course of
business;
(c) sale or transfer of cash or Cash Equivalents in the ordinary
course of business;
(d) any surrender or waiver of contract rights or the settlement
release or surrender of contract, tort or other litigation claims in the
ordinary course of business; and
(e) any sale or disposition of property or assets by a Subsidiary to
the Company or a Guarantor, or by a Subsidiary that is not a Guarantor to
another Subsidiary that is not a Guarantor.
(f) any transaction or series of related transactions resulting in
aggregate gross proceeds to the Company and its Subsidiaries of $250,000
or less.
"ASSET SALE PROCEEDS ACCOUNT" means an account of the Company established
with a financial institution reasonably satisfactory to the Purchasers, for the
purpose set forth in Section 5.10(c) and subject to an Account Control
Agreement.
52
"BOARD OF DIRECTORS" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof or similar governing body.
"BUSINESS DAY" means any day that is not a Legal Holiday.
"CAPITAL LEASE" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of that Person.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights, or options to purchase or other arrangements
or rights to acquire any of the foregoing.
"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guarantied as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's ("S&P") or ▇▇▇▇▇'▇ Investors Service,
Inc. ("MOODY'S"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates
of deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and (v) shares of any money market
mutual fund that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) through (iv) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating obtainable
from either S&P or Moody's.
"CASH RESERVE ACCOUNT" means an account of the Company established with a
financial institution reasonably satisfactory to the Purchasers, for the purpose
set forth in Section 5.25 and subject to an Account Control Agreement.
"CHANGE IN LAW" means the occurrence, after the date of this Agreement, of
any of the following: (i) the adoption or taking effect of any law, rule,
regulation, treaty or order, (ii) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority, (iii) any determination of a court or other Governmental
Authority or (iv) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
53
(a) the approval by the holders of the Company's Capital Stock or
the Capital Stock of the Parent of any plan or proposal for liquidation or
dissolution;
(b) any person or group (as defined in Rules 13d-3 and 13d-5 of
the Securities Exchange Act of 1934, as amended) (other than a person or group
comprised solely of holders of the Company's Capital Stock as of the date
hereof) shall become the beneficial owner (as so defined), directly or
indirectly, of shares representing more than 35% of the aggregate voting power
represented by the issued and outstanding Capital Stock of the Company; or
(c) the Continuing Directors shall cease to constitute a majority
of the Board of Directors of the Company or, from and after the Conversion Date,
the Parent.
For the avoidance of doubt, the occurrence of the Conversion Date shall
not be deemed to constitute a Change of Control.
"CHANGE OF CONTROL OFFER" has the meaning assigned to such term in Section
5.18.
"CHANGE OF CONTROL PAYMENT" has the meaning assigned to such term in
Section 5.18.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning assigned to such term in
Section 5.18.
"CLOSING" has the meaning assigned to such term in Section 1.2.
"CLOSING DATE" has the meaning assigned to such term in Section 1.2.
"CODE" means the Internal Revenue Code of 1986, as amended to the date
hereof from time to time hereafter, and any successor statute.
"COLLATERAL" has the meaning assigned to such term in the Security
Agreement.
"COLLATERAL AGENT" means The Bank of New York, acting in its capacity as
collateral agent for the benefit of the Holders of the Notes under the
Collateral Agency Agreement, together with its successors and assigns.
"COLLATERAL AGENCY AGREEMENT" means the Collateral Agency Agreement dated
as of the date hereof, in substantially the form of Exhibit D hereto, by and
between the Holders and the Collateral Agent.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Collateral Agency
Agreement, each Account Control Agreement and all other instruments or documents
delivered by any Note Party pursuant to this Agreement or any of the other Note
Documents in order to grant to the Collateral Agent, on behalf of holders of the
Notes, a First Priority Lien on any property of such Note Party as security for
the obligations.
"COMMON STOCK" has the meaning assigned to such term in Section 1.2(c).
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
54
"COMPANY" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"COMPANY LLC AGREEMENT" means the Amended and Restated Limited Liability
Agreement of the Company dated as of April 13, 2005.
"COMPLIANCE CERTIFICATE" means an Officer's Certificate delivered in
accordance with Section 5.1(c).
"CONTINUING DIRECTORS" means the directors of the Company on the Closing
Date, and each other director if, in each case, such other director's nomination
for election to the Board of Directors of the Company (or, following the
Conversion Date, the Parent) is recommended by at least a majority of the then
Continuing Directors.
"CONTRACTUAL OBLIGATION" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any Guarantor, are treated as a single
employer under Section 414 of the Code.
"CONVERSION" means the transaction whereby the Company merges with or into
a wholly-owned subsidiary of the Parent, and becomes a wholly-owned Subsidiary
of the Parent on the Conversion Date.
"CONVERSION DATE" means the effective date of the filing of the
certificate of merger with the Secretary of State of the State of Delaware, or
any other action pursuant to which the Company becomes a wholly owned Subsidiary
of the Parent.
"CONVERSION TARGET DATE" shall have the meaning assigned to such term in
Section 1.2(e).
"COVERED TAXES" shall mean Taxes other than Excluded Taxes and Other
Taxes.
"DEFAULT" means a condition or event that, after notice or after any
applicable grace period has lapsed, or both, would constitute an Event of
Default.
"DOMESTIC SUBSIDIARY" means a Subsidiary incorporated, organized or
otherwise formed under the laws of any state in the United States of America or
the District of Columbia.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or within the last five (5) years was maintained
or contributed to by the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, written notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any Governmental Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
55
alleged violation of, or liability under, any Environmental Law; (ii) in
connection with any Release or threatened Release of or exposure to Hazardous
Material; or (iii) in connection with any actual or alleged damage, injury,
threat or harm to, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities (i) imposing liability or
establishing standards for conduct for the preservation and protection of the
environment; (ii) relating to any Hazardous Materials; or (iii) occupational
safety and health, industrial hygiene or land use matters, as they relate to
protection or preservation of the environment or toxic materials, substances or
wastes, in any manner applicable to the Company or any of its Subsidiaries or
any Facility.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company (or, following the
Conversion Date, the Parent) within the meaning of Section 414(b), 414(c),
414(m) or 414(o) of the Code or Section 4001 of ERISA.
"ERISA EVENT" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by the Company, the Parent or any
ERISA Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA); (c) a complete or partial withdrawal by the Company, the
Parent any Guarantor or any ERISA Affiliate from a Multiemployer Plan; (d) the
filing of a notice of intent to terminate, the treatment of a plan amendment as
a termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Qualified Plan or Multiemployer Plan
subject to Title IV of ERISA; (e) a failure by the Company, the Parent, any
Guarantor or any member of the Controlled Group to make required contributions
to a Qualified Plan or Multiemployer Plan; (f) an event or condition which could
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Qualified
Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company, the Parent, any Guarantor or any ERISA Affiliate; (h)
an application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code with respect to any Plan; or (i) a
non-exempt prohibited transaction occurs with respect to any Plan for which the
Company or any Subsidiary of the Company may be directly or indirectly liable.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, from
time to time, and any successor statute.
"EXCLUDED TAXES" means, with respect to any Holder or any other recipient
of any payment to be made by or on account of any obligation of the Issuer
hereunder (i) taxes that are imposed on the net income (however denominated) and
56
franchise taxes imposed in lieu thereof (a) by the United States, (b) by any
other Governmental Authority under the laws of which such recipient is organized
or has its principal office or maintains its applicable lending office, or (c)
by any Governmental Authority as a result of a present or former connection
between such recipient and the jurisdiction of such Governmental Authority
(other than any such connection arising solely from such recipient having
executed, delivered or performed its obligations or received a payment under, or
enforced, any of the Note Documents), (ii) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
any of the Issuer is located, and (iii) any tax that (x) is imposed on amounts
payable at the time such recipient becomes a party hereto (or designates a new
office), or (y) is attributable to such recipient's failure or inability (other
than as a result of a Change in Law after such recipient becomes a party hereto)
to comply with its obligations under Sections 1.7(d), except, in the case of
clause (x), to the extent that such recipient (or its assignor, if any) was
entitled, at the time of designation of a new office (or assignment), to receive
additional amounts from the Issuer with respect to such withholding tax pursuant
to Section 1.7.
"EXISTING LICENSES" means (i) each FCC License owned by the Company or a
Subsidiary thereof on the Closing Date, including all such Licenses listed on
Schedule 4.13, (ii) any rights of the Company or a Subsidiary held as of the
Closing Date in respect of any Underlying License as set forth on Schedule 4.8
(Underlying Licenses are set forth on Schedule 4.13) and (iii) upon the
acquisition thereof by the Company or any Subsidiary, (w) each FCC License as to
which there is an application pending before the FCC as of the Closing Date, as
set forth on Schedule 4.13, if such application is granted and the related
transfer or assignment is consummated, (x) each FCC License as to which the FCC
has consented, as of the Closing Date, to a transfer to the Company or a
Subsidiary, as set forth on Schedule 4.13, and (y) each FCC License listed on
Schedule 4.13B, and all Spectrum Leases and Spectrum Holdings in respect of any
of the foregoing.
"FACILITIES" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by the Company.
"FAIR MARKET VALUE" means the value that would be paid by a willing buyer
to an unaffiliated willing seller in a transaction not involving undue pressure
or compulsion to complete the transaction on the part of either party,
determined in good faith by the Board of Directors of the Company (unless
otherwise provided in this Agreement).
"FCC" means the Federal Communications Commission and any successor
thereto.
"FCC LICENSE" means any paging, mobile telephone, specialized mobile
radio, microwave, personal communications services or other license, permit,
consent, certificate of compliance, franchise, approval, waiver or authorization
granted or issued by the FCC, including authorizing or permitting the
acquisition, construction or operation of any Wireless Communications System.
"FCC RULES" means all rules, regulations, written policies, orders and
decisions of the FCC adopted under the Communications Act, in each case as from
time to time in effect.
57
"FIRST PRIORITY" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that such Lien is
perfected and has priority over any other Lien on such Collateral.
"FISCAL QUARTER" means a fiscal quarter of a Fiscal Year.
"FISCAL YEAR" means the fiscal year of the Company and its Subsidiaries
ending on December 31 of each calendar year.
"FOREIGN LICENSE" means any paging, mobile telephone, specialized mobile
radio, microwave, personal communications services or other license, permit,
consent, certificate of compliance, franchise, approval, waiver or authorization
granted or issued by any Governmental Authority other than the FCC, including
authorizing or permitting the acquisition, construction or operation of any
Wireless Communications System.
"FOREIGN SPECTRUM HOLDINGS" means the right of a Person to use a defined
portion of the radiofrequency spectrum resulting from the Person being the
holder of Foreign Licenses, and rights of the Person arising under Foreign
Spectrum Leases.
"FOREIGN SPECTRUM LEASE" means any lease, license, agreement or other
arrangement to which any Foreign Subsidiary of the Company is now or may
hereafter become a party pursuant to which any such Foreign Subsidiary leases,
licenses or otherwise acquires or obtains any rights, whether exclusive or
non-exclusive, with respect to radiofrequency specified in a Foreign License
issued to the lessor or sublessor, in each case, as amended, restated,
supplemented or otherwise modified from time to time.
"FOREIGN SUBSIDIARY" means a Subsidiary that is not a Domestic Subsidiary.
"FORM 10" means Amendment No.1 to the Form 10 Registration Statement filed
by the Company with the SEC on June 28, 2006.
"GAAP" means the generally accepted accounting principles in the United
States as in effect as of the Closing Date, provided that with respect to
Sections 5.1 and 5.6, GAAP shall mean generally accepted accounting principles
in the United States as in effect from time to time.
"GEOGRAPHIC SERVICE AREA" means the geographic area over which a licensee
is entitled to transmit signals pursuant to an FCC License or Underlying
License. In the case of site-based licenses in the Educational Broadband Service
and Broadband Radio Service, this area is bounded by a circle having 35 mile
radius and centered at the stations' reference coordinates, which was the
previous protected service area to which incumbent licensees were entitled prior
to January 10, 2005, and is bounded by the chords drawn between intersection
points of the licensee's previous 35 mile protected service area and those of
respective adjacent market co-channel licensees.
"GOVERNMENTAL AUTHORITY" means (a) the government of the United States of
America or any state or other political subdivision thereof, (b) any government
or political subdivision of any other jurisdiction in which the Company or any
of its Subsidiaries conducts business, or which properly asserts jurisdiction
58
over any Facilities, (c) any entity properly exercising executive, legislative,
judicial, regulatory or administrative functions of any such government or (d)
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any Governmental
Authority.
"GUARANTY" means the Guaranty executed and delivered by existing Material
Subsidiaries of the Company on the Closing Date and to be executed and delivered
by additional Material Subsidiaries of the Company from time to time thereafter
in accordance with Section 5.9, substantially in the form of Exhibit E annexed
hereto.
"GUARANTORS" means each of:
(1) the guarantors party to the Guaranty; and
(2) any other Subsidiary that executes a Guaranty in accordance with
the provisions of this Agreement,
and their respective successors and assigns.
"HAZARDOUS MATERIALS" means any chemical, material or substance, the
generation, use, storage, transportation or disposal of which, or the exposure
to which, is prohibited, limited or regulated pursuant to an Environmental Law.
"HOLDER" OR "HOLDERS" means the Purchasers (as initial holders of the
Notes) and their respective successors or assignees in whose name a Note is
registered.
"INDEBTEDNESS" means, as applied to any Person, (i) all obligations for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred under
ERISA, trade payables incurred in the ordinary course of business, volume based
vendor arrangements accounted for as deferred income on the balance sheet of the
Company and obligations under earn-out agreements which are not yet earned),
(iv) all obligations evidenced by notes, bonds (other than performance or surety
bonds), debentures or other similar instruments, (v) all Indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to any property or assets acquired by such Person (even though the
rights and remedies of the seller or the lender under such agreement in the
event of default are limited to repossession or sale of such property or
assets), (vi) all obligations, contingent or otherwise, as an account party
under any letter of credit or under acceptance, letter of credit or similar
facilities to the extent not reflected as trade liabilities on the balance sheet
of such Person in accordance with GAAP, (vii) all contingent obligations in
respect of obligations of the kind referred to in clauses (i) through (vi)
above, and (viii) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
59
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person.
"INDEMNIFIED PARTIES" has the meaning assigned to such term in Section
1.5.
"INDEMNIFYING PARTIES" has the meaning assigned to such term in Section
1.5.
"INITIAL ESCROW FUNDS" means an amount equal to $297,500,000, representing
the gross proceeds of the issuance and sale of the Notes to the Purchasers.
"INTELLECTUAL PROPERTY" has the meaning assigned to such term in Section
4.14(a).
"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including guaranties or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers,
directors and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Capital Stock or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided,
however, that the term "Investment" shall not include: (a) trade and customer
accounts receivable for goods furnished or services rendered in the ordinary
course of business and payable in accordance with customary trade terms and (b)
deposits, advances and prepayments to suppliers for goods and services in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto minus all
payments received in respect thereof, including payments of principal, interest,
proceeds of sale or other disposition and cash dividends or distributions in
respect thereof, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"ISSUER" has the meaning assigned to such term in the preamble.
"LEGAL HOLIDAY" means a Saturday, Sunday or day on which banks and trust
companies in the principal place of business of the Company or in New York are
not required to be open. If a payment date is a Legal Holiday, payment may be
made on the next succeeding day that is not a Legal Holiday, and interest shall
accrue for the intervening period.
"LICENSE SUBSIDIARY" has the meaning assigned to that term in Section
5.27.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
fixed or floating charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any financing lease in the nature
thereof but not including Operating Leases and any agreement to give any
security interest) and any trust or deposit or other preferential arrangement
having the practical effect of any of the foregoing.
"LLC UNITS" has the meaning assigned to such term in Section 1.2(e).
"LOSSES" has the meaning assigned to such term in Section 1.5.
60
"MAKE-WHOLE AMOUNT" has the meaning given such term in Section 8.1(d)
hereof.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
ability of the Company and its Subsidiaries to perform, or of the Collateral
Agent and Holders to enforce, the obligations under the Note Documents, (b) the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Parent (from and after the Conversion Date), the Company and
its Material Subsidiaries taken as a whole or (c) the validity or enforceability
of this Agreement or any of the other Note Documents or the rights or remedies
of the Holders hereunder or thereunder.
"MATERIAL CONTRACTS" means any or all of the following, as the context may
require: (i) any material indenture, mortgage, deed of trust, agreement or other
instrument evidencing or with respect to indebtedness in a principal amount in
excess of $7,500,000 to which the Company or any of its Subsidiaries is a party
and (ii) any other document, agreement or instrument that is material to the
operation or business of the Company and its Subsidiaries, taken as a whole.
"MATERIAL SUBSIDIARY" means each of NextWave Broadband Inc., a Delaware
corporation, Packet Video Corporation, a Delaware Corporation, NW Spectrum Co.,
a Delaware Corporation, AWS Wireless, Inc., a Delaware corporation, each other
License Subsidiary, each Foreign Subsidiary that holds any Foreign Spectrum
Holdings and each other Subsidiary of the Company or Parent that constitutes a
"Significant Subsidiary" within the meaning of Regulation S-X promulgated by the
SEC.
"MATURITY DATE" means July 15, 2010.
"MAXIMUM RATE" has the meaning assigned to such term in Section 10.5.
MHZ-POP" means the channel capacity held in MHz multiplied by the
population of the Geographic Service Area for which such rights are held, as
reasonably determined by the Company in a manner generally consistent with past
practice.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) and to which the Company or any member of the
Controlled Group may have any liability.
"NEW LICENSE" means an FCC License, Foreign License or rights in respect
of an Underlying License or under a Foreign Spectrum Lease that, in each case,
is not an Existing License.
"NEW LICENSE PROCEEDS" has the meaning given such term in Section 5.14(b)
hereof.
"NET PROCEEDS" means, with respect to any Asset Sale, cash proceeds of
such Asset Sale net of bona fide direct costs of sale including, without
limitation, (i) income taxes actually paid or reasonably estimated to be
61
actually payable, as the case may be, as a result of such Asset Sale, (ii)
transfer, sales, use and other taxes payable in connection with such Asset Sale,
(iii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness that is secured by a Lien on the stock or
assets in question or Indebtedness that is required to be repaid under the terms
thereof as a result of such Asset Sale, (iv) brokers' and financial advisors'
commissions and reasonable fees and expenses of counsel and other advisors
(including, without limitation, accountants and investment bankers) and other
reasonable costs and expenses incurred or estimated to be incurred in connection
with such Asset Sale, (v) amounts to be paid to third parties having a
beneficial interest in the assets sold, and (vi) reasonable reserves against
indemnities or other obligations (so long as such indemnity or other obligations
are outstanding) in respect of post-closing and purchase price adjustments
(including adjustments related to the performance or results of any divested or
acquired business) in connection with the acquisition or disposition of assets
permitted hereunder.
"NOTE DOCUMENTS" means this Agreement, the Notes, the Warrant Agreement
(or, in the event that Purchaser Units are issued, the limited liability
agreement of the Company as relates to the Purchaser Units, and any other
agreement or instrument representing the Purchaser Units), the Warrants, the
Warrant Shares, the Registration Rights Agreement, the Guaranty, the Parent
Guaranty, the Collateral Documents, the Collateral Agency Agreement and all
certificates, instruments and other documents made or delivered in connection
herewith and therewith.
"NOTE PARTIES" means, collectively, the Parent, the Company, the
Guarantors and any other Subsidiary of the Company that is a party to a Note
Document and "NOTE PARTY" means any of them.
"NOTES" has the meaning assigned to such term in Section 1.1.
"OFAC" means the Office of Foreign Assets Control of the United States
Department of the Treasury, or any successor office or agency.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a certificate
executed on behalf of such Person (x) if such Person is a partnership or limited
liability company, by the chairman of the Board of Directors (if an officer),
chief executive officer, or chief financial officer or vice president of its
general partner or managing member or other Person authorized to do so by its
Organizational Documents, (y) if such Person is a corporation, on behalf of such
corporation by its chairman of the Board of Directors (if an officer) or chief
executive officer or its chief financial officer or vice president, and (z) if
such person is the Company or a Subsidiary of the Company, a Responsible
Officer.
"OPERATING LEASE", as applied to any Person, means any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person, the bylaws,
partnership agreement, limited liability company agreement, operating agreement,
management agreement or other similar or equivalent organizational, charter or
constitutional agreement or arrangement.
62
"OTHER TAXES" means any present or future stamp, documentary, excise,
privilege, property, intangible taxes, charges or similar levies arising from
any payment made under any and all Note Documents or from the execution or
delivery by the Company or any of the Guarantors or from the filing or recording
or maintenance of, or otherwise with respect to the exercise or enforcement by
the Holders of their respective rights under any and all Note Documents.
"PARENT" means NextWave Wireless Inc., a Delaware corporation that, upon
consummation of the Conversion, will own 100% of the issued and outstanding
Capital Stock of the Company.
"PARENT GUARANTY" means the Parent Guaranty to be executed and delivered
by Parent effective as of the Conversion Date in substantially the form of
Exhibit K hereto.
"PATRIOT ACT" has the meaning given such term in Section 4.36.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED BUSINESS" means any business in which the Company or any of its
Subsidiaries was engaged on the date hereof and any business that is a
reasonable extension thereof or is ancillary or related thereto.
"PERMITTED LIENS" means the following types of Liens:
(1) Liens in favor of the Collateral Agent securing the
obligations of the Company and the Guarantors under this Agreement;
(2) Liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons imposed without action
of such parties, provided that payment thereof is not yet required;
(3) Liens incurred or deposits made in the ordinary course of
business of the Company and any of the Guarantors in connection with worker's
compensation, unemployment insurance, other business-related insurance, social
security and other like laws;
(4) Leases, subleases, licenses and sublicenses granted to others
in the ordinary course of business not interfering in any material respect with
the conduct of the business of the Company and any of the Guarantors, and any
interest or title of a lessor, sublessor, licensor or sublicensor or under any
lease, sublease, license or sublicense;
(5) Liens arising from judgments, decrees or attachments to the
extent and only so long as such judgment, decree or attachment does not
constitute an Event of Default;
(6) Easements, reservations, rights of way, restrictions, minor
defects or irregularities in title and other similar liens affecting real
property not interfering in any material respect with the ordinary conduct of
the business of the Company and any of the Guarantors;
63
(7) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods;
(8) Liens which constitute the right of set off of a customary
nature of banker's lien with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with the arrangements entered
into with banks in the ordinary course of business;
(9) Liens incurred in connection with the extension, renewal or
refinancing of the obligations secured by Liens of the type herein above,
provided that any extension, renewal or replacement Lien shall be limited to the
property encumbered by the existing Lien;
(10) Liens in favor of the Company or any of the Guarantors;
(11) Liens for Taxes the payment of which, at the relevant time, is
not required by Section 5.3 hereof; and
(12) Precautionary financing statement filings regarding Operating
Leases.
"PERMITTED SPECTRUM HOLDINGS" means (i) US Spectrum Holdings in any of the
following spectrum bands: AWS, WCS, EBS, and BRS, and (ii) Foreign Spectrum
Holdings or Spectrum Holdings in other spectrum bands, provided that the
aggregate purchase price paid for all such Foreign Spectrum Holdings and
Spectrum Holdings in other spectrum bands, plus the aggregate obligations of the
Company and its Subsidiaries under Foreign Spectrum Leases and Spectrum Leases
of rights in other spectrum bands, shall not exceed $10,000,000.
"PERSON" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental authority
or other entity.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company, any Guarantor or any member of the Controlled Group
sponsors or maintains or to which the Company, any Guarantor or any member of
the Controlled Group has liability.
"PURCHASER UNITS" has the meaning assigned to such term in Section 1.2(e).
"PURCHASERS" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes, is
making or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) years, but excluding any
Multiemployer Plan.
"REGISTER" has the meaning assigned to such term in Section 1.6(a).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
64
dated as of even date herewith and operative as of the Conversion Date, among
the Parent and the Purchasers, substantially in the form of Exhibit J to this
Agreement, as the same may be amended, supplemented and modified from time to
time.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the environment (including the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Material), including the movement of any Hazardous
Material through the air, soil, surface water or groundwater.
"REPORTABLE EVENT" means, as to any Plan, (a) any of the events set forth
in Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the thirty (30) day notice requirement under ERISA has been
waived in regulations issued by the PBGC, (b) a withdrawal from a Plan described
in Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"REQUIRED HOLDERS" means Holders of at least two thirds (66-2/3%) of the
aggregate principal amount of the outstanding Notes.
"RESPONSIBLE OFFICER" means the chief executive officer, chief financial
officer, president, any executive vice president or chief operating officer of
the Company or the applicable Subsidiary, but in any event, with respect to
financial matters, the chief financial officer, treasurer or controller of the
Company or of the applicable Subsidiary.
"RESTRICTED PAYMENTS" means (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of Capital Stock of Company
or Parent now or hereafter outstanding (other than a dividend payable solely in
additional shares of the same class of Capital Stock to the holders of that
class), (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of Company or Parent now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any
outstanding, options or other rights to acquire shares of any class of Capital
Stock of Company or Parent now or hereafter outstanding (other than the
Warrants, the Warrant Shares or, if applicable, Purchaser Units) and (iv) any
payment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance, sinking fund or similar payment with respect
to, any Indebtedness subordinated to the Notes.
"RULE 144" means Rule 144 as promulgated by the SEC under the Securities
Act, as amended from time to time, and any successor rule or Regulation thereto.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and any successor statute or law thereto.
"SECURITY" has the meaning set forth in Section 2(l) of the Securities
Act.
"SECURITY AGREEMENT" means the Security Agreement dated as of even date
65
herewith among the Collateral Agent, the Company and the Guarantors (other than
Packet Video Corporation), substantially in the form of Exhibit F to this
Agreement, as the same may be amended, supplemented and modified from time to
time.
"SECURITIES" means, collectively, the Notes and the Warrants or the
Purchaser Units, as applicable.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (i) (a) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities but excluding amounts payable under intercompany promissory notes)
of such Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (b) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (c) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and (ii) such Person is "solvent" within the
meaning given that term and similar terms under Applicable Laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"SPECTRUM CASH ACCOUNT" means an account of the Company established with a
financial institution reasonably satisfactory to the Purchasers, for the purpose
set forth in Section 5.10(a) and subject to an Account Control Agreement.
"SPECTRUM HOLDINGS" means US Spectrum Holdings and/or Foreign Spectrum
Holdings.
"SPECTRUM LEASE" means any lease, license, agreement or other arrangement
to which any Note Party is now or may hereafter become a party pursuant to which
any Note Party leases, licenses or otherwise acquires or obtains any rights,
whether exclusive or non-exclusive, with respect to radiofrequency specified in
an Underlying License, in each case, as amended, restated, supplemented or
otherwise modified from time to time.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by the Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TAXES" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax, penalties and
any similar liabilities with respect thereto.
66
"TRANSACTIONS" means the consummation of the transactions contemplated
under this Agreement and the other Note Documents.
"UNDERLYING LICENSE" means any license granted by the FCC to a Person who
is the lessor to the Company or its Subsidiaries under a Spectrum Lease or, in
the case of a sublease, to the Person who is the lessor to the applicable
sublessor to the Company or its Subsidiaries.
"UBS" means UBS Securities LLC.
"UNFUNDED PENSION LIABILITIES" means the amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, with respect to
Qualified Plans only.
"US SPECTRUM HOLDINGS" means the right of a Person to use a defined
portion of the radiofrequency spectrum within a Geographic Service Area,
including rights resulting from such Person being the holder of FCC Licenses and
rights of such Person arising under Spectrum Leases.
"WARRANT" has the meaning assigned to such term in Section 1.2(c).
"WARRANT AGREEMENT" means the Warrant Agreement dated as of even date
herewith, among the Company and the Purchasers, substantially in the form of
Exhibit H to this Agreement, as the same may be amended, supplemented and
modified from time to time.
"WARRANTS SHARES" has the meaning assigned to such term in Section 1.2(c).
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of
such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WIRELESS COMMUNICATIONS SYSTEM" means any system to provide
telecommunications services, including, without limitation, specialized mobile
radio system, radio paging system, mobile telephone system, cellular radio
telecommunications system, conventional mobile telephone system, personal
communications system, EBS/ITFS-based system or BRS/MDS/MMDS-based system, data
transmission system or any other paging, mobile telephone, radio, microwave,
communications, broadband or data transmission system.
"WITHDRAWAL LIABILITIES" means the amount of withdrawal liability as
determined in accordance with Section 4201 of ERISA.
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ARTICLE X
MISCELLANEOUS
10.1 NOTICES.
All notices and other communications provided for or permitted hereunder
shall be made by hand-delivery, first-class mail, telecopier or overnight air
courier guarantying next day delivery:
(a) if to the Purchasers or any Holder, to the address set forth
on its signature page hereto or as otherwise provided in writing to the Company,
with a copy to O'Melveny & ▇▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.;
(b) if to Collateral Agent, to the address set forth on its
signature page hereto or as otherwise provided in writing to the Company and the
Holders, with a copy to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.; and
(c) if to the Company or its Subsidiaries, to it at ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Facsimile No. 858-480-3112), Attention: ▇▇▇▇▇
▇▇▇▇▇▇, Esq; with a copy (which shall not constitute notice) to ▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
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, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guarantying next day delivery. The
parties may change the addresses to which notices are to be given by giving five
days' prior notice of such change in accordance herewith.
10.2 SUCCESSORS AND ASSIGNS; ASSIGNMENTS.
(a) This Agreement shall inure to the benefit of and be binding
upon the successors and registered assigns of each of the parties, including,
without limitation and without the need for an express assignment, subsequent
Holders of Notes.
(b) Each Holder may sell or assign all or any portion of its Note
to any Person, at any time, subject to clause (e) below.
(c) Each Holder may, in the ordinary course of its business and in
accordance with the Note Documents and Applicable Law, including applicable
securities laws, at any time sell to one or more Persons (each, a
"Participant"), participating interests in all or a portion of its rights and
obligations under this Agreement. Notwithstanding any such sale by such Holder
of participating interests to a Participant, such Holder's rights and
obligations under this Agreement shall remain unchanged, such Holder shall
remain solely responsible for the performance thereof, and the Company shall
continue to deal solely and directly with such Holder and shall have no
68
obligations to deal with any Participant in connection with such Holder's rights
and obligations under this Agreement or the Notes. Any agreement or instrument
pursuant to which a Holder sells such a participation shall provide that such
Holder shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Holder will not, without
the consent of the Participant, agree to any amendment, modification or waiver
directly affecting (i) an extension of the scheduled final maturity date of any
Note allocated to such participation, or (ii) a reduction of the principal
amount of or the rate of interest payable on any Note allocated to such
participation. Subject to the further provisions of this subsection 10.2(c),
Company agrees that each Participant shall be entitled to the benefits of
Section 1.7 to the same extent as if it were a Holder and had acquired its
interest by assignment pursuant to Section 10.2. A Participant shall not be
entitled to receive any greater payment under Section 1.7 than the applicable
Holder would have been entitled to receive with respect to the participation
sold to such Participant unless the sale of the participation to such
Participant is made with Company's prior written consent.
(d) In the event that any Holder sells any participation or
assigns or transfers any interest in any Note, each Participant, successor or
assign shall agree to make the representations and warranties in Section 1.3 of
this Agreement. Each assignee, by its purchase of a note, hereby agrees to be
bound by the terms of the Collateral Agency Agreement.
(e) In no event may a Holder sell any participation or assign or
transfer any interest in any Note to a business competitor of the Company or any
Guarantor.
(f) The Company and each of the Guarantors shall assist any Holder
in connection with any transfer, whether by sale or otherwise, assignment or
participation permitted under this Agreement as reasonably required to enable
the assigning or selling Holder to effect any such transfer, assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. The Company and each
Guarantor shall certify the correctness, completeness and accuracy of all
descriptions of each of them and their respective affairs contained in any
selling materials provided by it and all other information provided by it and
included in such materials.
(g) Any Holder may furnish any information concerning the Company
and the Guarantors in the possession of such Holder from time to time to
transferees, assignees and participants (including prospective transferees,
assignees and participants); provided that such Holder shall obtain from actual
or potential transferees, assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 10.20.
10.3 AMENDMENT AND WAIVER.
(a) Except as heretofore expressly provided otherwise, this
Agreement may be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may be given; provided that the same are
in writing and signed by the Company, the Guarantors and the Required Holders;
69
provided further, however, that any amendment, modification or supplement that:
1. reduces the aggregate principal amount of any Note;
2. (other than as set forth in this Agreement) reduces the
rate of interest on any Note (including default interest), reduces the amount of
principal or changes the principal maturity date of any Note or the redemption
or prepayment provisions (other than any notice provisions relating thereto,
which shall require only the written consent of the Required Holders);
3. makes any Note payable in money or property other than that
stated in the Note; or
4. makes any change in Sections 6.2, 6.4, 6.5 or 10.10 hereof
or this Section 10.3 (or any related defined terms) or in the definition of
"Required Holders";
5. shall not be binding upon any Holder of any outstanding
Note that has not consented thereto in writing.
(b) For all purposes under this Agreement, in determining whether
the Holders of the requisite principal amount of outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company, any Subsidiary of the Company or any
Affiliate of the Company or any Subsidiary shall be disregarded.
10.4 RELEASE OF SECURITY INTEREST OR GUARANTY; RELEASE OF GUARANTOR.
(a) Upon the proposed sale or other disposition of any Collateral
to any Person (other than an Affiliate of the Company) that is permitted by this
Agreement or to which Required Holders have otherwise consented, or the sale or
other disposition of all of the Capital Stock of a Guarantor to any Person
(other than an Affiliate of the Company) that is permitted by this Agreement or
to which Required Holders have otherwise consented, for which the Company or any
of the Guarantors desire to obtain a security interest release or a release of
the Guaranty from the Holders of the Notes, the Company or such Guarantor shall
deliver an Officer's Certificate to the Holders and the Collateral Agent (i)
stating that the Collateral or the Capital Stock subject to such disposition is
being sold or otherwise disposed of in compliance with the terms hereof and (ii)
specifying the Collateral or Capital Stock being sold or otherwise disposed of
in the proposed transaction. Upon the receipt of such Officer's Certificate, the
Collateral Agent shall, at the Company's expense, so long as the Collateral
Agent (a) has no reason to believe that the facts stated in such Officer's
Certificate are not true and correct and (b), if the sale or other disposition
of such item of Collateral or Capital Stock constitutes an Asset Sale, shall
have received evidence satisfactory to it that arrangements satisfactory to it
have been made for delivery of the Net Proceeds from such Asset Sale as required
by Section 5.14, execute and deliver such releases of its security interest in
such Collateral or such Guaranty, as may be reasonably requested by the Company
or such Guarantor.
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(b) If (i) a Guarantor (a "RELEASED GUARANTOR") shall have been
unconditionally and absolutely released as a guarantor of and obligor with
respect to any and all Indebtedness and such release is not part of a plan of
financing that contemplates such Guarantor guarantying any other Indebtedness of
the Company or becoming a co-obligor with respect thereto, and (ii) no Default
or Event of Default shall have occurred and be continuing, the Company may
deliver to the Collateral Agent an Officer's Certificate to such effect and from
and after the date such Officer's Certificate is delivered to the Collateral
Agent, such Released Guarantor shall, subject to this Section 10.4(b) if such
Released Guarantor shall again become a Guarantor, be released from its
obligations under the Guaranty.
10.5 INTEREST RATE LIMITATION.
Notwithstanding anything to the contrary contained in any Note Document,
the interest paid or agreed to be paid under the Note Documents shall not exceed
the maximum rate of non-usurious interest permitted by Applicable Laws (the
"MAXIMUM RATE"). If any Holder shall receive interest in an amount that exceeds
the Maximum Rate, the excess interest shall be applied to the principal of the
Notes, or, if it exceeds such unpaid principal, refunded to the Company. In
determining whether the interest contracted for, charged, or received by any
Holder exceeds the Maximum Rate, such Person may, to the extent permitted by
Applicable Laws, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Notes hereunder.
10.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
10.7 HEADINGS.
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
10.8 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
10.9 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ISSUER ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
71
DELIVERING THIS AGREEMENT, ISSUER FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ISSUER, AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER ISSUER IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT HOLDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ISSUER IN THE COURTS OF
ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 10.9 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.10 WAIVER OF JURY TRIAL.
ISSUER AND HOLDERS HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort claims, breach of
duty claims and all other common law and statutory claims. Issuer and Holders
each acknowledge that this waiver is a material inducement for Issuer and
Holders to enter into a business relationship that Issuer and Holders have
already relied on the waiver in entering into this Agreement and that each will
continue to rely on the waiver in their related future dealings. Issuer and
Holders further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.10 AND EXECUTED
BY EACH OF THE PARTIES HERETO), AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
72
10.11 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.
All agreements, representations and warranties made herein or in any Note
Document shall survive the execution and delivery of this Agreement, the
execution and delivery of the Securities hereunder and the Conversion.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Issuer set forth in sections 1.4, 1.5 and 1.7 shall survive
repayment of the Notes and termination of this Agreement.
10.12 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any Holder or Collateral Agent in the
exercise of any power, right or privilege hereunder or under any Notes shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under this
Agreement and the other Note Documents are cumulative to and not exclusive of,
any rights or remedies otherwise available.
10.13 INDEPENDENCE OF COVENANTS.
Except as otherwise expressly stated in a covenant herein, all covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of an Event of Default if such action is
taken or condition exists.
10.14 MARSHALLING; PAYMENTS SET ASIDE.
No Holder or Collateral Agent shall be under any obligation to marshal any
assets in favor of Issuer or any other party or against or in payment of any or
all of the obligations. To the extent that Issuer makes a payment or payments to
any Holder (or to the Collateral Agent for the benefit of Holders), or any
Holder or Collateral Agent enforces any security interests or exercises their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, any other state
or federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.
10.15 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 and during
the continuance of any Event of Default each Holder is hereby authorized by
Issuer at any time or from time to time, without notice to Issuer or to any
other Person, any such notice being hereby expressly waived, to set off and to
73
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Holder to or for the credit or the account of Issuer against and
on account of the obligations and liabilities of Issuer to that Holder under
this Agreement and the other Note Documents, including all claims of any nature
or description arising out of or connection with this Agreement or any other
Note Document, irrespective of whether or not (i) that Holder shall have made
any demand hereunder or (ii) the principal of or the interest on the Notes or
any other amounts due hereunder shall have become due and payable pursuant to
Section 6.
10.16 CLASSIFICATION OF TRANSACTION.
Notwithstanding anything to the contrary herein contained, Holders, by
entering into this Agreement or by any action pursuant hereto, will not be, and
neither the Company nor Holders intend any Holder to be, deemed a partner or
joint venturer with Issuer.
10.17 EXCULPATION.
The Company acknowledges that neither the Collateral Agent nor any of its
affiliated entities, nor the partners of any Holder nor any investment manager
or adviser to any Holder, any investor or participant in the partners of any
Holders, nor any of their respective officers, directors, employees, partners,
members or shareholders, assume any personal liability for any of the
obligations under the Note Documents.
10.18 ENTIRE AGREEMENT.
The Note Documents and the Notes are intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. The Note Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter. Nothing
in any of the Note Documents or the Notes shall confer upon any other Person
other than the parties hereto any right, remedy or claim under this Agreement.
10.19 SEVERABILITY.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Purchasers' rights and privileges shall be enforceable
to the fullest extent permitted by law.
74
10.20 CONFIDENTIALITY.
(a) Each Holder and the Collateral Agent shall hold all non-public
information obtained pursuant to the requirements of this Agreement in
accordance with such Holder's and Collateral Agent's customary procedures for
handling confidential information of this nature, it being understood and agreed
by Company that in any event a Holder or the Collateral Agent may make
disclosures (a) to its and its Affiliates' directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential), (b) to the extent requested by any Government
Authority, (c) to the extent required by Applicable Laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement
or the other Note Documents, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section 10.20, to any
assignees of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the consent
of Company, (h) to the extent such information (i) is or becomes publicly
available other than as a result of a breach of this Section 10.20 or (ii)
becomes available to Collateral Agent or any Holder on a nonconfidential basis
from a source other than Company or (i) to the National Association of Insurance
Commissioners or any other similar organization or any nationally recognized
rating agency that requires access to information about a Holder's, the
Collateral Agent's or their respective Affiliates' investment portfolio in
connection with ratings issued with respect to such Holder or its Affiliates;
provided that, unless specifically prohibited by Applicable Law or court order,
each Holder and the Collateral Agent shall promptly notify Company of any
request by any Government Authority or representative thereof (other than any
such request in connection with any regulatory examination or examination of the
financial condition of such Holder or the Collateral Agent by such Government
Authority) for disclosure of any such non-public information; and provided,
further that in no event shall any Holder or the Collateral Agent be obligated
or required to return any materials furnished by Company or any of its
Subsidiaries. In addition, the Collateral Agent and the Holders may disclose the
existence of the Note Documents and information about the Note Documents to
market data collectors, similar service providers to the lending industry, and
service providers to Collateral Agent and Holders.
(b) From and after the occurrence of an effective registration
statement of the Company under the Securities Act, no Holder shall be in
possession of any material, nonpublic information received from the Company, any
of its Subsidiaries or any of their respective officers, directors, employees or
agents, that is not disclosed in the filings made by the Company with the SEC in
compliance with Regulation FD unless such Holder (i) has been provided with an
opportunity to decline receipt of such information and (ii) has affirmatively
agreed to receive such information. For the purposes of this paragraph,
material, nonpublic information shall not include any information which such
Holder obtains or is privy to because such Holder has representation (direct or
indirect) on the Company's Board of Directors.
75
10.21 RATABLE SHARING.
The Holders hereby agree among themselves that if any of them shall,
whether by voluntary or mandatory payment (other than a payment or prepayment of
the Notes made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Note Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment or
reduction of a proportion of the aggregate amount of principal, interest, fees
and other amounts then due and owing to that Holder hereunder or under the other
Note Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Holder) that
is greater than the proportion received by any other Holder in respect of the
Aggregate Amounts Due to such other Holder, then the Holder receiving such
proportionately greater payment shall, unless such proportionately greater
payment is required by the terms of this Agreement, (i) notify the Collateral
Agent and each other Holder of the receipt of such payment and (ii) apply a
portion of such payment to purchase assignments (which it shall be deemed to
have purchased from each seller of an assignment simultaneously upon the receipt
by such seller of its portion of such payment) of the Aggregate Amounts Due to
the other Holders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Holders in proportion to the Aggregate Amounts Due to them;
provided that (A) if all or part of such proportionately greater payment
received by such purchasing Holder is thereafter recovered from such Holder upon
the bankruptcy or reorganization of the Company or its Subsidiaries or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such assignments shall be returned to such purchasing Holder ratably to the
extent of such recovery, but without interest and (B) the foregoing provisions
shall not apply to (1) any payment made by the Company pursuant to and in
accordance with the express terms of this Agreement or (2) any payment obtained
by a Holder as consideration for the assignment or transfer (other than an
assignment or transfer pursuant to this Section 10.21) of its Note pursuant to
Section 10.2. The Company expressly consents to the foregoing arrangement and
agrees that any purchaser of an assignment so purchased may exercise any and all
rights of a Holder as to such assignment as fully as if that Holder had complied
with the provisions of Section 10.2 with respect to such assignment. In order to
further evidence such assignment (and without prejudice to the effectiveness of
the assignment provisions set forth above), each purchasing Holder and each
selling Holder agree to comply with the provisions of Section 10.2 at the
request of a selling Holder or a purchasing Holder.
10.22 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS.
The obligations of each Purchaser under any Note Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Note Document. Nothing contained herein or in any other Note
Document, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Note Documents. Each Purchaser confirms
that it has independently participated in the negotiation of the transaction
76
contemplated hereby with the advice of its own counsel and advisors. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Note Documents, and it shall not be necessary for any other
Purchase to be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES FOLLOW]
77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY: NEXTWAVE WIRELESS LLC
-------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
GUARANTORS: NEXTWAVE BROADBAND INC.,
---------- NW SPECTRUM CO.,
AWS WIRELESS INC.,
PACKETVIDEO CORPORATION,
Each By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
S-1
COLLATERAL AGENT: THE BANK OF NEW YORK
---------------- as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address: The Bank of New York,
Asset Solutions Division
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Director of Agent Services,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
S-2
PURCHASERS:
----------
AVENUE INVESTMENTS, L.P.
By: Avenue Partners, LLC, its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Member
Address: Avenue Capital Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Initial Bank Account: ▇▇ ▇▇▇▇▇▇ Chase Bank
ABA #: ▇▇▇-▇▇▇-▇▇▇
FBO: Citigroup Global Markets, Inc.
Acct: ▇▇▇-▇▇▇-▇▇▇
F/F/C: Avenue Capital Mgmt, II LP
Acct #: 522-36818-2-5
Attn: Prime Broker Group
S-3
AVENUE SPECIAL SITUATIONS FUND IV, L.P.
By: Avenue Capital Partners IV, LLC, its General Partner
By: GL Partners IV, LLC, its Managing Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Member
Address: Avenue Capital Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Initial Bank Account: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank
ABA #: ▇▇▇-▇▇▇-▇▇▇
FBO: Citigroup Global Markets, Inc.
Acct: ▇▇▇-▇▇▇-▇▇▇
F/F/C: Avenue Capital Mgmt, II LP
Acct #: 522-36818-2-5
Attn : Prime Broker Group
US Dollars
S-4
DK ACQUISITION PARTNERS, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇▇ & Co., its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
Address:
Credit Contact: DK Acquisition Partners, L.P.
c/o Davidson Kempner Capital Management
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Operations Contact: DK Acquisition Partners, L.P.
c/o Davidson Kempner Capital Management
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Initial Bank Account: Citibank
ABA No.: ▇▇▇-▇▇▇-▇▇▇
F/C: Bear ▇▇▇▇▇▇▇
Acct. No.: 09253186
F/B/O: DK Acquisition Partners, L.P.
Acct. No.: ▇▇▇-▇▇▇▇▇-▇▇
USD
S-5
HIGHBRIDGE INTERNATIONAL LLC
By: Highbridge Capital Management, LLC
By: /s/ ▇▇▇▇ ▇. Chill
---------------------------
Name: ▇▇▇▇ ▇. Chill
Title: Managing Director
Address: c/o Highbridge Capital Management, LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇ ▇. Chill
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇/▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Initial Bank Account: Citibank
ABA #: ▇▇▇-▇▇▇-▇▇▇
A/C: Bears ▇▇▇▇▇▇▇ Securities Corp.
A/C #: 09253186
FBO: Highbridge International LLC
A/C #: 102-07954
S-6
INVESTCORP INTERLACHEN MULTI-STRATEGY MASTER FUND LIMITED
By: Interlachen Capital Group LP, an Authorized Signatory
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ and Legal Department
Initial Bank Account:
Fed Wire: Citibank, N.A. New York
ABA#: ▇▇▇▇▇▇▇▇▇
Account: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., NY
Account #: ▇▇▇▇▇▇▇▇
Subaccounts: Investcorp Interlachen Multi-Strategy Master
Fund Limited
Subaccount #: 038-C0961
Check: Payable to same
Deliver to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
1221 Ave. of the Americas - 28th Fl.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Prime Brokerage
S-7
POLYGON DEBT HOLDINGS LIMITED
By: Polygon Investment Partners LLP, its investment manager
By: /s/ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇. ▇▇▇▇▇▇▇
Title: PM
Address: ▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇.▇.
Initial Bank Account:
Bank: UBS AG London
Correspondent Bank: UBS AG Stamford Branch
Account No.: 101-WA-377104-000
Swift BIC: ▇▇▇▇▇▇▇▇
Beneficiary BIC: ▇▇▇▇▇▇▇▇▇▇▇
Name: NextWave Wireless LLC
S-8
SILVER OAK CAPITAL, L.L.C.,
as agent for and on behalf of the entities attached hereto
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
Address:
Operational/Administrative Contract: Angelo, Gordon, & Co., L.P.
Accounting Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Closing Documentation/Credit Contract: Angelo, Gordon, & Co., L.P.
Accounting Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Initial Bank Account: Citibank, N.A.
New York, NY
ABA #: 021-000089
A/C: Bear ▇▇▇▇▇▇▇ Securities Corp.
A/C #: 09253186
Sub A/C: Silver Oak Capital, L.L.C.
Sub A/C #: ▇▇▇-▇▇▇▇▇-▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Ref: {Credit Name}
S-9
EXHIBIT A
FORM OF NOTE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER MAY
NOT OFFER, SELL, TRANSFER, ASSIGN, PLEDGE, HYPOTHECATE, OR OTHERWISE DISPOSE OF
OR ENCUMBER THE SECURITIES REPRESENTED BY THIS CERTIFICATE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION. THE ISSUER OF THESE SECURITIES MAY REQUEST AN
OPINION OF LEGAL COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE ISSUER
THAT ANY SUCH OFFER, SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER
DISPOSITION OR ENCUMBRANCE IS EXEMPT FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, IF SUCH
OFFER, SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OR
ENCUMBRANCE IS NOT PURSUANT TO RULE 144, RULE 144A OR AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. FOR FURTHER INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE YIELD TO MATURITY OF THIS NOTE,
THE HOLDER OF THIS NOTE SHOULD CONTACT THE OFFICE OF THE CHIEF FINANCIAL OFFICER
OF NEXTWAVE WIRELESS LLC AT ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, WHO
WILL PROMPTLY MAKE SUCH INFORMATION AVAILABLE.
NEXTWAVE WIRELESS LLC
July 17, 2006
SENIOR SECURED NOTE
DUE 2010
No: [ ] U.S. $[ ]
NextWave Wireless LLC, a Delaware limited liability company (and its
permitted successors and assigns, the "COMPANY"), for value received, promises
to pay to [ ], or its permitted assigns, on the 15th day of July, 2010, the
principal amount of $[ ] (the "PRINCIPAL AMOUNT"), and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the then outstanding
Principal Amount at the rate of 7% per annum, payable in cash: provided that, if
the Conversion Date shall not have occurred on or prior to the Conversion Target
Date, interest shall accrue at the rate of 12% per annum during the period from
the Target Conversion Target Date to the Conversion Date. Interest shall be
payable semi-annually in arrears on January 15 and July 15 of each year,
commencing January 15, 2007 (each such date, an "INTEREST PAYMENT DATE"), and
upon any repayment, prepayment or redemption of any principal evidenced hereby,
whether at stated maturity or otherwise, on the principal amount so paid. During
any period during which there has occurred and is continuing any default in the
payment when due of interest on, principal of, or premium, if any, or fees with
respect to this Note (a "PAYMENT DEFAULT"), the principal amount of this Note
will accrue interest payable on demand in cash at a rate per annum equal to the
Exhibit A-1
sum of 2% plus the interest rate otherwise in effect on this Note (to the extent
that the payment of such interest shall be legally enforceable).
This Note is a duly authorized issue of Senior Secured Notes of the
Company, designated as "Senior Secured Notes due 2010" (the "NOTES"), in the
aggregate principal amount of U.S. $350,000,000 issued under the Purchase
Agreement, dated as of July 17, 2006, by and among the Company, the guarantors
named therein (the "GUARANTORS"), the Purchasers named therein and The Bank of
New York, as Collateral Agent (as amended, restated, modified or supplemented
from time to time, the "PURCHASE AGREEMENT"). All capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Purchase
Agreement. This Note shall at all times be secured by the Collateral Documents,
guarantied by the Guarantors pursuant to the Guaranty and, from and after the
Conversion Date, the Parent Guaranty, and subject to the terms and conditions of
the Purchase Agreement.
The Company shall treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes. The principal, premium, if any, and interest on this Note is
payable when due in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts in
the manner set forth in the Purchase Agreement.
The Holder's determination of the principal amount of this Note
shall be conclusive and binding, absent manifest error.
1. OPTIONAL REDEMPTION
This Note is subject to optional redemption by the Company as
provided in Article VIII of the Purchase Agreement.
2. ASSET SALES
This Note is subject to mandatory redemption in connection with
certain asset sales as provided in Section 5.14 and Section 8.1(b) of the
Purchase Agreement.
3. CHANGE OF CONTROL OFFERS
This Note is subject to mandatory offers to redeem in connection
with a Change of Control as provided in Section 5.18 of the Purchase Agreement.
4. GUARANTIES
Pursuant to the Guaranty, dated as of the date hereof (the
"GUARANTY"), each Guarantor has unconditionally and jointly and severally
guarantied the payment of all obligations of the Company under the Notes; and
pursuant to and the Parent Guaranty, dated as of the date hereof and effective
as of the Conversion Date, the Parent has unconditionally and jointly and
Exhibit A-2
severally guarantied the payment of all obligations of the Company under the
Notes.
5. COLLATERAL DOCUMENTS.
Pursuant to the Collateral Documents, the Company has secured its
obligations under the Note and the Note Documents, each Guarantor has secured
its obligations under the Guaranty by granting to the Holders of the Notes, a
First Priority Lien on substantially all of their right, title and interest in
and to the Collateral (as defined in the Security Agreement) and Parent will
secure its obligations under the Guaranty by granting to the Holders of the
Notes, a First Priority Lien on substantially all of its right, title and
interest in and to the Collateral (as defined in the Security Agreement) as of
the Conversion Date. Collateral shall be held by the Collateral Agent for the
benefit of the Holders pursuant to the terms of the Collateral Agency Agreement.
6. PURCHASE AGREEMENT
The Company issued this Note under the Purchase Agreement. The terms
of this Note include those stated in the Purchase Agreement, including, without
limitation, the provisions in the Purchase Agreement respecting covenants,
Events of Default and remedies.
7. MODIFICATION OF NOTES
The Notes may be modified as provided in Section 10.3 of the
Purchase Agreement.
8. TRANSFER
This Note is subject to certain transfer restrictions as set forth
in the Purchase Agreement.
9. NON-WAIVER
No course of dealing between the Company and the Holder of this Note
or any delay or failure on the part of the Holder hereof in exercising any
rights hereunder shall operate as a waiver of any rights of any Holder hereof,
except to the extent expressly waived in writing by the Holder hereof.
10. GOVERNING LAW
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
11. SUCCESSORS AND ASSIGNS
All of the covenants, promises and agreements in this Note shall
bind the Company's successors and assigns, whether so expressed or not.
Exhibit A-3
12. HEADINGS
The headings of the sections and paragraphs of this Note are
inserted for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
[Signature Page to Follow]
Exhibit A-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name by a duly authorized officer and to be dated as of the day and year
first above written.
NEXTWAVE WIRELESS LLC
By:______________________________________
Name:
Title:
Exhibit A-5
OPTION OF HOLDER TO ELECT PURCHASE
----------------------------------
If you want to elect to have this Note purchased by the Company pursuant
to Section 5.18 of the Purchase Agreement, check the box below:
[_] Yes
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 5.18 of the Purchase Agreement, state the amount you
elect to have purchased (if no amount is set forth below you will have elected
to have the full amount of the Note purchase by the Company):
$______________
Date: _______________
Your Signature: __________________________
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No.:____________________
Exhibit A-6