EXECUTION COPY
AGREEMENT TO PURCHASE LMDS LICENSE
AGREEMENT TO PURCHASE LMDS LICENSE, dated as of July 10, 1998 (this
"Agreement") by and between WinStar Communications, Inc., a Delaware corporation
the "Purchaser"), CellularVision USA, Inc., a Delaware corporation ("CVUSA") and
CellularVision of New York, L.P., a Delaware limited partnership ("Seller"),
WHEREAS, Seller holds the LMDS A Block License (the "License") from the
Federal Communications Commission (the "FCC") for the New York Primary
Metropolitan Statistical Area (i.e., the five boroughs comprising the City of
New York, and the contiguous New York State counties of Westchester, Rockland
and Xxxxxx), free and clear of all liens, claims, rights of usage by third
parties and other encumbrances (collectively, "Liens"),
WHEREAS, Seller and CVUSA have retained Xxxxxxxxxxx Xxxxxxx & Co., Inc.
to advise them on the marketing and sale of the 850 MHz License and Xxxxxxxxxxx
Xxxxxxx & Co., Inc. has managed the sale process, which included, among other
things, contacting a large number of potential purchasers as well as active
negotiations with certain potential purchasers, all of which resulted in the
offer of the Purchase Price and the Loans (as hereinafter defined) all on the
terms and conditions set forth herein, which CVUSA deems to be the best offer
currently available for the 850 MHz License;
WHEREAS, Seller intends to disaggregate 850 MHz of the spectrum covered by
the License, comprised of the frequencies between 27.5 and 28.35 GHz and to be
conveyed to Purchaser pursuant to a license granted by the FCC thereto (the "850
MHz License") and Purchaser wishes to purchase the 850 MHz License, upon the
terms and subject to the conditions set forth herein, free and clear of all
Liens.
WHEREAS, holders of not less than 39% of the outstanding shares of common
stock of CVUSA wish to irrevocably consent to this Agreement and the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises, and the mutual conditions
and obligations set forth herein, the parties hereto hereby agree as follows:
1. Purchase Price; Loan. (a) The purchase price for the 850 MHz License
shall be $32,500,000, of which a portion will be payable by offset of the total
outstanding principal amount and accrued interest on the Loan (as defined below)
and the remainder of which will be payable by wire transfer of immediately
available funds to Seller at the Closing (defined in Section 3).
(b) As promptly as practicable following the execution and delivery of this
Agreement by the parties hereto (including the voting agreement of certain
holders owning not less than 39% of the outstanding shares of common stock of
CVUSA), Purchaser will make an initial loan to Seller (the "Initial Loan") in
the amount of $3,500,000, and, when Seller shall have made the FCC filings
contemplated by Section 2(a) and CVUSA shall have obtained the stockholder
approval contemplated by Section 13, Purchaser will make an additional loan in
the amount of $2,000,000 (such loan, together with the Initial Loan and the
loans that Purchaser may, in its sole discretion, make pursuant to Section 6,
the "Loans") at 7.5% per annum, with interest and principal payable in full at
the Closing by way of offset against the purchase price then due, as provided
above, or on such earlier date as this Agreement may be terminated in accordance
with its terms, provided that in the event of such a termination, such interest
rate will be 18% per annum. The Loans will be secured by a first priority
perfected security interest on all of the assets of Seller as to which a
security interest may be granted, including, without limitation, the proceeds
from such assets as well as from the sale or other transfer of FCC licenses, it
being understood and agreed that (i) a vendor's security interest in certain
equipment has been assigned to NewStart Factors, Inc. and (ii) the FCC licenses
may not be subject to security interests as a matter of law. Purchaser's
security interest will extend to after-acquired property and to proceeds,
provided that Borrower will retain the right to enter into vendor financing and
equivalent secured financing arrangements with respect to equipment acquired
after the date hereof. CVUSA will guarantee the repayment in full of the Loans
in accordance with its terms, and will secure its guarantee with a pledge of all
of the outstanding shares of stock of CellularVision Capital Corp., the sole
general partner of Seller, and all of the outstanding limited partnership
interests in Seller, all of which are owned by CVUSA. The parties agree to
prepare, review and negotiate in good faith and execute as promptly as
practicable (and in any event prior to the funding of the Loans) mutually
acceptable definitive documentation ((the "Loan Documents") in customary form
for these financing transactions, including, without limitation, a Loan
Agreement (including guaranty provisions), a Note, a Security Agreement
(including pledge provisions), and UCC-1 forms. To the extent there is an
inconsistency between the Loan Documents and this Agreement with respect to the
Loans and related security arrangements, the Loan Documents shall control.
2. Government Approvals; Transition. (a) As promptly as practicable
following the execution and delivery of this Agreement, Seller and Purchaser
will (i) file appropriate applications for the disaggregation of the License and
assignment of the 850 MHz License to Purchaser and (ii) make such filings under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations (collectively, the "HSR Act") as may be legally required in order to
consummate the transactions contemplated herein, with the filing fee related to
any such filing to be shared by Purchaser and CVNY on a 50%/50% basis. Following
the making of such applications and filings, both parties will diligently
attempt to obtain successful results with respect thereto in a manner that
permits the consummation of the transactions contemplated herein as soon as
practicable.
(b) Prior to the Closing, and in accordance with all applicable legal and
regulatory requirements, Seller will clear its operations from the spectrum
covered by the 850 MHz License, such transition to be completed in any event
within 90 days of the date of FCC Approval (as herein defined).
3. Closing. The closing of the transactions contemplated herein (the
"Closing") shall occur on the first business day (the "Closing Date") following
the first date upon which all of the following conditions are satisfied: (i) the
FCC shall have granted its consent to the assignment of the 850 MHz License to
Purchaser and, unless waived by Purchaser, such consent shall have become a
final, nonappealable order no longer subject to review or reconsideration ("FCC
Approval"); (ii) CVUSA shall have obtained the approval of its stockholders with
respect to the transactions contemplated hereby; and (iii) any applicable
waiting period under the HSR Act shall have expired without action taken to
prevent the consummation of the transactions contemplated herein. At the
closing, Seller shall assign the 850 MHz License to Purchaser free and clear of
all Liens against payment of the Purchase Price as contemplated by Section 1.
4. Representations and Warranties. (a) Each party (the "Representer")
hereby represents and warrants to the other that (i) the Representer has all
requisite power and authority to execute this Agreement and the Loan Documents
and perform its obligations hereunder and thereunder, (ii) all corporate and
partnership action necessary for the authorization, execution and performance by
the Representer of its obligations hereunder and thereunder have been taken,
except that, in the case of CVUSA, stockholder approval may be required, and
(iii) subject to obtaining the consent and approvals referred to in paragraph 3
above, the execution, delivery and performance of this Agreement and the Loan
Documents does not and will not require the consent of any other person or
entity, contravene the certificate of incorporation or by-laws or certificate of
limited partnership or partnership agreement of the Representer or conflict with
or result in a breach or violation by the Representer of any law, court or
administrative order or contract to which the Representer is a party or by which
the Representer is bound.
(b) Seller and CVUSA hereby represent and warrant that Seller is the sole
legal and beneficial owner and holder of the License, has the right under
applicable law and FCC regulations to effect the disaggregation of spectrum
contemplated hereby and that the License is, and the 850 MHz License will be,
held by Seller free and clear of all Liens. Without limiting the foregoing,
Seller hereby represents and warrants that no person or entity other than Seller
has or will have the right to use all or any portion of the License or the 850
MHz License. Seller hereby further represents and warrants that (i) it is in
compliance in all material respects with the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC, (ii) Seller has
satisfied all build-out, renewal, construction and other material regulatory
requirements, and (iii) there are no pending complaints, challenges, petitions,
appeals or other regulatory encumbrances pending or, to the best of the
knowledge of Seller or CVUSA, threatened, against Seller or the License.
(c) Each party will use all commercially reasonable efforts to cause all of
its representations and warranties in this Agreement to remain true and correct
at all times through the Closing Date and to cause all conditions to Closing to
be satisfied.
5. Closing Conditions. (a) Each Party's obligation to close shall be
subject to the following conditions (i) the other party's representations and
warranties hereunder and under the Loan Documents shall be true and correct on
and as of the Closing Date as if made again on that date, (ii) the other party
shall have performed all covenants to have been performed hereunder and
thereunder and (iii) the other party shall have delivered a certificate of a
senior officer as to the matters in clauses (i) and (ii) above dated as of the
Closing Date.
(b) Purchaser's obligation to close shall be subject to the conditions that
(i) the conditions referred to in Sections 2(b) and 3 shall have been satisfied,
(ii) there shall be no injunction or order of any court or government agency
restraining or invalidating any of the transactions contemplated hereby, and
(iii) Purchaser shall have received opinions of Seller's counsel dated as of the
date hereof and as of the Closing date in form and substance reasonably
satisfactory to Purchaser and covering such portion of the matters covered by
Seller's and CVUSA's representations contained herein as are customarily covered
in legal opinions and subject to customary qualifications, including an opinion
of FCC counsel substantially in the form attached.
6. Termination. Either party which is not then in material breach of its
obligations hereunder may terminate this Agreement without liability by written
notice to the other party if the Closing Date shall not have occurred on or
before January 31, 1999, provided, however, that upon Purchaser's notice given
at least 10 days prior to the date that termination would otherwise be
permitted, such date shall be extended to June 30, 1999 and, thereafter, to
December 31, 1999 if (i) Purchaser is not in material breach of its obligations
hereunder and (ii) on each such occasion Purchaser makes an additional Loan of
$3.5 million in principal amount to the Seller on substantially the same terms
as the Loans. Purchaser may terminate this Agreement at any time if CVUSA has
not obtained stockholder approval of this transaction by October 10, 1998.
7. Transaction Expenses. Except as otherwise provided in Section 2(a) and
Section 13, each of the parties hereto will be responsible for its own expenses
(including fees and expenses of legal counsel) incurred in connection with the
transactions contemplated hereby, provided that as of the Closing Date (or
earlier termination of this Agreement in accordance with its terms in a case in
which the expense reimbursement provision of Section 13 do not apply) Seller and
CVUSA will reimburse Purchaser's reasonable fees and expenses of counsel
incurred in connection with the negotiation and preparation of the documents
relating to the transactions contemplated hereby, including the Loans, and the
prosecution of the FCC applications contemplated hereby, provided that the
amount of such fees and expenses related to the documentation of the
transactions through the funding of the Initial Loan and prosecution of the FCC
applications contemplated hereby shall not exceed $50,000. Each party represents
to the other that it has not incurred any liability for a broker's or finder's
fee in connection with the transactions contemplated hereby, except that Seller
is liable to Xxxxxxxxxxx Xxxxxxx & Co., Inc. for fees in connection with such
transactions.
8. Publicity; Disclosure. Without the prior approval of the other party,
neither of the parties hereto shall disclose to the public or to any third party
any information concerning the transactions contemplated hereby, other than
disclosures to their financial, legal and other advisors and to governmental
authorities or the public as may, in the opinion of counsel, be required by law.
Notwithstanding the foregoing, CVUSA shall be permitted to include in the proxy
statement described in Section 13 hereof, such details of the transactions
contemplated hereby as may be required by law; provided that Purchaser shall
have the right to review and comment thereon prior to the proxy statement being
filed with the SEC or distributed. The parties will cooperate in the preparation
of a joint press release or coordinated but separate press releases announcing
the effectiveness of this Agreement as soon as it occurs pursuant to Section 12.
9. Access. Until the Closing, CVUSA and Seller will give Purchaser and its
representatives all access during ordinary business hours to the premises and
personnel of Seller and CVUSA and to all accounting, financial and other records
applicable to Seller as Purchaser may reasonably request for the purpose of
confirming compliance with this Agreement and CVUSA and shall furnish all
information with respect to the business and affairs of Seller as Purchaser may
reasonably request for such purpose. CVUSA and Seller will cause their
executives, employees, attorneys and accountants to make themselves available to
provide reasonable cooperation to Purchaser in connection therewith.
10. Exclusivity. Neither CVUSA nor Seller shall (nor shall either of them
permit their representatives or stockholders to) discuss a possible sale, lease
or other disposition of or by Seller or CVUSA (whether by sale of stock or
assets or otherwise) that is not consistent with the sale to Purchaser of the
850 MHz License contemplated hereby or provide any information in connection
therewith to any other party or enter into any agreements or commitments to do
the same.
11. Assignment. This Agreement is intended to be a binding agreement
between Purchaser, CVUSA and Seller and shall bind and inure to the benefit of
the successors and assigns of such parties; provided that CVUSA and Seller may
not assign their rights or delegate their obligations hereunder without
Purchaser's prior written consent, which will not be unreasonably withheld. The
Purchaser may assign its rights hereunder to any of its wholly-owned or majority
controlled subsidiaries, provided that no such assignment of its rights shall
relieve Purchaser of any of its obligations hereunder.
12. Effectiveness. Simultaneously with the execution and delivery of this
Agreement the following are expected to occur, upon the occurrence of which this
Agreement will come into full force and effect:
(a) Holders of not less than 39% of the issued and outstanding shares of
Common Stock of CVUSA shall have agreed to vote their shares as provided below;
(b) Seller shall have executed and delivered to Purchaser the Loan
Documentation, including arrangements with existing creditors as Purchaser shall
deem appropriate;
(c) Purchaser shall have received such opinions of Seller's counsel as it
shall reasonably require in connection with FCC and corporate matters with
respect to the Loan Documents, the License and the transactions contemplated
hereby, including, if Purchaser so requires, a favorable opinion from
Purchaser's FCC counsel to the effect that there is no reason to expect (i) that
the transactions contemplated hereby will materially adversely affect the
regulatory status of any of the FCC wireless licenses currently held by
Purchaser or any of its subsidiaries or (ii) that there is any reason to believe
that the disaggregation of spectrum is not permissible under applicable law.
13. Shareholder Approval; Break-up fee; Events of Bankruptcy.
(a) CVUSA has obtained the approval of a majority of its board of directors
to the transactions contemplated hereby, and its board has recommended and will
continue to recommend, so long as such recommendation is consistent with their
fiduciary duties under applicable law, that its stockholders vote to approve the
transactions contemplated hereby. CVUSA will call a special meeting of its
stockholders as promptly as practicable for the purpose of obtaining such
approval, will file a preliminary proxy statement with respect thereto with the
Securities and Exchange Commission within five (5) business days of the
execution of this Agreement and will distribute a definitive proxy statement to
stockholders in accordance with applicable law, and use its best efforts to hold
such meeting and obtain such approval as quickly as possible.
(b) In the event a petition for relief under 11 U.S.C. ss.101 et seq. (the
"Bankruptcy Code") or similar State insolvency statute, is filed by or against
Seller or CVUSA, each Seller and CVUSA agree to (i) consent to entry of an order
for relief under Chapter 11 of the Bankruptcy Code; (ii) continue to comply with
the terms of this Agreement; and (iii) to the extent necessary for Seller or
CVUSA to continue to comply with the terms of this Agreement, seek Bankruptcy
Court approval of the sale contemplated by this Agreement or take such other
action as may be necessary or advisable to allow Seller and CVUSA to continue to
comply with the terms of this Agreement.
(c) in the event at any time on or prior to the Closing Date (i) this
Agreement is terminated by Seller or CVUSA (other than as a result of a material
breach by Purchaser) and a court determines that specific enforcement in
accordance with the provisions of Section 14(b) is not available to Purchaser,
or (ii) Purchaser terminates this Agreement because CVUSA stockholder approval
has not been obtained by October 10, 1998, then Purchaser shall be entitled to
the following as liquidated damages, and not as a penalty:
(i) Expense Reimbursement: Seller and CVUSA jointly and severally shall
reimburse Purchaser for its actual and reasonable out-of-pocket expenses, not to
exceed $325,000 (exclusive of the amounts payable pursuant to Section 7)
incurred in furtherance of this Agreement and the transactions contemplated
herein, including without limitation, attorneys' fees and expenses incurred by
Purchaser for services of outside counsel in negotiating this Agreement, the
Loan Documents and all related agreements, performance of due diligence, or
otherwise (the "Expense Reimbursement"). Purchaser shall submit to Seller and
CVUSA an itemized statement reflecting such actual reasonable expenses. Within
five (5) days thereafter, Seller and CVUSA shall make an Expense Reimbursement.
This obligation shall survive any termination of this Agreement, and shall be
secured by the collateral under the security agreement being executed in
relation to the Loans.
(ii) Termination Fee. Seller and CVUSA jointly and severally shall, within
five (5) days of such termination, pay $1,625,000 to the Purchaser as a
termination fee ("Termination Fee"). This obligation shall survive any
termination of this Agreement, and shall be secured by the collateral under the
security agreement being executed in relation to the Loans.
14. Specific Performance; Miscellaneous; Conflict Waiver. (a) This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of New York. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together shall
constitute one instrument.
(b) Notwithstanding the provisions of Section 13(c)(i) and (ii), it is
understood and agreed that money damages would not be an adequate remedy for a
breach of the Agreement by Seller or CVUSA and that Purchaser shall be entitled
to specific performance and injunctive or other equitable relief as a remedy for
any such breach. Seller and CVUSA agree to waive any requirement for the
securing or posting of any bond in connection with such remedy. Such remedy
shall not be deemed to be the exclusive remedy for any such breach, but shall be
in addition to all other remedies available to Purchaser at law or in equity.
(c) Each of the parties hereto acknowledges that Xxxxxxx Xxxx & Xxxxxxxxx
regularly acts as counsel for each of them, and consents to the fact that the
New York office of such firm will provide corporate (but not FCC) advice to
CVUSA and Seller (which will receive FCC advice from other counsel), its
Washington office will provide FCC (but not corporate) advice to Purchaser,
which is also represented by other counsel in this matter.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
WINSTAR COMMUNICATIONS, INC.
By:________________________
Title:
Accepted and agreed as of July 10, 1998
CELLULARVISION USA, INC.
By:_______________________
Printed name:
Title:
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
its General Partner
By:_____________________________
Title:
Voting Agreement by Stockholders
In consideration of the Purchaser executing the Agreement, the undersigned,
being the holders of not less than 39% outstanding shares of the voting capital
stock of CellularVision USA, Inc. which is entitled to vote a the approval of
the transactions described herein, hereby expressly and irrevocably agree to
vote all such shares in favor of approval of the transactions contemplated
hereby at any special meeting of stockholders to be called for such purpose and
do hereby agree to take such actions as Purchaser may reasonably request in
order to further evidence such approval and consent.
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