EXHIBIT 10.19
LIMITED GUARANTY AGREEMENT
This LIMITED GUARANTY AGREEMENT ("Guaranty") dated June 29, 2001 (the
"Effective Date") is made and executed by CONESTOGA ENTERPRISES, INC.
RECITALS
WHEREAS, concurrently herewith, Mountain Union, Guarantor, and its
wholly owned subsidiaries, CWC, Conestoga Telephone and Telegraph Company and
Conestoga Mobile Systems, Inc., have closed the transactions contemplated under
that certain Asset Acquisition Agreement dated as of March 15, 2001 ("AAA")
pursuant to which, among other things, Mountain Union is purchasing up to
seventy-six (76) existing communications sites from CWC (the "Closing").
WHEREAS, concurrently herewith, Mountain Union and CWC have entered
into a certain Master License Agreement whereby CWC will license space on all of
the sites transferred to Mountain Union at the Closing held on even date.
WHEREAS, concurrently herewith, Mountain Union, Guarantor and CWC have
entered into a certain Build-to-Suit Agreement under which from time to time
Mountain Union and CWC will enter into certain Site License Agreements covering
Towers to be constructed by Mountain Union under the Build-to-Suit Agreement.
WHEREAS, Guarantor is entering into this Guaranty in conjunction with,
and as an integral part of, the Closing of the transactions contemplated by the
AAA.
AGREEMENT
NOW, THEREFORE, the undersigned, intending to be legally bound, agrees
as follows:
1. Definitions
1.1 Mountain Union. Mountain Union Telecom, LLC, a Delaware limited
liability company with offices located at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000.
1.2 Build-to-Suit Agreement. That certain Build-to-Suit Agreement by
and between Mountain Union, the Guarantor and CWC of even date herewith.
1.3 CWC. Conestoga Wireless Company, a wholly owned subsidiary of
Guarantor, and a Pennsylvania corporation, with offices located at 000 Xxxx
Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
1.4 CWC Liabilities. All present and future liabilities and
obligations of CWC to Mountain Union under the Master License Agreement and
under each of the Site License Agreements arising during the "Initial Term" of
each respective agreement. As defined in each respective agreement, the "Initial
Term" is a period of ten (10) years beginning on the Commencement Date (as
defined therein).
1.5 Event of Default. As that term is defined in Section 4.1 of this
Guaranty.
1.6 Guarantor. Conestoga Enterprises, Inc., a Pennsylvania
corporation, with offices located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
1.7 Guarantor's Liabilities. All present and future liabilities and
obligations of the Guarantor to Mountain Union under this Guaranty.
1.8 Guaranty. This Limited Guaranty Agreement, and any future
amendments to this Limited Guaranty Agreement.
1.9 Master License Agreement. That certain Master License Agreement
by and between Mountain Union and CWC of even date herewith.
1.10 Site License Agreement. Each Site License Agreement entered
into between Mountain Union and CWC under the Build-to-Suit Agreement.
1.11 Affiliate. As used herein, the "Affiliate" of any entity means
any entity controlling, controlled by, or under common control with such entity
including, without limitation, a party to this Agreement. For the purpose of
this Agreement, "control" means the direct or indirect ownership of more than
fifty percent (50%) of the outstanding voting shares of an entity.
2. Interpretation.
2.1 Other Capitalized Terms. All capitalized words and/or phrases
not defined herein which are defined in the Master License Agreement or each
Site License Agreement shall have the meanings set forth in the Master License
Agreement or such Site License Agreement, as the case may be.
2.2 Captions. The section and subsection captions of this Guaranty
are included for reference only and are not to be used in the construction of
this Guaranty.
2.3 Severability. Any provision contained in this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
2.4 Construction. This Guaranty and the rights and obligations of
Mountain Union and the Guarantor under this Guaranty shall be governed by and
construed in accordance with the domestic, internal laws (but not the law of the
conflict of laws) of the Commonwealth of Pennsylvania.
3. Guaranty of Payment and Performance.
3.1 Guaranty of Payment and Performance. The Guarantor guarantees to
Mountain Union the full and prompt payment and performance when due, whether by
acceleration or otherwise, of the CWC Liabilities, subject to the limitations
set forth in Section 5 below.
3.2 Continuing Guaranty. This Guaranty is a continuing guaranty of
payment and performance, subject only to the limitations expressly set forth in
Section 5 below. The CWC Liabilities to which this Guaranty applies, or may
apply under the terms hereof, shall be conclusively presumed to have been
created in reliance hereon. The Guarantor guarantees that the CWC Liabilities
will be paid strictly in accordance with the terms of the Master License
Agreement and each relevant Site License Agreement, as the case may be,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Mountain Union with
respect thereto.
3.3 Amounts Recovered from Mountain Union. If any claim is ever made
upon Mountain Union for repayment or recovery of any amount or amounts received
by Mountain Union in payment, or on account of, any of the CWC Liabilities and
Mountain Union repays all or part of such amount by reason of:
(a) Any judgment, decree or order of any court or
administrative body having jurisdiction over Mountain Union or any
of its property; or
(b) Any settlement or compromise of any such claim
affected by Mountain Union with any such claimant (including CWC),
then and in such event the Guarantor agrees that the obligations of the
Guarantor under this Guaranty shall remain binding upon the Guarantor whether or
not this Guaranty shall have been revoked or the Master License Agreement or any
Site License Agreement shall have been cancelled, and the Guarantor shall be and
continue to remain liable to Mountain Union hereunder for the amount so repaid
or recovered to the same extent as if such amount had never originally been
received by Mountain Union.
3.4 Bankruptcy Rescission or Avoidance. If any settlement,
discharge, payment, grant of security or transfer of property relating to, or
discharging, any duty or liability created under this Guaranty is rescinded or
voided by virtue of any provision of any bankruptcy, insolvency or other similar
law affecting creditors' rights, Mountain Union will be entitled to recover the
value or amount of any such settlement, discharge, payment, grant of security or
transfer of property from the Guarantor as if such settlement, discharge,
payment, grant of security or transfer of property had not occurred.
3.5 Satisfaction of Guarantor's Liabilities. Satisfaction of the
Guarantor's Liabilities shall not relieve the Guarantor from liability therefor
if such satisfaction, or the performance of any of the CWC Liabilities, is
voided by a trustee in bankruptcy or receiver as a preference, or similar
voidable transfer, or for any other reason whatsoever.
3.6 Place and Mode of Payment. The Guarantor shall make all payments
under this Guaranty to Mountain Union at its offices at 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, or at such other location designated by
Mountain Union in writing. Payment shall be in lawful money of the United States
of America in funds immediately available to Mountain Union.
4. Default.
4.1 Events of Default. The occurrence of any one or more of the
following shall be deemed an Event of Default hereunder:
(a) The occurrence of a Default as defined in the Master
License Agreement or in any Site License Agreement;
(b) Failure by the Guarantor to pay any monies due under
this Guaranty within thirty (30) days after written demand by
Mountain Union;
(c) Failure by the Guarantor to observe or perform any
other covenant, condition, term, or provision contained in this
Guaranty, if such failure continues for a period of sixty (60) days
or more after written notice from Mountain Union;
(d) The suspension of any of the businesses of CWC;
(e) The making by CWC or the Guarantor of an assignment
for the benefit of creditors, or a trustee or receiver being
appointed for CWC or the Guarantor; or
(f) Any proceeding being commenced by or against CWC or
the Guarantor under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment
of debt, receivership, liquidation or dissolution law or statute,
which in the case of an involuntary proceeding, is not dismissed
within one hundred twenty (120) days.
4.2 Remedies. Upon the occurrence of an Event of Default, and so
long as such Event of Default shall continue unwaived, Mountain Union may, at
its option and upon not less than ten (10) days prior written notice to CWC and
the Guarantor, exercise any and all of its rights and remedies under the Master
License Agreement, the respective Site License Agreements and under this
Guaranty, as well as any and all of its right and remedies provided by the laws
of the Commonwealth of Pennsylvania or any other jurisdiction.
4.3 Mountain Union's Expenses. Guarantor shall pay to Mountain Union
all reasonable fees, costs and expenses, including filing fees and reasonable
attorney's fees, incurred by Mountain Union in connection with any proceedings
to collect any of the Guarantor's Liabilities.
5. Limitations of this Guaranty. The only limitations applicable to
this Guaranty for the payment and performance of the CWC liabilities are as
expressly set forth in this Section 5. The occurrence of any of the following
events shall cause this Guaranty to be terminated as to Guarantor and of no
further force and effect against Guarantor:
(a) The sale of all, or substantially all, of the stock of CWC (by
merger, consolidation, or otherwise) to Voicestream, Deutsche Telecom, Sprint,
AT&T, Verizon, Nextel, SBC/Xxxx South, WorldCom, Vodaphone (each of the
foregoing companies, a "Telecom Company"), any of their respective Affiliates,
and/or to any other third party having a net worth of at least One Billion
Dollars ($1,000,000,000.00) and a long-term issuer credit rating of at least a
BB by Standard & Poor's ("S&P") and, if also rated by Xxxxx'x Investor Service
("Moody's"), at least a Ba issuer rating by Moody's (as referred to herein, a
"Qualified Third Party"), together with the assumption by such Telecom Company
or Qualified Third Party of either (i) this Guaranty and all Guarantor's
Liabilities or (ii) the Master License Agreement and all Site License
Agreements, and all the CWC Liabilities thereunder; or
(b) The sale of all, or substantially all, of the assets of CWC (by
merger, consolidation, or otherwise) to a Telecom Company, any of its
Affiliates, and/or to any Qualified Third Party, together with the assumption by
such Telecom Company or Qualified Third Party of either (i) this Guaranty and
all Guarantor's Liabilities or (ii) the Master License Agreement and all Site
License Agreements, and all the CWC Liabilities thereunder; or
(c) The sale of all, or substantially all, of the stock of CWC (by
merger, consolidation, or otherwise) to a third party having all of the
following financial characteristics (an "Alternate Qualified Third Party"
herein), together with the assumption by such Alternate Qualified Third Party of
either (i) this Guaranty and all Guarantor's Liabilities or (ii) the Master
License Agreement and all Site License Agreements, and all the CWC Liabilities
thereunder:
(i) An Enterprise Value of at least Two Hundred Million
Dollars ($200,000,000.00);
(ii) A Debt-to-EBITDA ratio of less than 3.5 times;
(iii) An EBITDA-to-Interest ratio of more than 3 times;
(iv) A Debt-to-Funded Capital ratio of less than 50%; and
(v) A long-term issuer credit rating of at least a BB by S&P
and, if also rated by Moody's, at least a Ba issuer rating by Moody's;
or
(d) The sale of all, or substantially all, of the assets of CWC (by
merger, consolidation, or otherwise) to an Alternate Qualified Third Party (as
defined in Section 5(c) of this Guaranty), together with the assumption by such
Alternate Qualified Third Party of either
(i) this Guaranty and all Guarantor's Liabilities or (ii) the Master License
Agreement and all Site License Agreements, and all the CWC Liabilities
thereunder; or
(e) The sale of all, or substantially all, of the stock of CWC (by
merger, consolidation, or otherwise) to D&E Communications, Inc. ("D&E") and/or
Shenandoah Communications Company ("SCC"), or any of their respective
Affiliates, if at the time of the sale, the buyer(s) has the following
characteristics, and D&E and/or SCC, as the case may be, assumes either (i) this
Guaranty and all Guarantor's Liabilities or (ii) the Master License Agreement
and all Site License Agreements, and all the CWC Liabilities thereunder:
(i) An Enterprise Value of at least One Hundred Fifty Million
Dollars ($150,000,000.00);
(vi) A Debt-to-EBITDA ratio of less than 3.5 times;
(vii) An EBITDA-to-Interest ratio of more than 3 times;
(viii) A Debt-to-Funded Capital ratio of less than 50%; and
(ix) A long-term issuer credit rating of at least a BB by S&P
and, if also rated by Moody's, at least a Ba issuer rating by Moody's;
or
(f) The sale of all, or substantially all, of the assets of CWC (by
merger, consolidation, or otherwise) to D&E and/or SCC, or any of their
respective Affiliates, if at the time of the sale, the buyer(s) has the
characteristics set forth in Section 5(e) above and D&E and/or SCC, as the case
may be, assume either (i) this Guaranty and all Guarantor's Liabilities or (ii)
the Master License Agreement and all Site License Agreements, and all the CWC
Liabilities thereunder; or
(g) The expiration of the "Initial Term" under the Master License
Agreement and each of the Site License Agreements. As stated in Section 1.4 of
this Guaranty, the "Initial Term" of each such Agreement is ten (10) years
beginning on the Commencement Date set forth therein.
(h) As used in this Section 5, the following terms shall have the
meanings ascribed to them below:
(i) Debt means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness
or obligations of others of the kinds referred to in clauses (i)
through (iv) above; provided, that "Debt" shall not include trade
payables.
(ii) EBITDA means operating revenue less cost of sales,
operating expenses, and selling, general and administrative expenses
(including all salaries, indirect production, marketing, and general
corporation expenses) for the most recently completed fiscal quarter
multiplied by four (4).
(iii) Enterprise Value as of any date means the amount of
Equity as of such date plus Debt outstanding on such date.
(iv) Equity means the market value of a company measured as
follows:
(A) If the common stock of the company is publicly
traded on a national securities exchange or if sales or bid
and offer quotations are reported for that class of stock on
NASDAQ or New York Stock Exchange, then the "Equity" of the
company on a given date equals the product of the number of
shares outstanding on that date times the average closing
price of such stock over a period of thirty days prior to the
measuring date; or
(B) If the common stock of the company is not
publicly traded, then the "Equity" of the company on a given
date equals the aggregate amount of cash contributed in the
form of common or preferred equity reflected on the company's
balance sheet as of such date as actually received by the
company.
(v) Funded Capital means the amount of Debt funded and
actually received by the company as of such date.
(vi) Interest paid as of any date means the amount of interest
on Debt that has been paid in the previous fiscal quarter annualized by
multiplying such amount by four (4).
(i) Notwithstanding anything to the contrary contained in this
Guaranty, the termination of this Guaranty under this Section 5 shall not
release Guarantor of its obligations hereunder for claims arising out of events
or conditions occurring prior to the date of termination, which obligations
shall survive such termination.
6. Miscellaneous.
6.1 Waivers.
(a) No delay by Mountain Union in exercising, or any
partial or single exercise of, any of its options, powers or rights,
shall constitute a waiver of such option, power or rights.
(b) No waiver of any of Mountain Union's rights under
this Guaranty, and no amendment of this Guaranty shall be deemed to
be made by Mountain Union unless in writing and duly signed on
behalf of Mountain Union;
(c) Any written waiver shall apply only with respect to
the specific instance involved and shall in no way impair the rights
of the bank or the obligations of the Guarantor under this Guaranty
in any other respect at any other time.
6.2 Notices. All notices, demands, requests or other communications
which are required to be given, served or sent by one party to the other
pursuant to this Guaranty shall be in writing and shall be mailed, postage
prepaid, by registered or certified mail, or by a reliable overnight courier
service with delivery verification to the following address for Guarantor or
such address as may be designated in writing by Guarantor:
Conestoga Enterprises, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
with a copy to: Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
P. O. Xxx 000
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Notice given by certified or registered mail or by reliable overnight
courier shall be deemed delivered on the date of receipt (or on the date receipt
is refused) as shown on a certification of receipt or on the records or manifest
of the United States Postal Service or such courier service.
6.3 Binding Effect. This Guaranty shall be binding upon the Guarantor,
its heirs, personal representatives, successors and assigns; provided, however,
the Guarantor shall not assign its duties under this Guaranty without the prior
written consent of Mountain Union, which shall not be unreasonably withheld or
delayed. This Guaranty shall be binding upon, and shall inure to the benefit of,
Mountain Union, its successors and assigns.
6.4 Subrogation. Guarantor will not exercise any rights which it may
acquire by way of subrogation against CWC or any successor(s)-in-interest
thereto under this Guaranty, by any payment made hereunder or otherwise, until
all the CWC Liabilities have been paid in full. If any amount is paid to
Guarantor on account of such subrogation rights such amount shall be held in
trust for the benefit of Mountain Union and shall be paid to Mountain Union to
be credited and applied to the CWC Liabilities, whether matured or unmatured, in
accordance with the Master License Agreement or the relevant Site License
Agreement, as the case may be, or to be held by Mountain Union as collateral
security for any of the CWC Liabilities thereafter existing.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
Guarantor has executed this Guaranty the day and year first above written.
CONESTOGA ENTERPRISES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx, Xx.
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Print Name and Title: Senior Vice President
By:
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Print Name and Title:
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