LOAN AGREEMENT
dated as of July 10, 1998
among
CELLULARVISION OF NEW YORK, L.P.
(the "Borrower"),
CELLULARVISION USA, INC.
(the "Guarantor")
and
WINSTAR COMMUNICATIONS, INC.
(the "Lender")
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.........................................................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Accounting Terms.......................................................................7
ARTICLE 2. THE LOANS.............................................................................................8
Section 2.01. Loans..................................................................................8
Section 2.02. The Notes..............................................................................8
Section 2.03. Purpose................................................................................8
Section 2.04. Prepayments............................................................................8
Section 2.05. Interest and Principal.................................................................9
ARTICLE 3. CONDITIONS PRECEDENT..................................................................................9
Section 3.01. Documentary Conditions Precedent.......................................................9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.......................................................................11
Section 4.01. Organization, Good Standing and Due Qualification.....................................11
Section 4.02. Power and Authority of Borrower; No Conflicts.........................................11
Section 4.03. Corporate Power and Authority of Guarantor; No Conflicts..............................12
Section 4.04. Legally Enforceable Agreements........................................................12
Section 4.05. Litigation............................................................................13
Section 4.06. Ownership and Liens...................................................................13
Section 4.07. Taxes.................................................................................13
Section 4.08. ERISA.................................................................................13
Section 4.09. Subsidiaries and Affiliates...........................................................13
Section 4.10. Agreements............................................................................14
Section 4.11. Operation of Business.................................................................14
Section 4.12. No Default on Outstanding Judgments or Orders.........................................14
Section 4.13. No Defaults on Other Agreements.......................................................14
Section 4.14. Labor Disputes and Acts of God........................................................15
Section 4.15. Governmental Regulation...............................................................15
Section 4.16. No Forfeiture.........................................................................15
ARTICLE 5. AFFIRMATIVE COVENANTS................................................................................15
Section 5.01. Maintenance of Existence..............................................................15
Section 5.02. Conduct of Business...................................................................15
Section 5.03. Maintenance of Properties.............................................................16
Section 5.04. Maintenance of Records................................................................16
Section 5.05. Maintenance of Insurance..............................................................16
Section 5.06. Compliance with Laws..................................................................16
Section 5.07. Right of Inspection...................................................................16
Section 5.08. Reporting Requirements................................................................16
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ARTICLE 6. NEGATIVE COVENANTS...................................................................................18
Section 6.01. Debt..................................................................................18
Section 6.02. Guaranties............................................................................18
Section 6.03. Liens.................................................................................19
Section 6.04. Sale and Leaseback....................................................................19
Section 6.05. Investments...........................................................................20
Section 6.06. Distributions.........................................................................20
Section 6.07. Sale of Assets........................................................................20
Section 6.08. Subsidiary Capital Stock..............................................................21
Section 6.09. Transactions with Affiliates and Subsidiaries.........................................21
Section 6.10. Mergers, Etc..........................................................................21
Section 6.11. Acquisitions..........................................................................22
Section 6.12. No Activities Leading to Forfeiture...................................................22
Section 6.13. Restrictions..........................................................................22
ARTICLE 7. EVENTS OF DEFAULT....................................................................................22
Section 7.01. Events of Default.....................................................................22
Section 7.02. Remedies..............................................................................24
ARTICLE 8. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS...........................................................25
Section 8.01. Guarantied Obligations...................................................................25
Section 8.02. Performance Under This Agreement.........................................................25
Section 8.03. Waivers..................................................................................26
Section 8.04. Releases.................................................................................27
Section 8.05. Marshaling...............................................................................28
Section 8.06. Liability................................................................................29
Section 8.07. Unconditional Obligation.................................................................29
Section 8.08. Election to Perform Obligations..........................................................29
Section 8.09. No Election..............................................................................29
Section 8.10. Severability.............................................................................30
Section 8.11. Other Enforcement Rights.................................................................30
Section 8.12. Delay or Omission; No Waiver.............................................................30
Section 8.13. Restoration of Rights and Remedies.......................................................30
Section 8.14. Cumulative Remedies......................................................................31
Section 8.15. Survival.................................................................................31
ARTICLE 9. MISCELLANEOUS........................................................................................31
Section 9.01. Amendments and Waivers...................................................................31
Section 9.02. Usury....................................................................................31
Section 9.03. Expenses.................................................................................31
Section 9.04. Survival.................................................................................32
Section 9.05. Assignment...............................................................................32
Section 9.06. Notices..................................................................................32
Section 9.07. JURISDICTION; IMMUNITIES.................................................................33
Section 9.08. Subordination............................................................................34
Section 9.09. Table of Contents; Headings..............................................................34
Section 9.10. Severability.............................................................................34
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Section 9.11. Counterparts.............................................................................35
Section 9.12. Integration..............................................................................35
Section 9.13. GOVERNING LAW............................................................................36
EXHIBITS
Exhibit A Note
Exhibit B Security Agreement
Exhibit C Opinion of Counsel to the Obligors
SCHEDULES
Schedule I Subsidiaries and Affiliates
Schedule II Loan Arrangements; Liens
Schedule III Existing Guaranties
Schedule IV Litigation
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LOAN AGREEMENT
LOAN AGREEMENT dated as of July 10, 1998 among CELLULARVISION OF NEW YORK,
L.P., a limited partnership organized under the laws of the State of Delaware
(the "Borrower"), CELLULARVISION USA, INC., a corporation organized under the
laws of the State of Delaware (the "Guarantor" and, together with the Borrower,
the "Obligors") and WINSTAR COMMUNICATIONS, INC., a corporation organized under
the laws of the State of Delaware (the "Lender").
The Obligors have requested that the Lender extend credit to the Borrower
and make loans to the Borrower, the repayment which will be guarantied by the
Guarantor, as provided in this Agreement. The Guarantor will receive direct
economic and financial benefits from the Debt incurred under this Agreement and
the incurrence of such Debt is in the best interests of the Guarantor. Each
Obligor acknowledges that the Lender would not provide the financing hereunder
but for the obligations of such Obligor hereunder with respect hereto.
Accordingly, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Accounts" shall have the meaning assigned to such term in the Security
Agreement.
"Acquisition" means any transaction pursuant to which any Obligor (a)
acquires equity securities (or warrants, options or other rights to acquire such
securities) of any Person, (b) causes or permits any Person to be merged into
the Borrower or any Subsidiary, in any case pursuant to a merger, purchase of
assets or any reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding securities, in exchange for such
securities, of cash or securities of any Obligor, or a combination thereof, or
(c) purchases all or substantially all of the business or assets of any Person.
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"Affiliate" means any Person which directly or indirectly controls, or is
controlled by, or is under common control with, any Obligor. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this Loan Agreement, as amended, modified, extended,
supplemented, restated and/or replaced from time to time. References to
Articles, Sections, Exhibits, Schedules and the like refer to the Articles,
Sections, Exhibits, Schedules and the like of this Agreement unless otherwise
indicated.
"Business Day" means for all purposes, any day other than a Saturday,
Sunday or legal holiday on which banks in New York, New York are open for the
conduct of a substantial part of their commercial banking business.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Cash Equivalents" means (a) direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition; (b) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Xxxxx'x Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank operating within the United States of
America having capital and surplus in excess of $500,000,000; or (d) money
market or mutual funds whose sole investments are comprised of investments
permitted under the foregoing clauses (a) through (c).
"Closing Date" shall have the meaning assigned to such term in the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations thereunder, collectively, as amended or supplemented from time to
time and remain in effect.
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"Collateral" means all Property that is subject or is to be subject to the
Lien granted to the Lender by the Security Agreement.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness for the deferred purchase price of Property
or services (except trade payables in the ordinary course of business); (c)
Unfunded Benefit Liabilities of such Person; (d) liabilities under Guaranties of
Debt of any other Person; (e) obligations secured by any Lien on Property of
such Person; and (f) obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of the Loans and, to
the extent permitted by law, any other amount payable by any Obligor or the
Guarantor under this Agreement or any other Facility Document, or any Note that
is not paid when due (whether at stated maturity, by acceleration or otherwise),
a rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to four percent
per annum above the interest rate established pursuant to Section 2.05.
"Distribution" means, with respect to any Person, the declaration or
payment of any dividends by such Person, or the purchase, redemption, retirement
or other acquisition for value of any of its capital stock now or hereafter
outstanding, or the making of any distribution of assets to its stockholders as
such whether in cash, assets or in obligations of such Person, or the allocation
or other setting apart of any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock, or the making of any other distribution by reduction of
capital or otherwise in respect of any shares of its capital stock.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
supplemented and amended from time to time, including any rules and regulations
promulgated thereunder.
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"ERISA Affiliate" means any domestic United States corporation or trade or
business which is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which any Borrower or Affiliate is a
member, or (ii) solely for purposes of potential liability under Section
302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created
under Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which any Borrower or Affiliate is a
member.
"Event of Default" has the meaning given such term in Section 7.01.
"Facility Documents" means this Agreement, the Notes, the Security
Agreement, stock powers executed by the Guarantor, UCC financing statements
executed by the Borrower and the Guarantor, as debtor, and all certificates,
affidavits and other documents executed by the Borrower and/or the Guarantor and
relating to the transactions set forth in this Agreement, together with any
amendments thereto as may from time to time be executed.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any Obligor or any of their respective Affiliates before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or the receipt of notice by any such party that any of them
is a suspect in or a target of any governmental inquiry or investigation, which
may result in an indictment of any of them or the seizure or forfeiture of any
of their respective Properties.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a consistent basis.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty" means, with respect to any Person, guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person with respect to the obligations of any
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other Person (including, but not limited to, an agreement to purchase any
obligation, stock, assets, goods or services or to supply or advance any funds,
assets, goods or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any such other Person against loss).
"Investment" as applied to the Borrower, the Guarantor and Affiliates means
the purchase or acquisition of any share of capital stock, partnership interest,
evidence of indebtedness or other equity security of any other person or entity,
any loan, advance or extension of credit to, or contribution to the capital of,
any other person or entity, any real estate held for sale or investment, any
commodities futures contracts held other than in connection with bona fide
hedging transactions, any other investment in any other person or entity, and
the making of any commitment or acquisition of any option to make an Investment.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means an advance of funds to be made by the Lender to the Borrower
pursuant to the terms of this Agreement.
"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, Properties or condition of the Obligors and the Affiliates,
taken as a whole, (b) the ability of any Obligor to perform its obligations
under each of the Facility Documents to which it is a party, (c) the binding
nature, validity or enforceability of any of the Facility Documents and (d) the
validity, perfection, priority or enforceability of the Liens in favor of the
Lender securing the Loans hereunder which, in each case, arises from, or
reasonably could be expected to arise from, any action or omission of action on
the part of any Obligor or the occurrence of any event or the existence of any
fact or condition in respect of any Obligor, an Affiliate or any of their
respective Properties.
"Maturity Date" means the earliest of (i) the date on which the Purchase
Agreement is terminated in accordance with its terms, (ii) the Closing Date or
(iii) January 31, 1999, as such date may be extended pursuant to Section 2.01.
5
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by any Borrower or any Subsidiary or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means the promissory Notes of the Borrower in the form of Exhibit A
hereto evidencing the Loans made by the Lender hereunder and all promissory
notes delivered in substitution or exchange therefor, as amended or supplemented
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by any Borrower or Subsidiary or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Purchase Agreement" means the Agreement to Purchase LMDS Licenses dated
July 10, 1998 by and between the Lender, the Guarantor and the Borrower.
"Purchase Money Lien" means a Lien on any Property acquired by any Obligor
or Affiliate or placed on any Property in order to finance the acquisition or
construction of such Property or the construction of improvements located on
such Property, or the assumption of any Lien on Property existing at the time of
the acquisition of such Property or of the Person holding such Property or a
Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease.
6
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement in the form of Exhibit B
to be delivered by the Borrower and the Guarantor under the terms of this
Agreement, as amended or supplemented from time to time.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Unconditional Guaranty" shall have the meaning assigned to such term in
Section 10.01(a) of this Agreement.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001 (a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of any Borrower, Subsidiary or
any ERISA Affiliate under Title IV of ERISA.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
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ARTICLE 2. THE LOANS.
Section 2.01. Loans. Subject to the terms and conditions of this Agreement,
the Lender agrees to make an initial Loan to the Borrower on the Closing Date in
the amount of Three Million Five Hundred Thousand Dollars ($3,500,000.00). In
addition, at the request of Borrower, given on five Business Days' prior written
notice at any time after the Borrower has made the filings contemplated by
Section 2(a)(i) of the Purchase Agreement and the approval of the stockholders
of the Guarantor referred to in Sections 3 and 13 of the Purchase Agreement has
been obtained, the Lender shall make an additional Loan to the Borrower in the
amount of Two Million Dollars ($2,000,000.00). If the Lender, in its sole
discretion, extends the date before which the Purchase Agreement may not be
terminated to June 30, 1999, the Lender shall make a further Loan to the
Borrower and if the Lender, in its sole discretion, extends such date thereafter
to December 31, 1999, the Lender shall make a second further Loan to the
Borrower, each such Loan to be in the amount of Three Million Five Hundred
Thousand Dollars ($3,500,00.00), and, in each such instance, the Maturity Date
shall likewise be extended.
Section 2.02. The Notes. Each Loan shall be evidenced by a promissory note
(the "Notes") in favor of the Lender in the form of Exhibit A, dated the date on
which such Loan is advanced to the Borrower, and payable on the Maturity Date,
as the same may be extended pursuant to Section 2.01, duly completed and
executed by the Borrower and delivered by the Borrower to the Lender.
Section 2.03. Purpose. The Borrower shall use the proceeds of the Loans for
general corporate purposes, including working capital. Such proceeds shall not
be used for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U.
Section 2.04. Prepayments. The Loans may be prepaid at any time, without
premium or penalty, upon one Business Day's Notice. Any interest accrued on the
amounts so prepaid to the date of such payment must be paid at the time of any
such prepayment.
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Section 2.05. Interest and Principal.
(a) Interest shall accrue on the outstanding and unpaid principal amount of
the Loans for the period from the date on which it is advanced to the Borrower
to but excluding the Maturity Date, as the same may be extended pursuant to
Section 2.01. The Loans shall bear interest at a rate per annum equal to
eighteen percent, except that they shall bear interest at the rate of seven and
one-half percent per annum if the transactions contemplated by the Purchase
Agreement are consummated on or before the Maturity Date, as the same may be
extended pursuant to Section 2.01. If the principal amount of the Loans and any
other amount payable by any Obligor hereunder, under the Notes or under any
other Facility Document shall not be paid when due (at stated maturity, by
acceleration or otherwise), interest shall accrue on such amount to the fullest
extent permitted by law from and including such due date to but excluding the
date such amount is paid in full at the Default Rate. In no event shall the
interest rate exceed the maximum amount allowed by law.
(b) On the Maturity Date, as the same may be extended pursuant to Section
2.01, the Borrower shall pay the entire amount of the Loans together with
interest accrued thereon and all other sums outstanding hereunder and under the
Facility Documents. If, on or before the Maturity Date, as the same may be
extended pursuant to Section 2.01, the transactions contemplated by the Purchase
Agreement are consummated, payment shall be made by the offset by the Lender of
amounts due it hereunder and under the Notes against amounts payable by the
Lender pursuant to the Purchase Agreement.
ARTICLE 3. CONDITIONS PRECEDENT.
Section 3.01. Documentary Conditions Precedent. The obligations of the
Lender to make the initial Loan are subject to the condition precedent that the
Lender shall have received on or before the Closing Date each of the following,
in form and substance reasonably satisfactory to the Lender and its counsel:
(a) counterparts of this Agreement executed by each of the Borrower, the
Guarantor and the Lender;
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(b) a Note duly executed by the Borrower;
(c) the Security Agreement duly executed by the Borrower, the Guarantor and
the Lender together with (i) executed copies of the financing statements (UCC-1)
in recordable form necessary for filing under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Lender, desirable to perfect
the security interests of the Lender in and to the Collateral described in the
Security Agreement; (ii) stock certificates representing all of the capital
stock of CellularVision Capital Corp., a New Jersey corporation which is the
sole general partner of the Borrower; (iii) certificates representing all of the
outstanding limited partnership interests of the Borrower; and (iv) stock powers
executed in blank by the holders of the preceding items (ii) and (iii);
(d) certificates of the Secretary or Assistant Secretary of each of the
Borrower and the Guarantor, dated the Closing Date, (i) attesting to all
corporate action taken by such Borrower and the Guarantor, including resolutions
of its Board of Directors authorizing the execution, delivery and performance of
each of the Facility Documents to which it is a party and each other document to
be delivered by the Borrower and the Guarantor pursuant to this Agreement, (ii)
certifying the names and true signatures of the officers of the Borrower and the
Guarantor authorized to sign the Facility Documents to which it is a party and
each other document to be delivered by the Borrower and the Guarantor under this
Agreement and (iii) verifying that the agreement of limited partnership or the
charter and by-laws, as appropriate, of the Borrower and the Guarantor attached
thereto are true, correct and complete as of the date thereof;
(e) a certificate of a duly authorized officer of the Borrower and the
Guarantor, dated the Closing Date, stating that the representations and
warranties in Article 4 are true and correct on such date as though made on and
as of such date and that no event has occurred and is continuing which
constitutes a Default or Event of Default;
(f) good standing certificates, tax good standing certificates, and
certified copies of all charter documents with respect to the Borrower and the
Guarantor certified by the appropriate public official of its jurisdiction of
incorporation, and evidence that the Borrower and the Guarantor
10
each is qualified as a foreign limited partnership or corporation in every other
jurisdiction in which it does business;
(g) a favorable opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel to each of the
Obligors, dated the Closing Date, in substantially the form of Exhibit C and as
to such other matters as the Lender may reasonably request; and
(h) the Borrower shall have made arrangements with its existing creditors
as the Lender shall deem appropriate.
The obligations of the Lender to make a Loan other than the initial Loan
shall be subject to the condition precedent that the Lender shall have received
on or before the date such Loan is to be advanced a certificate to the effect
set forth in paragraph (e), above.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
Each of the Obligors hereby represents and warrants that:
Section 4.01. Organization, Good Standing and Due Qualification. The
Borrower and the Guarantor each is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has the power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign limited
partnership or corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
Section 4.02. Power and Authority of Borrower; No Conflicts. The execution,
delivery and performance by the Borrower of this Agreement and the other
Facility Documents to which it is a party have been duly authorized by all
necessary partnership action and do not and will not: (a) require any consent or
approval of its partners not heretofore obtained; (b) contravene its agreement
of limited partnership; (c) violate any provision of, or require any filing
(other than the filing of financing statements required pursuant to the terms of
11
the Security Agreement), registration, consent or approval under, any law, rule,
regulation (including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it; (d) subject to the completion of the arrangements referred
to in Section 3.01(h), result in a breach of or constitute a default or require
any consent under any indenture or loan or credit agreement, or any other
agreement, lease or instrument to which it is a party or by which it or its
Properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien (other than as created under the Security Agreement),
upon or with respect to any of the Properties now owned or hereafter acquired by
it; or (f) cause it to be in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 4.03. Corporate Power and Authority of Guarantor; No Conflicts. The
execution, delivery and performance by the Guarantor of this Agreement and the
other Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing (other than the filing of financing
statements required pursuant to the terms of the Security Agreement),
registration, consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to it; (d)
result in a breach of or constitute a default or require any consent under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which it is a party or by which it or its Properties may be bound
or affected; (e) result in, or require, the creation or imposition of any Lien
(other than as created under the Security Agreement), upon or with respect to
any of the Properties now owned or hereafter acquired by it; or (f) cause it to
be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
Section 4.04. Legally Enforceable Agreements. Each Facility Document to
which any Obligor is a party is, or when delivered under this Agreement will be,
a legal, valid and binding obligation of such Obligor enforceable against such
Obligor in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally.
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Section 4.05. Litigation. Except as listed in Schedule IV, there are no
material actions, suits or proceedings pending or, to the knowledge of any
Obligor, threatened, against or affecting such Obligor or any of its Affiliates
before any court, Governmental Authority or arbitrator.
Section 4.06. Ownership and Liens. The Borrower , the Guarantor and each
Affiliate has title to, or valid leasehold interests in, all of its Properties,
and none of the Properties owned or leased by any of them is subject to any
Lien, except as may be permitted hereunder and except for the Liens created by
the Security Agreement.
Section 4.07. Taxes. Each of the Obligors and its Affiliates has filed all
tax returns (federal, state and local) required to be filed and has paid all
taxes, assessments and governmental charges and levies thereon then due and
payable, including interest and penalties, if applicable.
Section 4.08. ERISA. Each Plan and, to the best knowledge of any Obligor,
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other applicable Federal or state law, and
no event or condition is occurring or exists concerning which the Borrower, the
Guarantor or any Affiliate would be under an obligation to furnish a report to
the Lender in accordance with Section 6.08(k) hereof. As of the most recent
valuation date for each Plan, each Plan was "fully funded", which for purposes
of this Section 4.08 shall mean that the fair market value of the assets of the
Plan is not less than the present value of the accrued benefits of all
participants in the Plan, computed on a Plan termination basis. To the best
knowledge of any Obligor, no Plan has ceased being fully funded as of the date
these representations are made with respect to any Loan under this Agreement.
Section 4.09. Subsidiaries and Affiliates. Schedule I sets forth the name
of each Subsidiary of the Guarantor and each Affiliate, in each case showing the
jurisdiction of its incorporation or organization and showing the percentage of
each Person's ownership of the outstanding stock of such Subsidiary or
Affiliate. All of the outstanding shares of capital stock of each Subsidiary,
either directly or indirectly, are validly issued, fully paid and nonassessable,
and all such shares or interests are owned free and clear of all Liens (other
13
than as created under the Security Agreement). Except as set forth on Schedule
I, no Obligor or Affiliate owns or holds the right to acquire any shares of
stock or any other security or interest in any other Person.
Section 4.10. Agreements. Schedule II is a complete and correct list of all
credit agreements, indentures, purchase agreements (except for purchase
agreements of inventory in the ordinary course of business), guaranties, Capital
Leases and other investments, agreements and arrangements presently in effect in
excess of $50,000 (the "Loan Arrangements") providing for or relating to
extensions of credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which any Obligor
or any of its Affiliates is in any manner directly or contingently obligated;
and the maximum principal or face amounts of the credit in question, outstanding
and which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Section 4.11. Operation of Business. The Borrower, the Guarantor and each
Affiliate possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct the business
substantially as conducted and as presently proposed to be conducted, and
neither the Borrower, the Guarantor nor any Affiliate is in violation of any
valid rights of others with respect to any of the foregoing.
Section 4.12. No Default on Outstanding Judgments or Orders. Each of the
Obligors and its respective Affiliates has satisfied all judgments and no
Obligor or Affiliate is in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court, arbitrator or federal,
state, municipal or other Governmental Authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 4.13. No Defaults on Other Agreements. No Obligor or Affiliate is a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or other restriction which could have a
Material Adverse Effect. No Obligor or Affiliate is in default in any respect in
the performance, observance or fulfillment of any of the obligations, covenants
14
or conditions contained in any agreement or instrument material to its business
to which it is a party.
Section 4.14. Labor Disputes and Acts of God. Neither the business nor the
Properties of the Borrower, the Guarantor or any Affiliate are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have a Material
Adverse Effect.
Section 4.15. Governmental Regulation. Neither the Borrower, the Guarantor
or any Affiliate is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act, the Federal Power Act or any statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby.
Section 4.16. No Forfeiture. Neither any Obligor nor any of its Affiliates
is engaged in or proposes to be engaged in the conduct of any business or
activity which could result in a Forfeiture Proceeding and no Forfeiture
Proceeding against any of them is pending or threatened.
ARTICLE 5. AFFIRMATIVE COVENANTS.
So long as the Notes shall remain unpaid, each Obligor and its respective
Affiliates shall:
Section 5.01. Maintenance of Existence. Preserve and maintain its existence
and good standing in the jurisdiction of its organization, and qualify and
remain qualified as a foreign corporation or limited partnership in each
jurisdiction in which such qualification is required.
Section 5.02. Conduct of Business. Continue to engage in the business of
the same general type as conducted by it on the date of this Agreement.
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Section 5.03. Maintenance of Properties. Maintain, keep and preserve all of
its Properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
Section 5.04. Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all financial transactions of Borrower, each Subsidiary Guarantor or
Affiliate.
Section 5.05. Maintenance of Insurance. Maintain business insurance,
liability insurance and insurance against fire and other risks with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated but no less than that required by law
and satisfactory to the Lender.
Section 5.06. Compliance with Laws. Comply in all respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property.
Section 5.07. Right of Inspection. Annually and at any other reasonable
time and from time to time, permit the Lender or any agent or representative
thereof, at Borrower's reasonable cost and expense to examine and make copies
and abstracts from the records and books of account of, and visit the Properties
and inspect the Collateral of, such Obligor, and to discuss the affairs,
finances and accounts of such Obligor with him, its officers and directors and
independent accountants, as applicable.
Section 5.08. Reporting Requirements. Furnish directly to the Lender:
(a) promptly after the commencement thereof, notice of all material
actions, suits, and proceedings before any court or Governmental Authority
affecting any Obligor or its Affiliates;
16
(b) as soon as possible and in any event within 10 days after the
occurrence of each Default or Event of Default a written notice setting forth
the details of such Default or Event of Default and the action which is proposed
to be taken by the applicable Obligor with respect thereto;
(c) copies of all reports and forms filed with respect to all pension or
other employee benefit plans under ERISA, except as filed in the normal course
of business and that would not result in an adverse action to be taken by ERISA
and each annual report filed pursuant to Section 104 of ERISA with respect to
each Plan (including, to the extent required by Section 104 of ERISA, the
related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information referred to in Section
103) and each annual report filed with respect to each Plan under Section 4065
of ERISA; provided, however, that in the case of a Multiemployer Plan, such
annual reports shall be furnished only if they are available to any Borrower,
Subsidiary Guarantor or an ERISA Affiliate;
(d) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower, the Guarantor
or Affiliate sends to its stockholders or partners, and copies of all regular,
periodic and special reports, and all registration statements which the
Borrower, the Guarantor or Affiliate files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted therefor, or
with any national securities exchange except those as prepaid in the normal
course of business and that would not result in an adverse action to be taken by
any such agencies;
(e) promptly after the commencement thereof or promptly after any Obligor
knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
(f) within thirty (30) days of a request by the Lender, such other
information respecting the condition or operations, financial or otherwise, of
any Obligor or Affiliate as the Lender may from time to time reasonably request,
including but not limited to, schedules detailing operating costs, accounts
receivables agings, projections and inventory summary schedules.
17
ARTICLE 6. NEGATIVE COVENANTS.
So long as the Notes shall remain unpaid, no Obligor or any of its
respective Affiliates shall directly or indirectly, without the prior written
consent of the Lender;
Section 6.01. Debt. Create, incur, assume, suffer or permit to exist any
Debt, except:
(a) Debt under this Agreement, the Notes and the other Facility Documents;
(b) Debt outstanding on the Closing Date and set forth on Schedule II;
(c) Debt consisting of Guaranties permitted pursuant to Section 6.02;
(d) Debt secured by a Purchase Money Lien for the purchase of equipment
after the date of this Agreement:
(e) Debt that is unsecured and fully subordinated to Debt owed to the
Lender in a manner satisfactory to the Lender in its sole discretion; and
(f) Debt owed to the Lender.
Section 6.02. Guaranties. Assume, guarantee, endorse or otherwise become
directly or contingently responsible or liable for any Guaranty except:
(a) the Unconditional Guaranty by the Guarantor hereunder;
(b) Guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(c) existing Guaranties of Debt set forth on Schedule III, which shall not
be increased or modified; and
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(d) Guaranties by the Borrower, the Guarantor or an Affiliate of an
obligation of a Subsidiary of the Borrower or a Subsidiary of the Guarantor or
Affiliate issuing the Guaranty, provided the obligation that is the subject of
the Guaranty is not an obligation that the Borrower, the Guarantor or Affiliate
is prohibited from entering into pursuant to the terms of any of the Facility
Documents.
Section 6.03. Liens. Create, incur, assume or suffer to exist any Lien,
upon or with respect to any of its Properties, now owned or hereafter acquired,
except:
(a) Liens in favor of the Lender;
(b) Liens for taxes or assessments or other government charges or levies if
not yet due and payable;
(c) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than 60 days;
(d) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Purchase Money Liens granted with respect to equipment purchased after
the date of this Agreement; and
(f) Existing Liens described on Schedule II.
Section 6.04. Sale and Leaseback. Sell, transfer or otherwise dispose of
any real or personal Property to any Person and thereafter directly or
indirectly lease back the same or similar Property.
19
Section 6.05. Investments. Make any Investment, except:
(a) cash or Cash Equivalents;
(b) Property to be used or useful in the ordinary course of business of the
Borrower or the Guarantor or Affiliate; and
(c) for customary collection arrangements for accounts receivable.
Section 6.06. Distributions. Make any Distribution, except that:
(a) the Borrower may make Distributions payable solely in its common stock;
and
(b) any Subsidiary may make Distributions to the Borrower.
Section 6.07. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its now owned or hereafter acquired assets (including, without
limitation, shares of stock and indebtedness, receivables and leasehold
interests); except:
(a) the licenses to be sold pursuant to the Purchase Agreement;
(b) assets used exclusively in connection with Borrower's broadcast
television business;
(c) for inventory disposed of in the ordinary course of business; and
(d) the sale or other disposition of assets no longer used or useful in the
conduct of its business.
20
Section 6.08. Subsidiary Capital Stock. Issue, sell or exchange, agree or
obligate itself to issue, sell or exchange, any additional shares of its capital
stock, sell or otherwise dispose of any shares of capital stock of any of its
Subsidiaries, or permit any such Subsidiary to issue any additional shares of
its capital stock, or form or acquire any additional Subsidiaries.
Section 6.09. Transactions with Affiliates and Subsidiaries. (a) Make any
Investment in an Affiliate or a Subsidiary of any Obligor; (b) transfer, sell,
lease, assign or otherwise dispose of any Property to any Affiliate or a
Subsidiary of the Borrower or the Guarantor; (c) merge into or consolidate with
or purchase or acquire Property from any Affiliate or a Subsidiary of the
Borrower or the Guarantor; or (d) enter into any other transaction directly or
indirectly with or for the benefit of any Affiliate or a Subsidiary of the
Borrower or the Guarantor (including, without limitation, guaranties and
assumption of obligations of any Affiliate or a Subsidiary of the Borrower or
the Guarantor); provided that (x) any Affiliate who is an individual may serve
as a director, officer or employee of the Borrower or the Guarantor and receive
reasonable compensation for his or her services in such capacity and (y) the
Borrower or the Guarantor may enter into transactions (other than Investments by
the Borrower or the Guarantor in any Affiliate or the Subsidiary of the Borrower
or the Guarantor) providing for the sale of inventory and other Property in the
ordinary course of business if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower or the
Guarantor as the monetary or business consideration which would obtain in a
comparable arm's length transaction with a Person not an Affiliate or a
Subsidiary of the Borrower or the Guarantor, provided that the Guarantor may
acquire issued and outstanding shares of VisionStar, Inc. in exchange for Debt
permitted pursuant to Section 6.01(e) and any Obligor may accept capital
contributions, in kind or in cash, from Affiliates.
Section 6.10. Mergers, Etc. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), except as may be set forth in the Purchase Agreement.
21
Section 6.11. Acquisitions. Make any Acquisition other than the acquisition
of shares of VisionStar, Inc. and interests in CellularVision Technologies &
Telecommunications, L.P., its general partner, as a contribution to capital,
pursuant to Section 6.09.
Section 6.12. No Activities Leading to Forfeiture. Engage in or propose to
be engaged in the conduct of any business or activity which could reasonably be
expected to result in a Forfeiture Proceeding.
Section 6.13. Restrictions. Enter into or suffer to exist any agreement
with any Person that prohibits, requires the consent of such Person for or
limits the ability of (i) the Borrower or the Guarantor or Affiliate to pay
dividends or make other distributions or pay Debt owed to any other Obligor or
Affiliate, make loans or advances to any other Obligor or Affiliate or transfer
any of its Property which constitutes Collateral to any other Obligor or
Affiliate, (ii) any Obligor or Affiliate to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues which constitute Collateral
under the Security Agreement, whether now owned or hereafter acquired, or (iii)
any Obligor or Affiliate to enter into any modification or supplement of the
Facility Documents.
ARTICLE 7. EVENTS OF DEFAULT.
Section 7.01. Events of Default. Any of the following events shall be an
"Event of Default":
(a) the Borrower shall fail to pay the principal or interest of a Note on
or before the date when due and payable;
(b) any representation or warranty made or deemed made in this Agreement or
in any other Facility Document or which is contained in any certificate,
document, opinion, financial or other statement furnished at any time under or
in connection with any Facility Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made;
22
(c) (i) any Obligor shall fail to observe any covenant on its part to be
observed in Article 6 of this Agreement and such failure shall continue for
fifteen (15) consecutive days; or (ii) any Obligor (other than as specifically
referred to elsewhere in this Section 7.01) fails to perform or observe any
term, covenant or agreement on its part to be performed or observed in any
Facility Document.
(d) any Obligor or Affiliate shall: (i) fail to pay any indebtedness in
excess of $50,000, including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of such Obligor or
Affiliate, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or (ii) fail
to perform or observe any term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any such
indebtedness, when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
indebtedness; or any such indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) any Obligor, or Affiliate: (i) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such debts become due;
or (ii) shall make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a period of 30 days
or more; or shall be the subject of any proceeding under which its assets may be
subject to seizure, forfeiture or divestiture; or (v) by any act or omission
shall indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
23
receiver or trustee for all or any substantial part of its Property; or (vi)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 30 days or more;
(f) one or more judgments, decrees or orders for the payment of money in
excess of $50,000 in the aggregate shall be rendered against any Obligor, the
Individual Guarantor or Affiliate;
(g) The Unfunded Benefit Liabilities of one or more Plans have increased
after the date of this Agreement in an amount which is material;
(h) (i) CellularVision Capital Corp. shall have ceased to be the sole
general partner of the Borrower; or (ii) the Guarantor shall have ceased to own
all of the outstanding capital stock of CellularVision Capital Corp.;
(i) (i) any Forfeiture Proceeding shall have been commenced; or (ii) the
Lender has a good faith basis to believe that a Forfeiture Proceeding has been
threatened or commenced;
(j) the Security Agreement shall at any time after its execution and
delivery and for any reason cease: (i) to create a valid and perfected first
priority security interest in and to the Property purported to be subject to
such agreement; or (ii) to be in full force and effect or shall be declared null
and void, or the validity or enforceability thereof shall be contested by any
Obligor or other Person or any Obligor or other Person shall deny it has any
further liability or obligation under the Security Agreement or any Obligor or
other Person shall fail to perform any of its obligations thereunder; or
(k) the Purchase Agreement shall have been terminated or either of the
Borrower or the Guarantor shall be in material breach of any of its obligations
under the Purchase Agreement.
Section 7.02. Remedies. If any Event of Default shall occur and be
continuing, the Lender may by notice to the Borrower declare the outstanding
principal of all of the Notes, all interest thereon and all other amounts
payable under this Agreement and the Notes to be forthwith due and payable,
24
whereupon the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower and
the Guarantor; provided that, in the case of an Event of Default referred to in
Section 7.01(e) or Section 7.01(k) above, the Notes, all interest thereon and
all other amounts payable under this Agreement shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantor.
ARTICLE 8. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS.
Section 8.01. Guarantied Obligations. The Guarantor, in consideration of
the execution and delivery of this Agreement by the Lender, hereby irrevocably
and unconditionally guarantees to the Lender, as and for the Guarantor's own
debt, until final payment has been made:
(a) the due and punctual payment by the Borrower of the principal of, and
interest on, the Notes at any time outstanding and all other amounts payable,
and all other indebtedness owing, by each of the Obligors under (i) each of the
Facility Documents to which it is a party and (ii) the Purchase Agreement (all
such obligations so guarantied are herein collectively referred to as the
"Guarantied Obligations"), in each case when and as the same shall become due
and payable, whether at maturity, pursuant to mandatory or optional prepayment,
by acceleration or otherwise, all in accordance with the terms and provisions
hereof and thereof, it being the intent of the Guarantor that the guaranty set
forth in this Section 8.01 (the "Unconditional Guaranty") shall be a guaranty of
payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by any Obligor of all duties, agreements, covenants and obligations
of such Obligor contained in each of the Facility Documents to which it is a
party and the Purchase Agreement.
Section 8.02. Performance Under This Agreement. In the event the Borrower
fails to make, on or before the due date thereof, any payment of the principal
of, or interest on, the Notes or of any other amounts payable, or any other
indebtedness owing, under any of the Facility Documents or the Purchase
25
Agreement or if the Borrower shall fail to perform, keep, observe, or fulfill
any other obligation referred to in clause (a) or clause (b) of Section 8.01
hereof in the manner provided in the Notes or in any of the other Facility
Documents or the Purchase Agreement, the Guarantor shall cause forthwith to be
paid the moneys, or to be performed, kept, observed, or fulfilled each of such
obligations, in respect of which such failure has occurred.
Section 8.03. Waivers. To the fullest extent permitted by law, the
Guarantor does hereby waive:
(a) notice of acceptance of the Unconditional Guaranty;
(b) notice of any borrowings under this Agreement, or the creation,
existence or acquisition of any of the Guarantied Obligations, subject to the
Guarantor's right to make inquiry of the Lender to ascertain the amount of the
Guarantied Obligations at any reasonable time;
(c) notice of the amount of the Guarantied Obligations, subject to the
Guarantor's right to make inquiry of the Lender to ascertain the amount of the
Guarantied Obligations at any reasonable time;
(d) notice of adverse change in the financial condition of the Borrower,
any other Guarantor or any other fact that might increase the Guarantor's risk
hereunder;
(e) notice of presentment for payment, demand, protest, and notice thereof
as to the Notes or any other instrument;
(f) notice of any Default or Event of Default;
(g) all other notices and demands to which the Guarantor might otherwise be
entitled (except if such notice or demand is specifically otherwise required to
be given to the Guarantor hereunder or under the other Facility Documents);
26
(h) the right by statute or otherwise to require the Lender to institute
suit against the Borrower or to exhaust the rights and remedies of the Lender
against the Borrower, the Guarantor being bound to the payment of each and all
Guarantied Obligations, whether now existing or hereafter accruing, as fully as
if such Guarantied Obligations were directly owing to the Lender by the
Guarantor;
(i) any defense arising by reason of any disability or other defense (other
than the defense that the Guarantied Obligations shall have been fully and
finally performed and indefeasibly paid) of the Borrower or by reason of the
cessation from any cause whatsoever of the liability of the Borrower in respect
thereof; and
(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
which, but for this waiver, might be applicable to any sale of Property of the
Guarantor made under any judgment, order or decree based on this Agreement, and
the Guarantor covenants that it will not at any time insist upon or plead, or in
any manner claim or take the benefit or advantage of such law.
Until all of the Guarantied Obligations shall have been paid in full, the
Guarantor hereby agrees to completely subordinate any right of subrogation,
reimbursement, or indemnity whatsoever in respect thereof and any right of
recourse to or with respect to any assets or Property of the Borrower. Nothing
shall discharge or satisfy the obligations of the Guarantor hereunder except the
full and final performance and indefeasible payment of the Guarantied
Obligations by the Guarantor as provided herein and the Facility Documents and
the Purchase Agreement, upon which the Lender agrees to transfer and assign its
interest in the Notes to the Guarantors without recourse, representation or
warranty of any kind (other than that the Lender owns the Notes and that the
Notes is free of Liens created by the Lender). All of the Guarantied Obligations
shall in the manner and subject to the limitations provided herein for the
acceleration of the Notes forthwith become due and payable without notice.
Section 8.04. Releases. The Guarantor consents and agrees that, without
notice to or by it and without affecting or impairing the joint and several
obligations of the Guarantor hereunder or under any other Facility Document, the
27
the Lender, in the manner provided herein, by action or inaction, may:
(a) compromise or settle, extend the period of duration or the time for the
payment, or discharge the performance of, or may refuse to, or otherwise not,
enforce, or may, by action or inaction, release all or any one or more parties
to, the Notes or the other Facility Documents;
(b) grant other indulgences to the Borrower in respect thereof;
(c) amend or modify in any manner and at any time (or from time to time)
the Notes and the other Facility Documents in accordance with Section 9.01 or
otherwise;
(d) release or substitute any one or more of the endorsers or guarantors of
the Guaranteed Obligations whether parties hereto or any Facility Document or
not; and
(e) exchange, enforce, waive, or release, by action or inaction, any
security for the Guarantied Obligations (including, without limitation, any of
the collateral therefor) or any other guaranty of the Notes.
Section 8.05. Marshaling. The Guarantor consents and agrees that:
(a) the Lender shall be under no obligation to marshal any assets in favor
of the Guarantor or against or in payment of any or all of the Guarantied
Obligations; and
(b) to the extent the Borrower makes a payment or payments to the Lender,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required, for any of
the foregoing reasons or for any other reason, to be repaid or paid over to a
custodian, trustee, receiver, or any other party under any bankruptcy law,
common law, or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof intended to be satisfied thereby shall be revived
28
and continued in full force and effect as if said payment or payments had not
been made and the Guarantor shall be primarily liable for such obligation.
Section 8.06. Liability. The Guarantor agrees that its liability shall not
be contingent upon the exercise or enforcement by the Lender of whatever
remedies the Lender may have against the Borrower or the Guarantor or the
enforcement of any Lien or realization upon any security the Lender may at any
time possess.
Section 8.07. Unconditional Obligation. The Unconditional Guaranty set
forth in this Article 8 is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full and final payment of the Guarantied Obligations
without respect to future changes in conditions, including change of law or any
invalidity or irregularity with respect to the issuance or assumption of any
obligations (including, without limitation, the Notes) of or by the Borrower, or
with respect to the execution and delivery of any agreement (including, without
limitation, the Notes and the other Facility Documents) of the Borrower.
Section 8.08. Election to Perform Obligations. Any election by the
Guarantor to pay or otherwise perform any of the obligations of the Borrower
under the Notes or under any of the other Facility Documents, whether pursuant
to this Article 8 or otherwise, shall not release the Borrower or the Guarantor
from such obligations or any of its other obligations under the Notes or under
any of the other Facility Documents.
Section 8.09. No Election. The Lender shall have the right to seek recourse
against the Guarantor to the fullest extent provided for herein for the
Guarantor's obligations under this Agreement (including, without limitation,
this Article 8) in respect of the Notes. No election to proceed in one form of
action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of the Lender's right to proceed in any other form of action
or proceeding or against other parties unless the Lender has expressly waived
such right in writing. Specifically, but without limiting the generality of the
foregoing, no action or proceeding by the Lender against the Borrower under any
document or instrument evidencing obligations of the Borrower to the Lender
29
shall serve to diminish the liability of the Guarantor under this Agreement
(including, without limitation, this Article 8) except to the extent that the
Lender finally and unconditionally shall have realized payment by such action or
proceeding, notwithstanding the effect of any such action or proceeding upon the
Guarantor's right of subrogation against the Borrower.
Section 8.10. Severability. Subject to Article 7 hereof and applicable law,
each of the rights and remedies granted under this Article 8 to the Lender may
be exercised by the Lender without notice by the Lender to, or the consent of or
any other action by, the Lender.
Section 8.11. Other Enforcement Rights. The Lender may proceed, as provided
in Article 8 hereof, to protect and enforce the Unconditional Guaranty by suit
or suits or proceedings in equity, at law or in bankruptcy, and whether for the
specific performance of any covenant or agreement contained herein (including,
without limitation, in this Article 8) or in execution or aid of any power
herein granted; or for the recovery of judgment for the obligations hereby
guarantied or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.
Section 8.12. Delay or Omission; No Waiver. No course of dealing on the
part of the Lender and no delay or failure on the part of any such Person to
exercise any right hereunder (including, without limitation, this Article 8)
shall impair such right or operate as a waiver of such right or otherwise
prejudice such Person's rights, powers and remedies hereunder. Every right and
remedy given by the Unconditional Guaranty or by law to the Lender may be
exercised from time to time as often as may be deemed expedient by such Person.
Section 8.13. Restoration of Rights and Remedies. If the Lender shall have
instituted any proceeding to enforce any right or remedy under the Unconditional
Guaranty, the Notes, the Security Agreement or any other Facility Document or
the Purchase Agreement, and such proceeding shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Lender,
then and in every such case the Lender, the Borrower and each Guarantor shall,
except as may be limited or affected by any determination in such proceeding, be
restored severally and respectively to its respective former positions hereunder
and thereunder, and thereafter, subject as aforesaid, the rights and remedies
30
of the Lender shall continue as though no such proceeding had been instituted.
Section 8.14. Cumulative Remedies. No remedy under this Agreement
(including, without limitation, this Article 8), the Notes or any of the other
Facility Documents is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given hereunder this Agreement (including, without limitation, this Article 8),
under the Notes or under any of the other Facility Documents or the Purchase
Agreement.
Section 8.15. Survival. So long as the Guarantied Obligations shall not
have been fully and finally performed and indefeasibly paid, the obligations of
the Guarantor under this Article 10 shall survive the transfer and payment of
the Notes.
ARTICLE 9. MISCELLANEOUS.
Section 9.01. Amendments and Waivers. No provision of this Agreement may be
amended, waived or modified unless such amendment, waiver or modification is
evidenced by an instrument in writing signed by the Obligors and the Lender. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.02. Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender.
Section 9.03. Expenses. Each Obligor shall reimburse the Lender on demand
for all reasonable costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel and costs allocated by
internal legal departments) incurred by the Lender in connection with the
performance or enforcement of this Agreement or the other Facility Documents or
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the Purchase Agreement. Each Obligor agrees to indemnify the Lender and its
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them arising out of or by reason of any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) relating to or arising out of this Agreement or the other Facility
Documents or the Purchase Agreement or any of the transactions contemplated
thereunder or any remedial or other action taken by any Obligor or the Lender in
connection with compliance by any Obligor, or any of their respective
Properties, with any law, including without limitation, the fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or wilful
misconduct of the Person to be indemnified).
Section 9.04. Survival. The obligations of the Obligors under Section 9.03
shall survive the repayment of the Loans.
Section 9.05. Assignment. This Agreement shall be binding upon, and shall
inure to the benefit of, Obligors and the Lender and their respective
successors, assigns, heirs and rep resentatives, as applicable except that no
Obligor may assign or transfer their rights or obligations hereunder. The Lender
may assign all or any part of its rights and obligations under this Agreement
(including, without limitation, all or a portion of the Loans and the Notes) to
any entity, in which event in the case of an assignment, upon notice thereof by
the Lender to the Borrower, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it were the Lender hereunder.
Section 9.06. Notices. Unless the party to be notified otherwise notifies
the other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be given to the Lender by telephone,
confirmed by telex, telecopy or other writing, and to the Obligors by ordinary
mail, return receipt requested, or telecopier addressed to such party at its
address on the signature page of this Agreement. Notices shall be effective: (a)
if given by mail, 72 hours after deposit in the mails with first class postage
prepaid, addressed as aforesaid; and (b) if given by telecopier, when the
telecopy is transmitted to the telecopier number as aforesaid; provided that
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notices to the Lender shall be effective upon receipt. A copy of any notices to
an Obligor relating to an Event of Default shall be delivered to Xxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000; Attention: Xxxxx
X. Xxxxx, Esq.; provided however, that failure to provide such copy to Xxxxxxx
Xxxx & Xxxxxxxxx will not otherwise affect the validity or effectiveness of the
notice delivered to an Obligor.
Section 9.07. JURISDICTION; IMMUNITIES. (a) EACH OBLIGOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER FACILITY DOCUMENTS, AND EACH
OBLIGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
EACH OBLIGOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
OBLIGOR AT ITS ADDRESS SPECIFIED IN SECTION 9.06. EACH OBLIGOR AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. EACH OBLIGOR FURTHER WAIVES ANY OBJECTION TO VENUE IN THE STATE
OF NEW YORK AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN NEW YORK STATE ON
THE BASIS OF FORUM NON CONVENIENS. EACH OBLIGOR FURTHER AGREES THAT ANY ACTION
OR PROCEEDING BROUGHT AGAINST THE BANK SHALL BE BROUGHT ONLY IN NEW YORK STATE
OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK. EACH OBLIGOR WAIVES ANY
RIGHT IT MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 9.07 shall affect the right of the Lender to
serve legal process in any other manner permitted by law or affect the right of
the Lender to bring any action or proceeding against any Obligor or their
respective Properties in the courts of any other jurisdictions.
33
(c) To the extent that any Obligor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its Property, each Obligor
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, the Notes and the other Facility Documents.
Section 9.08. Subordination. Each Obligor hereby agrees that any Debt or
other intercompany receivable or advance of any other Obligor, directly or
indirectly, in favor of such Obligor of whatever nature at any time outstanding
shall be completely subordinate in right of payment to the prior payment in full
of the Notes and all other obligations owing by such Obligor or any other
Obligor under each of the Facility Documents to which it is a party, and that no
payment on any such Debt or intercompany receivables or advances shall be made
except intercompany receivables and advances permitted pursuant to the terms of
this Agreement may be repaid in the ordinary course of business so long as no
Default or Event of Default shall have occurred and be continuing. In the event
that any payment on any such Debt or intercompany receivable or advance shall be
received by such Obligor other than as permitted by this Section 9.08 before
payment in full of the Notes and all other obligations owing by such Obligor or
any other Obligor under each of the Facility Documents to which it is a party,
such Obligor shall receive such payment and hold the same in trust for, and
shall immediately pay over to, the Lender all such sums to the extent necessary
so that the Lender shall have paid all obligations owed or which may become
owing to it under the Notes or any other Facility Document.
Section 9.09. Table of Contents; Headings. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 9.10. Severability. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
34
hereof in any jurisdiction. Without limiting the foregoing, to the extent that
mandatory and non-waivable provisions of applicable law (including but not
limited to any applicable laws pertaining to fraudulent conveyance and any
applicable business corporation laws) otherwise would render the full amount of
any Obligor's obligations hereunder and under the other Facility Documents
invalid or unenforceable, such Obligor's obligations hereunder and under the
other Facility Documents shall be limited to the maximum amount which does not
result in such invalidity of the foregoing.
Section 9.11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 9.12. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
[The balance of this page is intentionally blank]
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Section 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
General Partner
By:_________________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chairman & Chief Executive Officer
CELLULARVISION USA, INC.
By:__________________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chairman & Chief Executive Officer
Address for Notices (for Borrower and Guarantor):
000 00xx Xxxxxx -- Xxx 0X
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
FAX: 000-000-0000
WINSTAR COMMUNICATIONS, INC.
By:__________________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
Address for Notices:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
FAX: 000-000-0000
36
