UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 16, 1999
Date of earliest event reported: February 02, 1999
CHADMOORE WIRELESS GROUP, INC.
(Exact name of registrant as specified in its charter)
Colorado 0-20999 84-1058165
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2875 E. Patrick Lane, Suite G 89120
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 740-5633
-----------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
On March 2, 1999, pursuant to a Senior Secured Loan Agreement, among
Chadmoore Wireless Group, Inc., a Colorado corporation ("Chadmoore"), GATX
Capital Corporation and Chadmoore's subsidiaries, Chadmoore borrowed $13.5
million from GATX Capital, such amount to be increased at the option of GATX
Capital to $27 million. The closing of this transaction provides Chadmoore with
financing for up to $27 million, of which $13.5 million has now been funded. Per
the agreement, GATX Capital, at its sole discretion, has the option to make
available up to $13.5 million in additional funds, within 120 days.
Loans will be made at an interest rate fixed at the time of the funding
based on five-year US Treasury notes plus 5.5%, a five-year amortization
schedule following an interest only period, and warrants to purchase up to
1,822,500 shares of the Company's Common Stock at an exercise price of $0.39 per
share when issued to GATX Capital. The loan is secured by substantially all the
assets of the Company; provided, however, that if the full $27 million is not
received within 120 days of funding, certain assets will be released from
security and the number of the warrants will be reduced proportionately.
Reference is hereby made to the Senior Secured Loan Agreement and
related documents filed herewith as exhibits for a more complete description of
the terms and conditions of the transaction.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
None.
(b) Exhibits
10.1 Senior Secured Loan Agreement
10.2 CWG Note
10.3 CCI Note
10.4 Security Agreement
10.5 Guarantee
10.6 Warrant
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHADMOORE WIRELESS GROUP, INC.
By: /s/ Robert W. Moore
--------------------------
Robert W. Moore, President
Date: March 16, 1999
Exhibit 10.1
SENIOR SECURED LOAN AGREEMENT
Agreement No. Dated as of March 2, 1999
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among
GATX CAPITAL CORPORATION
Four Embarcadero Center
Suite 2200
San Francisco, CA 94111
as Lender
and
CHADMOORE WIRELESS GROUP, INC.
a Colorado corporation
2875 East Patrick Lane
Las Vegas, Nevada 89120
AND ITS SUBSIDIARIES LISTED ON SCHEDULE 1 HERETO
as Borrowers
<PAGE>
This SENIOR SECURED LOAN AGREEMENT, dated as of March 2, 1999 (this
"Agreement"), is entered into by and among GATX CAPITAL CORPORATION ("Lender"),
CHADMOORE WIRELESS GROUP, INC. ("Chadmoore"), and the SUBSIDIARIES OF CHADMOORE
LISTED ON SCHEDULE 1 HERETO (collectively, the "Chadmoore Subsidiaries" and,
together with Chadmoore, the "Borrowers").
ARTICLE I
INTERPRETATION
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1.01. Certain Definitions.
--------------------
Unless otherwise indicated in this Agreement or any other Operative
Document, the following terms, when used in this Agreement or any other
Operative Document, shall have the following respective meanings:
"Acquisition Transaction" shall have the meaning given to that term in
Section 7.01(e).
"Adjusted Consolidated Tangible Net Worth" shall mean, as of any date of
determination, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of Chadmoore and its
Subsidiaries minus intangible assets, on a consolidated basis determined in
accordance with GAAP, plus the aggregate book value of all FCC Licenses owned by
Chadmoore and its Subsidiaries.
"Affiliate" with respect to any Person, shall mean (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities 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. The term "Affiliate," when used herein without reference
to any Person, shall mean an Affiliate of Chadmoore.
"Agreement" has the meaning given to that term in the introductory
paragraph hereof.
"Borrowers" has the meaning given to that term in the introductory
paragraph hereof.
"Applicable Premium" shall mean an amount equal to the amount determined
by multiplying the principal amount being prepaid by:
3.0% if the date of prepayment is after the 8th Payment Date and on or
prior to the 12th Payment Date
2.0% if the date of prepayment is after the 12th Payment Date and on or
prior to the 16th Payment Date
1.0% if the date of prepayment is after the 16th Payment Date and on or
prior to the 20th Payment Date
provided, however, that if at the time of prepayment of a Loan the U.S. Treasury
note rate for notes of a similar term (the "New Rate") has declined from the
U.S. Treasury note rate used in the calculating the Loan Rate for such Loan (the
"Old Rate"), then there shall be added to the premium determined above an amount
equal to the difference between the amount determined under the following
formula at the New Rate and the amount determined pursuant to the following
formula at the Old Rate:
<PAGE>
The amount equal to the excess of (x) the sum of the present values, at the date
of prepayment of the amount of each remaining scheduled payment of interest on
and principal on a Loan, or portion of such payment, which will not be required
to be made as a result of such prepayment (each such payment an "Amount
Payable") (each such Amount Payable discounted separately at the Old Rate or the
New Rate, as applicable, compounded quarterly, from the date such Amount Payable
would be due), over (y) the principal amount of such Note to be prepaid. The
"New Rate" shall be the yield (as quoted in The Wall Street Journal on the date
which is three (3) Business Days prior to the date of prepayment) on U.S.
Treasury securities adjusted to a constant maturity equal to the Treasury Note
Maturity.
"Borrower's Home State" shall mean the state in which a Borrower's
principal place of business is located.
"Business Day" shall mean any day other than a Saturday, Sunday or public
holiday under the laws of California, Illinois or Nevada or any other day on
which banking institutions are authorized or obligated to close in California,
Illinois or Nevada.
"Business Plan" shall mean the Business Plan of Chadmoore dated as of
January 1999, attached hereto as Exhibit H.
"Capitalized Costs" shall mean all capitalized third party expenses
necessary for the implementation of the Business Plan, including engineering
fees and site acquisition and site improvement costs.
"CCI" shall mean Chadmoore Communications, Inc.
"Chadmoore Subsidiaries" has the meaning given to that term in the
introductory paragraph hereof.
"Claim" has the meaning given to that term in Section 10.03.
"CMRS" shall mean CMRS Systems, Inc.
"Code" has the meaning given in Section 3.01(n).
"Collateral" has the meaning given to that term in the Security
Agreement.
"Commercialized Market" shall mean a Market which has been producing
revenues for at least six months.
"Commitment Fee" has the meaning given to that term in Section 2.04.
"Commitment Termination Date" shall mean December 31, 1999.
"Communications Act" shall mean the Communications Act of 1934, as
amended and the rules and regulations issued thereunder, as in effect from time
to time.
"Consolidated Income Tax Expense" shall mean, with respect to any period,
the provision for federal, state, local, foreign and other income taxes of
Chadmoore and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
<PAGE>
"Consolidated Interest Expense" shall mean , with respect to any period,
without duplication, the sum of (i) the interest expense of Chadmoore and its
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount,
(b) the net cost under interest rate hedging arrangement (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and similar
transactions and (e) all capitalized interest and accrued interest, (ii) the
interest component of capital leases paid, accrued and/or scheduled to be paid
or accrued by Chadmoore and its Subsidiaries during such period as determined on
a consolidated basis in accordance with GAAP, (iii) the portion of any rental
obligation in respect of any sale/leaseback transaction allocable to interest
expense (determined as if such were treated as a capital lease), and (iv) the
amount of dividends and distributions in respect of Preferred Stock or
Disqualified Stock paid by Chadmoore's Subsidiaries to a Person other than
Chadmoore or any Subsidiary of Chadmoore or by Chadmoore during such period.
"Consolidated Net Income" shall mean, with respect to any period, the net
income (or loss) of Chadmoore and its Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP, adjusted, to the extent included
in calculating such consolidated net income (or loss) by excluding, without
duplication, (i) all extraordinary, unusual or nonrecurring gains or losses and
all gains or losses from sales or other dispositions of assets out of the
ordinary course of business (net of taxes, fees and expenses relating to the
transaction giving rise thereto) for such period, (ii) that portion of such net
income (or loss) derived from or in respect of Investments in Persons other than
Chadmoore's Subsidiaries, except to the extent of any cash dividends actually
received by Chadmoore or a Subsidiary of Chadmoore (subject, in the case of any
Subsidiary, to the provisions of clause (vi) of this definition); (iii) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan during such period, (iv) that portion of such net income (or loss)
allocable to minority interests in any Subsidiary for such period, (v) net
income (or loss) of any other Person combined with Chadmoore or any Subsidiary
on a "pooling of interests" basis attributable to any period prior to the date
of combination and (vi) the net income of any Subsidiary for such period to the
extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Operating Cash Flow" shall mean, with respect to any
period, Consolidated Net Income for such period (a) increased (without
duplication), to the extent deducted in arriving at such Consolidated Net
Income, by the sum of (i) Consolidated Income tax expense for such period; (ii)
Consolidated Interest Expense for such period; and (iii) depreciation,
amortization and any other non cash items for such period of Chadmoore and its
Subsidiaries (other than any non cash item which requires the accrual of, or a
reserve for, cash charges for any future period), including, without limitation,
amortization of capitalized debt issuance costs for such period, all determined
on a consolidated basis in accordance with GAAP, and (b) decreased by any non
cash items (including non recurring gains and non recurring items of income) to
the extent they increased Consolidated Net Income for such period (including any
partial or complete reversal of reserves taken in a prior period).
"Consolidated Total Indebtedness" shall mean as of any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
Chadmoore and its Subsidiaries outstanding as of such date of determination.
"Credit Amount" shall mean the maximum amount that Lender is committed to
lend (if the conditions specified in Article VIII are satisfied) under the terms
of Section 2.01.
<PAGE>
"Current Assets" shall mean the aggregate amount of the current assets of
Chadmoore and its Subsidiaries which would be set forth on the balance sheet of
Chadmoore in accordance with GAAP.
"Current Liabilities" shall mean the aggregate amount of the current
liabilities of Chadmoore and its Subsidiaries which would be set forth on the
balance sheet of Chadmoore in accordance with GAAP, excluding (i) the current
portion of the Loans made pursuant to this Agreement and (ii) the current
portion of Indebtedness to Cygni S.A.
"Default" shall mean any event which with the passing of time or the
giving of notice or both would become an Event of Default hereunder.
"Default Rate" shall mean the per annum rate of interest equal to the
higher of (i) 18% or (ii) the Prime Rate plus 6%, but such rate shall in no
event be more than the highest rate permitted by applicable law.
"Disclosure Schedule" shall mean the disclosure schedule attached hereto
as Schedule 3 setting forth certain disclosures related to Chadmoore and the
Subsidiaries. Each item set forth in the Disclosure Schedule shall set forth the
Section of this Agreement to which it relates.
"Disqualified Stock" means, with respect to any Person, any capital stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or becomes mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or becomes exchangeable for Indebtedness at the option
of the holder thereof, or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
Loans.
"Eligible Equipment" shall mean network infrastructure equipment
consisting primarily of Motorola and Uniden controllers and repeaters, Celewave,
Sinclair, D&L and Comtelco antennas, Celewave, Telewave and Sinclair combiners
and multicouplers; Celewave amplifiers and other equivalent equipment, which is
type-accepted or certified by the FCC to the extent required by the FCC Rules
and which complies with all of the representations and warranties to Lender.
"Employee Benefit Plan" has the meaning given to that term in Section
3.01(m).
"Environmental Law" shall mean the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and Liability
Act, and any other federal, state, local, foreign or international statute, law,
ordinance, code, rule, regulation, order, writ, judgment, or decree (in each
case having the force of law) (i) regulating, imposing liability or standards of
conduct concerning the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material, as now or
at any time hereafter in effect, or (ii) pertaining to the protection of the
health and safety of employees or the public.
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
"ERISA" has the meaning given to that term in Section 3.01(m).
"ERISA Affiliate" has the meaning given to that term in Section 3.01(m).
<PAGE>
"Event of Default" has the meaning given to that term in Section 9.01.
"Facility" shall mean any facility being operated by the Borrowers and
their Subsidiaries in connection with the management and operation of their
business.
"FCC" shall mean the Federal Communications Commission or any successor
thereto.
"FCC Licenses" shall mean any FCC license, permit, certificate,
ordinance, approval or other authorization, or any renewal or extension thereof
issued by the FCC.
"FCC Rules" shall mean the rules, regulations and policies of the FCC.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" shall mean, with respect to any accounting period
for any Person, statements of operations, retained earnings and cash flow of
such Person for such period, and balance sheets of such Person as of the end of
such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding fiscal year, all prepared in reasonable detail and in
accordance with GAAP. Unless otherwise indicated, each reference to Financial
Statements of any Person shall be deemed to refer to Financial Statements
prepared on a consolidated basis.
"Funding Date" shall mean any date on which a Loan is made to or on
account of a Borrower under this Agreement.
"GAAP" shall mean generally accepted accounting principles and practices
as in effect in the United States of America from time to time, consistently
applied.
"Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantor" has the meaning given in the Guaranty.
"Guaranty" means the Guaranty in the form attached hereto as Exhibit G.
"Hazardous Material" means any hazardous, dangerous or toxic material,
pollutant, waste or other substance, whether solid, liquid or gaseous in nature,
which is regulated by any federal, state, local, foreign or international
governmental authority.
"Indebtedness" shall mean, with respect to Chadmoore or any Subsidiary,
the aggregate amount of, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments, (d) all
obligations with respect to capital leases, (e) all obligations created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (f) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
payables aged less than 180 days), (g) all obligations or liabilities of
<PAGE>
others secured by a lien on any asset of such Person, whether or not such
obligation or liability is assumed, (h) all obligations or liabilities of others
guaranteed by such Person; and (i) any other obligations or liabilities which
are required by GAAP to be shown as debt on the balance sheet of such Person.
Unless otherwise indicated, the term "Indebtedness" shall include all
Indebtedness of Chadmoore and the Subsidiaries.
"Initial Loan" has the meaning given in Section 2.02(a).
"Investment" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such Person
for moving and travel expense, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including,
without limitation, any Indebtedness incurred by such Person of the type
described in clauses (a) and (b) of the definition of "Indebtedness" on behalf
of any other Person); provided, however, that Investments shall not include
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales or non-exclusive licensing in the
ordinary course of such Person's business.
"Landlord Consent" shall mean a consent in the form of Exhibit B or such
other form as Lender may agree to accept.
"Lender" has the meaning given to that term in the introductory paragraph
hereof.
"Lien" shall mean any pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreements, charge, claim, encumbrance or
other lien in favor of any Person.
"Loan" shall mean a loan advanced by Lender to a Borrower under this
Agreement.
"Loan Margin" shall mean 550 basis points (5.5%).
"Loan Rate" shall mean, with respect to the Loan, the per annum rate of
interest (based on a year of twelve 30 day months) equal to the sum of (a) the
U.S. Treasury note rate of a term equal to the Treasury Note Maturity as quoted
in The Wall Street Journal on the date of funding of each Loan, plus (b) the
Loan Margin.
"Management Agreement" shall mean any agreement between a Borrower and/or
any of its Subsidiaries, on the one hand, and any Other Licensee, on the other,
pursuant to which a Borrower and/or any of its Subsidiaries operates and/or
manages Facilities for which any FCC Licenses or Other Authorizations are held
by such Other Licensee
"Market" shall mean the geographical markets covered by the approximately
thirty (30) mile radius from the geographical center of the cities identified in
the Business Plan, as updated from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of the
Borrowers taken as a whole; (b) the ability of a Borrower to pay or perform the
Obligations in accordance with the terms of this Agreement and the other
Operative Documents and to avoid an Event of Default, or an event which, with
the giving of notice or the passage of time or both, would constitute an Event
of Default, under any Operative Document; or (c) the rights, remedies and
security interests of Lender under this Agreement, the other Operative Documents
or any related document, instrument or agreement or on any item of Collateral.
<PAGE>
"Multiemployer Plan" has the meaning given to that term in Section
3.01(m).
"Non-Utilization Fee" has the meaning set forth in Section 2.05.
"Note" or "Notes" shall mean the secured promissory note or notes, as
applicable, of a Borrower substantially in the form of Exhibit A.
"Obligations" shall mean and include all Loans, advances, debts,
liabilities and obligations, howsoever arising, owed by the Borrowers to Lender
of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now existing or
hereafter arising under or pursuant to the terms of this Agreement, the Notes
and the other Operative Documents, including, all interest, fees, charges,
premium payable under this Agreement, expenses, reasonable attorneys' fees and
costs and accountants' fees and costs chargeable to and payable by the Borrowers
hereunder and thereunder, in each case, whether direct or indirect, absolute or
contingent, due or to become due, and whether or not arising after the
commencement of a proceeding under Title 11 of the United States Code (11 U. S.
C. Section 101 et seq.), as amended from time to time (including post-petition
interest) and whether or not allowed or allowable as a claim in any such
proceeding.
"Operative Documents" shall mean this Agreement, the Notes, the Guaranty,
the Security Agreement, the Warrants, the Landlord Consent(s), if any, and all
other documents, instruments and agreements executed and delivered in connection
herewith or therewith or in respect of the closing of the transactions
contemplated hereby or thereby.
"Origination Fee" has the meaning given to that term in Section 2.04.
"Other Authorization" shall mean any license, permit, certificate,
ordinance, approval or other authorization specifically related to the use of
specialized mobile radio frequencies or the operation of a specialized mobile
radio business, or any renewal or extension thereof, from any Governmental
Authority other than the FCC, which are listed on Schedule 1-D to the Security
Agreement.
"Other Licensee" shall mean any party, other than the Borrowers or any of
their Subsidiaries, that holds an FCC License or Other Authorization for a
Facility being operated or managed by the Borrower or any of its Subsidiaries in
connection with the management and operation of their business.
"Participant" has the meaning given to that term in Section 10.10.
"Payment Date" means the last Business Day of each calendar quarter.
"Permitted Indebtedness" shall mean and include:
[1]
(a) Indebtedness of the Borrowers to Lender;
(b) Indebtedness existing on the date hereof and set forth on the
Disclosure Schedule;
(c) Indebtedness of a Borrower to any other Borrower; and
(d) Subordinated Indebtedness, so long as no Default or Event of Default
exists prior to the incurrence thereof or would exist immediately after giving
effect thereto.
<PAGE>
"Permitted Investments" shall mean and include:
[2]
(a) Investments in marketable obligations issued or fully guaranteed by
the United States and maturing not more than one (1) year from the date of
issuance;
(b) Investments in open market commercial paper rated at least "A1" or
"P1" or higher by a national credit rating agency and maturing not more than one
(1) year from the creation thereof;
(c) Other liquid Investments maturing not more than one (1) year from the
date of issuance permitted under a written investment policy of Chadmoore
approved by its Board of Directors and by Lender in writing;
(d) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in the ordinary course of business;
(e) Investments existing on the date of this Agreement and disclosed in
the Disclosure Schedule;
(f) Investments by a Borrower in any other Borrower;
(g) Investments consisting of loans and advances to employees aggregating
not in excess of Twenty-Five Thousand Dollars ($25,000) at any time;
(h) Investments consisting of deposit accounts of a Borrower in which
Lender has a perfected security interest; and
(i) Other Investments aggregating not in excess of One Hundred Thousand
Dollars ($100,000) at any time.
"Permitted Liens" shall mean:
(a) The Lien created by this Agreement;
(b) Liens for fees, taxes, levies, imposts, duties or other governmental
charges of any kind which are not yet delinquent or which are being contested in
good faith by appropriate proceedings which suspend the collection thereof
(provided, however, that such proceedings do not involve any substantial danger
of the sale, forfeiture or loss of any item of Collateral and that a Borrower
has adequately bonded such Lien or reserves sufficient to discharge such Lien
have been provided on the books of such Borrower);
(c) Liens identified on the Disclosure Schedule;
(d) Liens and deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or to secure statutory obligations or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
(e) Liens upon any equipment or other personal property acquired by a
Borrower after the date hereof to secure (i) the purchase price of such
equipment or other personal property or (ii)
<PAGE>
capital lease obligations or indebtedness otherwise permitted under this
Agreement and incurred solely for the purpose of financing the acquisition of
such equipment or other personal property; provided that (A) such Liens are
confined solely to the equipment or other personal property so acquired
(together with accessions thereto, substitutions therefore and proceeds
thereof), and (B) no such Lien shall be created, incurred, assumed or suffered
to exist in favor of a Borrower's officers, directors or shareholders holding
five percent (5%) or more of a Borrower's Equity Securities;
(f) Easements, reservations, rights of way, restrictions, minor defects
or irregularities in title and other similar charges or encumbrances affecting
real property in a manner not materially or adversely affecting the value or use
of such property;
(g) Liens arising solely by virtue of any contractual, statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights as to deposit accounts and other fund maintained with a depository
institution; provided, that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by a
Borrower in excess of those set forth by regulations promulgated by the Federal
Reserve Board, and (ii) such deposit account is not intended by such Borrower to
provide collateral to the depository institution;
(h) Carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings; and
(i) Non-exclusive licenses of Intellectual Property entered into in the
ordinary course of business.
"Person" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding or issued after
the date hereof, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Prime Rate" shall mean the interest rate per annum publicly announced
from time to time by Bank of America NT & SA (or its successor) as its reference
rate, but such rate shall in no event be more than the highest interest rate
permitted by applicable law.
"REI" shall mean Recovery Equity Investors, L.P., a Delaware limited
partnership.
"Representative" shall have the meaning given to that term in Schedule 1.
"Security Agreement" shall mean the Security Agreement in the form
attached hereto as Exhibit G.
"Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the
<PAGE>
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature and (d) such Person
is not engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's property would constitute an
unreasonably small capital.
"State PUC" shall mean any state administrative agency that has primary
jurisdiction for the regulation of specialized mobile radio services or
telecommunications services.
"State PUC Rules" shall mean the rules, regulations and policies of any
State PUC.
"Subordinated Indebtedness" shall mean unsecured Indebtedness
subordinated to the Obligations on terms and conditions, including no payments
of principal while the Obligations are outstanding, acceptable to Lender in its
sole and absolute discretion.
"Subsidiary" shall mean, with respect to any Person, a Person of which a
majority of the outstanding voting stock or other Equity Securities is owned by
such Person directly or indirectly through Subsidiaries.
"Surety Instruments" shall mean all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.
"Term" shall mean the period from and after the date hereof until the
payment or satisfaction in full of all Obligations under this Agreement and the
other Operative Documents.
"Transfer" shall have the meaning given to that term in Section 7.01(c).
"Transfer Agreement" shall mean any agreement between the Borrower and/or
any of its Subsidiaries, on the one hand, and any Other Licensee, on the other,
pursuant to which such Borrower and/or any of its Subsidiaries has the right to
effectuate, subject to FCC approval, the transfer of any FCC Licenses or Other
Authorizations held by such Other Licensee with respect to Facilities operated
and/or managed by a Borrower or a Subsidiary of a Borrower.
"Treasury Note Maturity" shall mean five (5) years.
"Warrants" shall mean warrants, each substantially in the form of Exhibit
E, to purchase up to 1,417,500 shares of common stock of Chadmoore.
1.02. Headings. Headings in this Agreement and each of the other Operative
Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
1.03. Plural Terms. All terms defined in this Agreement or any other Operative
Document in the singular form shall have comparable meanings when used in the
plural form and vice versa.
1.04. Construction. This Agreement is the result of negotiations among, and has
been reviewed by, the Borrowers and Lender and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against the Borrowers
or Lender.
<PAGE>
1.05. Entire Agreement. This Agreement, together with the terms set forth in
each of the other Operative Documents, taken together, constitute and, contain
the entire agreement of the Borrowers and Lender and, with regard to their
respective subject matters, supersede any and all prior agreements, term sheets,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, with respect to their respective subject
matters.
1.06. Other Interpretive Provisions. References in this Agreement to "Articles,"
"Sections," "Exhibits," "Schedules" and "Annexes" are to articles, sections,
exhibits, schedules and annexes herein and hereto unless otherwise indicated.
References in this Agreement and each of the other Operative Documents to any
document, instrument or agreement shall include (a) all exhibits, schedules,
annexes and other attachments thereto, (b) all documents, instruments or
agreements issued or executed in replacement thereof, and (c) such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
modified and supplemented from time to time and in effect at any given time. The
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Agreement or any other Operative Document shall refer to this Agreement
or such other Operative Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Operative Document, as the
case may be. The words "include" and "including" and words of similar import
when used in this Agreement or any other Operative Document shall not be
construed to be limiting or exclusive. Unless otherwise indicated in this
Agreement or any other Operative Document, all accounting terms used in this
Agreement or any other Operative Document shall be construed, and all accounting
and financial computations hereunder or thereunder shall be computed, in
accordance with GAAP.
ARTICLE II
THE CREDIT
----------
2.01. Credit Facility.
---------------
(a) Availability. On the terms and subject to the conditions hereof and
relying upon the representations and warranties herein set forth as and when
made or deemed to be made, Lender agrees to make Loans to the Borrowers in the
aggregate principal amount of Thirteen Million Five Hundred Thousand Dollars
($13,500,000).
(b) Increased Availability. On or prior to one hundred twenty (120) days
after the funding of the first Loan, Lender, in its sole and absolute
discretion, will notify Borrower whether or not it will make available any
additional Loans up to a total aggregate principal amount of $27,000,000 to
Borrower under this Agreement; provided, however, that Lender shall have no
obligation to make or make available any such additional Loans.
(c) Partial Collateral Release. If one hundred twenty (120) days after
the funding of the first Loan, Lender does not make available additional Loans
pursuant to Section 2.01(b) in the aggregate principal amount of Twenty-Seven
Million Dollars ($27,000,000) and if the aggregate value of the Collateral is in
excess of two times the aggregate outstanding amount of the Loans, then Lender
agrees to release its security interest in portions of the Collateral. The
release of the security interest in any portion of the Collateral pursuant to
this Section 2.01(c) shall be subject to the following conditions: (i) Borrower
shall deliver a Collateral Release Certificate in the form of Schedule 6
attached hereto and in substance satisfactory to Lender, certifying that the
aggregate value of the Collateral (calculated solely (i) on the value of the FCC
Licenses held by the Borrowers based on an orderly liquidation value appraisal
of such FCC Licenses conducted by an independent appraiser
<PAGE>
selected by Lender and (ii) the equipment owned by the Borrowers based on the
net book value of all such equipment) is in excess of two times the aggregate
outstanding amount of the Loans, (ii) Lender shall have the sole and absolute
discretion to determine which portions of the Collateral shall not be released
from the security interest of the Lender such that after giving effect to such
release, the aggregate value of the Collateral (calculated as set forth in
Section 2.01(c)(i)) subject to Lender's security interest is no more than two
times the aggregate outstanding amount of the Loans, and (iv) Borrower shall pay
all expenses and costs incurred in connection with the release of any security
interest in the Collateral. Notwithstanding anything contained in this Section
2.01(c), Lender shall have no obligation to release any Collateral consisting of
Equity Securities pledged to the Lender by any of the Borrowers.
(d) Frequency; Identity of Borrower. Loans shall be made to the Borrowers
not more often than quarterly. Lender shall advance a Loan only to the Borrower
that will utilize the proceeds of such Loan, provided however that (i) Loans may
be advanced by Lender to CCI or any of its Subsidiaries if the proceeds of such
Loan shall be utilized by CCI or any of its Subsidiaries and (ii) Loans may be
advanced by Lender to CMRS or any of its Subsidiaries if the proceeds of such
Loan shall be utilized by CMRS or any of its Subsidiaries.
(e) Loan Interest Rate. The Borrowers shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid
in full, at a per annum rate of interest equal to the Loan Rate determined in
accordance with the definition of Loan Rate. The interest rate applicable to
each Loan shall be fixed upon the funding of each Loan and will not be subject
to change as the Loan Rate changes. All computations of interest on Loans shall
be based on a year of twelve 30 day months. If any Borrower pays interest on any
Loan which is determined to be in excess of the then legal maximum rate, then
that portion of each interest payment representing an amount in excess of the
then legal maximum rate shall be deemed a payment of principal and applied
against the principal of the applicable Loan.
(f) Payments of Principal and Interest. With respect to each Loan, the
applicable Borrower shall make payments of accrued interest only on the
aggregate outstanding principal amount of such Loan on each Payment Date through
and including March 31, 2000. Thereafter, with respect to each Loan, on each
Payment Date, commencing on June 30, 2000, the applicable Borrower shall make
payments of principal equal to 5.0% of the original principal amount of such
Loan, plus accrued interest (at the rate applicable to such Loan) on the unpaid
principal balance of such Loan, until such Loan is paid in full. Payments of
principal and interest on the Loans may not be prepaid except as set forth in
Section 2.02(e).
2.02. Use of Proceeds; the Loans and the Notes; Disbursement.
------------------------------------------------------
(a) Use of Proceeds. The proceeds of the Loans shall be used solely for
acquisition of Eligible Equipment and the funding of Capitalized Costs to build
out the Borrowers' network infrastructure and working capital consistent with
the Business Plan. With respect to the initial Loan made hereunder (the "Initial
Loan"), the proceeds may be used for the repayment of the Indebtedness set forth
on Schedule 3 hereto.
(b) The Loans and the Notes. The obligation of a Borrower to repay the
aggregate unpaid principal amount of and interest on each Loan to such Borrower
shall be evidenced by a Note. Lender may, and is hereby authorized by each
Borrower to, endorse on a grid annexed to such Note appropriate notations
regarding such Loan; provided, however, that the failure to make, or an error in
making, any such notation shall not limit or otherwise affect the obligations of
a Borrower hereunder or under such Note.
<PAGE>
(c) Disbursement. Subject to the satisfaction of the conditions set forth
in this Agreement, Lender shall disburse the Loans by wire transfer to the
applicable Borrower unless otherwise directed in writing by such Borrower.
(d) Termination of Commitment to Lend. Notwithstanding anything to the
contrary in the Operative Documents, Lender's obligation to lend the undisbursed
portion of the Credit Amount to the Borrowers hereunder shall terminate on the
earlier of (i) the occurrence of any Event of Default hereunder, and (ii) the
Commitment Termination Date.
(e) Optional Prepayment with Premium. Prior to January 1, 2002, there
shall be no prepayment of the Loans (other than scheduled prepayments pursuant
to Section 2.01(c)) in whole or in part. The Borrowers may, at their option, at
any time on or after January 1, 2002, prepay the Loans, either in whole or from
time to time in any part of the principal amount thereof equal to $5,000,000 or
more, at a prepayment price equal to the principal amount of each Loan so to be
prepaid, plus interest accrued thereon through and including the date of such
prepayment, plus a premium equal to the Applicable Premium with respect to such
Loan.
2.03. Other Payment Terms.
-------------------
(a) Place and Manner. The Borrowers shall make all payments due to Lender
in lawful money of the United States, in immediately available funds, at the
address for payments and in the manner specified in Section 10.05(b).
(b) Date. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(c) Default Rate. If an Event of Default has occurred and is continuing,
the applicable Borrower shall pay interest on the aggregate, outstanding
principal balance of each Loan from the date of the Event of Default until all
Events of Defaults are cured, at a per annum rate equal to the Default Rate,
such rate to change from time to time as the Prime Rate shall change. All
computations of such interest at the Default Rate shall be based on a year of
360 days and twelve 30 day months.
2.04. Origination Fee.
----------------
Chadmoore will pay to Lender an origination fee (the "Origination Fee")
in the amount of Seventy-Five Thousand Dollars ($75,000), of which Lender
acknowledges receipt of Twenty-Five Thousand Dollars ($25,000). Chadmoore will
pay the balance of the Origination Fee in the amount of Fifty Thousand Dollars
($50,000) upon the funding of the Initial Loan.
2.05. Non-Utilization Fee.
-------------------
If the Loans funded under this Agreement are less than $10,800,000 in the
aggregate as of the Commitment Termination Date, then within ten Business Days
thereof, the Borrowers shall pay to Lender a non-utilization fee (the
"Non-Utilization Fee") equal to one and one-quarter percent (1.25%) of the
difference between the Credit Amount and the aggregate amount of the Loans
actually funded.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
<PAGE>
3.01. Representations and Warranties.
------------------------------
Except as set forth in the Disclosure Schedule, each Borrower makes the
following representations and warranties to Lender as of the date hereof and
again on each Funding Date:
(a) Due Incorporation, Qualification, etc. Each of such Borrower and its
Subsidiaries (i) is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of its state of
incorporation or formation; (ii) has the power and authority to own, lease and
operate its properties and carry on its business as now conducted and as
contemplated in the Business Plan; and (iii) is duly qualified, licensed to do
business and in good standing as a foreign corporation or limited liability
company in each jurisdiction where the failure to be so qualified or licensed
could reasonably be expected to have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by such Borrower
of each Operative Document to be executed by such Borrower and the consummation
of the transactions contemplated thereby (i) are within the power of such
Borrower and (ii) have been duly authorized by all necessary actions on the part
of such Borrower.
(c) Enforceability. Each Operative Document executed, or to be executed,
by such Borrower has been, or will be, duly executed and delivered by such
Borrower and constitutes, or will constitute, a legal, valid and binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by such Borrower of the
Operative Documents executed by such Borrower and the performance and
consummation of the transactions contemplated thereby do not and will not (i)
violate the articles of incorporation or bylaws or certificate of formation or
limited liability company agreement of such Borrower or any material judgment,
order, writ, decree, statute, rule or regulation applicable to such Borrower;
(ii) violate any provision of, or result in the breach or the acceleration of,
or entitle any other Person to accelerate (whether after the giving of notice or
lapse of time or both), any material mortgage, indenture, agreement, instrument
or contract to which such Borrower is a party or by which it is bound; or (iii)
result in the creation or imposition of any Lien upon any property, asset or
revenue of such Borrower (other than any Lien arising under the Operative
Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal
of any material permit, license, authorization or approval applicable to such
Borrower, its business or operations, or any of its assets or properties.
(e) Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Operative
Documents executed by such Borrower and the performance and consummation of the
transactions contemplated thereby.
(f) No Violation or Default. None of such Borrower or such Borrower's
Subsidiaries is in violation of or in default with respect to (i) its articles
of incorporation or bylaws or certificate of formation or limited liability
company agreement or any material judgment, order, writ, decree, statute, rule
or regulation applicable to such Person; (ii) any material mortgage, indenture,
agreement, instrument or contract to which such Person is a party or by which it
is bound (nor is there any waiver in effect which, if not in effect, would
result in such a violation or default), where, in each case, such violation or
default, individually, or together with all such violations or defaults, could
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, none of such Borrower or such Borrower's
Subsidiaries (A) has violated any Environmental Law, (B) has any liability under
any Environmental Law or (C) has received notice or other
<PAGE>
communication of an investigation or is under investigation by any Governmental
Authority having authority to enforce Environmental Law, where such violation,
liability or investigation could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
(g) Permits; Licenses; FCC Matters.
(i) To such Borrower's best knowledge and belief after diligent inquiry
including discussions with FCC counsel, each Facility being operated by such
Borrower and its Subsidiaries in connection with the management and operation of
their business as now conducted, and as contemplated to be conducted in the
Business Plan, have been and are being operated in material accordance with the
terms and conditions of such Borrower's and its Subsidiaries' FCC Licenses or
Other Authorizations and in compliance with any applicable law, including the
requirements of the Communications Act and the FCC Rules.
(ii) Except as set forth in the Disclosure Schedule, such Borrower and
its Subsidiaries, in their ownership, management and operation of their
business, as now conducted and as contemplated to be conducted in the Business
Plan, are not operating any of their Facilities for which any FCC License or any
Other Authorization is required, other than such Facilities for which an
appropriate FCC License (or any Other Authorization) has been obtained and is in
effect.
(iii) Part 1 of Schedule 1-C of the Security Agreement contains a
complete list of all FCC Licenses used by such Borrower or any of its
Subsidiaries, including the correct expiration date of each such FCC License.
Part 2 of Schedule 1-C of the Security Agreement contains a complete list of
those FCC Licenses held by Other Licensees that are used by the Borrowers or any
of their Subsidiaries pursuant to the terms of a Management Agreement that is
valid and enforceable, including the correct expiration date of each such FCC
License. Part 1 of Schedule 1-D of the Security Agreement contains a complete
list of all Other Authorizations used by such Borrower or any of its
Subsidiaries, including the correct expiration date of each such Other
Authorization, if any. Part 2 of Schedule 1-D of the Security Agreement contains
a complete list of each Other Authorization held by Other Licensees that are
used by the Borrowers or any of their Subsidiaries pursuant to the terms of a
Management Agreement that is valid and enforceable, including the correct
expiration date of each such Other Authorization.
(iv) The FCC Licenses listed on Schedule 1-C of the Security Agreement,
together with the Other Authorizations, if any, and the other permits, licenses,
authorizations and approvals currently held or obtained by such Borrower and its
Subsidiaries, constitute collectively all of the permits, licenses,
authorizations and approvals necessary or advisable for such Borrower and its
Subsidiaries to acquire, own, lease, control, manage and operate their business
as now conducted, and as contemplated to be conducted in the Business Plan.
(v) Except as set forth in the Disclosure Schedule (with a listing of
each license with respect to which the following is not true), (1) each of the
FCC Licenses on Schedule 1-C of the Security Agreement is validly issued, (2) is
in full force and effect, (3) has not been suspended, revoked, canceled, or
modified in any adverse way, and (4) is not subject to any conditions or
requirements that are not generally imposed by the FCC upon the holders of FCC
Specialized Radio licenses. Each of the Other Authorizations, if any, held by
such Borrower and its Subsidiaries is validly issued, is in full force and
effect, has not been suspended, revoked, or canceled, or modified in any adverse
way, and is not subject to any conditions or requirements that are not generally
imposed upon the holders of similar types of permits, licenses, authorizations
or approvals.
<PAGE>
(vi) Neither such Borrower nor any of its Subsidiaries has, nor will full
implementation and development of the Business Plan cause such Borrower or any
of its Subsidiaries to have, an attributable interest (as such term is defined
in 47 C.F.R. 20.6) in a total of more than 45 MHz of Commercial Mobile Radio
Service ("CMRS") spectrum with significant overlap in any geographic area (as
such concept is defined in 47 C.F.R. 20.6).
(vii) To the best of their knowledge after due inquiry, neither such
Borrower nor any of its Subsidiaries has foreign ownership that would cause it
to exceed the foreign ownership limitations of Section 310(b) of the
Communications Act, including the twenty-five percent (25%) indirect and direct
ownership threshold of Section 310(b)(4) of the Communications Act. If all of
the Warrants were exercised on the date on which this representation is being
made, such exercise would not cause such Borrower or any of its Subsidiaries to
exceed the foreign ownership limitations of Section 310(b) of the Communications
Act, including the twenty-five percent (25%) indirect and direct ownership
threshold of Section 310(b)(4) of the Communications Act.
(viii) To Borrower's best knowledge and belief after diligent inquiry
including discussions with FCC counsel, each of such Borrower, its Subsidiaries,
the Other Licensees and the Facilities is or are in compliance in all material
respects with: the terms and conditions of the FCC Licenses listed on Schedule
1-C of the Security Agreement, the Communications Act, the FCC Rules, any
applicable public utilities laws, and the State PUC Rules, and any other
applicable laws, regulations, permits, licenses, authorizations, or approvals.
(ix) Except as set forth in the Disclosure Schedule, each of such
Borrower , its Subsidiaries, and with respect to the FCC Licenses listed on Part
1 of Schedule 1-C of the Security Agreement, the Other Licensees, has taken all
actions and performed all obligations that are necessary to comply in all
material respects with the terms and conditions of the FCC Licenses listed on
Schedule 1-C of the Security Agreement and to maintain such FCC Licenses in full
force and effect and without adverse modification or impairment. Each of such
Borrower, its Subsidiaries, and with respect to the Other Authorizations listed
on Part 2 of Schedule 1-C of the Security Agreement, the Other Licensees, has
taken all actions and performed all obligations that are necessary to comply in
all material respects with the terms and conditions of its Other Authorizations.
Each of such Borrower and its Subsidiaries has taken all actions and performed
all obligations that are necessary to comply in all material respects with the
terms and conditions of its other permits, licenses, authorizations or approvals
and to maintain such permits, licenses, authorizations or approvals in full
force and effect and without adverse modification or impairment except where the
occurrence of any such suspension, revocation or cancellation or the imposition
of any such requirement could not reasonably be expected to have a Material
Adverse Effect.
(x) The Management Agreements are each legal, valid and binding on the
parties thereto, are each in the form of one of the three Forms of Management
Agreements attached hereto as Exhibit I, permit such Borrower or such Subsidiary
to use the FCC Licenses listed on Part 2 of Schedule 1-C of the Security
Agreement and the Other Authorizations, if any, listed on Part 2 of Schedule
1-D, and are enforceable in accordance with their terms. The Transfer Agreements
are each legal, valid and binding on the parties thereto, permit such Borrower
or such Subsidiary to effectuate, subject to FCC approval, the transfer to such
Borrower or such Subsidiary of the FCC Licenses listed on Schedule 1-C-2 of the
Security Agreement and the Other Authorizations listed on Schedule 1-D-2 of the
Security Agreement, and are enforceable in accordance with their terms.
(xi) Such Borrower and its Subsidiaries have no reason to believe that
the FCC Licenses listed on Schedule 1-C of the Security Agreement will not be
renewed by the FCC on a routine basis and in the
<PAGE>
ordinary course. Such Borrower and its Subsidiaries have no reason to believe
that the Other Authorizations, if any, listed on Schedule 1-C of the Security
Agreement will not be renewed by a State PUC on a routine basis and in the
ordinary course. Such Borrower and its Subsidiaries have no reason to believe
that the other permits, licenses, authorizations or approvals used by such
Borrower and its Subsidiaries will not be renewed by the relevant authority on a
routine basis and in the ordinary course. To such Borrower's best knowledge and
belief after diligent inquiry including discussions with FCC counsel, such
Borrower and its Subsidiaries have duly, timely, and accurately filed all
reports and documents required by the Communications Act, required by the FCC
Rules, requested by the FCC, required by any applicable public utilities laws,
required by any State PUC Rules, or requested by any State PUC.
(xii) None of such Borrower, any of its Subsidiaries, or with respect to
FCC Licenses held by Other Licensees, any of the Other Licensees, is a party to,
or has any reason to believe that any of such Borrower, any of its Subsidiaries
or any of the Other Licensees, is or will be threatened with, any material
investigation, notice of apparent liability, violation, forfeiture or other
notice, order or complaint issued by or before the FCC, or any other notice,
order or complaint issued by or before the FCC, or any other proceeding (other
than proceedings of general applicability) that questions the validity of,
contests or could reasonably be expected to threaten or adversely affect the
validity or continued effectiveness of any of the FCC Licenses listed on
Schedule 1-C of the Security Agreement, any Other Authorization or of any other
material permits, licenses, authorizations or approvals.
(xiii) None of such Borrower, any of its Subsidiaries, or with respect to
FCC Licenses held by Other Licensees, any of the Other Licensees, has received
any notice or any other formal or informal communication to the effect, or is
aware of any facts indicating, that either such Borrower, its Subsidiaries, such
Other Licensees or the Facilities is or are not in compliance with all
requirements of: (a) applicable provisions of the Communications Act and the FCC
Rules, or (b) any State PUC Rules.
(xiv) The operation by each of such Borrower and its Subsidiaries of its
respective Facilities does not and will not cause or result in exposure of
workers or the general public to levels of radio frequency radiation in excess
of the applicable limits stated in the FCC Rules, or any other applicable law,
and any renewals of the FCC Licenses will not constitute an action for which an
environmental assessment would be required under the FCC Rules.
(xvi) Except as set forth in the Disclosure Schedule (with a listing of
each license with respect to which the following is not true), no condition
exists or event has occurred which has resulted in, or after notice or lapse of
time or both would result in, suspension, revocation, impairment, forfeiture,
termination or non-renewal of any FCC License listed on Part 1 of Schedule 1-C
of the Security Agreement prior to the expiration date set forth on Schedule
1-C. No condition exists or event has occurred which has resulted in, or after
notice or lapse of time or both would result in, suspension, revocation,
impairment, forfeiture, termination or non-renewal of any Other Authorization
listed on Part 2 of Schedule 1-C of the Security Agreement prior to the
expiration date set forth on Schedule 1-C. Except as set forth in the Disclosure
Schedule, no condition exists or event has occurred which has resulted in, or
after notice or lapse of time or both would result in, suspension, revocation,
impairment, forfeiture, termination or non-renewal of any other material permit,
license, authorization or approval, except where the occurrence of any such
suspension, revocation, impairment, forfeiture, termination or non-renewal or
the imposition of any such requirement could not reasonably be expected to have
a Material Adverse Effect.
(xvii) Neither such Borrower nor any of its Subsidiaries has granted any
security interest in any of the FCC Licenses listed in Schedule 1-C of the
Security Agreement or in any of the proceeds derived therefrom (except in
connection with Indebtedness listed on Schedule 2 hereto which is being repaid
with the
<PAGE>
proceeds of the first Loan hereunder). Neither such Borrower nor any of its
Subsidiaries has received any notice or any other formal or informal
communication to the effect, or is aware of any facts indicating, that any party
has purported to grant a security interest in any of the FCC Licenses listed in
Schedule 1-C of the Security Agreement, in any of the Other Authorizations, or
in any of the proceeds derived therefrom.
(xviii) Such Borrower and each of its Subsidiaries acknowledge that
Section 13(j) of the Security Agreement permits the Lender to require such
Borrower and its Subsidiaries to execute and deliver all documents requested by
the Lender to effectuate a transfer of the FCC Licenses or a change of control
of such Borrower or its Subsidiaries upon the occurrence and during the
continuance of an Event of Default. Such Borrower and each of its Subsidiaries
acknowledge that, in the opinion of their FCC counsel, such provisions are
enforceable and that any exercise by the Lenders of such provisions would not
contravene the terms and conditions of the FCC Licenses, or any provisions of
the Communications Act or the FCC Rules.
(xix) Set forth on the Disclosure Schedule is a list (by Market) of each
agreement, written or oral, which materially affects the FCC Licenses listed on
Schedule 1-C to the Security Agreement or Other Authorizations and the business
of the Borrowers in each Market.
(h) Litigation. Except as set forth (with estimates of the dollar amounts
involved) in the Disclosure Schedule, no actions (including, without limitation,
derivative actions), suits, proceedings or investigations are pending or, to the
knowledge of such Borrower, threatened against such Borrower or such Borrower's
Subsidiaries at law or in equity in any court or before any other Governmental
Authority which if adversely determined (i) would (alone or in the aggregate)
have a Material Adverse Effect or (ii) seeks to enjoin, either directly or
indirectly, the execution, delivery or performance by such Borrower of the
Operative Documents or the transactions contemplated thereby.
(i) Title. Such Borrower and such Borrower's Subsidiaries own and have
good and marketable title in fee simple absolute to, or a valid leasehold
interest in, all then respective real properties and good title to their other
respective assets and properties as reflected in the most recent Financial
Statements delivered to Lender (except those assets and properties disposed of
in the ordinary course of business since the date of such Financial Statements)
and all respective assets and properties acquired by such Borrower and such
Borrower's Subsidiaries since such date (except those disposed of in the
ordinary course of business). Such assets and properties are subject to no Lien,
except for Permitted Liens.
(j) Intellectual Property. To the best of their knowledge, such Borrower
and such Borrower's Subsidiaries own or possess sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, processes and other intellectual property rights
necessary for its business as now conducted and as proposed to be conducted as
described in the Business Plan without any conflict with, or infringement of the
rights of, others.
(k) Financial Statements. Except as set forth in the Disclosure Schedule,
the Financial Statements of Chadmoore which have been delivered to Lender, (i)
are in accordance with the books and records of Chadmoore and its Subsidiaries,
which have been maintained in accordance with good business practice; (ii) have
been prepared in conformity with GAAP; and (iii) fairly present in all material
respects the consolidated financial position of Chadmoore as of the dates
presented therein and the results of operations, changes in financial positions
or cash flows, as the case may be, for the periods presented therein. None of
Chadmoore or any of Chadmoore's Subsidiaries has any contingent obligations,
liability for taxes or other outstanding obligations which are material in the
aggregate, except as disclosed in the audited Financial Statements for the
period ended December 31, 1997, furnished by Chadmoore to Lender prior to the
date hereof.
<PAGE>
(l) Equity Securities. Such Borrower's total authorized and issued
capitalization is as set forth in the Disclosure Schedule. The Equity Securities
of such Borrower have the respective rights, preferences and privileges set
forth in such Borrower's Articles of Incorporation or limited liability company
agreement in effect on the date hereof. All of the outstanding Equity Securities
of such Borrower have been duly authorized and are validly issued, fully paid
and nonassessable. Except as expressly referenced herein or as set forth in the
Disclosure Schedule, there are as of the date of this Agreement no options,
warrants or rights to purchase Equity Securities of such Borrower authorized,
issued or outstanding, nor is such Borrower obligated in any other manner to
issue shares of its Equity Securities. There are no restrictions on the transfer
of Equity Securities of such Borrower, other than those imposed by such
Borrower's Articles of Incorporation and Bylaws or limited liability company
agreement as of the date hereof, or relevant state and federal securities laws,
and no holder of any Equity Security of such Borrower is entitled to preemptive
or similar statutory or contractual rights, either arising pursuant to any
agreement or instrument to which such Borrower is a party or that are otherwise
binding upon such Borrower. The offer and sale of all Equity Securities of such
Borrower issued before the date of this Agreement complied with or were exempt
from registration or qualification under all applicable federal and state
securities laws. Except as expressly referenced herein or as set forth in the
Disclosure Schedule, no Person has the right to demand or other rights to cause
such Borrower to file any registration statement under the Securities Act of
1933, as amended (the "Securities Act"), relating to any Equity Securities of
such Borrower presently outstanding or that may be subsequently issued, or any
right to participate in any such registration statement.
(m) No Agreements to Sell Assets or Merge. None of such Borrower or such
Borrower's Subsidiaries has any legal obligation, absolute or contingent, to any
Person to sell the assets of such Borrower or such Borrower's Subsidiaries
(other than sales in the ordinary course of business), or to effect any merger,
consolidation or other reorganization of such Borrower or to enter into any
agreement with respect thereto.
(n) Employee Benefit Plans.
(i) Neither such Borrower nor any Person (each, an "ERISA Affiliate")
which is treated as a single employer with such Borrower under section 414 of
the Internal Revenue Code of 1986, as amended (the "Code") has an employee
benefit plan (an "Employee Benefit Plan") within the meaning of the Employee
Retirement Income Security Act of 1974 (as the same may from time to time be
amended or supplemented, and including any rules or regulations issued in
connection therewith, "ERISA") that is an "employee pension benefit plan"
(within the meaning of section 3(2) of ERISA). Neither such Borrower nor any
ERISA Affiliate has any liability with respect to any post retirement benefit
under any Employee Benefit Plan which is a welfare plan (as defined in section
3(1) of ERISA), other than liability for health plan continuation coverage
described in Part 6 of Title I(B) of ERISA, which liability for health plan
continuation coverage cannot reasonably be expected to have a Material Adverse
Effect.
(ii) Each Employee Benefit Plan complies, in both form and operation, in
all material respects, with its terms, ERISA and the Code, and no condition
exists or event has occurred with respect to any such Employee Benefit Plan
which would result in the incurrence by either such Borrower or any ERISA
Affiliate of any material liability, fine or penalty. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of such Borrower or
any ERISA Affiliate is legally valid and binding and in full force and effect.
No Employee Benefit Plan is being audited or investigated by any Governmental
Authority or is subject to any pending or threatened claim or suit. Neither such
Borrower nor any ERISA Affiliate nor any fiduciary of any Employee Benefit Plan
has engaged in a prohibited transaction under sections 406 or 407 of ERISA or
section 4975 of the Code (other than transactions which are otherwise exempt
under either Section 408 of ERISA or 4975(d) of the Code).
<PAGE>
(iii) Neither such Borrower nor any ERISA Affiliate (A) has incurred or
expects to incur any liability under Title IV of ERISA or Section 412 of the
Code, or (B) contributes to any multiemployer plan within the meaning of ERISA
(a "Multiemployer Plan"). Neither such Borrower nor any ERISA Affiliate has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under section 4201 of ERISA or as a result of a sale of
assets described in section 4204 of ERISA. Neither such Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of section 4241 or section 4245 of ERISA
or that any Multiemployer Plan intends to terminate or has been terminated under
section 4041A of ERISA.
(o) Other Regulations. None of such Borrower or its Subsidiaries is
subject to regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or to any federal or state statute
or regulation limiting its ability to incur Indebtedness.
(p) Governmental Charges. Each of such Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed by
it. Such Borrower and such Borrower's Subsidiaries have paid, or made provision
for the payment of, all taxes and other levies, assessments, fees, claims or
other charges imposed by any Governmental Authority which have or may have
become due pursuant to said returns and all other Indebtedness, except such
taxes, levies, assessments, fees, claims or other charges, if any, which are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided or which could not reasonably be
expected to have a Material Adverse Effect if unpaid.
(q) Subsidiaries, etc. Except as set forth in the Disclosure Schedule
(setting forth the jurisdiction of incorporation, capital structure and
percentage ownership of each shareholder), such Borrower has no Subsidiaries, is
not a partner in any partnership, a member of any limited liability company or a
joint venturer in any joint venture.
(r) Solvency, Etc. Such Borrower is Solvent and, after the execution and
delivery of the Operative Documents and the consummation of the transactions
contemplated thereby, each of such Borrower and its Subsidiaries will be
Solvent.
(s) Catastrophic Events; Labor Disputes. None of such Borrower or such
Borrower's Subsidiaries and none of their properties is or has been affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or other casualty that could
reasonably be expected to have a Material Adverse Effect. There are no disputes
presently subject to grievance procedure, arbitration or litigation under any of
the collective bargaining agreements, employment contracts or employee welfare
or incentive plans to which such Borrower or such Borrower's Subsidiaries is a
party, and there are no strikes, lockouts, work stoppages or slowdowns, or, to
the best knowledge of such Borrower, jurisdictional disputes or organizing
activity occurring or threatened which could reasonably be expected to have a
Material Adverse Effect.
(t) No Material Adverse Effect. No event has occurred and no condition
exists which could reasonably be expected to have a Material Adverse Effect
since September 30, 1998.
(u) Accuracy of Information Furnished. None of the Operative Documents
and none of the other certificates, statements or information furnished to
Lender by or on behalf of such Borrower or such Borrower's Subsidiaries in
connection with the Operative Documents or the transactions contemplated thereby
contains or
<PAGE>
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Lender recognizes that
the Business Plan and all financial projections furnished to Lender by or on
behalf of such Borrower or such Borrower's Subsidiaries in connection with the
Operative Documents or the transactions contemplated thereby are not to be
viewed as facts and that actual results during the period or periods covered by
such projections may differ from the projected or forecasted results; however,
such Borrower believes that the Business Plan and all financial forecasts and
the underlying assumptions are reasonable and achievable in light of such
Borrower's circumstance as they now exist.
(v) Certain Agreements of Officers, Employees and Consultants.
(i) No officer, employee or consultant of such Borrower or such
Borrower's Subsidiaries is, or is now expected to be, in violation of any term
of any employment contract, proprietary information agreement, nondisclosure
agreement, noncompetition agreement, or any other contract or agreement or any
restrictive covenant relating to the right of any such officer, employee or
consultant to be employed by such Borrower or such Borrower's Subsidiaries
because of the nature of the business conducted or to be conducted by such
Borrower or such Borrower's Subsidiaries or relating to the use of trade secrets
or proprietary information of others, and to the best of such Borrower's
knowledge, after due inquiry, the continued employment of such Borrower's and
such Borrower's Subsidiaries' officers, employees and consultants do not subject
such Borrower or its Subsidiaries to any liability for any claim or claims
arising out of or in connection with any such contract, agreement, or covenant.
(ii) To the knowledge of such Borrower, no officers of such Borrower, and
no employee or consultant of such Borrower or such Borrower's Subsidiaries whose
termination, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, has any present intention of
terminating his or her employment or consulting relationship with such Borrower
or such Borrower's Subsidiaries.
(w) Burdensome Agreements; Indebtedness. None of such Borrower or such
Borrower's Subsidiaries and none of their properties is subject to any material
judgment, order, writ, decree, statute, rule or regulation, or any material
mortgage, indenture, agreement, instrument or contract which could reasonably be
expected to have a Material Adverse Effect. Such Borrower and its Subsidiaries
have no Indebtedness other than Permitted Indebtedness.
(x) Transactions with Affiliates; Investments. There are no loans,
leases, royalty agreements or other continuing transactions between such
Borrower or its Subsidiaries and any Affiliate of such Borrower or its
Subsidiaries, except transactions in the ordinary course of business and on
terms at least as favorable to such Borrower or its Subsidiaries as would be the
case in an arms-length transaction with an unaffiliated Person. Such Borrower
and its Subsidiaries have no Investments other than Permitted Investments.
(y) Year 2000 Compliance. Chadmoore has (i) initiated a review and assessment of
all areas within its business and operations (including those affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by Chadmoore and its
Subsidiaries (or its suppliers and vendors) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Such Borrower
reasonably believes that all computer applications (including those of its
suppliers and vendors) that are material to its business and operations will on
a timely basis be able
<PAGE>
to perform properly date-sensitive functions for all dates before and after
January 1, 2000, except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(z) Margin Regulations. Such Borrower does not own any "margin security"
as that term is defined in Regulations T, U and X of the Federal Reserve Board,
and none of the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulations T, U and X of
the Federal Reserve Board.
(aa) Equipment Locations. Except as set forth in the Disclosure Schedule,
such Borrower does not have equipment valued in the aggregate in excess of
$250,000 in any single location.
ARTICLE IV
REPORTING REQUIREMENTS
----------------------
4.01. Furnishing Reports. Chadmoore shall furnish to Lender:
(a) Financial Statements. Promptly as soon as the necessary information
is available and in any event: (i) within 30 days of the end of each month, an
unaudited consolidated balance sheet of Chadmoore and its Subsidiaries, as of
the end of such month, and unaudited consolidated statements of income, retained
earnings and changes in cash flows of Chadmoore and its Subsidiaries for such
month and the fiscal year to date, prepared in accordance with GAAP (subject to
normal year-end adjustments and without footnote disclosure), and certified on
behalf of Chadmoore by the chief financial officer, setting forth in comparative
form (x) the corresponding figures for the corresponding periods of the
preceding year and (y) the corresponding figures for the corresponding periods
in the budget and management's discussion and analysis of such financials
(including the effects and reasons for any deviation between the budget and such
financials), (ii) at the time of filing of Chadmoore's Form 10-K with the
Securities and Exchange Commission after the end of each fiscal year of
Chadmoore, the Financial Statements of Chadmoore filed with such Form 10-K; and
(iii) at the time of filing of Chadmoore's Form 10-Q with the Securities and
Exchange Commission after the end of each of the first three fiscal quarters of
Chadmoore, the Financial Statements of Chadmoore filed with such Form 10-Q.
(b) Compliance Statements. Promptly as soon as the necessary information
is available and in any event within forty-five (45) days of the end of each
fiscal quarter of Chadmoore a certificate of Chadmoore's chief financial officer
or other senior officer stating that (i) he or she has reviewed the provisions
of this Agreement and that no Default or Event of Default has occurred, or if a
Default or Event of Default has occurred and is continuing, specifying all such
Defaults and Events of Default of which he or she may have knowledge and setting
forth the calculation of compliance or noncompliance with each of the financial
covenants set forth in Section 7.02, (ii) attached to such certificate are
updated schedules to the Security Agreement, which are accurate as of the date
of such certificate.
(c) Monthly Operating Reports. Within fifteen days after the end of each
month, a report on the buildout and loading activities of the Company during
such month on a Market-by-Market basis, setting forth in comparative form the
corresponding figures for the corresponding periods in the Business Plan and
management's discussion and analysis of such activities (including the effects
of and reasons for any deviations from the Business Plan and performance to
date).
<PAGE>
(d) Budgets. (i) At least 30 days prior to the end of each fiscal year of
Chadmoore, a budget which (A) forecasts ahead at least one year Chadmoore's
consolidated projected costs, revenues, income, balance sheets and cash flow on
a monthly basis, and (B) forecasts ahead at least one year the capital
requirements necessary to reasonably expand the operations of Chadmoore and its
Subsidiaries, and (ii) promptly, upon preparation thereof, any other budgets
that Chadmoore may prepare and any revisions of any budgets delivered under this
Section 4.01(d).
(e) Notices. Promptly after management of Chadmoore becomes aware
thereof, and in any event within ten (10) Business Days of such awareness,
provide Lender with notice of:
(i) the occurrence of a Default or an Event of Default and a
certificate setting forth the facts relating to or giving
rise to such Default or Event of Default and the action
which Chadmoore proposes to take with respect thereto;
(ii) receipt of any material and adverse notice or communication
issued to or by any Governmental Authority and copies of any
relevant documents with respect thereto, including, without
limitation, (A) any notice of a proceeding, order, or
complaint issued by or before the FCC, and State PUC or any
other regulatory authority, that questions the validity of,
contests or could in any manner threaten or adversely affect
the validity, continued effectiveness, or ownership of the
FCC Licenses or of any Other Authorizations that are
necessary or advisable in connection with the control,
management, and operation of the business of the Borrower
and its Subsidiaries, and (B) any notice or any other formal
or informal communication to the effect that the Borrower,
any of its Subsidiaries, any Other Licensee, or any Facility
is not in compliance with all requirements of applicable
provisions of the Communications Act, the FCC Rules, any
applicable public utilities laws, or State PUC Rules;
(iii) the institution of any litigation, investigation or other
proceeding by any Person involving any alleged liability in
excess of Two Hundred Fifty Thousand Dollars ($250,000);
(iv) the occurrence or existence of any event or condition (other
than general business conditions) which could reasonably be
expected to have a Material Adverse Effect;
(v) any notice or any other formal or informal communication to
the effect that any person or entity has purported to grant
a security interest in any of the FCC Licenses or of any
Other Authorizations that are necessary or advisable in
connection with the control, management, and operation of
the business of the Borrower and its Subsidiaries, or in any
of the proceeds derived therefrom, other than the security
interests granted pursuant to the Operative Documents; and
(vi) any notice of any material default under any of the
Management Agreements or any of the Transfer Agreements or
any notice of any failure by any Other Licensee to maintain,
in full force and effect and without adverse modification or
impairment, any FCC License or any Other Authorization that
is necessary or advisable in connection with the control,
management, and operation of the business of the Borrower
and its Subsidiaries, or any failure to comply with the
terms and conditions of any such FCC License or Other
Authorization, the Communications Act, the FCC
<PAGE>
Rules, and any applicable public utilities laws, and any
State PUC Rules.
Notwithstanding the foregoing, with respect to matters relating to the FCC, the
ten (10) Business Day period specified above shall run from the date on which
the management of Chadmoore is or should have been able to determine the
materiality of any such matter.
(f) Failure to Achieve Business Plan. Promptly after the management of
Chadmoore becomes aware thereof, notice that it is management's expectation that
the actual consolidated results of Chadmoore are expected to materially deviate
from the forecasts set forth in the Business Plan.
(g) FCC Filings. Promptly after filing, copies of all filings made the
FCC that relate to: (1) any threatened, pending, or ongoing proceeding that (a)
questions the validity of, contests or could in any manner threaten or adversely
affect the validity, continued effectiveness, or ownership of the FCC Licenses
or of any Other Authorizations used by such Borrower or any of its Subsidiaries,
or (b) could be expected to result in a fine, forfeiture, or other
administrative sanction being imposed on such Borrower or any of its
Subsidiaries; or (2) any proposed, announced, pending, or ongoing rulemaking
proceeding, the outcome of which could be expected to have a material impact on
the ability of such Borrower or any of its Subsidiaries to acquire, own, lease,
control, manage and operate their business as now conducted or as contemplated
to be conducted in the Business Plan.
(h) Miscellaneous. Promptly upon request, such other information and
reports as Lender may reasonably request from time to time.
ARTICLE V
SECURITY; GUARANTIES; CORPORATE STRUCTURE
-----------------------------------------
5.01 Security Agreement.
------------------
The Obligations shall be secured by the Security Agreement which shall be
entered into by each of the Borrowers and each Guarantor.
5.02. Guaranty.
Each of the Borrowers and each new Subsidiary shall become a party to the
Guaranty and guaranty the Obligations of each of the Borrowers.
5.03 Corporate Structure.
-------------------
(a) Formation of New Subsidiaries. Without the prior written consent of
Lender, Chadmoore and its Subsidiaries shall not form or suffer to exist any new
Subsidiaries except Subsidiaries formed in connection with Acquisition
Transactions permitted under Section 7.01(e). Any such acquisition Subsidiaries
will be eliminated pursuant to Section 5.03(b) within ninety (90) days unless
such elimination within such time period would have adverse tax or FCC
consequences, in which case such Subsidiary shall be eliminated as soon
practicable without incurring such adverse tax or FCC consequences. In the event
that potential adverse FCC consequences would prevent elimination of a
Subsidiary within such 90 day period, Chadmoore and its Subsidiaries shall use
their reasonable best efforts to eliminate obtain relief from the FCC to permit
such elimination.
(b) Consolidation of Existing Subsidiaries. Subject to receipt of FCC
approval, Chadmoore shall use its reasonable best efforts to (i) consolidate all
FCC Licenses (other than those with respect to which the
<PAGE>
Borrowers have existing contractual obligations to maintain licenses in
non-wholly-owned Subsidiaries) in one or more non-operating direct Subsidiaries
of Chadmoore, (ii) consolidate its operations (except with respect to the
operations of non-wholly-owned Subsidiaries) in one or more direct Subsidiaries
of Chadmoore, and (iii) eliminate through merger or liquidation all other
wholly-owned Subsidiaries. Prior to the first funding of a Loan, Chadmoore shall
deliver to Lender a plan and timeline for complying with this Section 5.03(b)
with respect to existing Subsidiaries and shall take all actions within its
control to complete compliance prior to September 30, 1999, and will continue to
use its best efforts to complete compliance thereafter.
(c) Elimination of Minority Interests. On or prior to March 31, 1999, the
Borrowers shall take such action as is necessary to eliminate the minority
shareholders in CCI.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
6.01. Affirmative Covenants.
---------------------
(a) Existence; Good Standing; Maintenance. Each Borrower shall maintain
or cause to be maintained its and each of its Subsidiaries' corporate existence
(except as permitted in Section 7.01(e)) and good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify would reasonably be expected to have a Material Adverse
Effect. Each Borrower shall maintain, and shall cause each of its Subsidiaries
to maintain, in force all licenses, approvals and agreements necessary to
construct its network infrastructure and otherwise operate its business in
accordance with the Business Plan, the loss of which would reasonably be
expected to have a Material Adverse Effect.
(b) Government Compliance TC.
(i) Subject to the more specific requirements of clauses (ii)
through (ix) below, each Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws,
ordinances and government rules and regulations, including
Environmental Laws, to which it is subject, noncompliance
with which could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the
Collateral or the priority of Lender's Lien on the
Collateral. Each Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of
ERISA with respect to any employee benefit plans subject to
ERISA.
(ii) Each Borrower and its Subsidiaries shall operate the
Facilities in all material respects in accordance with the
terms and conditions of the FCC Licenses and the Other
Authorizations, if any, that are necessary or advisable in
connection with the control, management, and operation of
the business of the Borrowers, and in compliance with any
applicable law, including the requirements of the
Communications Act, the FCC Rules, public utilities laws,
and State PUC Rules.
(iii) Each of the Borrowers and its Subsidiaries shall obtain any
appropriate FCC Licenses and any Other Authorizations, if
any, necessary for it to acquire, own, lease, control,
manage and operate their business.
<PAGE>
(iv) Each of the Borrowers and its Subsidiaries shall comply in
all material respects with, and shall ensure that all
Facilities comply in all material respects with the
Communications Act, the FCC Rules, any applicable public
utilities laws, State PUC Rules, and the FCC Licenses and
Other Authorizations, if any, that are necessary or
advisable in connection with the control, management, and
operation of the business of such Borrowers and its
Subsidiaries.
(v) Each of Borrowers and its Subsidiaries shall duly, timely,
and accurately file all material reports and documents
required by the Communications Act, required by the FCC
Rules, requested by the FCC, required by any applicable
public utilities laws, required by any State PUC Rules, or
requested by any State PUC.
(vi) Each of the Borrowers and its Subsidiaries shall take all
actions and perform all obligations that are necessary or
advisable to comply in all material respects with the terms
and conditions of all FCC Licenses that are necessary or
advisable in connection with the control, management, and
operation of the business of such Borrower and its
Subsidiaries, and to maintain such FCC Licenses in full
force and effect and without adverse modification or
impairment. Each of the Borrowers and its Subsidiaries shall
take all actions and perform all obligations that are
necessary to comply in all material respects with the terms
and conditions of all Other Authorizations and to maintain
such Other Authorizations in full force and effect and
without adverse modification or impairment.
(vii) Each of the Borrowers and its Subsidiaries shall take all
actions and perform all obligations that are necessary or
advisable to effectuate the renewal of all FCC Licenses that
are necessary or advisable in connection with the control,
management, and operation of the business of such Borrower
and its Subsidiaries, including those listed on Schedule
1-C-1 of the Security Agreement, and of all Other
Authorizations that are necessary or advisable in connection
with the control, management, and operation of the business
of such Borrower and its Subsidiaries.
(viii) Each of the Borrowers and its Subsidiaries shall take all
actions necessary or advisable to preserve their material
rights under the Management Agreements and shall use
reasonable efforts to cause each Other Licensee: to perform
all of its respective obligations thereunder; to maintain in
full force and effect and without adverse modification or
impairment any FCC Licenses or Other Authorizations held by
such Other Licensee applicable to any Facility being
operated or managed by such Borrower or its Subsidiaries;
and to comply with the terms and conditions of any such FCC
Licenses or Other Authorizations, the Communications Act,
the FCC Rules, and any applicable public utilities laws, and
State PUC Rules.
(ix) Each of the Borrower and its Subsidiaries shall operate and
manage the Facilities in such a manner as to ensure that
they will not cause or result in exposure of workers or the
general public to levels of radio frequency radiation in
excess of the applicable limits stated in the FCC Rules, or
any other applicable law.
(c) Payment of Taxes, etc. Each Borrower shall pay and discharge, and
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and
<PAGE>
all lawful claims which, if unpaid, might become a Lien upon any of its
properties; provided that there shall be no requirement to pay any such tax,
assessment, charge, levy or claim (i) which is being contested in good faith and
by appropriate proceedings or which presents no risk of seizure, forfeiture,
levy or other event which could jeopardize any Collateral or (ii) for which
payment in full is bonded or reserved in Chadmoore's Financial Statements in
accordance with GAAP. Each Borrower shall pay and discharge, and cause each
Subsidiary to pay and discharge, each of its contractual obligations with third
parties except to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(d) Inspection Rights. Each Borrower shall, at any reasonable time and
from time to time, and so long as no Default or Event of Default has occurred
and is continuing, upon reasonable notice from Lender and at Lender's sole
expense, permit, and shall cause each Subsidiary to permit, Lender or any of its
agents or representatives to inspect the Collateral, to examine and make copies
of and abstracts from the records and books of account of, and visit the
properties of, such Borrower and to discuss the affairs, finances and accounts
of such Borrower with any of its officers or directors relating in each case to
Lender's capacity as lender and secured party hereunder and with respect to the
Collateral.
(e) Maintenance of Equipment and Other Assets. Each Borrower shall keep
and maintain, and shall cause each Subsidiary to keep and maintain, all items of
equipment and other tangible personal property in good operating condition,
reasonable wear and tear excepted, shall make all necessary replacements thereof
and renewals thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. Each Borrower shall not permit any such
material item of property to be operated or maintained in material violation of
any applicable law, statute, rule or regulation or provisions of insurance
policies. With respect to items of leased equipment, Each Borrower shall keep,
maintain, repair, replace and operate such leased equipment in accordance with
the terms of the applicable lease.
(f) Insurance.
(i) Chadmoore shall, obtain and maintain for the Term on its own behalf
and on behalf of its Subsidiaries, at its own expense, (x) "all risk" insurance
against loss or damage to the Collateral in an amount equal to the greater of
the full replacement value of the Equipment or the book value of the Equipment
as of the date of this Agreement, (y) commercial general liability insurance
(including contractual liability, products liability and completed operations
coverages) reasonably satisfactory to Lender.
(ii) The deductible with respect to "all risk" insurance required by
clause (x) above and product liability insurance required by clause (y) above
shall not exceed $25,000; otherwise there shall be no deductible with respect to
any insurance required to be maintained hereunder. The amount of commercial
general liability insurance (other than products liability coverage and
completed operations insurance) required by clause (y) above shall be at least
$10,000,000 per occurrence. The amount of the products liability and completed
operations insurance required by clause (y) above shall be at least $10,000,000
per occurrence. Each "all risk" policy shall: (x) name Lender as loss payee as
its interest may appear, (y) provide for each insurer's waiver of its right of
subrogation against Lender, and (z) provide that such insurance (A) shall not be
invalidated by any action of, or breach of warranty by, a Borrower of a
provision of any of its insurance policies, and (B) shall waive set off,
counterclaim or offset against Lender. Each liability policy shall (w) name
Lender as an additional insured in the full amount of the Chadmoore's liability
coverage limits (or the coverage limits of any successor to Chadmoore or such
successor's parent which is providing coverage) and (x) provide that such
insurance shall have cross liability and severability of interest endorsements
(which shall not increase the aggregate policy limits of Chadmoore's insurance).
All insurance policies shall (y) provide that Chadmoore's liability insurance
shall be primary without a right of contribution of Lender's insurance, if any,
or any obligation on the part of Lender to pay premiums of Chadmoore, and (z)
shall contain a clause requiring
<PAGE>
the insurer to give Lender at least 30 days' prior written notice of its
cancellation (other than cancellation for non payment for which 10 days' notice
shall be sufficient). Chadmoore shall on or prior to the first Funding Date and
prior to each policy renewal, furnish to Lender certificates of insurance or
other evidence satisfactory to Lender that such insurance coverage is in effect.
(g) New Subsidiaries.
(i) The Borrowers will cause each of their Subsidiaries hereafter formed
or acquired prior to the Commitment Termination Date, to execute and deliver to
the Lender a Borrower Joinder in the form of Exhibit F attached hereto, to cause
such Subsidiary to become a Borrower under this Agreement, a Guarantor under the
Guaranty and a Grantor under the Security Agreement. The Borrowers and such
Subsidiary shall fully cooperate with Lender and perform all additional acts
requested by Lender to effect the purposes of this Section 6.01(g)(i), including
without limitation, execution and delivery of agreements, instruments, UCC-1
financing statements, documents, certificates and opinions all in form and
substance satisfactory to Lender.
(ii) The Borrowers will cause each of their Subsidiaries hereafter formed
or acquired on or after the Commitment Termination Date, to execute and deliver
to the Lender a Subsidiary Joinder in the form of Attachment 1 to the Guaranty,
to cause such Subsidiary to become a Guarantor under the Guaranty and a Grantor
under the Security Agreement. The Borrowers and such Subsidiary shall fully
cooperate with Lender and perform all additional acts requested by Lender to
effect the purposes of this Section 6.01(g)(ii), including without limitation,
execution and delivery of agreements, instruments, UCC-1 financing statements,
documents, certificates and opinions all in form and substance satisfactory to
Lender.
(h) Landlord Consents. The Borrowers will use their reasonable best
efforts to obtain a Landlord Consent from the owner of each property at which
equipment of the Borrowers having an aggregate value in excess of $250,000 is
located.
ARTICLE VII
NEGATIVE AND FINANCIAL COVENANTS
--------------------------------
7.01. Negative Covenants. So long as the Obligations remain outstanding:
------------------
(a) Name; Location of Chief Executive Office. No Borrower shall, without
thirty (30) days prior written notice to Lender, change its name, chief
executive office or principal place of business.
(b) Liens. No Borrower shall, nor shall it permit its Subsidiaries to,
create, incur, assume or suffer to exist any Lien of any kind upon any of its
properties or assets, whether tangible or intangible, whether real, personal or
mixed, whether now owned or hereafter acquired, except Permitted Liens.
(c) Dispositions of Assets. No Borrower shall, nor shall it permit its
Subsidiaries to, convey, sell, offer to sell, lease, transfer, exchange or
otherwise dispose of (collectively, a "Transfer") all or any part of its assets
to any Person, other than: (i) Transfers of worn-out, obsolete or unneeded
equipment; (ii) Transfers from any Borrower to Chadmoore or a Borrower which is
a wholly-owned Subsidiary of Chadmoore; (iii) Transfers in compliance with
Section 5.03, (iv) Transfers of Licenses listed on the Disclosure Schedule to
non-wholly-owned Subsidiaries solely pursuant to the terms of existing
agreements with the holders of minority interests in such Subsidiaries, which
agreements are listed on the Disclosure Schedule, and (v) other Transfers of
property for fair consideration in an amount not exceeding ten percent (10%) of
Adjusted Consolidated Tangible Net Worth in any fiscal year.
<PAGE>
(d) Distributions. No Borrower shall, nor shall it permit its
Subsidiaries to, (i) pay any dividends or make any distributions on its Equity
Securities; (ii) purchase, redeem, retire, defease or otherwise acquire for
value any of its Equity Securities (other than repurchases by cancellation of
indebtedness pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not
to exceed $100,000); (iii) return any capital to any holder of its Equity
Securities as such; (iv) make any distribution of assets, Equity Securities,
obligations or securities to any holder of its Equity Securities as such; or (v)
set apart any sum for any such purpose; provided, however, that (A) Chadmoore
may pay dividends payable solely in its common stock, (B) any Subsidiary of
Chadmoore may pay dividends and make distributions to Chadmoore or a
wholly-owned Subsidiary of Chadmoore, (C) Chadmoore may redeem its Series C
Preferred Stock in accordance with the terms of such Series C Preferred Stock as
set forth in its Certificate of Designation of Rights and Preferences of Series
C Preferred Stock in effect as of the date hereof, and (D) each Subsidiary of
Chadmoore which is a limited liability company may make distributions in any
fiscal year to its members in an amount not to exceed such Subsidiary's net
income for such fiscal and the tax liabilities of its members arising during
such fiscal year solely from their ownership interests in such Subsidiary].
(e) Mergers or Acquisitions. No Borrower shall, nor shall it permit its
Subsidiaries to, merge or consolidate with or into any other Person or acquire
all or substantially all of the capital stock or assets of another Person (an
"Acquisition Transaction"); provided, that (i) any Borrower may merge with and
into Chadmoore and any Borrower may merge with and into any Borrower which is a
wholly-owned Subsidiary of Chadmoore so long as no Default or Event of Default
shall exist either immediately prior to or after giving effect thereto, and (ii)
Chadmoore and its Subsidiaries may undertake Acquisition Transactions so long as
(A) the purpose of the Acquisition Transaction is to acquire additional FCC
Licenses, (B) no Default or Event of Default shall exist either immediately
prior to or after giving effect thereto, and (C) the cash consideration paid in
connection with all such Acquisition Transactions in any fiscal year does not
exceed ten percent (10%) of Adjusted Consolidated Tangible Net Worth measured as
of the end of the fiscal quarter most recently ended.
(f) Transactions With Affiliates. No Borrower shall, nor shall it permit
its Subsidiaries to, enter into any contractual obligation with any Affiliate or
engage in any other transaction with any Affiliate except upon terms at least as
favorable to Borrower as an arms length transaction with unaffiliated Persons.
(g) Indebtedness Payments. (i) Prepay, redeem, purchase, defease or
otherwise satisfy in any manner prior to the scheduled repayment thereof any
Indebtedness for borrowed money (other than amounts due under this Loan
Agreement or the Notes) or lease obligations, (ii) amend, modify or otherwise
change the terms of any Indebtedness for borrowed money (other than the
Obligations) or lease obligations so as to accelerate the scheduled repayment
thereof or (iii) repay any notes to officers, directors or shareholders.
(h) Indebtedness. No Borrower shall, nor shall it permit its Subsidiaries
to, create, incur, assume or permit to exist any Indebtedness except Permitted
Indebtedness.
(i) Investments. No Borrower shall, nor shall it permit its Subsidiaries
to, make any Investment except for Permitted Investments.
(j) Security Interest in FCC Licenses. The Borrowers and their
Subsidiaries shall not contest the validity of the security interest granted
with respect to FCC Licenses pursuant to the terms of the Operative Documents.
7.02 Financial Covenants. Chadmoore shall maintain:
-------------------
<PAGE>
(a) Consolidated Total Indebtedness to Adjusted Consolidated Tangible Net
Worth Ratio. As of the last day of each calendar quarter, a ratio of (i)
Consolidated Total Indebtedness minus Subordinated Indebtedness to (ii) Adjusted
Consolidated Tangible Net Worth plus Subordinated Indebtedness of not more than
2.2:1.00 for each calendar quarter ending in 1999 and not more than 1.7 for each
calendar quarter ending thereafter;
(b) Current Ratio. As of the last day of each calendar quarter, a ratio
of Current Assets to Current Liabilities of not less than 0.7:1.00 for each
calendar quarter ending in 1999 and 2000 and not less than 1.3 for each calendar
quarter ending thereafter;
(c) Consolidated Operating Cash Flow to Consolidated Interest Expense and
Principal Repayment Ratio. As of the last day of each calendar quarter,
commencing with the calendar quarter ending March 31, 2000, a ratio of
Consolidated Operating Cash Flow to Consolidated Interest Expense and Principal
Repayment of not less than 0.7:1.00 for each calendar quarter ending in 2000,
not less than 1.8:1:00 for each calendar quarter ending in 2001 and not less
than 3.0 for each calendar quarter ending thereafter;
(d) Average EBITDA Margin Per Market. As of the last day of each calendar
quarter, an arithmetic mean of the ratios (expressed as a percentage) of
Consolidated Operating Cash Flow from each Commercialized Market to gross
revenue from each such Commercialized Market of not less than thirty percent
(30%).
(e) Adjusted Tangible Net Worth. At all times, Adjusted Consolidated
Tangible Net Worth plus Subordinated Indebtedness of not less than $18,000,000.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
8.01. Closing. At the time of execution and delivery of this Agreement, the
Borrowers shall have duly executed and/or delivered to Lender the items set
forth in Part I of Schedule 4.
8.02. Other Conditions. The obligation of Lender to make each Loan shall be
subject to the execution and/or delivery to Lender of each of the items set
forth in Part I of Schedule 4 and the satisfaction by the applicable Borrower of
each condition set forth in Part II of Schedule 4.
8.03. Covenant to Deliver. Borrower agrees (not as a condition but as a
covenant) to deliver to Lender each item required to be delivered to Lender as a
condition to a Loan, if the Loan is advanced. Borrower expressly agrees that the
extension of a Loan prior to the receipt by Lender of any such item shall not
constitute a waiver by Lender of Borrower's obligation to deliver such item.
ARTICLE IX
DEFAULT AND REMEDIES
--------------------
<PAGE>
9.01. Events of Default. An "Event of Default" shall mean the occurrence of one
or more of the following described events:
(a) Any Borrower shall (i) default in the payment of principal of or
interest on the Loan when the same is due, or (ii) default in the payment of any
expense or other amount payable hereunder or thereunder for five (5) days after
receipt of written notice from Lender that the same is due; or
(b) Any Borrower shall breach any provision of Section 5.03, Section
6.01(f), Section 6.01(g), Section 7.01 and Section 7.02,; or
(c) Any Borrower shall default in the performance of any covenant,
agreement or obligation (other than a covenant, agreement or obligation referred
to in, Section 9.01(a) or Section 9.01(b)) contained in any Operative Document
(other than any of the Warrants) and such Borrower shall fail to cure such
default for a period of twenty (20) days after Borrower knew or should have
known of such default; or
(d) Chadmoore shall have breached any material term of any of the
Warrants; or
(e) Any representation or warranty made herein or on a Funding Date by
any Borrower in any Operative Document, or any certificate or financial
statement furnished pursuant to the provisions of any Operative Document, shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
(f) Any Operative Document or any material term thereof shall in any
material respect cease to be, or any Borrower or any Guarantor shall assert that
any Operative Document or any material term thereof is not, a legal, valid and
binding obligation of such Borrower or such Guarantor, as applicable,
enforceable in accordance with its terms; or
(g) A default shall exist under any agreement with any third party or
parties which consists of the failure to pay any Indebtedness at maturity or
which results in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness of a Borrower in an
amount in excess of Two Hundred Fifty Thousand Dollars ($250,000); or
(h) A proceeding shall have been instituted in a court of competent
jurisdiction seeking a decree or order for relief in respect of a Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee (or similar official) of a Borrower or
for any substantial part of its property, or for the winding up or liquidation
of its affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of thirty (30) consecutive days or such court shall enter a
decree or order granting the relief sought in such proceeding; or
(i) Any Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian (or other similar official)
of a Borrower or for any substantial part of its property, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action in furtherance
of any of the foregoing.
(j) A final judgment or order for the payment of money in excess of Two
Hundred Fifty Thousand Dollars ($250,000) (exclusive of amounts fully covered by
insurance issued by an insurer not an affiliate of a
<PAGE>
Borrower) shall be rendered against a Borrower and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of a Borrower and such judgment, writ, or similar process
shall not be released, stayed, vacated or otherwise dismissed within thirty (30)
days after issue or levy.
(k) If (i) any Person or two or more Persons acting in concert, other
than REI, shall either acquire beneficial ownership, directly or indirectly, of,
or acquire by contract or otherwise, or enter into a contract or arrangement
which upon consummation will result in its or their acquisition of, or control
over, securities of Chadmoore (or other securities convertible into such
securities) representing 30% or more of the combined voting power of all
securities of Chadmoore entitled to vote in the election of directors; or (ii)
during any period of twelve (12) consecutive months, commencing after the date
hereof, individuals who at the beginning of such twelve (12) month period were
directors of Chadmoore shall cease for any reason to constitute a majority of
the Board of Directors of Chadmoore unless the directors replacing such
individuals were nominated by the Board of Directors of Chadmoore.
(l) Any holder of Chadmoore's Series C Preferred Stock shall have
tendered any Series C Preferred Stock for redemption in accordance with
Chadmoore's Certificate of Incorporation, as amended, unless such holder is
contractually obligated at such time to apply the proceeds of such redemption to
the purchase of Equity Securities of Chadmoore..
9.02. Consequences of Event of Default.
--------------------------------
(a) If an Event of Default specified under and of clauses (a) through (g)
or (j) or (k) of Section 9.01 shall occur and be continuing, Lender may (i)
declare the Loans, together with interest thereon, plus the Applicable Premium
(which, if any acceleration takes place prior to January 1, 2002 shall be equal
to the Applicable Premium which would be calculated in accordance with clause
(ii) of the definition of Applicable Premium upon a prepayment occurring on the
date of acceleration), plus the Non-Utilization Fee due under Section 2.05 with
respect to any unfunded portion of the Credit Amount (which shall be calculated
as of the date of the occurrence of the Event of Default if the Commitment
Termination Date has not yet occurred) and all other liabilities of the
Borrowers hereunder and under the other Operative Documents to be immediately
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived, and (ii) terminate its
commitment to make the Loans and terminate any commitment to advance money or
extend credit to or for the benefit of the Borrowers pursuant to any other
agreement or commitment extended by Lender to Borrowers.
(b) If an Event of Default specified under clause (h) or (i) of Section
9.01 shall occur, then immediately and without notice (i) the Loans, together
with interest thereon, plus the Applicable Premium (which, if any acceleration
takes place prior to January 1, 2002 shall be equal to the Applicable Premium
which would be calculated in accordance with clause (ii) of the definition of
Applicable Premium upon a prepayment occurring on the date of acceleration),
plus the Non-Utilization Fee due under Section 2.05 with respect to any unfunded
portion of the Credit Amount (which shall be calculated as of the date of the
occurrence of the Event of Default if the Commitment Termination Date has not
yet occurred), and all other liabilities of the Borrowers hereunder and under
the other Operative Documents shall automatically become due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and (ii) Lender's commitment hereunder to make the Loan
and any other commitment of Lender to the Borrowers to advance money or extend
credit pursuant to any other agreement or commitment shall be terminated.
<PAGE>
9.03. Rights Regarding Collateral.
---------------------------
The Borrowers agree that when any Event of Default has occurred and is
continuing, in addition to the rights set forth above, Lender shall have the
rights, options, duties and remedies of a secured party as permitted by law and
as set forth in the Security Agreement, subject, however, to all FCC Rules.
9.04. Reinstatement of Rights.
-----------------------
This Agreement and the other Operative Documents shall remain in full
force and effect and continue to be effective should any petition be filed by or
against a Borrower or any of its Subsidiaries for liquidation or reorganization,
should a Borrower become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of a Borrower's property and assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned. If Lender shall have proceeded to enforce any right under
this Agreement or any other Operative Document by foreclosure, sale, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely, then and in every such case
(unless otherwise ordered by a court of competent jurisdiction), Lender shall be
restored to its former position and rights hereunder with respect to the
property subject to the security interest created under this Agreement.
ARTICLE X
MISCELLANEOUS
-------------
10.01. Modifications, Amendments or Waivers.
------------------------------------
The provisions of any Operative Document may be modified, amended or
waived only by a written instrument signed by the parties thereto.
10.02. No Implied Waivers; Cumulative Remedies; Writing Required.
---------------------------------------------------------
No delay or failure of Lender in exercising any right, power or remedy
hereunder shall affect or operate as a waiver thereof; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any further exercise thereof or
of any other right, power or remedy. The rights and remedies hereunder of Lender
are cumulative and not exclusive of any rights or remedies which it would
otherwise have. Any waiver, permit, consent or approval of any kind or character
on the part of Lender of any breach or default under this Agreement or any such
waiver of any provision or condition of this Agreement must be in writing and
shall be effective only in the specified instance and to the extent specifically
set forth in such writing.
10.03. Expenses; Indemnification.
-------------------------
The Borrowers shall pay on demand (i) all reasonable fees and expenses
(not to exceed $50,000), including reasonable attorneys' fees and expenses,
incurred by Lender in connection with the preparation, execution and delivery
of, and the exercise of its duties under, this Agreement and the other Operative
Documents, (ii) all reasonable fees and expenses, including reasonable
attorneys' fees and expenses, incurred by Lender in connection with the
preparation, execution and delivery of amendments and waivers hereunder and
(iii) all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, incurred by Lender in connection with the enforcement or attempted
enforcement of this Agreement or any of the Obligations or in preserving any of
Lender's rights and remedies (including, without limitation, all such fees and
expenses incurred in connection with any "workout" or restructuring affecting
the Operative Documents or the Obligations or any bankruptcy or similar
proceeding involving any Borrower or any of its Affiliates). The Borrowers shall
indemnify, reimburse and hold Lender, each of Lender's members, and each of
their respective
<PAGE>
successors, assigns, agents, officers, directors, shareholders, servants, agents
and employees harmless from and against all liabilities, losses, damages,
actions, suits, demands, claims of any kind and nature (including claims
relating to environmental discharge, cleanup or compliance), all costs and
expenses whatsoever to the extent they may be incurred or suffered by such
indemnified party in connection therewith (including reasonable attorneys' fees
and expenses), fines, penalties (and other charges of applicable governmental
authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to a Borrower's property), or bodily injury to or death of
any person (including any agent or employee of a Borrower) (each, a "Claim"),
directly or indirectly relating to or arising out of the use of the proceeds of
the Loan, the falsity of any representation or warranty of a Borrower or a
Borrower's failure to comply with the terms of this Agreement or any other
Operative Document during the Term. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent or
patent) in any item of equipment included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape,
seepage, leakage, spillage, discharge, emission or release of any Hazardous
Materials on the premises of a Borrower, including any Claims asserted or
arising under any Environmental Law, or (iv) any Claim for negligence or strict
or absolute liability in tort; provided, however, that the Borrowers shall not
indemnify Lender for any liability incurred by Lender as a result of Lender's
gross negligence or willful misconduct. Such indemnities shall continue in full
force and effect, notwithstanding the expiration or termination of this
Agreement. Upon Lender's written demand, the Borrowers shall assume and
diligently conduct, at its sole cost and expense, the entire defense of Lender,
each of its members, and each of their respective, agents, employees, directors,
officers, shareholders, successors and assigns, using counsel reasonably
acceptable to such indemnitee against any indemnified Claim. The Borrowers shall
not settle or compromise any Claim against or involving Lender without first
obtaining Lender's written consent thereto, which consent shall not be
unreasonably withheld. If Lender elects to assume its own defense in connection
with an indemnified Claim, then Lender shall not settle or compromise such Claim
without first obtaining Borrower's written consent thereto, which consent shall
not be unreasonably withheld, provided that if Borrower does not consent
thereto, then Borrower shall post security or a bond in the amount of such Claim
for the benefit of the Lender.
10.04. Waivers.
-------
(a) Borrower shall give Lender written notice within one hundred eighty
(180) days of obtaining knowledge of the occurrence of any claim or cause of
action it believes it has, or may seek to assert to allege against Lender
whether such claim is based in law or equity, arising under or related to this
Agreement or any of the other Operative Documents or to the transactions
contemplated hereby or thereby, or any act or omission to act by Lender with
respect hereto or thereto, and that if it shall fail to give such notice to
Lender with regard to any such claim or cause of action, Borrower shall be
deemed to have waived, and shall be forever barred from bringing or asserting
such claim or cause of action in any suit, action or proceeding in any court or
before any governmental agency or authority or any arbitrator.
(b) NO CLAIM MAY BE MADE BY ANY BORROWER AGAINST LENDER OR THE MEMBERS,
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OF LENDER FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER
BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY OTHER
THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH AND EACH BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON
ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
<PAGE>
10.05. Notices; Payments.
-----------------
(a) All notices and other communications given to or made upon any party
hereto in connection with this Agreement shall be in writing (including telexed,
telecopied or telegraphic communication) and mailed (by certified or registered
mail), telexed, telegraphed, telecopied or delivered to the respective parties,
as follows:
Borrowers: At the address set forth on the cover page of this Agreement.
Lender: GATX CAPITAL CORPORATION
Four Embarcadero Center
Suite 2200
San Francisco, California 94111
Telephone No.: 415-955-3200
Telecopier No.: 415-955-3493
Attention: Contract Administration
or in accordance with any subsequent written direction from either party to the
other. All such notices and other communications shall, except as otherwise
expressly herein provided, be effective when received; or in the case of
delivery by messenger or overnight delivery service, when left at the
appropriate address.
(b) Unless Lender specifies otherwise in writing, all payments shall be
made by wire transfer to:
GATX Capital Corporation
Bank Name: Nationsbank
Bank Address:
[Atlanta, Georgia 30384-8592/Dallas, Texas 75202]
Account No.:
Reference: Chadmoore Wireless Group, Inc. Invoice #
10.06. Termination. This Agreement shall terminate at the end of the Term.
-----------
10.07. Severability.
------------
If any provision of any Operative Document is held invalid or
unenforceable to any extent or in any application, the remainder of such
Operative Document and all other Operative Documents, or the application of such
provision to different Persons or circumstances or in different jurisdictions,
shall not be affected thereby.
10.08. Survival.
--------
All covenants and agreements of the Borrowers contained herein or made in
writing in connection herewith shall survive the execution and delivery of the
Operative Documents, the making of Loans hereunder, the granting of security and
the issuance of the Notes. All representations and warrants shall be made upon
the execution and delivery of the Operative Documents and upon the making of
each Loan; provided that the right to declare an Event of Default or bring an
action for damages or exercise any other remedy if such representations and
warranties are found to have been false in any material respect when made shall
survive the execution and delivery of the Operative Documents and the making of
each Loan.
10.09. Governing Law.
-------------
This Agreement, the other Operative Documents and the rights and
obligations of the parties hereto and thereto shall be governed by and construed
and enforced in accordance with the laws of the State of California.
10.10. Successors and Assigns.
----------------------
This Agreement and the other Operative Documents shall be binding upon
and inure to the benefit of Lender, all future holders of the Notes, the
Borrowers and their respective successors and permitted assigns, except that no
Borrower may assign or transfer its rights hereunder or any interest herein
<PAGE>
without the prior written consent of Lender. Lender may sell to any other
financial entity (a "Participant") participation interests in Lender's rights
under this Agreement and the other Operative Documents; provided that
notwithstanding the sale of participations, Lender shall remain solely
responsible for the performance of its obligations under this Agreement, Lender
shall remain the holder of the Notes for all purposes under this Agreement and
the Borrowers shall continue to deal solely and directly with Lender in
connection with this Agreement and the other Operative Documents. Lender may
disclose the Operative Documents and any other financial or other information
relating to the Borrowers or any Subsidiary to any potential Participant,
provided that such Participant agrees to protect the confidentiality of such
documents and information using the same measures that it uses to protect its
own confidential information.
10.11. Counterparts.
------------
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute one and the same instrument.
10.12. Further Assurances.
------------------
Each Borrower will, at its own expense, from time to time do, execute,
acknowledge and deliver all further acts, deeds, conveyances, transfers and
assurances, and all financing and continuation statements and similar notices,
reasonably necessary or proper for the perfection of the security interest being
herein provided for in the Collateral, whether now owned or hereafter acquired.
10.13 Confidentiality.
---------------
All information (other than periodic reports filed by Chadmoore with the
Securities and Exchange Commission) disclosed by the Borrowers to Lender in
writing or through inspection pursuant to this Agreement shall be considered
confidential. Lender agrees to use the same degree of care to safeguard and
prevent disclosure of such confidential information as Lender uses with its own
confidential information, but in any event no less than a reasonable degree of
care. Lender shall not disclose such information to any third party (other than
Lender's members, Lender's or Lender's member's attorneys and auditors subject
to the same confidentiality obligation set forth herein) and shall use such
information only for purposes of evaluation of its extension of credit to
Borrower and the exercise of Lender's rights and the enforcement of its remedies
under this Agreement and the other Operative Agreements. The obligations of
confidentiality shall not apply to any information that (a) was known to the
public prior to disclosure by a Borrower under this Agreement, (b) becomes known
to the public through no fault of Lender, (c) is disclosed to Lender by a third
party' having a legal right to make such disclosure, or (d) is independently
developed by Lender.
10.14 Jury Trial.
----------
EACH BORROWER AND LENDER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE
RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
10.15 Payments Free of Taxes, Etc.
---------------------------
All payments made by the Borrowers under this Agreement shall be made by
the Borrowers free and clear of and without deduction for any and all present
and future taxes, levies, charges, deductions and withholdings. In addition, the
Borrowers shall pay upon demand any stamp or other taxes, levies or charges of
any jurisdiction with respect to the execution, delivery, registration,
performance and enforcement of this Agreement. If any taxes, levies, charges or
other amounts are required to be withheld from any amounts payable to Lender,
hereunder, the amounts so payable to Lender shall be increased to the extent
necessary to yield to Lender (after payment of all such amounts) any such
amounts payable hereunder in the amounts, specified in this Agreement. Upon
request by Lender, the Borrowers shall furnish evidence satisfactory to Lender
that all requisite authorizations and approvals by, and notices to and filings
with, governmental authorities and regulatory bodies have been obtained and made
and that all requisite taxes, levies and charges have been paid.
<PAGE>
10.16 Consent to Jurisdiction; Venue.
-------------------------------
All judicial proceedings with respect to this Agreement and the other
Operative Documents may be brought in any state or federal court of competent
jurisdiction in the City and County of San Francisco, California, and by
execution and delivery of this Agreement, each Borrower accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of such courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Each Borrower
irrevocably waives any right it may have to assert the doctrine of forum non
conveniens or to object to venue to the extent any proceeding is brought in
accordance with this Section. Any action with regard to Collateral, may be
brought wherever such Collateral is located. Nothing herein shall affect the
right of Lender to bring proceedings against a Borrower in courts of any
jurisdiction.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
Lender: GATX CAPITAL CORPORATION
By: /s/Matthew Maloney
---------------------------
Name: Matthew Maloney
Title: Vice President
Borrowers: CHADMOORE WIRELESS GROUP, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: CEO
------------------------
CHADMOORE COMMUNICATIONS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT TANNER, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT BEACON HILL, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
<PAGE>
PTT OF NEVADA, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CMRS SYSTEMS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE CONSTRUCTION SERVICES, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE COMMUNICATIONS OF TENNESSEE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF RICHMOND, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
<PAGE>
PTT MAPLE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF HUNTSVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT BURTON, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF FORT WAYNE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROANOKE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT TRISTAN, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF AUSTIN, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF JACKSONVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF VIRGINIA BEACH, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT ROSELAND, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT ARTINA, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT FRANKLIN, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT CHACO, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
800 SMR NETWORK, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF BATON ROUGE LIMITED
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF LAKE CHARLES, LLC
<PAGE>
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF BAY CITY, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROCKFORD, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
<PAGE>
SCHEDULES
1 List of Subsidiaries
2 Funding Certificate
3 Disclosure Schedule
4 Conditions Precedent
5 Collateral Value Certificate
6 Collateral Release Certificate
EXHIBITS
A Form of Secured Promissory Note
B Form of Landlord Consent
C Matters to Be Covered by Opinion of Corporate Counsel
D Matters to Be Covered by Opinion of FCC Counsel
E Form of Warrant
F Form of Borrower Joinder
F Form of Guaranty
G Form of Security Agreement
H Business Plan
I Forms of Management Agreements
<PAGE>
SCHEDULE 1
LIST OF SUBSIDIARIES
CHADMOORE COMMUNICATIONS, INC.
PTT TANNER, INC.
PTT BEACON HILL, INC.
PTT OF NEVADA, INC.
CMRS SYSTEMS, INC.
CHADMOORE CONSTRUCTION SERVICES, INC.
CHADMOORE COMMUNICATIONS OF TENNESSEE, INC.
PTT COMMUNICATIONS OF RICHMOND, LLC
PTT MAPLE, INC.
PTT COMMUNICATIONS OF HUNTSVILLE, LLC
PTT BURTON, INC.
PTT COMMUNICATIONS OF FORT WAYNE, LLC
PTT COMMUNICATIONS OF ROANOKE, LLC
PTT TRISTAN, INC.
PTT COMMUNICATIONS OF AUSTIN, LLC
PTT COMMUNICATIONS OF JACKSONVILLE, LLC
PTT COMMUNICATIONS OF VIRGINIA BEACH, LLC
PTT ROSELAND, INC.
PTT ARTINA, INC.
PTT FRANKLIN, INC.
PTT CHACO, INC.
800 SMR NETWORK, INC.
<PAGE>
PTT COMMUNICATIONS OF BATON ROUGE LIMITED
PTT COMMUNICATIONS OF LAKE CHARLES, LLC
PTT COMMUNICATIONS OF BAY CITY, LLC
PTT COMMUNICATIONS OF ROCKFORD, LLC
<PAGE>
SCHEDULE 2
FUNDING CERTIFICATE
The undersigned, , being the duly elected and
acting of CHADMOORE WIRELESS
GROUP, INC., a Colorado corporation, in its individual capacity as a Borrower
and as designated representative ("Representative") of and on behalf of each
other Borrower, does hereby certify to GATX CAPITAL CORPORATION, in connection
with that certain Senior Secured Loan Agreement dated as of March 2, 1998, (the
"Loan Agreement"; with other capitalized terms used herein having the meanings
ascribed thereto in the Loan Agreement) that:
1. Attached to this Funding Certificate are updated schedules to the Security
Agreement which are accurate as of the date hereof. The representations and
warranties made by each Borrower in Article III of the Loan Agreement and in the
other Operative Documents (reflecting the updated schedules to the Security
Agreement) are true and correct as of the date hereof.
2. No event or condition has occurred and is continuing that would constitute a
Default or an Event of Default under the Loan Agreement or any other Operative
Document.
3. Each Borrower is in compliance with the covenants and requirements contained
in Articles IV, VI and VII of the Loan Agreement.
4. All conditions referred to in Article VIII of the Loan Agreement to the
making of the Loan to be made on or about the date hereof have been satisfied.
5. No material adverse change in the general affairs, management, results of
operations, condition (financial or otherwise) or prospects of the Borrowers
taken as a whole, whether or not arising from transactions in the ordinary
course of business, has occurred.
Dated: , 199
--------------------------- --
CHADMOORE WIRELESS GROUP, INC.,
in its individual capacity as a Borrower and as Representative
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE>
SCHEDULE 3
DISCLOSURE SCHEDULE
<PAGE>
SCHEDULE 4
CONDITIONS PRECEDENT
PART I:
At the time of execution and delivery of this Agreement, there shall also have
been delivered to Lender:
(a) The Warrants;
(b) The Guaranty;
(c) The Security Agreement;
(d) A favorable opinion of corporate counsel for the Borrowers, dated as of
the closing date, as to the matters set forth in Exhibit D in form and
substance satisfactory to Lender.
(e) A favorable opinion of FCC counsel for the Borrowers, dated as of the
closing date, as to the matters set forth in Exhibit E in form and
substance satisfactory to Lender.
(f) Copies, certified by the Secretary or Assistant Secretary of each
Borrower as of the closing date, of each Borrower's charter documents
and bylaws and of all documents evidencing action taken by such
Borrower authorizing the execution, delivery and performance of the
Operative Documents to which Borrower or such Guarantor is a party, in
form and substance satisfactory to Lender and its counsel;
(g) Good standing certificates for Borrower and each Guarantor from (i)
such party's state of incorporation, (ii) the state in which such
party's principal place of business is located, and (iii) the states in
which such party operates or has employees, together with certificates
of the applicable governmental authorities that Borrower or such
Guarantor is in compliance with the franchise tax laws of each such
state, each dated as of a recent date;
(h) Evidence of the insurance coverage required by Section 6.01(f) of this
Agreement;
(i) All necessary consents of shareholders and other third parties with
respect to the execution, delivery and performance of this Agreement,
the Guaranty, the Security Agreement, the Warrants, the Notes and the
other Operative Documents;
(j) A closing agreement in form and substance satisfactory to Lender;
(k) Schedules and Exhibits to the Agreement in form and substance
satisfactory to Lender;
(l) A Disclosure Schedule in form and substance satisfactory to Lender;
(m) All other documents as Lender shall have reasonably requested.
PART II
<PAGE>
On or prior to the Funding Date of each Loan, each of the items set forth
in Part I of this Schedule 3 shall have been delivered to Lender and the
following conditions shall have been satisfied or waived by Lender:
(a) Each Borrower shall have provided to Lender such documents, instruments
and agreements as Lender shall have reasonably requested to evidence
the perfection and priority of the security interests granted to Lender
pursuant to the Security Agreement, including form UCC 1 Financing
Statements, duly executed by the applicable Borrower;
(b) Each new Subsidiary of Borrower which has not previously become a party
to the Loan Agreement, Security Agreement and the Guaranty, shall
execute and deliver and become a party to the Loan Agreement, Security
Agreement and the Guaranty;
(c) Each Borrower shall have delivered to Lender stock certificates,
endorsed in blank, or shall take such other actions as are necessary to
perfect the security interest of Lender in all of the Equity Securities
of each Borrower;
(d) Each Borrower shall have delivered to Lender copies of schedules
showing satisfactory categorization of the equipment constituting
Collateral and installation expenses.
(e) No Event of Default or Default shall have occurred and be continuing;
(f) The applicable Borrower shall have duly executed and delivered to
Lender a Note prepared by Lender with respect to the Loan;
(g) In Lender's sole discretion, there shall not have occurred any material
adverse change in the general affairs, management, results of
operations, condition (financial or otherwise) or prospects of the
Borrowers taken as a whole, whether or not arising from transactions in
the ordinary course of business, and there shall not have occurred
since the date first written on the cover page of this Agreement any
material adverse deviation by the Borrowers from the Business Plan;
(h) The representations and warranties (as updated by the schedules
attached to the Funding Certificate) contained in this Agreement and
the other Operative Documents to which each Borrower is a party shall
be true and correct in all material respects as if made on such Funding
Date and any updated representations and warranties shall be acceptable
to Lender;
(i) Each of the Operative Documents remains in full force and effect;
(j) The Funding Date of the requested Loan shall not be later than the
Commitment Termination Date; and
(k) With respect to each Loan made after the initial Loan, the Borrowers
shall have delivered to Lender (i) a Collateral Value Certificate, duly
executed by the Representative, in the form of Schedule 5 which shows
that the collateral value (determined according to the methodology set
forth in the Collateral Value Certificate) is not less than two times
the aggregate principal amount of all Loans made to the Borrowers
(including the Loan to be made as of the date of such Collateral Value
Certificate) and (ii) an opinion of FCC counsel in the form attached to
the Collateral Value Certificate.
<PAGE>
SCHEDULE 5
COLLATERAL VALUE CERTIFICATE
GATX Capital Corporation
Four Embarcadero Center
Suite 2200
San Francisco, CA 94111
Attn: Roger Johanson
The undersigned, , being the duly elected and
acting of CHADMOORE WIRELESS GROUP, INC., a Colorado corporation, in its
individual capacity as a Borrower and as designated representative
("Representative") of and on behalf of each other Borrower, does hereby certify
to GATX CAPITAL CORPORATION, in connection with that certain Senior Secured Loan
Agreement dated as of March 2, 1998 (the "Loan Agreement"; with other
capitalized terms used herein having the meanings ascribed thereto in the Loan
Agreement) that:
(a) The undersigned is an officer of Borrower, holding the respective
office set forth beneath the signature and is duly authorized to
sign this certificate on behalf of Borrower.
(b) The attached Schedule 1 accurately describes the FCC Licenses and
Equipment owned by the Borrowers.
(c) The valuation set forth below with respect to Equipment is based
upon the book value of such Equipment.
(d) The valuation set forth below with respect to FCC Licenses is
based upon the valuations, as provided to Representative by
Lender, set forth in the Bond & Pecaro appraisal delivered to
Lender prior to the date of the Loan Agreement. Each such FCC
License is owned by a wholly-owned Subsidiary of Chadmoore and is
not subject or expected to be subject to any material
investigation, notice of apparent liability, violation,
forfeiture or other notice, order or complaint issued by or
before the FCC, or any other notice, order or complaint issued by
or before the FCC, or any other proceeding (other than
proceedings of general applicability) that questions the validity
of, contests or could reasonably be expected to threaten or
adversely affect the validity or continued effectiveness of such
FCC License.
(e) The Collateral described on Schedule 1 hereto constitutes
Collateral as defined in the Security Agreement and Lender has a
perfected first priority security interest in such Collateral
subject only to Permitted Liens.
(f) Attached hereto is the opinion of FCC counsel required to be
delivered in connection with this certificate.
The following calculations, which are based upon the foregoing information, are
correct:
1. The valuation as of , 19 , of the Collateral described in Schedule 1
hereto is as follows:
Valuation
Type of Collateral ---------
- ------------------
<PAGE>
(a)Financed Equipment $
(b)FCC Licenses
Total: $
2. The aggregate outstanding amount of the Loans is $ .
The Total set forth in Section 1 is in excess of two times the aggregate
outstanding amount of the Loans.
IN WITNESS WHEREOF, this Certificate has been executed as of the date set forth
above.
CHADMOORE WIRELESS GROUP, INC.
By:
---------------------------
Name:
Title:
<PAGE>
Opinion of FCC Counsel to be Delivered With Collateral Value Certificate
-------------------------------------------------------------------------
, 199
GATX Capital Corporation
4 Embarcadero Center, Ste. 2200
San Francisco, CA 94111
RE: SENIOR SECURED LOAN AGREEMENT, BETWEEN GATX CAPITAL CORPORATION AND
CHADMOORE WIRELESS GROUP, INC., AND ITS SUBSIDIARIES LISTED ON SCHEDULE 1
THERETO
Dear Sir or Madam:
We have acted as special communications counsel to Chadmoore Wireless Group,
Inc. ("Chadmoore,,) in connection with the transaction contemplated by the
SENIOR SECURED LOAN AGREEMENT ("Loan Agreement,,) dated as of March 2, 1999 by
and between GATX Capital Corporation ("GATX,,) and Chadmoore and its
subsidiaries listed on Schedule 1 thereto. This opinion is being delivered to
you pursuant to Schedule 4, Part II (k)(2i) of the Loan Agreement.
For purposes of this Opinion, we hereby reaffirm and incorporate fully by
reference herein our opinion letter of [February 26,] 1999 issued to you with
respect to the Loan Agreement (the "Opinion,,). Without conducting any
additional factual investigation, we hereby affirm that since the issuance of
the Opinion, that we have no knowledge of any action taken by the Federal
Communications Commission ("FCC,,) which would in any material way change or
modify our Opinion with respect to the FCC licenses held or used by Chadmoore
and its subsidiaries and the other topics contained therein. Moreover, we have
no knowledge of any subsequent action by the FCC which would cause the FCC
licenses held or used by Chadmoore and its subsidiaries not to be renewed by the
FCC.
We assume no obligation to advise you of any changes in the foregoing subsequent
to the delivery of this Opinion. The foregoing Opinion is solely for the benefit
of and may be relied upon solely by GATX [ADD NAMES OF ANY ADDITIONAL LENDERS].
Otherwise, this letter may not be quoted in whole or in part or otherwise be
referred to, or be filed with or furnished to any governmental agency or other
person or entity without the prior written consent of this firm.
Very truly yours,
Irwin, Campbell & Tannenwald, P.C.
- -----------------------------
Peter Tannenwald, Vice President
<PAGE>
SCHEDULE 6
COLLATERAL RELEASE CERTIFICATE
GATX Capital Corporation
Four Embarcadero Center
Suite 2200
San Francisco, CA 94111
Attn: Roger Johanson
The undersigned, , being the duly elected and acting of
CHADMOORE WIRELESS GROUP, INC., a Colorado corporation, in its individual
capacity as a Borrower and as designated representative ("Representative") of
and on behalf of each other Borrower, does hereby certify to GATX CAPITAL
CORPORATION, in connection with that certain Senior Secured Loan Agreement dated
as of March 2, 1998 (the "Loan Agreement"; with other capitalized terms used
herein having the meanings ascribed thereto in the Loan Agreement) that:
(a) The undersigned is an officer of Borrower, holding the respective
office set forth beneath the signature and is duly authorized to sign this
certificate on behalf of Borrower.
(b) The attached Schedule 1 accurately describes the FCC Licenses and
Equipment owned by the Borrowers.
(c) The valuation set forth below with respect to Equipment is based upon
the book value of such Equipment.
(d) The valuation set forth below with respect to FCC Licenses listed on
Schedule 1 is based upon an orderly liquidation value appraisal of such FCC
Licenses conducted by an independent appraiser selected by Lender . Each such
FCC License is owned by a wholly-owned Subsidiary of Chadmoore and is not
subject or expected to be subject to any material investigation, notice of
apparent liability, violation, forfeiture or other notice, order or complaint
issued by or before the FCC, or any other notice, order or complaint issued by
or before the FCC, or any other proceeding (other than proceedings of general
applicability) that questions the validity of, contests or could reasonably be
expected to threaten or adversely affect the validity or continued effectiveness
of such FCC License.
(e) The Collateral described on Schedule 1 hereto constitutes Collateral
as defined in the Security Agreement and Lender has a perfected first priority
security interest in such Collateral subject only to Permitted Liens.
(f) Attached hereto is the opinion of FCC counsel required to be
delivered in connection with this certificate.
The following calculations, which are based upon the foregoing
information, are correct:
1. The valuation as of , 19 , of the Collateral described
in Schedule 1 hereto is as follows:
<PAGE>
Valuation
---------
Type of Collateral
- ------------------
(a)Financed Equipment $
(b)FCC Licenses
Total: $
2. The aggregate outstanding amount of the Loans is $ . The
Total set forth in Section 1 is in excess of two times the aggregate outstanding
amount of the Loans.
IN WITNESS WHEREOF, this Certificate has been executed as of the date set forth
above.
CHADMOORE WIRELESS GROUP, INC.
By:
--------------------------
Name:
Title:
<PAGE>
Opinion of FCC Counsel to be Delivered With Collateral Release Certificate
---------------------------------------------------------------------------
, 199
GATX Capital Corporation
4 Embarcadero Center, Ste. 2200
San Francisco, CA 94111
RE: SENIOR SECURED LOAN AGREEMENT, BETWEEN GATX CAPITAL CORPORATION AND
CHADMOORE WIRELESS GROUP, INC., AND ITS SUBSIDIARIES LISTED ON SCHEDULE 1
THERETO
Dear Sir or Madam:
We have acted as special communications counsel to Chadmoore Wireless Group,
Inc. ("Chadmoore,,) in connection with the transaction contemplated by the
SENIOR SECURED LOAN AGREEMENT ("Loan Agreement,,) dated as of March 2, 1999 by
and between GATX Capital Corporation ("GATX,,) and Chadmoore and its
subsidiaries listed on Schedule 1 thereto. This opinion is being delivered to
you pursuant to Schedule 4, Part II (k)(2i) of the Loan Agreement.
For purposes of this Opinion, we hereby reaffirm and incorporate fully by
reference herein our opinion letter of [February 26,] 1999 issued to you with
respect to the Loan Agreement (the "Opinion,,). Without conducting any
additional factual investigation, we hereby affirm that since the issuance of
the Opinion, that we have no knowledge of any action taken by the Federal
Communications Commission ("FCC,,) which would in any material way change or
modify our Opinion with respect to the FCC licenses held or used by Chadmoore
and its subsidiaries and the other topics contained therein. Moreover, we have
no knowledge of any subsequent action by the FCC which would cause the FCC
licenses held or used by Chadmoore and its subsidiaries not to be renewed by the
FCC.
We assume no obligation to advise you of any changes in the foregoing subsequent
to the delivery of this Opinion. The foregoing Opinion is solely for the benefit
of and may be relied upon solely by GATX [ADD NAMES OF ANY ADDITIONAL LENDERS].
Otherwise, this letter may not be quoted in whole or in part or otherwise be
referred to, or be filed with or furnished to any governmental agency or other
person or entity without the prior written consent of this firm.
Very truly yours,
Irwin, Campbell & Tannenwald, P.C.
- -----------------------------
Peter Tannenwald, Vice President
EXHIBIT A
<PAGE>
SECURED PROMISSORY NOTE
$ Dated: [Date], 199
FOR VALUE RECEIVED, the undersigned, [BORROWER] ("Borrower"), a [state of
formation] corporation/limited liability company, HEREBY PROMISES TO PAY to the
order of GATX CAPITAL CORPORATION, a Delaware limited liability company
("Lender") the principal amount of ($ ) or such lesser amount as shall equal the
aggregate outstanding principal balance of the Loan made by Lender to Borrower
pursuant to the Senior Secured Loan Agreement referred to below (the "Loan
Agreement") which is evidenced hereby, plus all accrued and unpaid interest, and
all other amounts due with respect to the Loan on the dates and in the amounts
set forth in the Loan Agreement. Capitalized terms used and not otherwise
defined herein shall have the meanings given in the Loan Agreement.
The principal amount of this Note shall be payable in 20 consecutive
quarterly installments of $ on the last Business Day of each calendar quarter
commencing on . All unpaid principal and interest shall, in any event,
be payable no later than .
Interest on the unpaid principal amount of this Note from the date of
this Note until such principal amount is paid in full shall accrue at the Loan
Rate or, if applicable, the Default Rate. The Loan Rate for this Note is % per
annum (based on a year of twelve 30 day months). All accrued interest shall be
payable on the last Business Day of each calendar quarter, commencing .
Principal, interest and all other amounts due with respect to the Loan
evidenced by this Note, are payable in lawful money of the United States of
America to Lender as set forth in the Loan Agreement.
This Note is the Note referred to in, and is entitled to the benefits of,
the Senior Secured Loan Agreement, dated as of March 2, 1999, among Borrower,
certain affiliates of Borrower and Lender. The Loan Agreement, among other
things, (a) provides for the making of secured Loans by Lender to Borrower
and/or certain affiliates of Borrower from time to time in an aggregate
principal amount set forth therein, the indebtedness resulting from each such
Loan being evidenced by a Note, and (b) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.
Prepayment of the Loan evidenced by this Note in whole or in part shall
be permitted, if at all, only as set forth under the Loan Agreement and in the
event of such permitted prepayment Borrower shall pay the premium set forth in
the Loan Agreement. If the maturity of this Note and the Loan evidenced thereby
is accelerated under the Loan Agreement, Borrower shall pay to Lender, in
addition to principal, interest and all other amounts due with respect to this
Note and the Loan, as liquidated damages for loss of Lender's benefit of the
bargain and not as a penalty, an amount equal to the premium amounts specified
in Sections 9.02(a) and (b) of the Loan Agreement.
This Note and the Obligations are guarantied by certain Guarantors and
secured under the Security Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower's
<PAGE>
obligations hereunder not performed when due. This Note shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
[BORROWER]
By:
------------------------
Name:
----------------------
Title:
---------------------
<PAGE>
LOAN, INTEREST RATE AND PAYMENTS OF PRINCIPAL
Principal Scheduled
Date Amount Interest rate Payment Amount Notation By
- ---- --------- ------------- -------------- -----------
<PAGE>
EXHIBIT B
FORM OF LANDLORD CONSENT
[RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
GATX CAPITAL CORPORATION
Four Embarcadero Center, Suite 2200
San Francisco, CA 94111
Attn: Contract Administration]
LANDLORD'S WAIVER AND CONSENT
THIS LANDLORD'S WAIVER AND CONSENT (this "Waiver"), dated as of
, 199 , is executed by and between
("Landlord") and GATX Capital Corporation, a Delaware limited liability company
("Lender").
RECITALS
--------
A. Landlord and ("Tenant") are parties to a , dated as of
, 19 (together with any other agreement between Landlord
and Tenant relating to the Premises, as defined below, all as amended from time
to time, to be referred to herein collectively as the "Lease"), pursuant to
which Landlord has leased to Tenant that certain real property commonly known as
, and more particularly described in Attachment 1 hereto (the "Premises").
B. Tenant and Lender intend to or have entered into a Loan and Security
Agreement dated as of March 2, 1999 (the "Loan Agreement") pursuant to which
Lender has agreed or will agree to make loans to Tenant from time to time
secured by certain equipment (the "Equipment") which will be located on the
Premises.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Lender hereby agree as follows:
1. Waiver and Consent. Landlord hereby consents to the location of the
Equipment on the Premises and does irrevocably waive, disclaim and relinquish
and assign to Lender any and all rights to impose, receive, assert or enforce
any lien, encumbrance, charge, security interest, ownership interest, claim or
demand of any kind against or involving the Equipment, whether arising by common
law, statute or consensually (under the Lease or otherwise) and whether now in
existence or hereafter created, including, but not limited to, those for rent or
other right of payment. This waiver, disclaimer, relinquishment and assignment
shall survive the termination of the Lease. Landlord further agrees that (a)
neither the Equipment nor any item thereof shall become part of, or otherwise be
or become a fixture attached to, the Premises, notwithstanding the manner of the
Equipment's annexation, the Equipment's adaptability to the uses and purposes
for which the Premises are
<PAGE>
used, and the intentions of the party making the annexation; (b) the Equipment
(or any item thereof) may be repossessed by Lender; and (c) in connection with
such repossession or otherwise, Lender, and any of its agents and employees, may
enter upon the Premises for the purposes of preparing for transport,
disassembling, dismantling, loading and/or removing the Equipment (or any item
thereof).
2. Costs. Lender agrees to indemnify and hold the Landlord harmless from
any out pocket costs incurred by Landlord for any physical damage to the
Premises caused by Lender solely from the exercise of its rights under clauses
(b) or (c) of Paragraph 1 above.
3. Lease Defaults. Landlord further agrees to provide Lender with
telephonic confirmation of any default or event of default under the Lease upon
inquiry by Lender.
4. Miscellaneous. All the terms and provisions of this Waiver shall be
binding on and inure to the benefit of the respective successors and assigns of
Landlord and Lender. Headings in this Waiver are for convenience of reference
only and are not part of the substance hereof. This Waiver shall be governed by
and construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Landlord and Lender have executed this Waiver as of
the date and year first written above.
LANDLORD:
By:
------------------------
Name:
----------------------
Title:
---------------------
LENDER:
GATX Capital Corporation
By:
------------------------
Name:
----------------------
Title:
---------------------
<PAGE>
EXHIBIT C
FORM OF WARRANT
<PAGE>
EXHIBIT D
MATTERS TO BE COVERED BY OPINION OF CORPORATE COUNSEL
(as to Borrower and each Guarantor)
[SEE ATTACHED]
<PAGE>
EXHIBIT E
MATTERS TO BE COVERED BY OPINION OF FCC COUNSEL
(as to Borrower and each Guarantor)
[SEE ATTACHED]
<PAGE>
EXHIBIT F
FORM OF
BORROWER JOINDER
----------------
THIS BORROWER JOINDER (this "Agreement"), dated as of , , is
executed by [NEW SUBSIDIARY], a [corporation] [partnership] [etc.]
("New Subsidiary"), in favor of GATX CAPITAL CORPORATION (the "Lender").
RECITALS
A. Pursuant to a Loan Agreement dated as of March 2, 1999 (as amended from time
to time, the "Loan Agreement"), among Chadmoore Wireless Group, Inc.
("Chadmoore") and the Subsidiaries of Chadmoore (together with Chadmoore, the
"Borrowers") listed therein and Lender, Lender has agreed to extend loans to
Borrowers upon the terms and subject to the conditions set forth therein.
B. The Lender's obligation to extend loans to Borrowers under the Loan Agreement
is subject, among other conditions, to receipt by lender of a Guaranty, dated as
of the March 2 , 1999 (the "Guaranty"), duly executed by Chadmoore and each of
its Subsidiaries and a Security Agreement, dated as of March 2, 1999 (the
"Security Agreement") duly executed by Chadmoore and each of its Subsidiaries.
C. Pursuant to Section 6.01(g) of the Loan Agreement, each new Subsidiary of
Chadmoore that is created prior to the Commitment Termination Date is required
to become a Borrower under the Loan Agreement, a Guarantor under the Guaranty
and a Grantor under the Security Agreement, by delivering and executing this
Agreement to the Lender.
D. New Subsidiary is a new Subsidiary of Chadmoore and expects to
derive substantial direct and indirect benefit from the transactions
contemplated by the Loan Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, New Subsidiary hereby agrees with Lender, as follows:
1. Definitions and Interpretation. Unless otherwise defined herein, all
capitalized terms used herein and defined in the Loan Agreement shall have the
respective meanings given to those terms in the Loan Agreement. New Subsidiary
acknowledges receipt of copies of the Loan Agreement, the Guaranty, the Security
Agreement and the other Operative Documents.
2. Representations and Warranties. On and as of the date of this Agreement (the
"Effective Date") and for the benefit of the Lender, New Subsidiary hereby makes
each of the representations and warranties made by (i) each Borrower in the Loan
Agreement, (ii) each Guarantor in the Guaranty and (iii) each Grantor in the
Security Agreement.
3. Agreement to be Bound. New Subsidiary agrees that, on and as of the Effective
Date, it shall become a Borrower under the Loan Agreement, a Guarantor under the
Guaranty and
<PAGE>
a Grantor under the Security Agreement and shall be bound by all the provisions
of the Loan Agreement, the Guaranty and the Security Agreement to the same
extent as if New Subsidiary had executed the Loan Agreement, the Guaranty and
the Security Agreement on the Closing Date.
4. Waiver. Without limiting the generality of the waivers in the Guaranty, New
Subsidiary specifically agrees to be bound by the Loan Agreement, the Guaranty
and the Security Agreement and waives any right to notice of acceptance of its
execution of this Agreement and of its agreement to be bound by the Loan
Agreement, the Guaranty and the Security Agreement.
5. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, New Subsidiary has caused this Agreement to be executed by
its duly authorized officer.
[NEW SUBSIDIARY]
By:
------------------------
Name:
----------------------
Title:
---------------------
Address:
[ ]
---------------------------------
[ ]
---------------------------------
[ ]
---------------------------------
Attn:
-----------------------------
Telephone:
------------------------
Facsimile:
------------------------
<PAGE>
EXHIBIT G
GUARANTY
<PAGE>
EXHIBIT H
SECURITY AGREEMENT
<PAGE>
EXHIBIT I
BUSINESS PLAN
<PAGE>
EXHIBIT J
FORMS OF MANAGMENT AGREEMENTS
Exhibit 10.2
SECURED PROMISSORY NOTE
$8,775,000 Dated: March 2, 1999
FOR VALUE RECEIVED, the undersigned, CHADMOORE WIRELESS GROUP, INC.
("Borrower"), a Nevada corporation, HEREBY PROMISES TO PAY to the order of GATX
CAPITAL CORPORATION ("Lender") the principal amount of EIGHT MILLION SEVEN
HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($4,775,000) or such lesser amount as
shall equal the aggregate outstanding principal balance of the Loan made by
Lender to Borrower pursuant to the Senior Secured Loan Agreement referred to
below (the "Loan Agreement") which is evidenced hereby, plus all accrued and
unpaid interest, and all other amounts due with respect to the Loan on the dates
and in the amounts set forth in the Loan Agreement. Capitalized terms used and
not otherwise defined herein shall have the meanings given in the Loan
Agreement.
The principal amount of this Note shall be payable in 20 consecutive
quarterly installments of $236,250 on the last Business Day of each calendar
quarter commencing on March 31, 2000. All unpaid principal and interest shall,
in any event, be payable no later than December 31, 20004.
Interest on the unpaid principal amount of this Note from the date of
this Note until such principal amount is paid in full shall accrue at the Loan
Rate or, if applicable, the Default Rate. The Loan Rate for this Note is 10.84%
per annum (based on a year of twelve 30 day months). All accrued interest shall
be payable on the last Business Day of each calendar quarter, commencing March
31, 1999.
Principal, interest and all other amounts due with respect to the Loan
evidenced by this Note, are payable in lawful money of the United States of
America to Lender as set forth in the Loan Agreement.
This Note is the Note referred to in, and is entitled to the benefits
of, the Senior Secured Loan Agreement, dated as of March 2, 1999, among
Borrower, certain affiliates of Borrower and Lender. The Loan Agreement, among
other things, (a) provides for the making of secured Loans by Lender to Borrower
and/or certain affiliates of Borrower from time to time in an aggregate
principal amount set forth therein, the indebtedness resulting from each such
Loan being evidenced by a Note, and (b) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.
Prepayment of the Loan evidenced by this Note in whole or in part shall
be permitted, if at all, only as set forth under the Loan Agreement and in the
event of such permitted prepayment Borrower shall pay the premium set forth in
the Loan Agreement. If the maturity of this Note and the Loan evidenced thereby
is accelerated under the Loan Agreement, Borrower shall pay to Lender, in
addition to principal, interest and all other amounts due with respect to this
Note and the Loan, as liquidated damages for loss of Lender's benefit of the
bargain and not as a penalty, an amount equal to the premium amounts specified
in Sections 9.02(a) and (b) of the Loan Agreement.
<PAGE>
This Note and the Obligations are guarantied by certain Guarantors and
secured under the Security Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower's obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
CHADMOORE WIRELESS GROUP, INC.
By:/s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
-2-
Exhibit 10.3
SECURED PROMISSORY NOTE
$4,725,000 Dated: March 2, 1999
FOR VALUE RECEIVED, the undersigned, CHADMOORE COMMUNICATIONS, INC.
("Borrower"), a Nevada corporation, HEREBY PROMISES TO PAY to the order of GATX
CAPITAL CORPORATION ("Lender") the principal amount of FOUR MILLION SEVEN
HUNDRED TWENTY FIVE THOUSAND DOLLARS ($4,725,000) or such lesser amount as shall
equal the aggregate outstanding principal balance of the Loan made by Lender to
Borrower pursuant to the Senior Secured Loan Agreement referred to below (the
"Loan Agreement") which is evidenced hereby, plus all accrued and unpaid
interest, and all other amounts due with respect to the Loan on the dates and in
the amounts set forth in the Loan Agreement. Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Loan Agreement.
The principal amount of this Note shall be payable in 20 consecutive
quarterly installments of $437,750 on the last Business Day of each calendar
quarter commencing on March 31, 2000. All unpaid principal and interest shall,
in any event, be payable no later than December 31, 2004.
Interest on the unpaid principal amount of this Note from the date of
this Note until such principal amount is paid in full shall accrue at the Loan
Rate or, if applicable, the Default Rate. The Loan Rate for this Note is 10.84%
per annum (based on a year of twelve 30 day months). All accrued interest shall
be payable on the last Business Day of each calendar quarter, commencing March
31, 1999.
Principal, interest and all other amounts due with respect to the Loan
evidenced by this Note, are payable in lawful money of the United States of
America to Lender as set forth in the Loan Agreement.
This Note is the Note referred to in, and is entitled to the benefits of,
the Senior Secured Loan Agreement, dated as of March 2, 1999, among Borrower,
certain affiliates of Borrower and Lender. The Loan Agreement, among other
things, (a) provides for the making of secured Loans by Lender to Borrower
and/or certain affiliates of Borrower from time to time in an aggregate
principal amount set forth therein, the indebtedness resulting from each such
Loan being evidenced by a Note, and (b) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.
Prepayment of the Loan evidenced by this Note in whole or in part shall
be permitted, if at all, only as set forth under the Loan Agreement and in the
event of such permitted prepayment Borrower shall pay the premium set forth in
the Loan Agreement. If the maturity of this Note and the Loan evidenced thereby
is accelerated under the Loan Agreement, Borrower shall pay to Lender, in
addition to principal, interest and all other amounts due with respect to this
Note and the Loan, as liquidated damages for loss of Lender's benefit of the
bargain and not as a penalty, an amount equal to the premium amounts specified
in Sections 9.02(a) and (b) of the Loan Agreement.
<PAGE>
This Note and the Obligations are guarantied by certain Guarantors and
secured under the Security Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower's obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
CHADMOORE COMMUNICATIONS, INC.
By:/s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
-2-
Exhibit 10.4
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of March 2, 1999, is made
between each entity set forth on the signature pages hereto as a grantor (each
such entity and each entity which hereafter executes and delivers a Borrower
Joinder in substantially the form of Exhibit E to the Loan Agreement or a
Subsidiary Joinder in substantially the form of Attachment 1 to the Guaranty (as
defined below) to be referred to herein as a "Grantor", and collectively as, the
"Grantors") and GATX CAPITAL CORPORATION ("Lender").
RECITALS
--------
A. Lender is entering into a Loan Agreement, dated as of March 2, 1999
(such agreement, as it may hereafter be amended or modified, the "Loan
Agreement" with Chadmoore Wireless Group, Inc. ("Chadmoore") and the
subsidiaries of Chadmoore party thereto (collectively, the "Subsidiaries," and
together with Chadmoore, the "Borrowers"). Each Grantor is a Borrower under the
Loan Agreement and a guarantor of each other Borrowers' Obligations pursuant to
a Guaranty of even date herewith executed in favor of Lender.
B. It is a condition precedent to the extension of credit by Lender under
the Loan Agreement that each Grantor shall have executed and delivered this
Agreement and shall have granted a security interest in all of its assets to
Lender in accordance herewith.
C. Terms defined in the Loan Agreement and not otherwise defined herein
have the same respective meanings when used herein.
AGREEMENT
---------
NOW, THEREFORE, in order to induce Lender to enter into the Loan
Agreement and for other good and valuable consideration, the receipt and
adequacy of which hereby is acknowledged, each Grantor hereby represents,
warrants, covenants, agrees and grants as follows:
1. Definitions. Unless the context otherwise requires, terms defined in
the Uniform Commercial Code of the State of California (the "Uniform Commercial
Code") and not otherwise defined in this Agreement or in the Loan Agreement
shall have the meanings defined for those terms in the Uniform Commercial Code.
In addition, the following terms shall have the meanings respectively set forth
after each:
"Certificates" means all certificates, instruments and other documents
now or hereafter representing or evidencing any Pledged Securities or Pledged
Limited Liability Company Interests.
"Closing Date" shall mean the date of this Agreement.
"Collateral" means and includes all present and future right, title,
interest, claims and demands of each Grantor in or to any personal property or
assets whatsoever, whether now owned or existing or hereafter arising or
acquired and wheresoever located, and all hereafter arising or acquired and
wheresoever located, and all rights and powers of such Grantor to transfer any
interest in or to any personal property or assets whatsoever, including without
limitation, any and all of the following personal property:
-1-
<PAGE>
(a) All present and future acounts, accounts receivable, agreements,
guaranties, contracts (including without limitation management agreements,
leases, contract rights and rights to payment (collectively, the "Accounts"),
together with all instruments, documents, chattel paper, security agreements,
guaranties, undertakings, surety bonds, insurance policies, notes and drafts,
and all forms of obligations owing to such Grantor or to which such Grantor may
have an interest, however created or arising;
(b) All present and future general intangibles, including without
limitation, (i) each FCC License and each Other Authorization described on
Schedule 1-C-1 and Schedule 1-D-1, respectively, attached hereto and including
without limitation, all of such Grantor's rights under or relating to any FCC
License or any Other Authorization and the proceeds of any FCC License or Other
Authorization; provided, however, that the Collateral does not include at any
time any FCC License to the extent, but only to the extent, that such Grantor is
prohibited at that time from granting a security interest therein pursuant to
the Communications Act and the FCC Rules, but includes, to the maximum extent
permitted by law, all of such Grantor's proprietary rights vis-a-vis third
parties under or relating to any FCC License and the rights to receive all
proceeds derived from or in connection with the sale, assignment or transfer of
such FCC License, (ii) all tax refunds of every kind and nature to which such
Grantor now or hereafter may become entitled, however arising, (iii) all other
refunds, (iv) all commitments to extend financing to such Grantor, (v) all
deposits, (vi) all goodwill, (vii) all choses in action, (viii) all insurance
proceeds, and (ix) all trade secrets, computer programs, software, customer
lists, trademarks, trade names, patents, licenses, copyrights, tecnology,
processes and proprietary information, including without limitation, the
Copyrights, the Patents and the Marks and the goodwill of such Grantor's
business connected with and symbolized by the Marks;
(c) All present and future demand, time, savings, passbook, deposit and
like accounts (general or special) (collectively, the "Deposit Accounts") in
which such Grantor has any interest which is maintained with any bank, savings
and loan association, credit union or like organization, including without
limitation, each account listed on Schedule 1-B attached hereto and all money,
cash and cash equivalents of such Grantor, whether or not deposited in any
Deposit Account;
(d) All present and future books and records, including without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to such Grantor, all receptacles and
containers for such records, and all files and correspondence;
(e) All present and future goods, including without limitation, all
equipment, machinery, audio and/or video recording equipment, transmitting
towers, transmitters, broadcasting equipment, videotapes, audio tapes, DAT tapes
and other recorded media, tools, molds, dies, furniture, furnishings, fixtures,
trade fixtures and all other goods used in connection with or in the conduct of
such Grantor's business, including without limitation, all goods as defined in
Section 9101(2) of the Uniform Commercial Code (collectively, the "Equipment");
(f) All present and future inventory and merchandise, including without
limitation, all present and future goods held for sale or lease or to be
furnished under a contract of service, all recorded media, all raw materials,
work in process and finished goods, all packing materials, supplies and
containers relating to or used in connection with any of the foregoing, and all
bills of lading, warehouse receipts and documents of title relating to any of
the foregoing (collectively, the "Inventory");
(g) All present and future stocks, bonds, debentures, certificated and
uncertificated securities, security entitlements, subscription rights, options,
warrants, puts, calls, certificates, security
-2-
<PAGE>
accounts, commodity accounts, commodity contracts, partnership interests,
limited liability compnay interests, joint venture interests and investment
and/or brokerage accounts, and all other investment properties, including
without limitation, the Certificates, the Pledged Securities, the Pledged
Partnership Interests, the Pledged Limited Liability Company Interests and all
rights, preferences, privileges, dividends, distributions (in cash or in kind),
redemption payments or liquidation payments with respect thereto;
(h) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;
(i) All other tangible and intangible personal property of such Grantor;
(j) All rights, remedies, powers and/or privileges of such Grantor with
respect to any of the foregoing; and
(k) Any and all proceeds and products of the foregoing, including without
limitation, all money, accounts, general intangibles, deposit accounts,
documents, instruments, chattel paper, goods, insurance proceeds and any other
tangible or intangible property received upon the sale or disposition of any of
the foregoing.
"Communications Act" has the meaning given to that term in the Loan
Agreement.
"Copyright" means all:
(a) Copyrights, whether or not published or registered under the
Copyright Act of 1976, 17 U.S.C. Section 101 et seq., as the same shall be
amended from time to time and any predecessor or successor statute thereto (the
"Copyright Act"), and applications for registration of copyrights, and all works
of authorship and other intellectual property rights therein, including without
limitation, copyrights for computer programs, source code and object code
databases and related materials and documentation and including without
limitation, the registered copyrights and copyright applications listed on
Schedule 1-J attached hereto, and (i) all renewals, revisions, derivative works,
enhancements, modifications, updates, new releases and other revisions thereof,
(ii) all income, royalties, damages and payments now and hereafter due and/or
payable with respect thereto, including without limitation, payments under all
licenses entered into in connection therewith and damages and payments for past
or future infringements thereof, (iii) the right to sue for past, present and
future infringemens thereof and (iv) all of such Grantor's rights corresponding
thereto throughout the world;
(b) Rights under or interests in any copyright license agreements
with any other party, whether Grantors are a licensee or licensor under any such
license agreement and the right to use the foregoing in connnection with the
enforcement of the Lender's rights under the Operative Documents; and
(c) Copyrightable materials now or hereafter owned by such Grantor,
including without limitation, all tangible property embodying the copyright
described in clause (a) hereof or such copyrightable materials, and all tangible
property covered by the licenses described in clause (b) hereof.
"Disclosure Schedule"has the meaning given to that term in the Loan
Agreement.
"FCC" has the meaning given to that term in the Loan Agreement.
"FCC License" has the meaning given to that term in the Loan Agreement.
-3-
<PAGE>
"FCC Rules" has the meaning given to that term in the Loan Agreement.
"Governmental Authority" has the meaning given to that term in the Loan
Agreement.
"Guaranty" has the meaning given to that term in the Loan Agreement.
"Issuer Acknowledgement" has the meaning given to that term in Section
3(b) of this Agreement.
"Liens" has the meaning given to that term in the Loan Agreement.
"Limited Liability Company Interests" means the entire limited liability
company interest at any time owned by the Grantors in any Pledged Entity.
"Loans" has the meaning given to that term in the Loan Agreement.
"Marks" means all (a) trademarks, trademark registrations, interest under
trademark license agreements, trade names, trademark applications, service
marks, business names, trade styles, designs, logos and other source or business
identifiers for which registrations have been issued or applied for in the
United States Patent and Trademark Office or in any other office or with any
other official anywhere in the world or which are used in the United States or
any state, territory or possession thereof, or in any other place, nation or
jurisdicion anywhere in the world including without limitation, the trademarks,
trademark registrations, applications, service marks, business names, trade
styles, design logos and other source or business identifiers listed on
Schedule1-H attached hereto, (b) licenses pertaining to any such mark whether
such Grantor is licensor or licensee, (c) all income, royalties, damages and
payments for past, present or future infringements thereof, (d) rights to sue
for past, present and future infringements thereof, (e) rights corresponding
thereto throughout the world, (f) all product specification documents and
production and quality control manuals used in the manufacture of products sold
under or in connection with such marks, (g) all documents that reveal the name
and address of all sources of supply of, and all terms of purchase and delivery
for, all materials and components used in the production of products sold under
or in connection with such marks, (h) all documents constituting or concerning
the then current or proposed advertising and promotion by such Grantor, their
subsidiaries or licensees of products sold under or in connection with such
marks, including without limitation, all documents that reveal the media used or
to be used and the cost for all such advertising conducted within the described
period or planned for such products and (i) renewals and proceeds of any of the
foregoing.
"Material Adverse Effect" has the meaning given to that term in the Loan
Agreement.
"Obligations" has the meaning given to that term in the Loan Agreement.
"Operative Documents" has the meaning given to that term in the Loan
Agreement.
"Other Authorization" has the meaning given to that term in the Loan
Agreement.
"Patents" means all (a) letters patent, design patents, utility patents,
inventions and trade secrets, all patents and patent applications in the United
States Patent and Trademark Office, and interests under patent license
agreements, including without limitation, the inventions and improvements
described and claimed therein, including without limitation, those patents
listed on Schedule 1-I attached hereto, (b) licenses pertaining to any patent
whether such Grantor is licensor or licensee, (c) income, royalties, damges and
payments now and hereafter due and /or payable under and with respect thereto,
including without
-4-
<PAGE>
limitation, damages and payments for past, present or future infringements, (d)
rights to sue for past, present and future infringements thereof, (e) rights
corresponding thereto throughout the world in all jurisdictions in which such
patents have been issud or applied for and (f) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any of the
foregoing.
"Permitted Liens" has the meaning given to that term in the Loan
Agreement.
"Person" has the meaning given to that term in the Loan Agreement.
"Partnership Interests" means the entire partnership interest at any time
owned by the Grantors in any Pledged Partnership Entity.
"Pledge Notice" shall have the meaning ascribed to it in Section 3(b) of
this Agreement.
"Pledged Collateral" means the Certificates, the Pledged Securities, the
Pledged Partnership Interests and the Pledged Limited Liability Company
Interests.
"Pledged Entity" means each limited liability company set forth in
Schedule 1-D attached hereto, together with any other limited liability company
in which any Grantor may have an interest at any time.
"Pledged Limited Liability Company Interests" means all limited liability
company interests held by each Grantor, including, but not limited to those
limited liability company interests set forth in Schedule 1-D attached hereto,
as such Schedule may be supplemented from time to time in accordance with the
terms of this Agreement and all capital, limited liability company assets,
dividends, cash, instruments and other properties from time to time received, to
be received or otherwise distributed in respect of or in exchange for any or all
of such interests and all certificates and instruments representing or
evidencing such other property received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof.
"Pledged Partnership Entity" means each partnership interest set forth in
Schedule 1-D attached hereto, together with any other partnership interest in
which any Grantor may have an interest at any time.
"Pledged Partnership Interests" means all interests in any partnership or
joint venture held by each Grantor, including, but not limited to those
partnership interests set forth in Schedule 1-D attached hereto, as such
Schedule may be supplemented from time to time in accordance with the terms of
this Agreement, and all dividends, cash, instruments and other properties from
time to time received, to be received or otherwise distributed in respect of or
in exchange for any or all of such interests.
"Pledged Securities" means all shares of capital stock of each issuer in
which each Grantor has an interest, including, but not limited to those shares
of capital stock set forth in Schedule 1-D attached hereto, as such Schedule may
be supplemented from time to time in accordance with the terms of this
Agreement, and all dividends, cash, instruments and other properties from time
to time received, to be received or otherwise distributed in respect of or in
exchange for any or all of such shares.
"Term" has the meaning given to that term in the Loan Agreement.
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2. Creation of Security Interest. Each Grantor, in order to secure the
Obligations, does hereby grant and pledge to Lender to the extent permitted by
law a security interest in and to, all right, title and interest of such Grantor
in and to all presently existing and hereafter acquired Collateral. The security
interest and pledge created by this Section 2 shall continue in effect so long
as any Obligation remains outstanding or Lender has any obligation to make Loans
under the Loan Agreement. Notwithstanding the foregoing provisions of this
Section 2, such grant of a security interest shall not extend to, and the term
"Collateral" shall not include, any general intangibles of the Grantors to the
extent that (but only to the extent that) (i) such general intangibles are not
assignable or capable of being encumbered as a matter of law or under the terms
of the license or other agreement applicable thereto (but solely to the extent
that any such restriction shall be enforceable under applicable law), without
the consent of the licensor thereof or other applicable party thereto and (ii)
such consent has not been obtained; provided, however, that the foregoing grant
of a security interest shall extend to, and the term "Collateral" shall include,
(A) any general intangible which is in the nature of an account receivable or a
right to the payment of money or a proceed of, or otherwise related to the
enforcement or collection of, any account receivable or right to the payment of
money, or goods which are the subject of any account receivable or right to the
payment of money, (B) any and all proceeds of any general intangibles which are
otherwise excluded to the extent that the assignment or encumbrance of such
proceeds is not so restricted, and (C) upon obtaining the consent of any such
licensor or other applicable party's consent with respect to any such otherwise
excluded general intangibles, such general intangibles as well as any and all
proceeds thereof that might have theretofor have been excluded from such grant
of a security interest and the term "Collateral".
3. Delivery of Pledged Collateral.
(a) Each Certificate shall, on (i) the Closing Date (with respect to
Certificates delivered on such date) and (ii) the day on which such Certificate
shall be received or acquired by a Grantor (with respect to any Certificate
received or acquired after the Closing Date), be delivered to and held by Lender
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed undated endorsements, instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to Lender.
(b) With respect to each uncertificated Limited Liability Company
Interest and each uncertificated Partnership Interest, on (i) the Closing Date
(with respect to such Limited Liability Company Interests and such Partnership
Interests existing on such date) and (ii) the day on which any such Limited
Liability Company Interest and any such Partnership Intersest shall be acquired
by a Grantor (with respect to such Limited Liability Company Interests and such
Partnership Interests acquired after the Closing Date), a notice in the form set
forth in Exhibit A-1 attached hereto (the "Pledge Notice") shall be
appropriately completed and delivered to each Pledged Entity and each Pledged
Partnership Entity, notifying each Pledged Entity and each Pledged Partnership
Entity of the existence of this Agreement, a certified copy of this Agreement
shall be delivered by the Grantor to the relevant Pledged Entity and relevant
Pledged Partnership Entity, and such Grantor shall have received and delivered
to Lender a copy of such Pledge Notice, along with an acknowledgment in the form
set forth in Exhibit A-2 attached hereto (the "Issuer Acknowledgment"), duly
executed by the relevant Pledged Entity.
(c) Subject to receipt of any and all necessary prior approvals
required under the Communications Act and the FCC Rules, Lender shall have the
right, upon the occurrence and during the continuance of an Event of Default,
without notice to any of the Grantors, in connection with a commercially
reasonable foreclosure sale, to transfer to, or to direct the applicable Grantor
or any nominee of such Grantor to register or cause to be registered in the name
of, Lender or any of its nominees any or all of the Pledged Securities, Pledged
Partnership Interests or Pledged Limited Liability Company Interests. In
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addition, Lender shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Securities for certificates or
instruments of smaller or larger denominations.
4. Further Assurances.
(a) At any time and from time to time at the reasonable written
request of Lender, each Grantor shall execute and deliver to Lender, at such
Grantor's expense, all such financing statements and other instruments,
certificates and documents (including notices to financial institutions holding
deposit accounts of any Grantor as to the security interest granted hereby) in
form and substance reasonably satisfactory to Lender, and perform all such other
acts as shall be necessary or reasonably desirable to fully perfect or protect
or maintain, when filed, recorded, delivered or performed, Lender's security
interests granted pursuant to this Agreement or to enable Lender to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor shall: (i) at the
request of the Lender, mark conspicuously each document included in the
Inventory and each other contract relating to the Accounts, and all chattel
paper, instruments and other documents and each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to Lender,
indicating that such document, contract, chattel paper, instrument or Collateral
is subject to the security interest granted hereby, (ii) at the request of
Lender, if any Account or contract or other writing relating thereto shall be
evidenced by a promissory note or other instrument, deliver and pledge to the
Lender, such note or other instrument duly endorsed and accompanied by duly
executed undated instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Lender; (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Lender may
reasonably request, in order to perfect and preserve, with the required
priority, the security interests granted, or purported to be granted hereby,
(iv) upon any Grantor's registration or application of any copyright under the
Copyright Act, execute and deliver immediately to Lender for recordation and
filing in the United States Copyright Office a Grant of Security Interest, in
the form of Exhibit B attached hereto, (v) upon any Grantor's registration or
application of any Patent or Mark, execute and deliver immediately to Lender for
recordation and filing in the United States Patent and Trademark Office a Grant
of Security Interest, in the form of Exhibit B attached hereto, and (vi) with
respect to any license or agreement in which any Grantor now has or hereafter
acquires an interest which by its terms prohibits assignment, such Grantor will
use its best efforts to procure the consent of the counterpart party thereto.
(b) At any time and from time to time, Lender shall be entitled to
file and/or record any or all such financing statements, instruments and
documents held by it, and any or all such further financing statements,
documents and instruments, relative to the Collateral or any part thereof in
each instance, and to take all such other actions as Lender may reasonably deem
appropriate to perfect and to maintain perfected the security interests granted
herein.
(c) Each Grantor hereby authorizes Lender to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(d) With respect to any Collateral consisting of securities,
instruments, partnership or joint venture interests, limited liability company
interests, or the like, each Grantor hereby consents and agrees that, upon the
occurrence and during the continuance of an Event of Default, subject to receipt
of any and all necessary prior approvals required under the Communications Act
and the FCC Rules, the
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issuers of, or obligors on, any such Collateral, or any registrar or transfer
agent or trustee for any such Collateral, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of Lender to
effect any transfer or exercise any right hereunder or with respect to any such
Collateral subject to the terms hereof, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Grantor or any
other Person to such issuers or such obligors or to any such registrar or
transfer agent or trustee. 5. Voting Rights; Dividends; etc. Subject to receipt
of any and all necessary prior approvals required under the Communications Act
and the FCC Rules, so long as no Event of Default shall have occurred and be
continuing:
(a) Voting Rights. Each Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to its Pledged Securities, its
Pledged Partnership Interests and its Pledged Limited Liability Company
Interests, or any part thereof, for any purpose not inconsistent with the terms
of this Agreement, the Loan Agreement or the other Operative Documents;
provided, however, that each Grantor shall not exercise, or shall refrain from
exercising, any such right if it would result in a Default.
(b) Dividend and Distribution Rights. Subject to the terms of the
Loan Agreement, each Grantor shall be entitled to receive and to retain and use
any and all dividends or distributions paid in respect of its Pledged
Securities, its Pledged Partnership Interests or its Pledged Limited Liability
Company Interests; provided, however, that any and all:
(i) non-cash dividends or distributions in the form of capital
stock, certificated limited liability company interests, instruments or other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Securities, Pledged Partnership Interests, Pledged
Limited Liability Company Interests,
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities, Pledged Partnership Interests or Pledged
Limited Liability Company Interests in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Securities, Pledged Partnership Interests or
Pledged Limited Liability Company Interests, shall, except as otherwise provided
for in the Loan Agreement or the other Operative Documents, forthwith be
delivered to Lender, in the case of (i) above, to be held as Collateral and
shall, if received by such Grantor, be received in trust for the benefit of
Lender, be segregated from the other property of such Grantor and forthwith be
delivered to Lender as Collateral in the same form as so received (with any
necessary endorsements), and in the case of (ii) and (iii) above, to be applied
to the Obligations to the extent permitted by the Loan Agreement or otherwise to
be held as Collateral.
6. Rights as to Pledged Collateral During Event of Default. When an Event
of Default has occurred and is continuing, subject to receipt of any and all
necessary prior approvals required under the Communications Act and the FCC
Rules:
(a) Voting, Dividend and Distribution Rights. At the option of
Lender, all rights of each Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to
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exercise pursuant to Section 5(a) above, and to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 5(b) above, shall cease, and all such rights shall thereupon
become vested in Lender who shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and to hold as Pledged
Collateral such dividends and distributions during the continuance of such Event
of Default.
(b) Dividends and Distributions Held in Trust. All dividends and
other distributions which are received by any Grantor contrary to the provisions
of Section 6(a) of this Agreement shall be received in trust for the benefit of
Lender, shall be segregated from other funds of such Grantor and forthwith shall
be paid over to Lender as Collateral in the same form as so received (with any
necessary endorsements).
7. Irrevocable Proxy. Each Grantor hereby revokes all previous proxies
with regard to its Pledged Securities, its Pledged Partnership Interests and its
Pledged Limited Liability Company Interests and, subject to receipt of any and
all necessary prior approvals required under the Communications Act and the FCC
Rules, appoints Lender as its respective proxyholder to (a) attend and vote at
any and all meetings of the shareholders of the corporation(s) which issued the
Pledged Securities, and any adjournments thereof, held on or after the date of
the giving of this proxy and prior to the termination of this proxy and to
execute any and all written consents of shareholders of such corporation(s)
executed on or after the date of the giving of this proxy and prior to the
termination of this proxy, with the same effect as if such Grantor had
personally attended the meetings or had personally voted its shares or had
personally signed the written consents, waivers or ratification, and (b) to
attend and vote at any and all meetings of the members of the Pledged Entities
or partners of the Pledged Partnership Entities (whether or not such Pledged
Limited Liability Company Interests or Pledged Partnership Interests are
transferred into the name of Lender), and any adjournments thereof, held on or
after the date of the giving of this proxy and to execute any and all written
consents, waivers and ratifications of the Pledged Entities or Pledged
Partnership Entities executed on or after the date of the giving of this proxy
and prior to the termination of this proxy with the same effect as if such
Grantor had personally attended the meetings or had personally voted on their
respective Limited Liability Company Interests or Partnership Interests or had
personally signed the consents, waivers or ratifications; provided, however,
that Lender as proxyholder shall have rights hereunder only upon the occurrence
and during the continuance of an Event of Default and subject to Section 13(j)
hereof. Each Grantor hereby authorizes Lender to substitute another Person
(which Person shall be a successor to the rights of Lender hereunder, a nominee
appointed by Lender to serve as proxyholder, or otherwise as approved by such
Grantor in writing, such approval not to be unreasonably withheld) as the
proxyholder and, upon the occurrence or during the continuance of any Event of
Default, hereby authorizes and directs the proxyholder to file this proxy and
the substitution instrument with the secretary of the appropriate corporation.
This proxy is-coupled with an interest and is irrevocable until such time as no
part of any commitment to make Loans pursuant to the Loan Agreement remains
outstanding and all Obligations have been indefeasibly paid in full.
8. The Grantors' Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) (i) The locations listed on the Schedule 1-A constitute all
locations at which Collateral owned by such Grantor is located; (ii) the chief
executive office of such Grantor, where such Grantor keeps its records
concerning the Collateral, is located at the address set forth for such Grantor
on Schedule 1-F; (iii) such Grantor has exclusive possession and control of the
Collateral owned by such Grantor and (iv) such Grantor has only the Deposit
Accounts listed on Schedule 1-B and, except as indicated on Schedule 1-B, no
individual Deposit Account has a balance in excess of $10,000.
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(b) Such Grantor currently conducts business only under its own name
and the trade names listed on Schedule 1-G. Neither such Grantor nor any
corporate predecessor has, during the preceding five years, been known as or
used any other corporate or fictitious name, except the names disclosed on
Schedule 1-G.
(c) Such Grantor is the legal and beneficial owner of the Collateral
free and clear of all Liens except for Permitted Liens and restrictions imposed
by the FCC Rules. Such Grantor has the power, authority and legal right to grant
the security interests in the Collateral purported to be granted hereby, and to
execute, deliver and perform this Agreement. The pledge of the Collateral
pursuant to this Agreement creates a valid first priority security interest in
the Collateral (except for any Permitted Liens).
(d) Except as set forth on Schedule 1-E, the Pledged Securities
described on Schedule 1-E attached hereto constitute (i) all of the shares of
capital stock of any Person owned by such Grantor and (ii) that percentage of
the issued and outstanding shares of the respective issuers thereof indicated on
Schedule 1-E attached hereto, and there is no other class of shares issued and
outstanding of the respective issuers thereof except as set forth on Schedule
1-E attached hereto. Except as set forth in Schedule 1-E, the Pledged
Partnership Interests described on Schedule 1-E attached hereto constitute all
of the partnerships or joint ventures in which each Grantor has an interest, and
such Grantor's percentage interest in each such partnership or joint venture is
as set forth on such Schedule 1-E attached hereto. Except as set forth in
Schedule 1-E, the Pledged Limited Liability Company Interests described on
Schedule 1-E attached hereto constitute all of the Limited Liability Company
Interests of each Grantor and such Grantor's percentage interest in each such
Pledged Entity is as set forth on Schedule 1-E attached hereto.
(e) No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority (other than such authorizations,
approvals and other actions as have already been taken and are in full force and
effect) is required (A) for the pledge of the Collateral or the grant of the
security interest in the Collateral by any of the Grantors hereby or for the
execution, delivery or, subject to approvals described in Section 13(j)(ii)
hereof, performance of this Agreement by any of the Grantors, or (B) for the
exercise by Lender of the voting rights in the Pledged Securities, the Pledged
Partnership Interest or the Pledged Limited Liability Company Interests or of
any other rights or remedies in respect of the Collateral hereunder except (1)
as may be required in connection with any disposition of Collateral consisting
of securities by laws affecting the offering and sale of securities generally,
and (2) as may be required by the FCC Rules and the Comunications Act.
9. Copyrights.
(a) Royalties. Each Grantor hereby agrees that the use by Lender of
the Copyrights as authorized hereunder in connection with Lender's exercise of
their rights and remedies hereunder shall be without any liability for royalties
or other related charges from Lender to Grantors.
(b) Restrictions on Future Agreements. Subject to the terms hereof
and of the Loan Agreement, each Grantor shall be permitted to manage, license
and administer its Copyrights in such manner as such Grantor in its reasonable
business judgment deems desirable, provided, however, that such Grantor will
not, without the Lender's prior written consent, such consent not to be
unreasonably withheld, (i) enter into any copyright license agreements except
license agreements entered into in the ordinary course
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of its business consistent with past practices and containing such additional
provisions to protect Lender's interest hereunder as Lender may from time to
time reasonably request or (ii) take any action, or permit any action to be
taken by others, including, without limitation, licensees, or fail to take any
action, which would customarily be taken by a Person in the same business and in
similar circumstances as such Grantor, which could in any respect reasonably be
expected to have a Material Adverse Effect.
(c) Duties of Grantors. Each Grantor shall have the duty to: (i)
prosecute diligently any copyright application included in the Copyrights, (ii)
upon the occurrence and during the continuance of an Event of Default, at the
request of Lender, make application for registration of such uncopyrighted but
copyrightable material owned by such Grantor as Lender reasonably deems
appropriate if the failure to do so could reasonably be expected to have a
Material Adverse Effect, (iii) place notices of copyright on all copyrightable
property produced or owned by such Grantor embodying the Copyrights and use
diligent reasonable efforts to have its licensees do the same and (iv) take all
reasonable action necessary in such Grantor's reasonable business judgment
consistent with past practices to preserve and maintain all of Grantor's rights
in the Copyrights that are or shall be necessary in the operation of Grantor's
business, including, without limitation, making timely filings for renewals and
extensions of registered Copyrights and diligently monitoring unauthorized use
thereof, unless the failure to do so could not reasonably be expected to have a
Material Adverse Effect. Any expenses incurred in connection with the foregoing
shall be borne by Grantors. Lender shall have no duty with respect to the
Copyrights other than to act lawfully and without gross negligence or willful
misconduct. Without limiting the generality of the foregoing, Lender shall not
be under any obligation to take any steps necessary to preserve rights in the
Copyrights against any other parties, but Lender may do so at its option upon
the occurrence and during the continuance of an Event of Default, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of Grantors and shall be added to the Obligations.
10. Patents and Marks.
(a) Royalties. Each Grantor hereby agrees that any rights granted
hereunder to Lender with respect to Patents and Marks shall be applicable to all
jurisdictions in which such Grantor has the right to use such Patents and Marks,
from time to time, and without any liability for royalties or other related
charges from Lender to Grantors.
(b) Restrictions on Future Agreements. Each Grantor will not,
without Lender's prior written consent, such consent not to be unreasonably
withheld, abandon any Patent or Mark in which such Grantor now owns or hereafter
acquires any rights or interests if such abandonment could reasonably be
expected to have a Material Adverse Effect or enter into any agreement,
including, without limitation, any license agreement, which is inconsistent with
such Grantor's obligations under this Agreement, if such actions could
reasonably be expected to have a Material Adverse Effect. Each Grantor further
agrees that it will not take any action, or permit any action to be taken by
others subject to its control, including licensees, or fail to take any action
which would customarily be taken by a Person in the same business and in similar
circumstances as such Grantor, which could reasonably be expected to have a
Material Adverse Effect.
(c) Duties of Grantors. Each Grantor shall have the duty to (i)
prosecute diligently any patent application or trademark application pending as
of the date hereof or thereafter until the Obligations shall have been
indefeasibly paid in full and Lender has no obligation to make any Loans under
the Loan Agreement, (ii) upon the occurrence and during the continuance of an
Event of Default, make application on unpatented but patentable inventions owned
by such Grantor and on
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Marks, as the case may be, as Lender reasonably deems appropriate, (iii) file
and prosecute opposition and cancellation proceedings if the failure to do so
could reasonably be expected to have a Material Adverse Effect and (iv) take all
reasonable action necessary in such Grantor's reasonable business judgment
consistent with past practices to preserve and maintain all rights in patent
applications of the Patents and in applications for registrations of the Marks
unless the failure so to do could not reasonably be expected to have a Material
Adverse Effect. Any expenses incurred in connection with such applications shall
be borne by Grantors. Each Grantor shall not abandon any right to file a Patent
application or Mark application without the consent of Lender (which consent
shall not be unreasonably withhold) if such abandonment could reasonably be
expected to have a Material Adverse Effect. Each Grantor shall give proper
statutory notice in connection with its use of each of the Marks to the extent
necessary for the protection of each of the Marks. Grantors shall notify the
Lender of any suits it commences to enforce the Patents and Marks and shall
provide Lender with copies of any documents reasonably requested by Lender
relating to such suits.
9. Grantors' Covenants. In addition to the other covenants and agreements
set forth herein and in the other Operative Documents, each Grantor covenants
and agrees as follows:
(a) Such Grantor will pay, prior to delinquency, all taxes, charges,
Liens and assessments against the Collateral owned by it, except those with
respect to which the amount or validity is being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Grantor and except those which
could not reasonably be expected to have a Material Adverse Effect.
(b) The Collateral will not be used in violation of any material
law, regulation or ordinance or any applicable laws (including without
limitation, all applicable regulations, rules and orders), nor used in any way
that will void or impair any insurance required to be carried in connection
therewith.
(c) Such Grantor will keep the Collateral in reasonably good repair,
working order and operating condition (normal wear and tear excluded), and from
time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto and, as appropriate and applicable, will
otherwise deal with the Collateral in all such ways as are considered customary
practice by owners of like property.
(d) Such Grantor will take all reasonable steps to preserve and
protect the Collateral except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(e) Such Grantor will maintain all insurance coverage required
pursuant to Section 6.01 of the Loan Agreement.
(f) Such Grantor will promptly notify Lender in writing in the event
of any material damage to the Collateral from any source whatsoever.
(g) Such Grantor will not (i) establish any location of Collateral
not listed in Schedule 1-A, (ii) move its principal place of business, chief
executive offices or any other office listed in Schedule 1-F or (iii) adopt, use
or conduct business under any trade name or other corporate or fictitious name
not disclosed in Schedule 1-G, except upon not less than 30 days prior written
notice to Lender and such Grantor's prior compliance with all applicable
requirements of Section 4 hereof necessary to perfect Lender's security interest
hereunder.
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(h) Subject to the provisions of Section 13(j) hereof, such Grantor
agrees to take any action which Lender may reasonably request in order to obtain
from the FCC such approval as may be necessary to enable Lender to exercise and
enjoy the full rights and benefits granted to them by this Agreement, including
the use of such Grantor's best efforts to assist in obtaining the approval of
the FCC for any action or transaction contemplated by this Agreement or any
other Operative Document for which such approval is required by law.
(i) Such Grantor shall cause all of its equipment constituting
Collateral to be operated and maintained in accordance with any applicable
manufacturer's manuals or instructions and the requirements of its insurance
policies. Such Grantor, at its expense, shall maintain such equipment in good
condition, reasonable wear and tear excepted, and will comply with all laws,
ordinances and regulations to which the use and operation of such equipment may
be or become subject. Such obligation shall extend to repair and replacement of
any partial loss or damage to such equipment, regardless of the cause. If
maintenance is mandated by the manufacturer, such Grantor shall obtain and keep
in effect at all times during the Term maintenance service contracts with the
vendor of such equipment or suppliers approved by Lessor, such approval not to
be unreasonably withheld. All parts furnished in connection with such
maintenance or repair shall immediately become part of such equipment. All such
maintenance, repair and replacement services shall be immediately paid for and
discharged by such Grantor with the result that no lien will attach to such
equipment. Only qualified personnel of such Grantor or qualified contract
personnel shall operate such equipment. Such equipment shall be used only for
the purposes for which it was designed. Upon prior written notice to Lessor,
such Grantor may make improvements, modifications or additions to such
equipment; provided, that if such improvements, modifications or additions are
not capable of being removed without causing material damage to such equipment,
then Lessor's prior written consent shall be required. Upon the return of such
equipment, such Grantor shall, at its expense, restore such equipment to the
original configuration in accordance with the manufacturer's specifications;
provided, that, with Lessor's prior written consent, such Grantor may return
such equipment as so improved, modified or added to.
(j) Such Grantor shall not establish any additional Deposit Account
not listed on Schedule 1-B, or any investment, securities, brokerage or similar
account, except upon prior written notice to Lender and, at Lender's request,
such Grantor's compliance with all applicable requirements of Section 4 hereof
necessary to perfect Lender's security interest hereunder, including without
limitation, delivery to the applicable depositary institution of a notice of
such security interest in Grantor's Deposit Account(s), in form and substance
satisfactory to Lender.
(k) Such Grantor shall maintain not more than $10,000 in any Deposit
Account including, without limitation, those listed on Schedule 1-B attached
hereto (unless it is indicated on Schedule 1-B that such account holds or may
hold in excess of $10,000); provided, however, that such Grantor may maintain in
excess of $10,000 in any Deposit Account if it gives prior written notice to
Lender and, at Lender's request, such Grantor complies with all applicable
requirements of Section 4 hereof necessary to perfect Lender's security interest
hereunder, including without limitation, delivery to the applicable depositary
institution of a notice of such security interest in Grantor's Deposit
Account(s), in form and substance satisfactory to Lender.
10. Lender's Rights Regarding Collateral. At any time and from time to
time, Lender may, to the extent necessary or desirable to protect the security
hereunder, but Lender shall not be obligated to: (a) (whether or not a Default
has occurred) itself or through its representatives, at its own expense, upon
reasonable notice and at such reasonable times during usual business hours,
visit and inspect any of the
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Grantors' properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and
discuss the business, operations, properties and financial and other condition
of any of the Grantors with officers of such Grantors and with their accountants
or (b) if an Event of Default has occurred and is continuing, at the expense of
the Grantors, perform any obligation of any of the Grantors under this
Agreement. At any time and from time to time, at the expense of the Grantors,
Lender may, to the extent necessary or desirable to protect the security
hereunder, but Lender shall not be obligated to: (i) notify obligors of the
Collateral that the Collateral has been pledged as security to Lender; (ii)
after an Event of Default has occurred and is continuing, at any time and from
time to time request from obligors of the Collateral, in the name of the
applicable Grantor or in the name of Lender, information concerning the
Collateral and the amounts owing thereon; and (iii) after an Event of Default
has occurred and is continuing, direct obligors under the contracts included in
the Collateral to direct their performance to Lender. Each Grantor shall keep
proper books and records and accounts in which full, true and correct entries in
conformity with GAAP and all applicable laws (including without limitation, all
applicable regulations, rules and orders) shall be made of all material dealings
and transactions pertaining to the Collateral. Lender shall at all reasonable
times on reasonable notice have full access to and the right to audit any and
all of Grantors' books and records pertaining to the Collateral, and to confirm
and verify the value of the Collateral. Lender shall not be under any duty or
obligation whatsoever to take any action to preserve any rights of or against
any prior or other parties in connection with the Collateral, to exercise any
voting rights or managerial rights with respect to any Collateral or to make or
give any presentments for payment, demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor or notices of
any other nature whatsoever in connection with the Collateral or the
Obligations. Lender shall not be under any duty or obligation whatsoever to take
any action to protect or preserve the Collateral or any rights of the Grantors'
therein, or to make collections or enforce payment thereon, or to participate in
any foreclosure or other proceeding in connection therewith. Nothing contained
herein or in any consent shall constitute an assumption by Lender of any of the
Grantors' obligations under the contracts assigned hereunder unless Lender shall
have given written notice to the counterpart to such assigned contract of
Lender's intention to assume such contract. Each Grantor shall continue to be
liable for performance of its obligations under such contracts.
11. Collections on the Collateral. Except as provided to the contrary in
the Loan Agreement, each Grantor shall have the right to use and to continue to
make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Event of Default
shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, at the option of Lender, each Grantor's
right to make collections on and receive dividends and other proceeds of the
Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on account
of the Collateral will be held or received by such Grantor in trust for Lender
and immediately delivered in kind to Lender (duly endorsed to Lender, if
required), to be applied to the obligations or held as Collateral, as Lender
shall elect. Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right at all times to receive, receipt for,
endorse, assign, deposit and deliver, in the name of any of the Grantors, any
and all checks, notes, drafts and other instruments for the payment of money
constituting proceeds of or otherwise relating to the Collateral; and each
Grantor hereby authorizes Lender to affix, by facsimile signature or otherwise,
the general or special endorsement of such Grantor, in such manner as Lender
shall deem advisable, to any such instrument in the event the same has been
delivered to or obtained by Lender without appropriate endorsement, and Lender
and any collecting bank are hereby authorized to consider such endorsement to be
a sufficient, valid and effective endorsement by such Grantor, to the same
extent as though it were manually executed by the duly authorized representative
of such Grantor, regardless of by whom or under what circumstances or by what
authority such endorsement actually is affixed, without duty of inquiry or
responsibility as to such matters,
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and such Grantor hereby expressly waives demand, presentment, protest and notice
of protest or dishonor and all other notices of every kind and nature with
respect to any such instrument.
12. Possession of Collateral by Lender. All the Collateral now,
heretofore or hereafter delivered to Lender shall be held by Lender in its
possession, custody and control. Upon the occurrence and during the continuance
of an Event of Default, whenever any of the Collateral is in Lender's
possession, custody or control, Lender may use, operate and consume the
Collateral, whether for the purpose of preserving and/or protecting the
Collateral, or for the purpose of performing any of the Grantors' obligations
with respect thereto, or otherwise so long as consistent with the Operative
Documents or transactions contemplated thereby. Lender may at any time deliver
or redeliver the Collateral or any part thereof to the Grantors, and the receipt
of any of the same by the Grantors shall be complete and full acquittance for
the Collateral so delivered, and Lender thereafter shall be discharged from any
liability or responsibility arising after such delivery to the Grantors. So long
as Lender exercises reasonable care and complies with Section 9207 of the UCC
with respect to any Collateral in its possession, custody or control, Lender
shall have no liability for any loss of or damage to any Collateral, and in no
event shall Lender have liability for any diminution in value of Collateral
occasioned by economic or market conditions or events.
13. Remedies. Provided that nothing contained in this Agreement shall be
construed to give Lender or any purchaser of the Collateral the right to operate
or control any aspect of the business of any of the Grantors that requires an
FCC License without the prior consent of the FCC, to the extent required by law
or the terms of any FCC License or the FCC Rules:
(a) Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, the Grantors shall be in default hereunder
and, subject to applicable law, Lender shall have, in any jurisdiction where
enforcement is sought, in addition to all other rights and remedies that Lender
may have under this Agreement and under applicable laws or in equity, all rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
any such jurisdiction in effect at that time, and in addition the following
rights and remedies, all of which may be exercised with or without further
notice to the Grantors except such notice as may be specifically required by
applicable law: (i) to foreclose the Liens and security interests created
hereunder or under any other Operative Document by any available judicial
procedure or without judicial process; (ii) to enter any premises where any
Collateral may be located for the purpose of securing, protecting, inventorying,
appraising, inspecting, repairing, preserving, storing, preparing, processing,
taking possession of or removing the same; (iii) to sell, assign, lease or
otherwise dispose of any Collateral or any part thereof, either at public or
private sale or at any broker's board, in lot or in bulk, for cash, on credit or
otherwise, with or without representations or warranties and upon such terms as
shall be commercially reasonable; (iv) to notify obligors on the Collateral that
the Collateral has been assigned to Lender and that all payments thereon, or
performance with respect thereto, are to be made directly and exclusively to
Lender; (v) to collect by legal proceedings or otherwise all dividends,
distributions, interest, principal or other sums now or hereafter payable upon
or on account of the Collateral; (vi) to enter into any extension,
reorganization, disposition, merger or consolidation agreement, or any other
agreement relating to or affecting the Collateral, and in connection therewith
Lender may deposit or surrender control of the Collateral and/or accept other
property in exchange for the Collateral as Lender reasonably deems appropriate
and is commercially reasonable; (vii) to settle, compromise or release, on terms
acceptable to Lender, in whole or in part, any amounts owing on the Collateral
and/or any disputes with respect thereto; (viii) to extend the time of payment,
make allowances and adjustments and issue credits in connection with the
Collateral in the name of the applicable Grantor for the benefit of Lender; (ix)
to enforce payment and prosecute any action or proceeding with respect to any or
all of the Collateral and take or bring, on behalf of itself or in the name of
the applicable Grantor, any and all steps, actions, suits or proceedings deemed
necessary or reasonably desirable by Lender to
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effect collection of or to realize upon the Collateral,
including any judicial or nonjudicial foreclosure thereof or thereon, and each
Grantor specifically consents to any nonjudicial foreclosure of any or all of
the Collateral or any other action taken by Lender which may release any obligor
from personal liability on any of the Collateral, and each Grantor waives, to
the extent permitted by applicable law, any right to receive notice of any
public or private judicial or nonjudicial sale or foreclosure of any security or
any of the Collateral, and any money or other property received by Lender in
exchange for or on account of the Collateral, whether representing collections
or proceeds of Collateral, and whether resulting from voluntary payments or
foreclosure proceedings or other legal action taken by Lender or any of the
Grantors, may be applied by Lender, without notice to the Grantors, to the
Obligations in such order and manner as Lender in their sole discretion shall
determine; (x) to insure, protect and preserve the Collateral; (xi) to exercise
all rights, remedies, powers or privileges provided under any of the Operative
Documents; and (xii) to remove, from any premises where the same may be located,
the Collateral and any and all documents, instruments, files and records, and
any receptacles and cabinets containing the same, relating to the Collateral,
and Lender may, at the cost and expense of the Grantors, use such of its
supplies, equipment, facilities and space at its places of business as may be
necessary or appropriate to properly administer, process, store, control,
prepare for sale or disposition and/or sell or dispose of the Collateral or to
properly administer and control the handling of collections and realizations
thereon, and Lender shall be deemed to have a rent-free tenancy of any premises
of the Grantors for such purposes and for such periods of time as reasonably
required by Lender. So long as an Event of Default has occurred and is
continuing, each Grantor will, at Lender's request, assemble the Collateral and
make it available to Lender at places which Lender may designate, whether at the
premises of such Grantor or elsewhere, and will make available to Lender, free
of cost, all premises, equipment and facilities of such Grantor for the purpose
of Lender's taking possession of the Collateral or storing the same or removing
or putting the Collateral in salable form or selling or disposing of the same.
(b) Possession by Lender. Upon the occurrence and during the
continuance of an Event of Default, Lender also shall have the right, without
notice or demand, either in person, by Lender or by a receiver to be appointed
by a court in accordance with the provisions of applicable law (and each Grantor
hereby expressly consents, to the fullest extent permitted by applicable law,
upon the occurrence and during the continuance of an Event of Default to the
appointment of such a receiver), and, to the extent permitted by applicable law,
without regard to the adequacy of any security for the Obligations, to take
possession of the Collateral or any part thereof and to collect and receive the
rents, issues, profits, income and proceeds thereof. The taking possession of
the Collateral by Lender shall not cure or waive any Event of Default or notice
thereof or invalidate any act done pursuant to such notice. The rights, remedies
and powers of any receiver appointed by a court shall be as ordered by said
court.
(c) Sale of Collateral. Any public or private sale or other
disposition of the Collateral may be held at any office of Lender, or at the
Grantors' places of business, or at any other place permitted by applicable law,
and without the necessity of the Collateral being within the view of prospective
purchasers. Lender may direct the order and manner of sale of the Collateral, or
portions thereof, as it in its sole and absolute discretion may determine
provided such sale is commercially reasonable, and each Grantor expressly
waives, to the extent permitted by applicable law, any right to direct the order
and manner of sale of any Collateral. Lender or any Person acting on Lender's
behalf may bid and purchase at any such sale or other disposition. In
furtherance of Lender's rights hereunder, each Grantor hereby grants to Lender
an irrevocable, non-exclusive license (exercisable without royalty or other
payment by Lender) to use, license or sublicense any patent, trademark, trade
name, copyright or other intellectual property in which Grantor now or hereafter
has any right, title or interest together with the right of access to all media
in which any of the foregoing may be recorded or stored; provided, however, that
such license shall only be
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exercisable in connection with the disposition of Collateral upon Lender's
exercise of its remedies hereunder.
(d) Notice of Sale. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, Lender will give the Grantors reasonable notice of the time and place of
any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of reasonable notice conclusively shall
be met if: (i) such notice is mailed, certified mail, postage prepaid, to the
Grantors at their addresses set forth on the signature page hereto or delivered
or otherwise sent to the Grantors, at least five (5) Business Days before the
date of the sale or (ii) if Grantors have previously executed any applications
for consent to the assignment of any FCC Licenses or for consent to the transfer
of control of any holder of such licenses. Each Grantor expressly waives, to the
fullest extent permitted by applicable law, any right to receive notice of any
public or private sale of any Collateral or other security for the Obligations
except as expressly provided for in this paragraph. Lender shall not be
obligated to make any sale of the Collateral if it shall determine not to do so
regardless of the fact that notice of sale of the Collateral may have been
given. Lender may, without notice or publication, except as required by
applicable law, adjourn the sale from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice (except as
required by applicable law), be made at the time and place to which the same was
so adjourned.
(e) Private Sales. With respect to any Collateral consisting of
securities, partnership interests, limited liability company interests, joint
venture interests or the like, and whether or not any of such Collateral has
been effectively registered under the Securities Act of 1933, as amended, or
other applicable laws, Lender may, in its sole and absolute discretion, sell all
or any part of such Collateral at private sale in such manner and under such
circumstances as Lender may deem necessary or advisable in order that the sale
may be lawfully conducted in a commercially reasonable manner. Without limiting
the foregoing, Lender may (i) approach and negotiate with a limited number of
potential purchasers, and (ii) restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing such Collateral
for their own account for investment and not with a view to the distribution or
resale thereof. In the event that any such Collateral is sold at private sale,
each Grantor agrees to the extent permitted by applicable law that if such
Collateral is sold for a price which is commercially reasonable, then (A) the
Grantors shall not be entitled to a credit against the Obligations in an amount
in excess of the purchase price, and (B) Lender shall not incur any liability or
responsibility to the Grantors in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Each Grantor recognizes that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by Lender of any such Collateral for an amount substantially
less than a pro rata share of the fair market value of the issuer's assets minus
liabilities may be commercially reasonable in view of the difficulties that may
be encountered in attempting to sell a large amount of such Collateral or
Collateral that is privately traded.
(f) Title of Purchasers. Upon consummation of any sale of Collateral
hereunder, Lender shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the Collateral so sold absolutely free from any claim
or right upon the part of any Grantor or any other Person claiming through any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
laws) all rights of redemption, stay and appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. If the sale of all or any part of the Collateral is made on
credit or for future delivery, Lender shall not be required to apply any portion
of the sale price to the Obligations until such amount actually is received by
Lender, and any Collateral so sold may be retained by Lender until the sale
price is paid in full by the purchaser or purchasers thereof. Lender shall not
incur any liability in case any
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such purchaser or purchasers shall fail to pay for the Collateral so sold, and,
in case of any such failure, the Collateral may be sold again.
(g) Disposition of Proceeds of Sale. The proceeds resulting from the
collection, liquidation, sale or other disposition of the Collateral shall be
applied, first, to the reasonable costs and expenses (including reasonable
attorneys' fees) of retaking, holding, storing, processing and preparing for
sale, selling, collecting and liquidating the Collateral, and the like; second,
to the satisfaction of all Obligations; and third, any surplus remaining after
the satisfaction of all Obligations, to be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
(h) Certain Waivers. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands against Lender arising out of the
repossession, retention or sale of the Collateral, or any part or parts thereof,
except to the extent any such claims, damages and awards arise out of the gross
negligence or willful misconduct of Lender.
(i) Remedies Cumulative. The rights and remedies provided under this
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any other rights and remedies provided by law or equity.
(j) Compliance with Communications Act and FCC Rules and
Regulations.
(i) Notwithstanding any other provision of this Agreement, any
foreclosure on, sale, transfer or other disposition of, or the exercise of any
right to vote or consent with respect to, any of the Collateral as provided
herein or any other action taken or proposed to be taken by Lender hereunder
which would affect the operational, voting or other control of any entity
holding an FCC License shall be made in accordance with the Communications Act,
the terms of each FCC License, and any applicable FCC Rules, including any
requirement that there be a public or private sale.
(ii) If an Event of Default shall have occurred and be
continuing, each Grantor shall take any action which Lender may request in the
exercise of its rights and remedies under this Agreement, including, but not
limited to, the execution and delivery of any documents requested by Lender, in
order to transfer and assign to Lender or to one or more third parties as Lender
may designate, including, but not limited to, a receiver or trustee or to a
combination of the foregoing, the Collateral for the purposes of a public or
private sale. Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall further use its best efforts to assist in obtaining
the approval of the FCC (and that required by any other Governmental Authority)
for any action or transaction contemplated by this Agreement, including without
limitation, the preparation, execution and filing with the FCC of the assignor's
or transferor's portion of any application or applications for consent to the
assignment of any FCC License or transfer of control of any entity holding or
controlling any FCC License as may be necessary or appropriate under the FCC
Rules. Each Grantor further agrees that, because of the unique nature of its
undertaking in this Section 13(j), the same may be specifically enforced, and it
hereby waives, and agrees to waive, any claim or defense that Lender would have
an adequate remedy at law for the breach of this undertaking and any requirement
for the posting of bond or other security. Each Grantor hereby agrees that in
the event that such Grantor has been given five Business Days' prior written
notice telecopied to its telecopier number set forth on the signature page
hereto and such Grantor has not responded by executing any such applications or
other instruments, the clerk of the court of any court of competent jurisdiction
may execute in the place of such Grantor any application or other instrument
necessary or appropriate for the obtaining of such consent. This Section 13(j)
shall not be deemed to limit any other rights of Lender available under
applicable law and consistent with the Communications Act and the applicable FCC
Rules.
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14. Notice. Lender shall use reasonable efforts to give the Grantors
prior written notice of the exercise of any remedy provided for herein, provided
that the failure to give such notice shall not subject Lender to liability and
shall not affect the validity or exercise of any remedy hereunder.
15. Lender Appointed Attorney-in-Fact. To the full extent permitted by
applicable law, including the Communications Act and FCC Rules, each Grantor
hereby irrevocably appoints Lender as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor, and in the name of such
Grantor, or otherwise, from time to time, in Lender's sole and absolute
discretion to do any of the following acts or things upon the occurrence and
during the continuance of an Event of Default: (a) to do all acts and things and
to execute all documents necessary or advisable to perfect and continue
perfected the security interests created by this Agreement and to preserve,
maintain and protect the Collateral; (b) to do any and every act which such
Grantor is obligated to do under this Agreement; (c) to prepare, sign, file and
record, in such Grantor's name, any financing statement covering the Collateral;
(d) to endorse and transfer the Collateral upon foreclosure by Lender; and (e)
to file any claims or take any action or institute any proceedings which Lender
may reasonably deem necessary or desirable for the protection or enforcement of
any of the rights of Lender with respect to any of the Collateral; provided,
however, that Lender shall be under no obligation whatsoever to take any of the
foregoing actions, and Lender shall have no liability or responsibility for any
act or omission (other than Lender's own gross negligence or willful misconduct)
taken with respect thereto.
16. Costs and Expenses. Each Grantor shall pay on demand (i) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Lender in connection with the preparation, execution and delivery
of, and the exercise of its duties under, this Agreement (not to exceed
$50,000), (ii) all reasonable fees and expenses, including reasonable attorneys'
fees and expenses, incurred by Lender in connection with the preparation,
execution and delivery of amendments and waivers hereunder and (iii) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Lender in connection with the enforcement or attempted enforcement
of this Agreement or any of the Obligations or in preserving any of Lender's
rights and remedies (including, without limitation, all such fees and expenses
incurred in connection with any "workout" or restructuring affecting the
Operative Documents or the Obligations or any bankruptcy or similar proceeding
involving such Grantor, any other Grantor, Borrower or any of their Affiliates).
17. Transfers and Other Liens. Each Grantor agrees that, except as
specifically permitted under the Loan Agreement or any other Operative Document,
it will not (a) sell, assign, exchange, transfer or otherwise dispose of, or
contract to sell, assign, exchange, transfer or otherwise dispose of, or grant
any option with respect to, any of the Collateral, or (b) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for legally
permissible Liens in favor of Lender or otherwise permitted under the Loan
Agreement or any other Operative Document.
18. Other Agreements; Governing Agreement. Nothing herein shall in any
way modify or limit the effect of terms or conditions set forth in any other
Operative Document executed by the Grantors or any other Person in connection
with the Obligations, but each and every term and condition hereof shall be in
addition thereto; provided, however, that in the event of inconsistency between
this Agreement and the Loan Agreement, the Loan Agreement shall govern.
19. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
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20. Understandings With Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against Lender or others, or against any Collateral. If any
of the waivers or consents herein are determined to be unenforceable under
applicable law, such waivers and consents shall be effective to the maximum
extent permitted by law.
21. Indemnity. Each Grantor shall indemnify, reimburse
and hold Lender, each of Lender's members, and each of their respective
successors, assigns, agents, officers, directors, shareholders, servants, agents
and employees harmless from and against all liabilities, losses, damages,
actions, suits, demands, claims of any kind and nature (including claims
relating to environmental discharge, cleanup or compliance), all costs and
expenses whatsoever to the extent they may be incurred or suffered by such
indemnified party in connection therewith (including reasonable attorneys' fees
and expenses), fines, penalties (and other charges of applicable governmental
authorities), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to Borrower's property), or bodily injury to or death of any
person (including any agent or employee of Borrower) (each, a "Claim"), directly
or indirectly relating to or arising out of the use of the proceeds of the Loan,
the falsity of any representation or warranty of such Grantor or such Grantor's
failure to comply with the terms of this Agreement or any other Operative
Document during the Term. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent or
patent) in any item of equipment included in the Collateral, (ii) any Claim for
infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the escape,
seepage, leakage, spillage, discharge, emission or release of any Hazardous
Materials on the premises of such Grantor, including any Claims asserted or
arising under any Environmental Law, or (iv) any Claim for negligence or strict
or absolute liability in tort; provided, however, that such Grantor shall not
indemnify Lender for any liability incurred by Lender as a result of Lender's
gross negligence or willful misconduct. Such indemnities shall continue in full
force and effect, notwithstanding the expiration or termination of this
Agreement. Upon an indemnitee's written demand, such Grantor shall assume and
diligently conduct, at its sole cost and expense, the entire defense of Lender,
each of its members, and each of their respective agents, employees, directors,
officers, shareholders, successors and assigns, using counsel reasonably
acceptable to such indemnitee against any indemnified Claim. Such Grantor shall
not settle or compromise any Claim against or involving Lender without first
obtaining Lender's written consent thereto, which consent shall not be
unreasonably withheld. If Lender elects to assume its own defense in connection
with an indemnified Claim, then Lender shall not settle or compromise such Claim
without first obtaining such Grantor's written consent thereto, which consent
shall not be unreasonably withheld, provided that if such Grantor does not
consent thereto, then Borrower shall post security or a bond in the amount of
such Claim for the benefit of the Lender.
22. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Grantors herefrom (other than
supplements to the Schedules hereto in accordance with the terms of this
Agreement) shall in any event be effective unless the same shall be in writing
and made in accordance with Section 10.01 of the Loan Agreement, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
23. Notices. All notices and other communications provided for hereunder
shall be given in the manner and to the addresses set forth either in the Loan
Agreement or in the Guaranty dated as of even date herewith made by the
Grantors.
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24. Continuing Security Interest: Transfer of Notes; Termination. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until indefeasible payment in full of
the Obligations and the termination or expiration of Lender's obligation to make
Loans under the Loan Agreement, (ii) be binding upon each Grantor, their
successors and assigns and (iii) inure, together with the rights and remedies of
Lender hereunder, to the benefit of Lender and any successor Lender, subject to
the terms and conditions of the Loan Agreement. Subject to the terms of the Loan
Agreement, any Lender may assign or otherwise transfer any Loan, or any rights
in Collateral held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender or Lender herein or otherwise. Nothing set forth herein or in any other
Operative Document is intended or shall be construed to give to any other party
any right, remedy or claim under, to or in respect of this Agreement or any
other Operative Document or any Collateral. The Grantors' successors and assigns
shall include, without limitation, a receiver, trustee or debtor-in-possession
thereof or therefor, provided that, except as otherwise permitted under the Loan
Agreement or any other Operative Document, none of the rights or obligations of
the Grantors hereunder may be assigned or otherwise transferred without the
prior written consent of Lender.
25. Release of the Grantors. This Agreement and all obligations of each
Grantor hereunder and all security interests granted hereby shall be released
and terminated when all Obligations have been paid in full in cash and when
Lender's obligation to make Loans under the Loan Agreement has expired or have
otherwise been terminated. Upon such release and termination of all Obligations
and the security interest hereunder, all rights in and to the Collateral granted
or pledged by the Grantors hereunder shall automatically revert to the Grantors,
and Lender shall return any pledged Collateral in their possession to the
Grantors, or to the Person or Persons legally entitled thereto, and shall
endorse, execute, deliver, record and file all instruments and documents, and do
all other acts and things, reasonably required for the return of the Collateral
to the Grantors, or to the Person or Persons legally entitled thereto, and to
evidence or document the release of the interests of Lender arising under this
Agreement, all as reasonably requested by, and at the sole expense of, the
Grantors.
26. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California (without reference to its
choice of law provisions), except as otherwise required by mandatory provisions
of law and except to the extent that remedies provided by the laws of a
jurisdiction other than the State of California are governed by the laws of such
jurisdiction.
-21-
<PAGE>
27. Jury Trial . EACH GRANTOR AND LENDER, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO
ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
28. Limitation of Liability . NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST
LENDER OR THE MEMBERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OF
LENDER FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT
OF ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF
STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH AND EACH GRANTOR HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
29. Covenant Not to Issue Uncertificated Securities. Each Grantor
covenants to Lender that any Pledged Securities held by them shall be in
certificated form (as contemplated by Article 8 of the Uniform Commercial Code),
and that it will not seek to convert all or any part of any Pledged Securities
into uncertificated form (as contemplated by Article 8 of the Uniform Commercial
Code).]
30. Covenant Not to Dilute Interests of Secured Party in Securities. Each
Grantor represents, warrants and covenants to Lender that it will (a) not at any
time cause or permit any Subsidiary that is an issuer of Pledged Securities to
issue any capital stock or any warrant options or other rights to acquire any
capital stock, other than to such Grantor or as otherwise permitted under the
Loan Agreement and (b) pledge to Lender in accordance with the terms hereof,
immediately upon its acquisition (directly or indirectly) thereof, any and all
shares of stock or other securities of each issuer of Pledged Securities.
31. Pledged Limited Liability Company Interests/Covenant Not to Dilute.
Each Grantor represents, warrants and covenants to Lender that it will (a) not
at any time cause or permit any Pledged Entities to issue any additional
membership interests or any other rights or options to acquire any additional
limited liability company interests, other than to the Grantors or as otherwise
permitted under the Loan Agreement, and (b) pledge to Lender in accordance with
the terms hereof, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional Limited Liability Company Interests of each
Pledged Entity.
32. Pledged Partnership Interests/Covenant Not to Dilute. Each Grantor
represents, warrants and covenants to Lender that it will (a) not at any time
cause or permit any Pledged Partnership Entities to issue any additional
partnership interests or any other rights or options to acquire any additional
partnership interests, other than to the Grantors or as otherwise permitted
under the Loan Agreement, and (b) pledge to Lender in accordance with the terms
hereof, immediately upon its acquisition (directly or indirectly) thereof, any
and all additional Partnership Interests of each Pledged Partnership Entity. IN
WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
-22-
<PAGE>
CHADMOORE WIRELESS GROUP, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: CEO
------------------------
CHADMOORE COMMUNICATIONS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT TANNER, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT BEACON HILL, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
<PAGE>
PTT OF NEVADA, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CMRS SYSTEMS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE CONSTRUCTION SERVICES, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE COMMUNICATIONS OF TENNESSEE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF RICHMOND, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
<PAGE>
PTT MAPLE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF HUNTSVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT BURTON, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF FORT WAYNE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROANOKE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT TRISTAN, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF AUSTIN, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF JACKSONVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF VIRGINIA BEACH, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT ROSELAND, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT ARTINA, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT FRANKLIN, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT CHACO, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
800 SMR NETWORK, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF BATON ROUGE LIMITED
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF LAKE CHARLES, LLC
<PAGE>
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF BAY CITY, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROCKFORD, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
GATX CAPITAL CORPORATION
By:/s/ Mathew Maloney
---------------------------
Name: Mathew Maloney
-------------------------
Title: Vice President
------------------------
-28-
<PAGE>
Schedule 1-A
------------
List of Asset Locations
-----------------------
Grantor Brief Description of Assets Location (county, state)
- ------- --------------------------- ------------------------
<PAGE>
Schedule 1-B
------------
List of Deposit Accounts
------------------------
Grantor/Depositor's Name Depositary Bank Account Number Account
- ------------------------ --------------- -------------- -------
Type
- ----
<PAGE>
Schedule 1-C
------------
List of FCC Licenses
--------------------
Part 1 -- Schedule 1-C-1: FCC Licenses Held By Grantors
- --------------------------------------------------------
Grantor Description of FCC License Date of Expiration
- ------- -------------------------- ------------------
Part 2 -- Schedule 1-C-2:
- ------------------------
FCC Licenses Used by Grantors Pursuant to a Management Agreement
- ----------------------------------------------------------------
Transfer Option Exercised:
Grantor Other Licensee Description of FCC License Date of Expiration
- ------- -------------- -------------------------- ------------------
Transfer Option to be Exercised:
Grantor Other Licensee Description of FCC License Date of Expiration
- ------- -------------- -------------------------- ------------------
<PAGE>
Schedule 1-D
------------
List of Other Authorizations
----------------------------
Part 1 -- Schedule 1-D-1: Other Authorizations Held By Grantors
Grantor Description of Other Authorization Date of Expiration
- ------- ---------------------------------- ------------------
Part 2 -- Schedule 1-D-2:
- ------------------------
Other Authorizations Used by Grantors Pursuant to a Management Agreement
- ------------------------------------------------------------------------
Transfer Option Exercised:
Grantor Other Licensee Description of FCC License Date of Expiration
- ------- -------------- -------------------------- ------------------
Transfer Option to be Exercised:
Grantor Other Licensee Description of FCC License Date of Expiration
- ------- -------------- -------------------------- ------------------
<PAGE>
Schedule 1-E
------------
List of Pledged Collateral
--------------------------
Shares or Interest Shares Issued Shares
Grantor Issuer Certif. # Pledged & Outstanding Authorized
- ------- ------ --------- ------------------ ------------- ----------
<PAGE>
Schedule 1-F
------------
Location of Chief Executive Office of each Grantor
--------------------------------------------------
Grantor Location
- ------- --------
<PAGE>
Schedule 1-G
------------
List of Tradenames
------------------
Grantor Trade Names (including any used in the preceding 5 years)
- ------- ---------------------------------------------------------
<PAGE>
Schdule 1-H
-----------
Trademark Registration Number Registration Date
- --------- ------------------- -----------------
Trademark Application Application Number Application Date
- --------------------- ------------------ ----------------
<PAGE>
Schdule 1-I
-----------
Patent Registration Number Registration Date
- ------ ------------------- -----------------
Patent Application Application Number Application Date
- ------------------ ------------------ ----------------
<PAGE>
Schdule 1-J
-----------
Copyright Registration Number Registration Date
- --------- ------------------- -----------------
Copyright Application Application Number Application Date
- --------------------- ------------------ ----------------
<PAGE>
Exhibit A-1
-----------
To Security Agreement
---------------------
FORM OF PLEDGE NOTICE
---------------------
[Letterhead of Grantor]
-----------------------
[Date]
TO: [Name of Pledged Entity]
Notice is hereby given that, pursuant to the Security
Agreement (a true and correct copy of which is attached hereto), dated as of
[Date] (as amended, modified or supplemented from time to time in accordance
with the terms thereof, the "Security Agreement"), among [NAME OF GRANTOR] (the
"Grantor"), the other pledgors from time to time party thereto and GATX CAPITAL
CORPORATION (the "Lender"), the Grantor has pledged and assigned to the Lender,
and granted to the Lender a continuing security interest in, all right, title
and interest of the Grantor, whether now existing or hereafter arising or
acquired, as a [[limited partner] [general partner]] [member] in [NAME OF
PLEDGED ENTITY] (the ["Partnership"] ["LLC"]), and in, to and under the [TITLE
OF APPLICABLE AGREEMENT] (the "[Partnership] [LLC] Agreement"), including,
without limitation:
(i)all the capital of the [Partnership] [LLC] and the Grantor's
interest in all profits, income, surplus, losses, [Partnership] [LLC]
assets and other distributions to which the Grantor shall at any time be
entitled in respect of such [Partnership] [Membership] interest;
(ii)other payments due or to become due to the Grantor in respect of
such [partnership [limited liability company] interest, whether under the
[Partnership] [LLC] Agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(iii)f its claims, rights, powers, privileges, authority, options,
security interest, liens and remedies, if any, under the [Partnership]
[LLC] Agreement or at law or otherwise in respect of such [Partnership]
[Membership] Interest;
(iv)all present and future claims, if any, of the Grantor against
the [Partnership [LLC] for moneys loaned or advanced, for services
rendered or otherwise;
(v)all of the Grantor's rights under the [Partnership] [LLC]
Agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of the Grantor relating to the
[Partnership] [Membership] Interest, including any power to terminate,
cancel or modify the [Partnership] [LLC] Agreement, to execute any
instruments and to take any and all other action on behalf of and in the
name of the Grantor in respect of the [Partnership] [Membership] Interest
and the [Partnership] [LLC], to make determinations, to
<PAGE>
exercise any election (including, but not limited, election of remedies)
or option or to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive,
enforce, collect or receipt for any of the foregoing, to enforce or
execute any checks, or other instruments or orders, to file any claims
and to take any action in connection with any of the foregoing;
(vi)all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(vii)to the extent not otherwise included, all proceeds of any or
all of the foregoing.
Pursuant to the Security Agreement, the [Partnership] [LLC] is
hereby authorized and directed to register the Grantor's pledge to the Lender of
the interest of the Grantor on the [Partnership's] [LLC's] books.
The Grantor hereby requests the [Partnership] [LLC] to indicate the
[Partnership's] [LLC's] acceptance of this Notice and consent to and
confirmation of its terms and provisions by signing a copy hereof where
indicated on the attached page and returning the same to the Lender
[NAME OF GRANTOR]
By
Name:
Title:
<PAGE>
Exhibit A-2
-----------
To Security Agreement
---------------------
FORM OF ISSUER ACKNOWLEDGMENT
-----------------------------
[NAME OF PLEDGED ENTITY] (the ["Partnership"] ["LLC"]) hereby
acknowledges receipt of a copy of the assignment by [NAME OF GRANTOR]
("Grantor") of its interest under the [TITLE OF APPLICABLE AGREEMENT] (the
"[Partnership] [LLC] Agreement") pursuant to the terms of the Security
Agreement, dated as of [Date] (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "Security Agreement"), among the
Grantor, the other grantors from time to time party thereto, and GATX TELECOM I,
L.L.C. (the "Lender"). The undersigned hereby further confirms (i) the
registration of the Grantor's pledge of its interest to the Lender on behalf of
the Secured Creditors on the [Partnership's] [LLC's] books and (ii) upon receipt
from the Lender of a notice stating that an "Event of Default" has occurred and
is continuing, subject to applicable law, including the Communications Act and
the FCC Rulees, the undersigned shall only comply with instructions originated
by the Lender with respect to the pledge of the interest referred to above
notwithstanding contrary instructions given by any other person or entity,
including the Grantor until such time as otherwise notified by the Lender.
Dated: ,
----------- ----
[NAME OF PLEDGED ENTITY]
BY
Name:
Title:
<PAGE>
Exhibit B
---------
To Security Agreement
---------------------
[SEPARATE INSTRUMENT FOR
EACH FORM OF COLLATERAL]
GRANT OF SECURITY INTEREST
--------------------------
[PATENTS][TRADEMARKS][COPYRIGHTS]
THIS GRANT OF SECURITY INTEREST, dated as of , 199 , is
executed by [GRANTOR], a [state of incorporation] corporation ("Grantor"), in
favor of GATX CAPITAL CORPORATION ("Secured Party").
A. Pursuant to a Senior Secured Loan Agreement, dated as of [Date] (the
"Loan Agreement"), among Chadmoore Wireless Group, Inc. ("Chadmoore"), the
subsidiaries of Chadmoore party thereto (collectively, the "Subsidiaries," and
together with Chadmoore, the "Borrowers") and Secured Party, Secured Party has
agreed to extend certain credit facilities to Borrowers upon the terms and
subject to the conditions set forth therein.
[B. Grantor owns the letters patent, and/or applications for letters
patent, of the United States, more particularly described on Schedules 1 A and 1
B annexed hereto as part hereof (collectively, the "Patents");]
[B. Grantor has adopted, used and is using the trademarks, more
particularly described on Schedules 1 A and 1 B annexed hereto as part hereof,
which trademarks are registered or subject to an application for registration in
the United States Patent and Trademark Office (collectively, the "Trademarks");]
[B. Grantor owns the copyrights registered in the United States
Copyright Office, more particularly described on Schedule 1 A annexed hereto as
part hereof (collectively, the "Copyrights");]
C. Grantor has entered into a Security Agreement dated the date hereof
(the "Security Agreement") in favor of Secured Party; and
[D. Pursuant to the Security Agreement, Grantor has granted to Secured
Party a security interest in all right, title and interest of Grantor in and to
the Patents, together with any reissue, continuation, continuation part or
extension thereof, and all proceeds thereof, including any and all causes of
action which may exist by reason of infringement thereof for the full term of
the Patents (the "Collateral"), to secure the prompt payment, performance and
observance of the Obligations, as defined in the Security Agreement;
[D. Pursuant to the Security Agreement, Grantor has granted to Secured
Party a security interest in all right, title and interest of Grantor in and to
the Trademarks, together with the goodwill of the business symbolized by the
Trademarks and the customer lists and records related to the Trademarks and the
applications and registrations thereof, and all proceeds thereof, including any
and all causes of action which may exist by reason of
II-2
<PAGE>
infringement thereof (the "Collateral"), to secure the payment, performance and
observance of the Obligations, as defined in the Security Agreement;]
[D. Pursuant to the Security Agreement, Grantor has granted to Secured
Party a security interest in all right, title and interest of Grantor in and to
the Copyrights and the registrations thereof, together with any renewals or
extensions thereof, and all proceeds thereof, including any and all causes of
action which may exist by reason of infringement thereof for the full term of
the Copyrights (the "Collateral"), to secure the prompt payment, performance and
observance of the Obligations, as defined in the Security Agreement;]
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Grantor does hereby further grant to Secured Party a
security interest in the Collateral to secure the prompt payment, performance
and observance of the Obligations.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are hereby incorporated herein by reference as
if fully set forth herein.
Secured Party's address is: GATX CAPITAL CORPORATION
Four Embarcadero Center
Suite 2200
San Francisco, CA 94111
II-3
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this instrument to be executed as of the
day and year first above written.
[GRANTOR]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
STATE OF CALIFORNIA )
)
COUNTY OF )
On , 199 before me, , personally appeared , personally
known to me (or proved to me on the basis of satis factory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in her/her/their
authorized capacity(ies), and that by his/her/their signature(s) on such
instrument the person or entity on behalf of which the person(s) acted executed
the instrument.
WITNESS my hand and official seal.
Signature (Seal)
<PAGE>
SCHEDULE 1 A TO GRANT OF SECURITY INTEREST
------------------------------------------
PATENTS
-------
Title Date Issued Patent No.
SCHEDULE 1B TO GRANT OF SECURITY INTEREST
-----------------------------------------
PATENT APPLICATIONS
-------------------
Title Application Date Application No.
<PAGE>
SCHEDULE 1A TO GRANT OF SECURITY INTEREST
-----------------------------------------
TRADEMARKS
----------
Mark Registration Date Registration No.
SCHEDULE 1B TO GRANT OF SECURITY INTEREST
-----------------------------------------
TRADEMARK APPLICATIONS
----------------------
Mark Application Date Application No.
<PAGE>
SCHEDULE 1A TO GRANT OF SECURITY INTEREST
-----------------------------------------
COPYRIGHTS
----------
Description Registration Date Registration No.
Exhibit 10.5
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of March 2, 1999 is
executed by each of the undersigned (each such entity and each entity which
hereafter executes and delivers a Subsidiary Joinder in substantially the form
of Attachment 1 hereto to be referred to herein as a "Guarantor"), in favor of
GATX CAPITAL CORPORATION (the "Lender").
RECITALS
--------
A. Pursuant to a Loan Agreement dated as of March 2, 1999 (as amended
from time to time, the "Loan Agreement"), among Chadmoore Wireless Group, Inc.
("Chadmoore"), the subsidiaries of Chadmoore party thereto (collectively, the
"Subsidiaries," and together with Chadmoore, the "Borrowers," and each, a
"Borrower") and Lender, Lender has agreed to extend Loans to Borrower upon the
terms and subject to the conditions set forth therein.
B. The Lender's obligation to extend Loans to Borrowers under the Loan
Agreement is subject, among other conditions, to receipt by Lender of this
Guaranty duly executed by each of the undersigned Guarantors.
C. Each of the Subsidiaries of Chadmoore expects to derive substantial
direct and indirect benefit from the transactions contemplated by the Loan
Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each Guarantor and the Lender hereby agree as follows:
1. Definitions and Interpretation
------------------------------
(a)Definition. When used in this Guaranty, the following terms shall have
the following respective meanings:
"Adjusted Maximum Guaranty Amount" shall mean, with respect to any
Guarantor, the maximum liability of such Guarantor under this Guaranty, limited
to the extent provided in Section 2(d) hereof (except that, for purposes of
calculating the Adjusted Maximum Guaranty Amount of a Guarantor only, any assets
or liabilities of such Guarantor arising under Section 8 hereof shall be
ignored).
"Aggregate Guaranty Payments" shall mean, with respect to any Guarantor
at any time, the aggregate net amount of all payments made by such Guarantor
under this Guaranty (including, without limitation, under Section 8 hereof) at
or prior to such time.
"Borrower" shall have the meaning given to that term in Recital A hereof.
"Disallowed Post-Commencement Interest and Expenses" shall mean interest
computed at the rate provided in the Loan Agreement and claims for
reimbursement, costs, expenses or indemnities under the terms of any of the
Operative Documents accruing or claimed at any time after the commencement of
any Insolvency
<PAGE>
Proceeding, if the claim for such interest, reimbursement, costs, expenses or
indemnities is not allowable, allowed or enforceable against any Borrower in
such Insolvency Proceeding.
"Fair Share" shall mean, with respect to any Guarantor at any time, an
amount equal to (i) a fraction, the numerator of which is the Adjusted Maximum
Guaranty Amount of such Guarantor and the denominator of which is the aggregate
Adjusted Maximum Guaranty Amounts of all Guarantors, multiplied by (ii) the
aggregate amount paid by all Funding Guarantors under this Guaranty at or prior
to such time.
"Fair Share Shortfall" shall mean, with respect to any Guarantor at any
time, the amount, if any, by which the Fair Share of such Guarantor at such time
exceeds the Aggregate Guaranty Payments of such Guarantor at such time.
"Funding Guarantor" shall have the meaning given to that term in
Section 8 hereof.
"Guaranteed Obligations" shall mean the Obligations.
"Guarantor" shall have the meaning given to that term in the introductory
paragraph hereof.
"Insolvency Proceeding" shall mean any case or proceeding under the
United States Bankruptcy Code or any other similar law, rule or regulation of
the United States or any jurisdiction or any other action or proceeding for the
reorganization, liquidation, appointment of a receiver, rearrangement of debts,
marshalling of assets or similar action relating to any Borrower or any
Guarantor, their respective creditors or any substantial part of their
respective assets, whether or not any such case, proceeding or action is
voluntary or involuntary.
"Lender" shall have the meaning given to that term in the introductory
paragraph hereof.
"Loan Agreement" shall have the meaning given to that term in Recital A
hereof
"Subordinated Obligations" shall have the meaning given to that term in
Section 6 hereof.
"Subsidiary Joinder" shall mean an agreement substantially in the form of
Attachment 1 hereto. Unless otherwise defined herein, all other capitalized
terms used herein and defined in the Loan Agreement shall have the respective
meanings given to those terms in the Loan Agreement.
(b) Other Interpretive Provisions. The rules of construction set forth
in Section 1.02-1.06 of the Loan Agreement shall, to the extent not inconsistent
with the terms of this Guaranty, apply to this Guaranty and are hereby
incorporated by reference. Each Guarantor acknowledges receipt of copies of the
Loan Agreement and the other Operative Documents.
2. Guaranty
--------
(a)Payment Guaranty Each Guarantor unconditionally guarantees and
promises to pay and perform as and when due, whether at stated maturity, upon
acceleration or otherwise, any and all of the Guaranteed Obligations. If any
Insolvency Proceeding relating to any Borrower is commenced, each Guarantor
<PAGE>
further unconditionally guarantees and promises to pay and perform, upon the
demand of Lender, any and all of the Guaranteed Obligations (including any and
all Disallowed Post-Commencement Interest and Expenses) in accordance with the
terms of the Operative Documents, whether or not such obligations are then due
and payable by any Borrower and whether or not such obligations are modified,
reduced or discharged in such Insolvency Proceeding. This Guaranty is a guaranty
of payment and not of collection.
(b) Continuing Guaranty. This Guaranty is an irrevocable continuing
guaranty of the Guaranteed Obligations which shall continue in effect until all
obligations of the Lender to extend credit to any Borrower have terminated and
all of the Guaranteed Obligations have been fully, finally and indefensibly
paid. If any payment on any Guaranteed Obligation is set aside, avoided or
rescinded or otherwise recovered from Lender, such recovered payment shall
constitute a Guaranteed Obligation hereunder and, if this Guaranty was
previously released or terminated, it automatically shall be fully reinstated,
as if such payment was never made.
(c) Independent Obligation. The liability of each Guarantor hereunder is
independent of the Guaranteed Obligations and of the obligations of each other
Guarantor hereunder, and a separate action or actions may be brought and
prosecuted against each Guarantor irrespective of whether action is brought
against any Borrower, any other Guarantor or any other guarantor of the
Guaranteed Obligations or whether any Borrower, any other Guarantor or any other
guarantor of the Guaranteed Obligations is joined in any such action or actions.
(d) Fraudulent Transfer Limitation. If, in any action to enforce this
Guaranty, any court of competent jurisdiction determines that enforcement
against any Guarantor for the full amount of the Guaranteed Obligations is not
lawful under or would be subject to avoidance under Section 548 of the United
States Bankruptcy Code or any applicable provision of any comparable law of any
state or other jurisdiction, the liability of such Guarantor under this Guaranty
shall be limited to the maximum amount lawful and not subject to such avoidance.
(e) Termination. Notwithstanding any termination of this Guaranty in
accordance with Section 6 hereof, this Guaranty shall continue to be in full
force and effect and applicable to any Guaranteed Obligations arising thereafter
which arise because prior payments of Guaranteed Obligations are rescinded or
otherwise required to be surrendered by Lender after receipt.
3. [Intentionally Deleted]
4. Covenants.
---------
Until all obligations of Lender to extend credit to Borrowers have
terminated and all of the Guaranteed Obligations have been fully, finally and
indefensibly paid, each Guarantor shall comply with the following covenants:
(a) Financial Statements, Reports, Etc. Such Guarantor shall furnish to
Lender such Financial Statements, certificates, opinions, statements, documents
and information relating to the operations or condition (financial or otherwise)
of such Guarantor or its Subsidiaries, and compliance by each Borrower and such
Guarantor with the terms of the Operative Documents as Lender may from time to
time reasonably request.
(b) Inspections. Such Guarantor and its Subsidiaries shall permit any
Person designated by Lender, upon reasonable notice and during normal business
hours, to visit and inspect any of the properties and offices of such Guarantor
and its Subsidiaries, to examine the books and records of such Guarantor and its
Subsidiaries and make copies thereof and to discuss the affairs, finances and
accounts of such Guarantor and its Subsidiaries with, and to be advised as to
the same by, their officers, auditors and accountants, all at such times and
intervals as Lender may reasonably request.
<PAGE>
(c) Insurance. Such Guarantor and its Subsidiaries shall maintain the
insurance required to be maintained under the Loan Agreement.
(d) Governmental Charges and Other Indebtedness. To the extent failure to
do so could have a Material Adverse Effect, such Guarantor and its Subsidiaries
shall promptly pay and discharge all taxes and other charges imposed by any
Government Authority upon such Guarantor or its Subsidiaries or their property
as and when they become due.
(e) General Business Operations. To the extent failure to do so could
have a Material Adverse Effect, such Guarantor and its Subsidiaries shall (i)
maintain its corporate existence and all rights, privileges and franchises
necessary for the conduct of its business and (ii) comply with any material
judgment, order, writ, decree, statute, rule or regulation applicable to such
Person and any material mortgage, indenture, agreement, instrument or contract
to which such Person is a party or by which it is bound.
5. Authorizations, Waivers, Etc.
----------------------------
(a) Authorizations. Each Guarantor authorizes Lender, in their
discretion, without notice to such Guarantor, irrespective of any change in the
financial condition of any Borrower, such Guarantor, any other Guarantor or any
other guarantor of the Guaranteed Obligations since the date hereof, and without
affecting or impairing in any way the liability of such Guarantor hereunder,
from time to time to:
(i) Create new Guaranteed Obligations and renew, compromise,
extend, accelerate or otherwise change the time for payment or performance of,
or otherwise amend or modify the Operative Documents or change the terms of the
Guaranteed Obligations or any part thereof, including increase or decrease of
the rate of interest thereon;
(ii) Take and hold security for the payment or performance of
the Guaranteed Obligations and exchange, enforce, waive or release any such
security; apply such security and direct the order or manner of sale thereof;
and purchase such security at public or private sale;
(iii) Otherwise exercise any right or remedy they may have
against any Borrower, such Guarantor, any other Guarantor, any other guarantor
of the Guaranteed Obligations or any security, including, without limitation,
the right to foreclose upon any such security by judicial or nonjudicial sale;
(iv) Settle, compromise with, release or substitute any one or
more makers, endorsers or guarantors of the Guaranteed Obligations; and
(v) Assign the Guaranteed Obligations, this Guaranty or the
other Operative Documents in whole or in part to the extent provided in the Loan
Agreement and the other Operative Documents.
(b) Waivers. Each Guarantor hereby waives:
(i)Any right to require Lender to (A) proceed against any
Borrower, any other Guarantor or any other guarantor of the Guaranteed
Obligations, (B) proceed against or exhaust any security received from any
Borrower, such Guarantor, any other Guarantor or any other guarantor of the
Guaranteed Obligations or otherwise marshal the assets of any Borrower, such
Guarantor, any other Guarantor or any other guarantor of the Guaranteed
Obligations or (C) pursue any other remedy in Lender's power whatsoever;
(ii)Any defense arising by reason of the application by any
Borrower of the proceeds of any borrowing;
<PAGE>
(iii) Any defense resulting from the absence, impairment or loss
of any right of reimbursement, subrogation, contribution or other right or
remedy of Guarantor against any Borrower, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any security, whether resulting from
an election by Lender to foreclose upon security by nonjudicial sale, or
otherwise;
(iv) Any setoff or
counterclaim of any Borrower or any defense which results from any disability or
other defense of any Borrower or the cessation or stay of enforcement from any
cause whatsoever of the liability of any Borrower (including, without
limitation, the lack of validity or enforceability of any of the Operative
Documents);
(v) Any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more burdensome
than the obligation of the principal;
(vi) Until all obligations of Lender to extend credit to any
Borrower have terminated and all of the Guaranteed Obligations have been fully,
finally and indefensibly paid, any right of subrogation, reimbursement,
indemnification or contribution and other similar right to enforce any remedy
which Lender or any other Person now has or may hereafter have against any
Borrower on account of the Guaranteed Obligations, and any benefit of, and any
right to participate in, any security now or hereafter received by Lender or any
other Person on account of the Guaranteed Obligations;
(vii) All presentments, demands for performance, notices of
nonperformance, notices delivered under the Operative Documents, protests,
notice of dishonor, and notices of acceptance of this Guaranty and of the
existence, creation or incurring of new or additional Guaranteed Obligations and
notices of any public or private foreclosure sale;
(viii) The benefit of any statute of limitations to the extent
permitted by law;
(ix) Any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(x) Any right to be informed by Lender of the financial
condition of any Borrower, any other Guarantor or any other circumstances
bearing upon the risk of nonpayment or nonperformance of the Guaranteed
Obligations;
(xi) Until all obligations of Lender to extend credit to any
Borrower have terminated and all of the Guaranteed Obligations have been fully,
finally and indefensibly paid, any right to revoke this Guaranty;
(xii) Any defense arising from an election for the application
of Section 1111(b)(2) of the United States Bankruptcy Code which applies to the
Guaranteed Obligations;
(xiii) Any defense based upon any borrowing or grant of a
security interest under Section 364 of the United States Bankruptcy Code; and
(xiv) Any right it may have to a fair value hearing to determine
the size of a deficiency judgment following any foreclosure on any security for
the Guaranteed Obligations.
Without limiting the scope of any of the foregoing provisions of this Section 5,
each Guarantor hereby further waives (A) all rights and defenses arising out of
an election of remedies by Lender, even though that election of remedies, such
as a nonjudicial foreclosure with respect to security for a Guaranteed
Obligation, has destroyed
<PAGE>
such Guarantor's rights of subrogation and reimbursement against any Borrower by
the operation of Section 580d of the Code of Civil Procedure or otherwise, (B)
all rights and defenses such Guarantor may have by reason of protection afforded
to any Borrower with respect to the Guaranteed Obligations pursuant to the
antideficiency or other laws of California limiting or discharging the
Guaranteed Obligations, including, without limitation, Section 580a, 580b, 580d,
or 726 of the California Code of Civil Procedure, and (C) all other rights and
defenses available to such Guarantor by reason of Sections 2787 to 2855,
inclusive, Section 2899 or Section 3433 of the California Civil Code or Section
3605 of the California Commercial Code.
(c) Financial Condition of Borrower, Etc. Each Guarantor is fully aware
of the financial condition and affairs of each Borrower. Each Guarantor has
executed this Guaranty without reliance upon any representation, warranty,
statement or information concerning each Borrower furnished to such Guarantor by
Lender and has, independently and without reliance on Lender and based on such
documents and information as it has deemed appropriate, made its own appraisal
of the financial condition and affairs of each Borrower and of other
circumstances affecting the risk of nonpayment or nonperformance of the
Guaranteed Obligations. Each Guarantor is in a position to obtain, and assumes
full responsibility for obtaining, any additional information about the
financial condition and affairs of each Borrower and of other circumstances
affecting the risk of nonpayment or nonperformance of the Guaranteed Obligations
and will, independently and without reliance upon Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action in
connection with this Guaranty.
6. Subordination.
-------------
Each Guarantor hereby subordinates any and all debts, liabilities and
obligations owed to such Guarantor by each Borrower or any Subsidiary of such
Borrower (the "Subordinated Obligations") to the Guaranteed Obligations as
provided in this Section 6.
(a) Prohibited Payments, Etc. Until the occurrence of a Default or an
Event of Default or any default by any Guarantor hereunder, each Guarantor and
its Subsidiaries may receive regularly scheduled payments from Borrowers on
account of Subordinated Obligations. After the occurrence and during the
continuance of any Default or Event of Default or any default by any Guarantor
hereunder (including the commencement and continuation of any Insolvency
Proceeding relating to any Borrower, however, unless Lender otherwise requests,
no Guarantor shall, nor shall it permit any of its Subsidiaries to, demand,
accept or take any action to collect any payment on account of the Subordinated
Obligations.
(b) Prior Payment of Guaranteed Obligation. In any Insolvency Proceeding
relating to any Borrower, each Guarantor agrees that Lender shall be entitled to
receive payment of all Guaranteed Obligations (including any and all Disallowed
Post-Commencement Interest and Expenses) before such Guarantor or any of its
Subsidiaries receives payment of any Subordinated Obligations.
(c) Turn-Over. After the occurrence and during the continuance of any
Default or Event of Default (including the commencement and continuation of any
Insolvency Proceeding relating to any Borrower, each Guarantor and its
Subsidiaries shall, if Lender so requests, collect, enforce and receive payments
on account of the Subordinated Obligations as trustee for Lender and deliver
such payments to Lender on account of the Guaranteed Obligations (including any
and all Disallowed Post-Commencement Interest and Expenses), together with any
necessary endorsements or other instruments of transfer, but without reducing or
affecting in any manner the liability of such Guarantor under the other
provisions of this Guaranty.
(d) Lender Authorization. After the occurrence and during the continuance
of any Default or Event of Default or any default by a Guarantor hereunder
(including the commencement and continuation of any Insolvency Proceeding
relating to any Borrower, Lender is authorized and empowered (but without any
<PAGE>
obligation to so do), in its discretion, (i) in the name of each Guarantor and
its Subsidiaries, to collect and enforce, and to submit claims in respect of,
Subordinated Obligations and to apply any amounts received thereon to the
Guaranteed Obligations (including any and all Disallowed Post-Commencement
Interest and Expenses), and (ii) to require each Guarantor (A) to collect and
enforce, and to submit claims in respect of, Subordinated Obligations and (B) to
pay any amounts received on such obligations to Lender for application to the
Guaranteed Obligations (including any and all Disallowed Post-Commencement
Interest and Expenses).
7. General Pledge; Setoff.
----------------------
(a) Pledge. In addition to all liens upon and rights of setoff against
the property of any Guarantor given to Lender by law or separate agreement to
secure the liabilities of any Guarantor hereunder, to the extent permitted by
law, each Guarantor hereby grants to Lender, as security for such Guarantor's
obligations hereunder, a security interest in all monies, securities and other
property of such Guarantor now or hereafter in the possession of Lender; and
Lender shall have all rights and remedies of a secured party with respect to
such property.
(b) Setoff. In addition to any rights and remedies of Lender provided by
law, Lender shall have the right, without prior notice to any Guarantor, any
such notice being expressly waived by each Guarantor to the extent permitted by
applicable law, upon the occurrence and during the continuance of a Default or
an Event of Default, to set-off and apply against the Guaranteed Obligations any
amount owing from Lender to such Guarantor.
(c) Nonwaiver. No security interest or right of setoff shall be deemed to
have been waived by any act or conduct on the part of Lender or by any failure
to exercise such right of setoff or to enforce such security interest, or by any
delay in so doing; and every right of setoff and security interest shall
continue in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing executed
by Lender.
8. Contribution among Guarantors.
-----------------------------
The Guarantors desire to allocate among themselves, in a fair and
equitable manner, their rights of contribution from each other when any payment
is made by any Guarantor under this Guaranty. Accordingly, if any payment is
made by any Guarantor under this Guaranty (a "Funding Guarantor"') that exceeds
its Fair Share, the Funding Guarantor shall be entitled to a contribution from
each other Guarantor in the amount of such other Guarantor's Fair Share
Shortfall, so that all such contributions shall cause each Guarantor's Aggregate
Guaranty Payments to equal its Fair Share. The amounts payable as contributions
hereunder shall be determined by the Funding Guarantor as of the date on which
the related payment or distribution is made by the Funding Guarantor, and such
determination shall be binding on the other Guarantors absent manifest error.
The allocation and right of contribution among the Guarantors set forth in this
Section 8 shall not be construed to limit in any way the liability of any
Guarantor under this Guaranty or the amount of the Guaranteed Obligations.
9. Miscellaneous.
-------------
(a) Notices. Except as otherwise provided herein, all notices, requests,
demands, consents, instructions or other communications to or upon any Guarantor
or Lender under this Guaranty or the other Operative Documents to which a
Guarantor is a party shall be in writing and fixed, mailed or delivered, if to a
Guarantor c/o Chadmoore or Lender, at its respective facsimile number or address
set forth below or in the respective Subsidiary Joinder for such Guarantor (or
to such other facsimile number or address for any party as indicated in any
notice given by that party to the other parties). All such notices and
communications shall be effective (i) when sent by overnight service of
recognized standing, on the second Business Day following the
<PAGE>
deposit with such service; (ii) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(iii) when delivered by hand, upon delivery; and (iv)when faxed, upon
confirmation of receipt.
Guarantor: [Guarantor]
c/o Chadmoore Wireless Group, Inc.
2875 East Patrick Lane
Las Vegas, Nevada 89120
Attention:
Facsimile:
Telephone:
Lender GATX CAPITAL CORPORATION
Four Embarcadero Center
Suite 2200
San Francisco, CA 94111
Attention: Contract Administration
Telephone: (415) 955-3200
Facsimile: (415) 955-3493
(b) Payments. Each Guarantor shall make all payments required hereunder
to Lender, or its order, at Lender's office located at the address set forth in
Section 9(a) hereof, or at such other office as Lender may designate, on demand,
in U.S. dollars. If any amounts required to be paid by a Guarantor under this
Guaranty are not paid when due, such Guarantor shall pay interest on the
aggregate, outstanding balance of such amounts from the date due until those
amounts are paid in full at a per annum rate equal to the Default Rate.
(c) Expenses. Each Guarantor shall pay on demand (i) all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
Lender in connection with the preparation, execution and delivery of, and the
exercise of its duties under, this Guaranty and the preparation, execution and
delivery of amendments and waivers hereunder and (ii) all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by Lender
in connection with the enforcement or attempted enforcement of this Guaranty or
any of the Guaranteed Obligations or in preserving any of Lender's rights and
remedies (including, without limitation, all such fees and expenses incurred in
connection with any "workout" or restructuring affecting the Operative Documents
or the Guaranteed Obligations or any bankruptcy or similar proceeding involving
Guarantor, any other Guarantor, Borrower or any of their Affiliates).
Notwithstanding anything contained in this Section 9(c), the Guarantors
obligation to reimburse Lender for fees and expenses incurred by Lender in
connection with the preparation, execution and delivery of this Guaranty shall
be limited by any cap or limitation set forth in Section 10.03 of the Loan
Agreement.
(d) Waivers, Amendments. This Guaranty may not be amended or modified,
nor may any of its terms be waived, except by written instruments signed by each
Guarantor and Lender to the extent permitted pursuant to Section 10.01 of the
Loan Agreement. Each waiver or consent under any provision hereof shall be
effective only in the specific instances for the purpose for which given. No
failure or delay on Lender's part in exercising any right hereunder shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right.
(e) Assignment. This Guaranty shall be binding upon and inure to the
benefit of Lender, the Guarantors and their respective successors and assigns;
provided, however, that no Guarantor may assign or transfer any of its rights
and obligations under this Guaranty without the prior written consent of Lender,
and,
<PAGE>
provided, further, that Lender may sell, assign and delegate their respective
rights and obligations hereunder only as permitted by the Loan Agreement. All
references in this Guaranty to any Person shall be deemed to include all
permitted successors and assigns of such Person.
(f) Cumulative Rights, etc. The rights, powers and remedies of Lender
under this Guaranty shall be in addition to all rights, powers and remedies
given to Lender by virtue of any applicable law, rule or regulation of any
Governmental Authority, the Loan Agreement, any other Operative Document or any
other agreement, all of which rights, powers, and remedies shall be cumulative
and may be exercised successively or concurrently without impairing Lender's
rights hereunder. Each Guarantor waives any right to require Lender to proceed
against any Person or to exhaust any Collateral or to pursue any remedy in
Lender's power.
(e) Payments Free of Taxes, Etc. All payments made by each Guarantor
under this Guaranty shall be made by each Guarantor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, each Guarantor shall pay upon demand
any stamp or other taxes, levies or charges of any jurisdiction with respect to
the execution, delivery, registration, performance and enforcement of this
Guaranty. If any taxes, levies, charges or other amounts are required to be
withheld from any amounts payable to Lender, hereunder, the amounts so payable
to Lender shall be increased to the extent necessary to yield to Lender (after
payment of all such amounts) any such amounts payable hereunder in the amounts,
specified in this Guaranty. Upon request by Lender, each Guarantor shall furnish
evidence satisfactory to Lender that all requisite authorizations and approvals
by, and notices to and filings with, governmental authorities and regulatory
bodies have been obtained and made and that all requisite taxes, levies and
charges have been paid.
(h) Partial Invalidity. If at any time any provision of this Guaranty is
or becomes illegal, invalid or unenforceable in any respect under the law or any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Guaranty nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be affected
or impaired thereby.
(i) Joint and Several Obligation. The obligations of the Guarantors under
this Guaranty are joint and several obligations of each Guarantor and may be
freely enforced against each Guarantor, for the full amount of the Guaranteed
Obligations, without regard to whether enforcement is sought or available
against any other Guarantor.
(j) Governing Law. This Guaranty and the rights and obligations of the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of California (without reference to its choice of
laws provisions).
(k) Jury Trial. EACH GUARANTOR AND LENDER, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY.
(l) Limitation of Liability. NO CLAIM MAY BE MADE BY ANY GUARANTOR
AGAINST LENDER OR THE MEMBERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OF LENDER FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN RESPECT OF ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH
OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO
THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH AND EACH GUARANTOR
<PAGE>
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed as of the day and year first above written.
CHADMOORE WIRELESS GROUP, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: CEO
------------------------
CHADMOORE COMMUNICATIONS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT TANNER, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT BEACON HILL, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
<PAGE>
PTT OF NEVADA, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CMRS SYSTEMS, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE CONSTRUCTION SERVICES, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
CHADMOORE COMMUNICATIONS OF TENNESSEE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF RICHMOND, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
<PAGE>
PTT MAPLE, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF HUNTSVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT BURTON, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF FORT WAYNE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROANOKE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT TRISTAN, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF AUSTIN, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF JACKSONVILLE, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF VIRGINIA BEACH, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT ROSELAND, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT ARTINA, INC.
<PAGE>
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT FRANKLIN, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT CHACO, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
800 SMR NETWORK, INC.
By: /s/Robert W. Moore
---------------------------
Name: Robert W. Moore
-------------------------
Title: President
------------------------
PTT COMMUNICATIONS OF BATON ROUGE LIMITED
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF LAKE CHARLES, LLC
<PAGE>
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF BAY CITY, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
PTT COMMUNICATIONS OF ROCKFORD, LLC
By: /s/Jan Zwaik
---------------------------
Name: Jan Zwaik
-------------------------
Title: Manager
------------------------
-6-
<PAGE>
ATTACHMENT 1
------------
SUBSIDIARY JOINDER
------------------
THIS SUBSIDIARY JOINDER (this "Agreement"), dated as of , ,
is executed by [NEW SUBSIDIARY], a [corporation] [partnership]
[etc.] ("New Subsidiary"), in favor of GATX CAPITAL CORPORATION (the "Lender").
RECITALS
--------
A. Pursuant to a Loan Agreement dated as of March 2, 1999 (as amended
from time to time, the "Loan Agreement"), among Chadmoore Wireless Group, Inc.
("Chadmoore"), the subsidiaries of Chadmoore party thereto (collectively, the
"Subsidiaries," and together with Chadmoore, the "Borrowers," and each a
"Borrower") and Lender, Lender has agreed to extend Loans to Borrower upon the
terms and subject to the conditions set forth therein.
B. The Lender's obligation to extend the loans to Borrowers under the
Loan Agreement is subject, among other conditions, to receipt by Lender of a
Guaranty, dated as of March 2, 1999 (the "Guaranty"), duly executed by each
Subsidiary of Borrower and a Security Agreement, dated as of March 2, 1999 (the
"Security Agreement") duly executed by each Subsidiary of Borrower.
C. New Subsidiary is a new Subsidiary of Borrower and expects to derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, New Subsidiary hereby agrees with Lender, as follows:
1. Definitions and Interpretation. Unless otherwise defined herein, all
capitalized terms used herein and defined in the Guaranty shall have the
respective meanings given to those terms in the Guaranty. New Subsidiary
acknowledges receipt of copies of the Guaranty, the Security Agreement, the Loan
Agreement and the other Operative Documents.
2. Representations and Warranties. On and as of the date of this
Agreement (the "Effective Date") and for the benefit of the Lender, New
Subsidiary hereby makes each of the representations and warranties made by each
Guarantor in the Guaranty.
3. Agreement to be Bound. New Subsidiary agrees that, on and as of the
Effective Date, it shall become a Guarantor under the Guaranty and a Grantor
under the Security Agreement and shall be bound by all the provisions of the
Guaranty and the Security Agreement to the same extent as if New Subsidiary had
executed the Guaranty on the Closing Date.
4. Waiver. Without limiting the generality of the waivers in the
Guaranty, New Subsidiary specifically agrees to be bound by the Guaranty and the
Security Agreement and waives any right to notice of acceptance of its execution
of this Agreement and of its agreement to be bound by the Guaranty and the
Security Agreement.
5. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, New Subsidiary has caused this Agreement to be
executed by its duly authorized officer.
[NEW SUBSIDIARY]
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Address:
[---------------------------------]
[---------------------------------]
[---------------------------------]
Attn:
-----------------------------
Telephone:
------------------------
Facsimile:
------------------------
-2-
Exhibit 10.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
CHADMOORE WIRELESS GROUP, INC.
WARRANT TO PURCHASE 1,822,500 SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, GATX CAPITAL CORPORATION and its
assignees are entitled to subscribe for and purchase 1,822,500 shares of the
fully paid and nonassessable Common Stock (as adjusted pursuant to Section 4
hereof, the "Shares") of CHADMOORE WIRELESS GROUP, INC., a Colorado corporation
(the "Company"), at the price of $0.39 per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
Notwithstanding the foregoing, if the initial holder of this Warrant, does not
increase the availability to the Company of loans pursuant to Section 2.01(b) of
the Senior Secured Loan Agreement, dated as of March 2, 1999 (the "Loan
Agreement") to $27,000,000 on or before 120 days from the Date of Grant, then on
such date the number of shares issuable upon exercise of this Warrant shall be
reduced to the number determined by multiplying number of shares by a fraction
the numerator of which is the maximum aggregate amount of all loans made
available to the Company under Sections 2.01(a) and 2.01(b) of the Loan
Agreement and the denominator of which is $27,000,000. As used herein, (a) the
term "Date of Grant" shall mean March 2, 1999 and (b) the term "Other Warrants"
shall mean any other warrants issued by the Company in connection with the
transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of this Warrant. The term "Warrant" as
used herein shall be deemed to include Other Warrants unless the context clearly
requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
until ten (10) years after the Date of Grant.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
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purchased; (b) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-2 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by certified or
bank check or by Wire Transfer from the proceeds of the sale of shares to be
sold by the holder in such public offering of an amount equal to the then
applicable Warrant Price per share multiplied by the number of Shares then being
purchased; or (c) exercise of the "net issuance" right provided for in Section
10.2 hereof. The person or persons in whose name(s) any certificate(s)
representing the Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. In order to prevent
dilution of the rights granted under this Warrant, the Warrant Price shall be
subject to adjustment from time to time as provided in this Section 4, and the
number of Shares obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time, as provided in this Section 4.
(a) Adjustment of Warrant Price and Number of Shares upon Issuance of
Common Stock. If and whenever, on or after the date hereof, either the Company
issues or sells, or has issued or sold, or in accordance with Section 4(b) is
deemed to have issued or sold, other than pursuant to a Permitted Issuance, any
shares of Common Stock, including upon exercise, exchange or conversion of any
Floating Price Securities for a consideration per share less than the Warrant
Price in effect immediately prior to such issuance or sale, then immediately
upon such issuance or sale the Warrant Price shall be reduced to equal the
amount determined by multiplying the Warrant Price in effect immediately prior
to such issuance or sale by a fraction, the numerator of which will be the sum
of (1) the number of shares of Common Stock Deemed Outstanding immediately prior
to such issuance or sale multiplied by the Warrant Price in effect immediately
prior to such issuance or sale, plus (2) the consideration, if any, received by
the Company upon such issuance or sale, and the denominator of which will be the
product derived by multiplying the Warrant Price in effect immediately prior to
such issuance or sale by the number of shares of Common Stock Deemed Outstanding
immediately after such issuance or sale. Upon each such adjustment of the
Warrant Price hereunder, the number of
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Shares acquirable upon exercise of this Warrant shall
be adjusted to equal the number of shares determined by multiplying the Warrant
Price in effect immediately prior to such adjustment by the number of Shares
acquirable (whether or not then acquirable or subject to a contingency) upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product thereof by the Warrant Price resulting from such adjustment. For
purposes of this Section 4, the calculation of the number of shares of Common
Stock Deemed Outstanding shall exclude the number of Shares issuable upon
exercise of the Warrants.
(b) Effect on Warrant Price of Certain Events. For
purposes of determining the adjusted Warrant Price under Section 4(a), the
following shall be applicable:
(i) Issuance of Rights or Options. If the Company in any manner grants
any rights or options to subscribe for or to purchase (including, without
limitation, the issuance of any notes or other debt instruments convertible into
or payable in) Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (including without limitation convertible common
stock) (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities" other than a Permitted Issuance, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities is less than the Warrant Price in effect
immediately prior to such issuance or sale, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For purposes of this paragraph, the "price per share for which Common
Stock is issuable upon exercise of such Options or upon conversion or exchange
of such Convertible Securities" is determined by dividing (A) the total amount,
if any, received or receivable by the Company as consideration for the granting
of such Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus in the case
of such Options which are exercisable for Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such Options. No
further adjustment of the Warrant Price shall be made upon the actual issuance
of such Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the price per share for which
Common Stock is issuable upon such conversion or exchange is less that the
Warrant Price in effect immediately prior to such issuance or sale, then the
maximum number of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities shall be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes of
this paragraph, the "price per share for which common Stock is issuable upon
such conversion or exchange" is determined by dividing (A) the total amount
received or receivable by the Company as consideration for the issue or sale of
such
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Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the Warrant Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities, and if
any such issuance or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of the Warrant Price has been or is to be
made pursuant to other provisions of this Section 4(b), no further adjustment of
the Warrant Price shall be made by reason of such issuance or sale.
(iii) Change in Option Price or Conversion Rate. If either the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange or any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock shall change at any time (other than with respect to Options or
Convertible Securities constituting Floating Price Securities), the Warrant
Price in effect at the time of such change shall be adjusted to the Warrant
Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold and the number of Shares shall be
correspondingly readjusted; provided that no readjustment shall be made pursuant
to this Section 4(b)(iii) in respect of any Shares which have been issued on or
prior to the occurrence of any action otherwise requiring such readjustment.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
Upon the expiration of any Option or the termination of any right to convert or
exchange any Convertible Securities, in either case without the exercise of such
Option or right, the Warrant Price then in effect and the number of Shares
acquirable hereunder (whether or not then acquirable or subject to a
contingency) shall be adjusted to the Warrant Price and number of Shares which
would have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent not exercised in full and
outstanding immediately prior to such expiration or termination, never been
issued; provided, that no readjustment shall be made under this Section 4(b)(iv)
in respect of any Shares which have been issued on or prior to such expiration
or termination.
(v) Calculation of Consideration Received. If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to be the net
amount received by the Company therefor. In case any Common Stock, Options or
Convertible Securities are issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the Company shall be
the fair value of such consideration, except where such consideration consists
of marketable securities, in which case the amount of consideration received by
the Company shall be the market price thereof as of the date of receipt. In case
any Common Stock, Options or Convertible Securities are issued to the owners of
the non-surviving entity in connection with any merger or other business
combination in which the Company is the surviving entity, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or marketable securities shall
be determined jointly by the Company and the holder of this Warrant. If such
parties are unable to reach agreement within a
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reasonable period of time, such fair value shall be determined by an independent
investment banking or appraisal firm jointly selected by the Company and the
holder of this Warrant, whose determination shall be final and binding on the
Company and the holder of this Warrant. If the holder of this Warrant and the
Company are unable to agree upon an independent investment banking or appraisal
firm, then the holder of this Warrant shall select one such independent
investment banking or appraisal firm and the Company shall select another such
firm, and the calculation of fair value shall be made by a third independent
investment banking or appraisal firm that has been selected by the two firms so
chosen by the holder of this Warrant and the Company. In each such case, the
firm calculating fair value shall submit to the Company and to each holder of
this Warrant such firm's written opinion addressed to the holder of this Warrant
setting forth such determination of fair value. If the independent investment
banking or appraisal firm gives a range for its calculation of fair value, then
fair value for purposes of this paragraph shall be the midpoint of such range.
The fees and expenses of such firm shall be paid by the Company.
(vi) Integrated Transactions. In case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Option shall be deemed to have been
issued for no consideration.
(vii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time does not include shares owned or held by or for the account of
the Company or any direct or indirect subsidiary of the Company and the
disposition of any shares so owned or held shall be considered an issue or sale
of Common Stock.
(viii) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(c) Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Common Stock into a greater number of shares or pays a dividend
or makes a distribution to holders of the Common Stock in the form of shares of
Common Stock, then the Warrant Price and Deemed Issue Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Shares obtainable upon exercise of this Warrant (whether or not then
acquirable or subject to a contingency), as the case may be, shall be
proportionately increased. If the Company at any time combines (by reverse stock
split or otherwise) the Common Stock into a smaller number of shares, then the
Warrant Price and Deemed Issue Price in effect immediately prior to such
combination shall be proportionately increased and the number of Shares
obtainable upon exercise of this Warrant (whether or not then acquirable or
subject to a contingency), as the case may be, shall be proportionately
decreased.
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(d) Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change". Prior to
the consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the holder of this
Warrant) to ensure that such holder shall thereafter have the right to acquire
and receive upon exercise hereof, in lieu of or addition to (as the case may be)
the Shares immediately theretofore acquirable and receivable upon exercise of
this Warrant (whether or not then acquirable or subject to a contingency), such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of Shares immediately theretofore acquirable
and receivable (whether or not then acquirable or subject to a contingency) upon
exercise of such holder's Warrant had such Organic Change not taken place. In
any such case, the Company shall make appropriate provision (in form and
substance satisfactory to the holder of this Warrant) with respect to such
holder's rights and interests to insure that the provisions hereof shall
thereafter be applicable to this Warrant (including, without limitation, in the
case of any such Organic Change in which the successor entity or purchasing
entity is other than the Company, an immediate adjustment of the Warrant Price
to the product of the Warrant Price immediately prior to such Organic Change
multiplied by the ratio of such value of the Common Stock reflected by the terms
of such Organic Change divided by the Fair Market Value of the Common Stock in
effect immediately prior to such Organic Change and a corresponding immediate
adjustment to the number of Shares acquirable and receivable upon exercise of
the Warrant (whether or not then acquirable or subject to a contingency), if the
value so reflected is less than the Fair Market Value of the Common Stock in
effect immediately prior to such Organic Change). The Company shall not affect
any such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument (in form and substance satisfactory to the holder of this Warrant)
the obligation to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire upon exercise of Warrants.
(e) Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features but excluding any
Permitted Issuance), then the Company's Board of Directors shall make an
appropriate adjustment in the Warrant Price, the Deemed Issue Price and the
number of Shares obtainable upon exercise of this Warrant (whether or not then
acquirable or subject to a contingency) so as to protect the rights of the
holder of this Warrant; provided that no such adjustment shall increase the
Warrant Price or decrease the number of Shares issuable upon exercise hereof
other than as a readjustment in a manner consistent with that contemplated by
Section 2(b)(iv).
(f) Notices.
(i) The Company shall give written notice to the holder of this Warrant
at least 30 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders
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of Common Stock, or (C) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
(ii) The Company shall also give written notice to the holder of this Warrant at
least 30 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
(g) Definitions. The following terms shall have the following respective
meanings when used in this Section 4:
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of all classes of the Company's Common Stock actually outstanding at such
time, plus the number of shares of the Company's Common Stock deemed to be
outstanding pursuant to Sections 4(b)(i) and 4(b)(ii) hereof.
"Floating Price Securities" means the securities listed in Section 2 of
Exhibit C hereto and any other securities pursuant to which the Company is
either obligated or permitted to issue shares of Common Stock at a conversion or
exercise price which is determined from time to time with reference to the
market price for shares of the Company's Common Stock.
"Identified Securities" means the securities listed on Exhibit C hereto.
"Investment Agreement" means the Investment Agreement, dated as of May 1,
1999, between the Company and Recovery Equity Investors II, L.P.
"Permitted Issuance" means (i) the issuance from time to time by the
Company of shares of Common Stock upon exercise of the REI Warrants, and (ii)
the issuance from time to time by the Company of Identified Securities or of
shares of Common Stock upon the exercise of Identified Securities other than
Floating Price Securities.
"REI Warrants" means the Stock Purchase Warrants, each dated as of May 1,
1998, issued to Recovery Equity Investors II, L.P. (as each such Warrant may be
amended, supplemented or otherwise modified from time to time in accordance with
the provisions thereof).
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant at such holder's last known address.
6. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company's Board of Directors.
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7. Compliance with Act; Disposition of Warrant or Shares of Common Stock.
(a) Compliance with Act. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Act or any applicable
state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Act and any applicable state securities laws
or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of the
Act and shall confirm such other matters related thereto as may be reasonably
requested by the Company. This Warrant and all Shares issued upon exercise of
this Warrant (unless registered under the Act and any applicable state
securities laws) shall be stamped or imprinted with a legend in substantially
the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS
RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii)
RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR
(iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER
WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY."
Said legend shall be removed by the Company, upon the request of a
holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated to the reasonable satisfaction of counsel to the
Company. In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:
(1)The holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(2)The holder understands that this Warrant has not been registered under
the Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the holder's investment intent
as expressed herein.
(3)The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available. The holder is aware of the provisions of
Rule 144, promulgated under the Act.
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(4)The holder is an "accredited investor" as such term is defined in Rule
501 of Regulation D promulgated under the Act.
(b) Disposition of Warrant or Shares. With respect to any offer, sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder hereof agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, or other evidence, if reasonably satisfactory to the Company,
to the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or the Shares and
indicating whether or not under the Act certificates for this Warrant or the
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Upon receiving such written notice and reasonably satisfactory opinion
or other evidence, the Company, as promptly as practicable but no later than
fifteen (15) days after receipt of the written notice, shall notify such holder
that such holder may sell or otherwise dispose of this Warrant or such Shares,
all in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 7(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly with details thereof
after such determination has been made. Notwithstanding the foregoing, this
Warrant or such Shares may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 or 144A under the Act,
provided that the Company shall have been furnished with such information as the
Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 or 144A have been satisfied. Each certificate
representing this Warrant or the Shares thus transferred (except a transfer
pursuant to Rule 144 or 144A) shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with such laws,
unless in the aforesaid opinion of counsel for the holder, such legend is not
required in order to ensure compliance with such laws. The Company may issue
stop transfer instructions to its transfer agent in connection with such
restrictions.
(c) Applicability of Restrictions. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall apply
to any transfer or grant of a security interest in, this Warrant (or the Common
Stock obtainable upon exercise thereof) or any part hereof (i) to a partner of
the holder if the holder is a partnership or to a member of the holder if the
holder is a limited liability company, (ii) to a partnership of which the holder
is a partner or to a limited liability company of which the holder is a member,
or (iii) to any affiliate of the holder if the holder is a corporation;
provided, however, in any such transfer, if applicable, the transferee shall on
the Company's request agree in writing to be bound by the terms of this Warrant
as if an original holder hereof.
8. Rights as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Shares, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares
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purchasable upon the exercise hereof shall have become deliverable, as provided
herein. Notwithstanding the foregoing, the Company will transmit to the holder
of this Warrant such information, documents and reports as are generally
distributed to the holders of any class or series of the securities of the
Company concurrently with the distribution thereof to the shareholders.
9. Registration Rights. Concurrently with the issuance of this Warrant,
the initial holder of this Warrant has been made a party to that certain
Registration Rights Agreement, dated as of May 1, 1998, between the Company and
Recovery Equity Investors II, L.P., (the "Registration Rights Agreement").
10. Additional Rights.
10.1 [Intentionally omitted.]
10.2 Right to Convert Warrant into Stock: Net Issuance.
(a) Right to Convert. In addition to and without limiting the rights of
the holder under the terms of this Warrant, the holder shall have
the right to convert this Warrant or any portion thereof (the
"Conversion Right") into shares of Common Stock as provided in this
Section 10.2 at any time or from time to time during the term of
this Warrant. Upon exercise of the Conversion Right with respect to
a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder
(without payment by the holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and
nonassessable Common Stock as is determined according to the
following formula:
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X = B - A
-----
Y
Where: X = the number of shares of Common Stock that shall be
issued to holder
Y = the fair market value of one share of Common Stock
A = the aggregate Warrant Price of the specified number of
Converted Warrant Shares immediately prior to the
exercise of the Conversion Right (i.e., the number of
Converted Warrant Shares multiplied by the Warrant
Price)
B = the aggregate fair market value of the specified number
of Converted Warrant Shares (i.e. the number of
Converted Warrant Shares multiplied by the fair market
value of one Converted Warrant Share)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a written statement (which may be in the form of Exhibit A-1 or
Exhibit A-2 hereto) specifying that the holder thereby intends to exercise the
Conversion Right and indicating the number of shares subject to this Warrant
which are being surrendered (referred to in Section 10.2(a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
"Conversion Date"), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company's Common Stock to the
public in a public offering pursuant to a Registration Statement under the Act
(a "Public Offering"). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty (30) days following the
Conversion Date.
<PAGE>
(c) Determination of Fair Market Value. For purposes of this Section
10.2, "fair market value" of a share of Common Stock as of a particular date
(the "Determination Date") shall mean:
(i) If the Conversion Right is exercised in connection with and
contingent upon a Public Offering, and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been declared
effective by the Securities and Exchange Commission, then the initial "Price to
Public" specified in the final prospectus with respect to such offering.
(ii) If the Conversion Right is not exercised in connection with and
contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five business days
prior to the Determination Date;
(B) If traded on the Nasdaq Stock Market or other over-the-counter
system, the fair market value of the Common Stock shall be deemed to be the
average of the closing bid prices of the Common Stock over the 30-day period
ending five business days prior to the Determination Date; and
(C) If there is no public market for the Common Stock, then fair market
value shall be determined by mutual agreement of the holder of this Warrant and
the Company.
10.3 Exercise Prior to Expiration. To the extent this Warrant is not
previously exercised as to all of the Shares subject hereto, and if the fair
market value of one share of the Common Stock is greater than the Warrant Price
then in effect, this Warrant shall be deemed automatically exercised pursuant to
Section 10.2 above (even if not surrendered) immediately before its expiration.
For purposes of such automatic exercise, the fair market value of one share of
the Common Stock upon such expiration shall be determined pursuant to Section
10.2(c). To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 10.3, the Company agrees to
promptly notify the holder hereof of the number of Shares, if any, the holder
hereof is to receive by reason of such automatic exercise.
11. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law or principles at
equity governing specific performance, injunctive relief and other equitable
remedies;
(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and non-assessable;
(c) The execution and
delivery of this Warrant are not, and the issuance of the Shares upon exercise
of this Warrant in accordance with the terms hereof will not be, inconsistent
with the
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<PAGE>
Company's articles of incorporation, as amended (the "Charter") or by-laws, do
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to the Company, and do not and will not conflict with or
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument of which the Company is a party or by
which it is bound or require the consent or approval of, the giving of notice
to, the registration or filing with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws,
which filings will be effected by the time required thereby;
(d) There are no actions, suits, audits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to perform its obligations under this Warrant; and
(e) The Charter of the Company is attached as Exhibit B hereto and the
capitalization of the Company is set forth on Exhibit C hereto.
12. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.
15. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
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<PAGE>
17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
20. No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
21. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
22. Recovery of Litigation Costs. If any legal action or other proceeding
is brought for the enforcement of this Warrant, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Warrant, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it or they
may be entitled.
23. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
[ The remainder of this page is intentionally left blank.]
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<PAGE>
The Company has caused this Warrant to be duly executed and delivered as
of the Date of Grant specified above.
CHADMOORE WIRELESS GROUP, INC.
By:/s/Robert W. Moore
------------------------------
Title: President
-----------------------------
Address: 2875 Patrick lane, Suite G, Las Vegas, NV 89120
---------------------------------------------------
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<PAGE>
EXHIBIT A-1
NOTICE OF EXERCISE
To: CHADMOORE WIRELESS GROUP, INC.
1.The undersigned hereby:
*elects to purchase shares of Common Stock of CHADMOORE WIRELESS
GROUP, INC. pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full, or
*elects to exercise its net issuance rights pursuant to Section 10.2 of
the attached Warrant with respect to shares of Common Stock.
2. Please issue a certificate or certificates representing shares in
the name of the undersigned or in such other name or names as are specified
below:
(Name) (Address)
-------------- -------------------------
3.The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.
(Signature)
-------------------------
(Date)
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<PAGE>
EXHIBIT A-2
NOTICE OF EXERCISE
To: CHADMOORE WIRELESS GROUP, INC. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S, filed, 19, the undersigned hereby:
*elects to purchase shares of Common Stock of the Company (or such
lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant, or
*elects to exercise its net issuance rights pursuant to Section 10.2 of
the attached Warrant with respect to Shares of Common Stock.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $ or, if less, the net proceeds due the
undersigned from the sale of shares in the aforesaid public offering. If such
net proceeds are less than the purchase price for such shares, the undersigned
agrees to deliver the difference to the Company prior to theClosing.
(Signature)
(Date)
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<PAGE>
EXHIBIT B
CHARTER
of
CHADMOORE WIRELESS GROUP, INC.
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<PAGE>
EXHIBIT C
CAPITALIZATION
of
CHADMOORE WIRELESS GROUP, INC.
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