SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 10, 1998
WINSTAR COMMUNICATIONS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-10726 13-3585278
- ----------------- --------------- --------------
(State or Other (Commission File (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
230 Park Avenue, New York, New York 10169
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(212) 584-4000
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 3 Pages
<PAGE>
Item 5. Other Events.
On July 10, 1998, WinStar Communications, Inc. (Registrant)
entered into an Agreement to Purchase LMDS License with CellularVision USA, Inc.
("CVUSA") and CellularVision of New York, L.P. ("CVNY") pursuant to which
Registrant has agreed to purchase from CVNY a license granted by the Federal
Communications Commission ("FCC") for 850 MHz of bandwidth in New York City.
This bandwidth will be disaggregated from CVNY's license and combined with
Registrant's existing 38 GHz licenses to establish a total spectrum position of
1.750 MHz in New York City. Registrant will pay $32.5 million in cash for the
license. The transaction is subject to the receipt of consent of the FCC to the
transfer of the license, compliance with provisions of the Hart-Scott- Rodino
Antitrust Improvements Act of 1976, approval of the stockholders of CVUSA and
other conditions usual to transactions of such nature.
Registrant also has agreed to lend CVNY $3.5 million (which
was advanced on July 17, 1998) and an additional $2.0 million upon completion of
necessary filings with the FCC and the granting of approval by CVUSA's
stockholders. Registrant may lend CVNY up to an additional $7.0 in certain
circumstances. Payment of the loans to CVNY is guaranteed by CVUSA and is
secured by pledges of all of the assets of both CVUSA and CVNY as well as
pledges of the stock of the general partner of CVNY and all of the limited
partnership interests of CVNY.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
1. Agreement to Purchase LMDS License dated July 10, 1998 by
and between Registrant, CVUSA and CVNY.
2. Loan Agreement dated July 10, 1998 among CVNY, CVUSA and
Registrant.
3. Security Agreement dated July 10, 1998 by and among CVNY,
CVUSA and Registrant.
4. Press Release of Registrant issued July 13, 1998.
2
<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.
Dated: July 23, 1998 WINSTAR COMMUNICATIONS, INC.
----------------------------
(Registrant)
/s/ Frederic E. Rubin
------------------------------
Frederic E. Rubin
Vice President and Treasurer
3
EXECUTION COPY
AGREEMENT TO PURCHASE LMDS LICENSE
AGREEMENT TO PURCHASE LMDS LICENSE, dated as of July 10, 1998 (this
"Agreement") by and between WinStar Communications, Inc., a Delaware corporation
the "Purchaser"), CellularVision USA, Inc., a Delaware corporation ("CVUSA") and
CellularVision of New York, L.P., a Delaware limited partnership ("Seller"),
WHEREAS, Seller holds the LMDS A Block License (the "License") from the
Federal Communications Commission (the "FCC") for the New York Primary
Metropolitan Statistical Area (i.e., the five boroughs comprising the City of
New York, and the contiguous New York State counties of Westchester, Rockland
and Putnam), free and clear of all liens, claims, rights of usage by third
parties and other encumbrances (collectively, "Liens"),
WHEREAS, Seller and CVUSA have retained Wasserstein Perella & Co., Inc.
to advise them on the marketing and sale of the 850 MHz License and Wasserstein
Perella & Co., Inc. has managed the sale process, which included, among other
things, contacting a large number of potential purchasers as well as active
negotiations with certain potential purchasers, all of which resulted in the
offer of the Purchase Price and the Loans (as hereinafter defined) all on the
terms and conditions set forth herein, which CVUSA deems to be the best offer
currently available for the 850 MHz License;
WHEREAS, Seller intends to disaggregate 850 MHz of the spectrum covered by
the License, comprised of the frequencies between 27.5 and 28.35 GHz and to be
conveyed to Purchaser pursuant to a license granted by the FCC thereto (the "850
MHz License") and Purchaser wishes to purchase the 850 MHz License, upon the
terms and subject to the conditions set forth herein, free and clear of all
Liens.
WHEREAS, holders of not less than 39% of the outstanding shares of common
stock of CVUSA wish to irrevocably consent to this Agreement and the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises, and the mutual conditions
and obligations set forth herein, the parties hereto hereby agree as follows:
<PAGE>
1. Purchase Price; Loan. (a) The purchase price for the 850 MHz License
shall be $32,500,000, of which a portion will be payable by offset of the total
outstanding principal amount and accrued interest on the Loan (as defined below)
and the remainder of which will be payable by wire transfer of immediately
available funds to Seller at the Closing (defined in Section 3).
(b) As promptly as practicable following the execution and delivery of this
Agreement by the parties hereto (including the voting agreement of certain
holders owning not less than 39% of the outstanding shares of common stock of
CVUSA), Purchaser will make an initial loan to Seller (the "Initial Loan") in
the amount of $3,500,000, and, when Seller shall have made the FCC filings
contemplated by Section 2(a) and CVUSA shall have obtained the stockholder
approval contemplated by Section 13, Purchaser will make an additional loan in
the amount of $2,000,000 (such loan, together with the Initial Loan and the
loans that Purchaser may, in its sole discretion, make pursuant to Section 6,
the "Loans") at 7.5% per annum, with interest and principal payable in full at
the Closing by way of offset against the purchase price then due, as provided
above, or on such earlier date as this Agreement may be terminated in accordance
with its terms, provided that in the event of such a termination, such interest
rate will be 18% per annum. The Loans will be secured by a first priority
perfected security interest on all of the assets of Seller as to which a
security interest may be granted, including, without limitation, the proceeds
from such assets as well as from the sale or other transfer of FCC licenses, it
being understood and agreed that (i) a vendor's security interest in certain
equipment has been assigned to NewStart Factors, Inc. and (ii) the FCC licenses
may not be subject to security interests as a matter of law. Purchaser's
security interest will extend to after-acquired property and to proceeds,
provided that Borrower will retain the right to enter into vendor financing and
equivalent secured financing arrangements with respect to equipment acquired
after the date hereof. CVUSA will guarantee the repayment in full of the Loans
in accordance with its terms, and will secure its guarantee with a pledge of all
of the outstanding shares of stock of CellularVision Capital Corp., the sole
general partner of Seller, and all of the outstanding limited partnership
interests in Seller, all of which are owned by CVUSA. The parties agree to
prepare, review and negotiate in good faith and execute as promptly as
practicable (and in any event prior to the funding of the Loans) mutually
acceptable definitive documentation ((the "Loan Documents") in customary form
for these financing transactions, including, without limitation, a Loan
Agreement (including guaranty provisions), a Note, a Security Agreement
(including pledge provisions), and UCC-1 forms. To the extent there is an
inconsistency between the Loan Documents and this Agreement with respect to the
Loans and related security arrangements, the Loan Documents shall control.
<PAGE>
2. Government Approvals; Transition. (a) As promptly as practicable
following the execution and delivery of this Agreement, Seller and Purchaser
will (i) file appropriate applications for the disaggregation of the License and
assignment of the 850 MHz License to Purchaser and (ii) make such filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations (collectively, the "HSR Act") as may be legally required in order to
consummate the transactions contemplated herein, with the filing fee related to
any such filing to be shared by Purchaser and CVNY on a 50%/50% basis. Following
the making of such applications and filings, both parties will diligently
attempt to obtain successful results with respect thereto in a manner that
permits the consummation of the transactions contemplated herein as soon as
practicable.
(b) Prior to the Closing, and in accordance with all applicable legal and
regulatory requirements, Seller will clear its operations from the spectrum
covered by the 850 MHz License, such transition to be completed in any event
within 90 days of the date of FCC Approval (as herein defined).
3. Closing. The closing of the transactions contemplated herein (the
"Closing") shall occur on the first business day (the "Closing Date") following
the first date upon which all of the following conditions are satisfied: (i) the
FCC shall have granted its consent to the assignment of the 850 MHz License to
Purchaser and, unless waived by Purchaser, such consent shall have become a
final, nonappealable order no longer subject to review or reconsideration ("FCC
Approval"); (ii) CVUSA shall have obtained the approval of its stockholders with
respect to the transactions contemplated hereby; and (iii) any applicable
waiting period under the HSR Act shall have expired without action taken to
prevent the consummation of the transactions contemplated herein. At the
closing, Seller shall assign the 850 MHz License to Purchaser free and clear of
all Liens against payment of the Purchase Price as contemplated by Section 1.
4. Representations and Warranties. (a) Each party (the "Representer")
hereby represents and warrants to the other that (i) the Representer has all
requisite power and authority to execute this Agreement and the Loan Documents
and perform its obligations hereunder and thereunder, (ii) all corporate and
partnership action necessary for the authorization, execution and performance by
the Representer of its obligations hereunder and thereunder have been taken,
except that, in the case of CVUSA, stockholder approval may be required, and
(iii) subject to obtaining the consent and approvals referred to in paragraph 3
above, the execution, delivery and performance of this Agreement and the Loan
Documents does not and will not require the consent of any other person or
entity, contravene the certificate of incorporation or by-laws or certificate of
limited partnership or partnership agreement of the Representer or conflict with
or result in a breach or violation by the Representer of any law, court or
administrative order or contract to which the Representer is a party or by which
the Representer is bound.
(b) Seller and CVUSA hereby represent and warrant that Seller is the sole
legal and beneficial owner and holder of the License, has the right under
applicable law and FCC regulations to effect the disaggregation of spectrum
contemplated hereby and that the License is, and the 850 MHz License will be,
held by Seller free and clear of all Liens. Without limiting the foregoing,
Seller hereby represents and warrants that no person or entity other than Seller
has or will have the right to use all or any portion of the License or the 850
MHz License. Seller hereby further represents and warrants that (i) it is in
compliance in all material respects with the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC, (ii) Seller has
satisfied all build-out, renewal, construction and other material regulatory
requirements, and (iii) there are no pending complaints, challenges, petitions,
appeals or other regulatory encumbrances pending or, to the best of the
knowledge of Seller or CVUSA, threatened, against Seller or the License.
<PAGE>
(c) Each party will use all commercially reasonable efforts to cause all of
its representations and warranties in this Agreement to remain true and correct
at all times through the Closing Date and to cause all conditions to Closing to
be satisfied.
5. Closing Conditions. (a) Each Party's obligation to close shall be
subject to the following conditions (i) the other party's representations and
warranties hereunder and under the Loan Documents shall be true and correct on
and as of the Closing Date as if made again on that date, (ii) the other party
shall have performed all covenants to have been performed hereunder and
thereunder and (iii) the other party shall have delivered a certificate of a
senior officer as to the matters in clauses (i) and (ii) above dated as of the
Closing Date.
(b) Purchaser's obligation to close shall be subject to the conditions that
(i) the conditions referred to in Sections 2(b) and 3 shall have been satisfied,
(ii) there shall be no injunction or order of any court or government agency
restraining or invalidating any of the transactions contemplated hereby, and
(iii) Purchaser shall have received opinions of Seller's counsel dated as of the
date hereof and as of the Closing date in form and substance reasonably
satisfactory to Purchaser and covering such portion of the matters covered by
Seller's and CVUSA's representations contained herein as are customarily covered
in legal opinions and subject to customary qualifications, including an opinion
of FCC counsel substantially in the form attached.
6. Termination. Either party which is not then in material breach of its
obligations hereunder may terminate this Agreement without liability by written
notice to the other party if the Closing Date shall not have occurred on or
before January 31, 1999, provided, however, that upon Purchaser's notice given
at least 10 days prior to the date that termination would otherwise be
permitted, such date shall be extended to June 30, 1999 and, thereafter, to
December 31, 1999 if (i) Purchaser is not in material breach of its obligations
hereunder and (ii) on each such occasion Purchaser makes an additional Loan of
$3.5 million in principal amount to the Seller on substantially the same terms
as the Loans. Purchaser may terminate this Agreement at any time if CVUSA has
not obtained stockholder approval of this transaction by October 10, 1998.
7. Transaction Expenses. Except as otherwise provided in Section 2(a) and
Section 13, each of the parties hereto will be responsible for its own expenses
(including fees and expenses of legal counsel) incurred in connection with the
transactions contemplated hereby, provided that as of the Closing Date (or
earlier termination of this Agreement in accordance with its terms in a case in
which the expense reimbursement provision of Section 13 do not apply) Seller and
CVUSA will reimburse Purchaser's reasonable fees and expenses of counsel
incurred in connection with the negotiation and preparation of the documents
relating to the transactions contemplated hereby, including the Loans, and the
prosecution of the FCC applications contemplated hereby, provided that the
amount of such fees and expenses related to the documentation of the
transactions through the funding of the Initial Loan and prosecution of the FCC
applications contemplated hereby shall not exceed $50,000. Each party represents
to the other that it has not incurred any liability for a broker's or finder's
fee in connection with the transactions contemplated hereby, except that Seller
is liable to Wasserstein Perella & Co., Inc. for fees in connection with such
transactions.
8. Publicity; Disclosure. Without the prior approval of the other party,
neither of the parties hereto shall disclose to the public or to any third party
any information concerning the transactions contemplated hereby, other than
disclosures to their financial, legal and other advisors and to governmental
authorities or the public as may, in the opinion of counsel, be required by law.
Notwithstanding the foregoing, CVUSA shall be permitted to include in the proxy
statement described in Section 13 hereof, such details of the transactions
contemplated hereby as may be required by law; provided that Purchaser shall
have the right to review and comment thereon prior to the proxy statement being
filed with the SEC or distributed. The parties will cooperate in the preparation
of a joint press release or coordinated but separate press releases announcing
the effectiveness of this Agreement as soon as it occurs pursuant to Section 12.
<PAGE>
9. Access. Until the Closing, CVUSA and Seller will give Purchaser and its
representatives all access during ordinary business hours to the premises and
personnel of Seller and CVUSA and to all accounting, financial and other records
applicable to Seller as Purchaser may reasonably request for the purpose of
confirming compliance with this Agreement and CVUSA and shall furnish all
information with respect to the business and affairs of Seller as Purchaser may
reasonably request for such purpose. CVUSA and Seller will cause their
executives, employees, attorneys and accountants to make themselves available to
provide reasonable cooperation to Purchaser in connection therewith.
10. Exclusivity. Neither CVUSA nor Seller shall (nor shall either of them
permit their representatives or stockholders to) discuss a possible sale, lease
or other disposition of or by Seller or CVUSA (whether by sale of stock or
assets or otherwise) that is not consistent with the sale to Purchaser of the
850 MHz License contemplated hereby or provide any information in connection
therewith to any other party or enter into any agreements or commitments to do
the same.
11. Assignment. This Agreement is intended to be a binding agreement
between Purchaser, CVUSA and Seller and shall bind and inure to the benefit of
the successors and assigns of such parties; provided that CVUSA and Seller may
not assign their rights or delegate their obligations hereunder without
Purchaser's prior written consent, which will not be unreasonably withheld. The
Purchaser may assign its rights hereunder to any of its wholly-owned or majority
controlled subsidiaries, provided that no such assignment of its rights shall
relieve Purchaser of any of its obligations hereunder.
12. Effectiveness. Simultaneously with the execution and delivery of this
Agreement the following are expected to occur, upon the occurrence of which this
Agreement will come into full force and effect:
(a) Holders of not less than 39% of the issued and outstanding shares of
Common Stock of CVUSA shall have agreed to vote their shares as provided below;
(b) Seller shall have executed and delivered to Purchaser the Loan
Documentation, including arrangements with existing creditors as Purchaser shall
deem appropriate;
(c) Purchaser shall have received such opinions of Seller's counsel as it
shall reasonably require in connection with FCC and corporate matters with
respect to the Loan Documents, the License and the transactions contemplated
hereby, including, if Purchaser so requires, a favorable opinion from
Purchaser's FCC counsel to the effect that there is no reason to expect (i) that
the transactions contemplated hereby will materially adversely affect the
regulatory status of any of the FCC wireless licenses currently held by
Purchaser or any of its subsidiaries or (ii) that there is any reason to believe
that the disaggregation of spectrum is not permissible under applicable law.
13. Shareholder Approval; Break-up fee; Events of Bankruptcy.
(a) CVUSA has obtained the approval of a majority of its board of directors
to the transactions contemplated hereby, and its board has recommended and will
continue to recommend, so long as such recommendation is consistent with their
fiduciary duties under applicable law, that its stockholders vote to approve the
transactions contemplated hereby. CVUSA will call a special meeting of its
stockholders as promptly as practicable for the purpose of obtaining such
approval, will file a preliminary proxy statement with respect thereto with the
Securities and Exchange Commission within five (5) business days of the
execution of this Agreement and will distribute a definitive proxy statement to
stockholders in accordance with applicable law, and use its best efforts to hold
such meeting and obtain such approval as quickly as possible.
(b) In the event a petition for relief under 11 U.S.C. ss.101 et seq. (the
"Bankruptcy Code") or similar State insolvency statute, is filed by or against
Seller or CVUSA, each Seller and CVUSA agree to (i) consent to entry of an order
for relief under Chapter 11 of the Bankruptcy Code; (ii) continue to comply with
the terms of this Agreement; and (iii) to the extent necessary for Seller or
CVUSA to continue to comply with the terms of this Agreement, seek Bankruptcy
Court approval of the sale contemplated by this Agreement or take such other
action as may be necessary or advisable to allow Seller and CVUSA to continue to
comply with the terms of this Agreement.
(c) in the event at any time on or prior to the Closing Date (i) this
Agreement is terminated by Seller or CVUSA (other than as a result of a material
breach by Purchaser) and a court determines that specific enforcement in
accordance with the provisions of Section 14(b) is not available to Purchaser,
or (ii) Purchaser terminates this Agreement because CVUSA stockholder approval
has not been obtained by October 10, 1998, then Purchaser shall be entitled to
the following as liquidated damages, and not as a penalty:
(i) Expense Reimbursement: Seller and CVUSA jointly and severally shall
reimburse Purchaser for its actual and reasonable out-of-pocket expenses, not to
exceed $325,000 (exclusive of the amounts payable pursuant to Section 7)
incurred in furtherance of this Agreement and the transactions contemplated
herein, including without limitation, attorneys' fees and expenses incurred by
Purchaser for services of outside counsel in negotiating this Agreement, the
Loan Documents and all related agreements, performance of due diligence, or
otherwise (the "Expense Reimbursement"). Purchaser shall submit to Seller and
CVUSA an itemized statement reflecting such actual reasonable expenses. Within
five (5) days thereafter, Seller and CVUSA shall make an Expense Reimbursement.
This obligation shall survive any termination of this Agreement, and shall be
secured by the collateral under the security agreement being executed in
relation to the Loans.
<PAGE>
(ii) Termination Fee. Seller and CVUSA jointly and severally shall, within
five (5) days of such termination, pay $1,625,000 to the Purchaser as a
termination fee ("Termination Fee"). This obligation shall survive any
termination of this Agreement, and shall be secured by the collateral under the
security agreement being executed in relation to the Loans.
14. Specific Performance; Miscellaneous; Conflict Waiver. (a) This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of New York. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together shall
constitute one instrument.
(b) Notwithstanding the provisions of Section 13(c)(i) and (ii), it is
understood and agreed that money damages would not be an adequate remedy for a
breach of the Agreement by Seller or CVUSA and that Purchaser shall be entitled
to specific performance and injunctive or other equitable relief as a remedy for
any such breach. Seller and CVUSA agree to waive any requirement for the
securing or posting of any bond in connection with such remedy. Such remedy
shall not be deemed to be the exclusive remedy for any such breach, but shall be
in addition to all other remedies available to Purchaser at law or in equity.
(c) Each of the parties hereto acknowledges that Willkie Farr & Gallagher
regularly acts as counsel for each of them, and consents to the fact that the
New York office of such firm will provide corporate (but not FCC) advice to
CVUSA and Seller (which will receive FCC advice from other counsel), its
Washington office will provide FCC (but not corporate) advice to Purchaser,
which is also represented by other counsel in this matter.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
WINSTAR COMMUNICATIONS, INC.
By:________________________
Title:
Accepted and agreed as of July 10, 1998
CELLULARVISION USA, INC.
By:_______________________
Printed name:
Title:
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
its General Partner
By:_____________________________
Title:
Voting Agreement by Stockholders
In consideration of the Purchaser executing the Agreement, the undersigned,
being the holders of not less than 39% outstanding shares of the voting capital
stock of CellularVision USA, Inc. which is entitled to vote a the approval of
the transactions described herein, hereby expressly and irrevocably agree to
vote all such shares in favor of approval of the transactions contemplated
hereby at any special meeting of stockholders to be called for such purpose and
do hereby agree to take such actions as Purchaser may reasonably request in
order to further evidence such approval and consent.
--------------------------------
Shant Hovnanian
--------------------------------
Vahak Hovnanian
LOAN AGREEMENT
dated as of July 10, 1998
among
CELLULARVISION OF NEW YORK, L.P.
(the "Borrower"),
CELLULARVISION USA, INC.
(the "Guarantor")
and
WINSTAR COMMUNICATIONS, INC.
(the "Lender")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.........................................................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Accounting Terms.......................................................................7
ARTICLE 2. THE LOANS.............................................................................................8
Section 2.01. Loans..................................................................................8
Section 2.02. The Notes..............................................................................8
Section 2.03. Purpose................................................................................8
Section 2.04. Prepayments............................................................................8
Section 2.05. Interest and Principal.................................................................9
ARTICLE 3. CONDITIONS PRECEDENT..................................................................................9
Section 3.01. Documentary Conditions Precedent.......................................................9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.......................................................................11
Section 4.01. Organization, Good Standing and Due Qualification.....................................11
Section 4.02. Power and Authority of Borrower; No Conflicts.........................................11
Section 4.03. Corporate Power and Authority of Guarantor; No Conflicts..............................12
Section 4.04. Legally Enforceable Agreements........................................................12
Section 4.05. Litigation............................................................................13
Section 4.06. Ownership and Liens...................................................................13
Section 4.07. Taxes.................................................................................13
Section 4.08. ERISA.................................................................................13
Section 4.09. Subsidiaries and Affiliates...........................................................13
Section 4.10. Agreements............................................................................14
Section 4.11. Operation of Business.................................................................14
Section 4.12. No Default on Outstanding Judgments or Orders.........................................14
Section 4.13. No Defaults on Other Agreements.......................................................14
Section 4.14. Labor Disputes and Acts of God........................................................15
Section 4.15. Governmental Regulation...............................................................15
Section 4.16. No Forfeiture.........................................................................15
ARTICLE 5. AFFIRMATIVE COVENANTS................................................................................15
Section 5.01. Maintenance of Existence..............................................................15
Section 5.02. Conduct of Business...................................................................15
Section 5.03. Maintenance of Properties.............................................................16
Section 5.04. Maintenance of Records................................................................16
Section 5.05. Maintenance of Insurance..............................................................16
Section 5.06. Compliance with Laws..................................................................16
Section 5.07. Right of Inspection...................................................................16
Section 5.08. Reporting Requirements................................................................16
i
<PAGE>
ARTICLE 6. NEGATIVE COVENANTS...................................................................................18
Section 6.01. Debt..................................................................................18
Section 6.02. Guaranties............................................................................18
Section 6.03. Liens.................................................................................19
Section 6.04. Sale and Leaseback....................................................................19
Section 6.05. Investments...........................................................................20
Section 6.06. Distributions.........................................................................20
Section 6.07. Sale of Assets........................................................................20
Section 6.08. Subsidiary Capital Stock..............................................................21
Section 6.09. Transactions with Affiliates and Subsidiaries.........................................21
Section 6.10. Mergers, Etc..........................................................................21
Section 6.11. Acquisitions..........................................................................22
Section 6.12. No Activities Leading to Forfeiture...................................................22
Section 6.13. Restrictions..........................................................................22
ARTICLE 7. EVENTS OF DEFAULT....................................................................................22
Section 7.01. Events of Default.....................................................................22
Section 7.02. Remedies..............................................................................24
ARTICLE 8. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS...........................................................25
Section 8.01. Guarantied Obligations...................................................................25
Section 8.02. Performance Under This Agreement.........................................................25
Section 8.03. Waivers..................................................................................26
Section 8.04. Releases.................................................................................27
Section 8.05. Marshaling...............................................................................28
Section 8.06. Liability................................................................................29
Section 8.07. Unconditional Obligation.................................................................29
Section 8.08. Election to Perform Obligations..........................................................29
Section 8.09. No Election..............................................................................29
Section 8.10. Severability.............................................................................30
Section 8.11. Other Enforcement Rights.................................................................30
Section 8.12. Delay or Omission; No Waiver.............................................................30
Section 8.13. Restoration of Rights and Remedies.......................................................30
Section 8.14. Cumulative Remedies......................................................................31
Section 8.15. Survival.................................................................................31
ARTICLE 9. MISCELLANEOUS........................................................................................31
Section 9.01. Amendments and Waivers...................................................................31
Section 9.02. Usury....................................................................................31
Section 9.03. Expenses.................................................................................31
Section 9.04. Survival.................................................................................32
Section 9.05. Assignment...............................................................................32
Section 9.06. Notices..................................................................................32
Section 9.07. JURISDICTION; IMMUNITIES.................................................................33
Section 9.08. Subordination............................................................................34
Section 9.09. Table of Contents; Headings..............................................................34
Section 9.10. Severability.............................................................................34
ii
<PAGE>
Section 9.11. Counterparts.............................................................................35
Section 9.12. Integration..............................................................................35
Section 9.13. GOVERNING LAW............................................................................36
EXHIBITS
Exhibit A Note
Exhibit B Security Agreement
Exhibit C Opinion of Counsel to the Obligors
SCHEDULES
Schedule I Subsidiaries and Affiliates
Schedule II Loan Arrangements; Liens
Schedule III Existing Guaranties
Schedule IV Litigation
</TABLE>
iii
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT dated as of July 10, 1998 among CELLULARVISION OF NEW YORK,
L.P., a limited partnership organized under the laws of the State of Delaware
(the "Borrower"), CELLULARVISION USA, INC., a corporation organized under the
laws of the State of Delaware (the "Guarantor" and, together with the Borrower,
the "Obligors") and WINSTAR COMMUNICATIONS, INC., a corporation organized under
the laws of the State of Delaware (the "Lender").
The Obligors have requested that the Lender extend credit to the Borrower
and make loans to the Borrower, the repayment which will be guarantied by the
Guarantor, as provided in this Agreement. The Guarantor will receive direct
economic and financial benefits from the Debt incurred under this Agreement and
the incurrence of such Debt is in the best interests of the Guarantor. Each
Obligor acknowledges that the Lender would not provide the financing hereunder
but for the obligations of such Obligor hereunder with respect hereto.
Accordingly, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Accounts" shall have the meaning assigned to such term in the Security
Agreement.
"Acquisition" means any transaction pursuant to which any Obligor (a)
acquires equity securities (or warrants, options or other rights to acquire such
securities) of any Person, (b) causes or permits any Person to be merged into
the Borrower or any Subsidiary, in any case pursuant to a merger, purchase of
assets or any reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding securities, in exchange for such
securities, of cash or securities of any Obligor, or a combination thereof, or
(c) purchases all or substantially all of the business or assets of any Person.
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"Affiliate" means any Person which directly or indirectly controls, or is
controlled by, or is under common control with, any Obligor. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this Loan Agreement, as amended, modified, extended,
supplemented, restated and/or replaced from time to time. References to
Articles, Sections, Exhibits, Schedules and the like refer to the Articles,
Sections, Exhibits, Schedules and the like of this Agreement unless otherwise
indicated.
"Business Day" means for all purposes, any day other than a Saturday,
Sunday or legal holiday on which banks in New York, New York are open for the
conduct of a substantial part of their commercial banking business.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Cash Equivalents" means (a) direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition; (b) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank operating within the United States of
America having capital and surplus in excess of $500,000,000; or (d) money
market or mutual funds whose sole investments are comprised of investments
permitted under the foregoing clauses (a) through (c).
"Closing Date" shall have the meaning assigned to such term in the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations thereunder, collectively, as amended or supplemented from time to
time and remain in effect.
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"Collateral" means all Property that is subject or is to be subject to the
Lien granted to the Lender by the Security Agreement.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness for the deferred purchase price of Property
or services (except trade payables in the ordinary course of business); (c)
Unfunded Benefit Liabilities of such Person; (d) liabilities under Guaranties of
Debt of any other Person; (e) obligations secured by any Lien on Property of
such Person; and (f) obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of the Loans and, to
the extent permitted by law, any other amount payable by any Obligor or the
Guarantor under this Agreement or any other Facility Document, or any Note that
is not paid when due (whether at stated maturity, by acceleration or otherwise),
a rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to four percent
per annum above the interest rate established pursuant to Section 2.05.
"Distribution" means, with respect to any Person, the declaration or
payment of any dividends by such Person, or the purchase, redemption, retirement
or other acquisition for value of any of its capital stock now or hereafter
outstanding, or the making of any distribution of assets to its stockholders as
such whether in cash, assets or in obligations of such Person, or the allocation
or other setting apart of any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock, or the making of any other distribution by reduction of
capital or otherwise in respect of any shares of its capital stock.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
supplemented and amended from time to time, including any rules and regulations
promulgated thereunder.
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"ERISA Affiliate" means any domestic United States corporation or trade or
business which is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which any Borrower or Affiliate is a
member, or (ii) solely for purposes of potential liability under Section
302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created
under Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which any Borrower or Affiliate is a
member.
"Event of Default" has the meaning given such term in Section 7.01.
"Facility Documents" means this Agreement, the Notes, the Security
Agreement, stock powers executed by the Guarantor, UCC financing statements
executed by the Borrower and the Guarantor, as debtor, and all certificates,
affidavits and other documents executed by the Borrower and/or the Guarantor and
relating to the transactions set forth in this Agreement, together with any
amendments thereto as may from time to time be executed.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any Obligor or any of their respective Affiliates before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or the receipt of notice by any such party that any of them
is a suspect in or a target of any governmental inquiry or investigation, which
may result in an indictment of any of them or the seizure or forfeiture of any
of their respective Properties.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a consistent basis.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty" means, with respect to any Person, guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person with respect to the obligations of any
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other Person (including, but not limited to, an agreement to purchase any
obligation, stock, assets, goods or services or to supply or advance any funds,
assets, goods or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any such other Person against loss).
"Investment" as applied to the Borrower, the Guarantor and Affiliates means
the purchase or acquisition of any share of capital stock, partnership interest,
evidence of indebtedness or other equity security of any other person or entity,
any loan, advance or extension of credit to, or contribution to the capital of,
any other person or entity, any real estate held for sale or investment, any
commodities futures contracts held other than in connection with bona fide
hedging transactions, any other investment in any other person or entity, and
the making of any commitment or acquisition of any option to make an Investment.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means an advance of funds to be made by the Lender to the Borrower
pursuant to the terms of this Agreement.
"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, Properties or condition of the Obligors and the Affiliates,
taken as a whole, (b) the ability of any Obligor to perform its obligations
under each of the Facility Documents to which it is a party, (c) the binding
nature, validity or enforceability of any of the Facility Documents and (d) the
validity, perfection, priority or enforceability of the Liens in favor of the
Lender securing the Loans hereunder which, in each case, arises from, or
reasonably could be expected to arise from, any action or omission of action on
the part of any Obligor or the occurrence of any event or the existence of any
fact or condition in respect of any Obligor, an Affiliate or any of their
respective Properties.
"Maturity Date" means the earliest of (i) the date on which the Purchase
Agreement is terminated in accordance with its terms, (ii) the Closing Date or
(iii) January 31, 1999, as such date may be extended pursuant to Section 2.01.
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"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by any Borrower or any Subsidiary or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means the promissory Notes of the Borrower in the form of Exhibit A
hereto evidencing the Loans made by the Lender hereunder and all promissory
notes delivered in substitution or exchange therefor, as amended or supplemented
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by any Borrower or Subsidiary or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Purchase Agreement" means the Agreement to Purchase LMDS Licenses dated
July 10, 1998 by and between the Lender, the Guarantor and the Borrower.
"Purchase Money Lien" means a Lien on any Property acquired by any Obligor
or Affiliate or placed on any Property in order to finance the acquisition or
construction of such Property or the construction of improvements located on
such Property, or the assumption of any Lien on Property existing at the time of
the acquisition of such Property or of the Person holding such Property or a
Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease.
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"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement in the form of Exhibit B
to be delivered by the Borrower and the Guarantor under the terms of this
Agreement, as amended or supplemented from time to time.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Unconditional Guaranty" shall have the meaning assigned to such term in
Section 10.01(a) of this Agreement.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001 (a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of any Borrower, Subsidiary or
any ERISA Affiliate under Title IV of ERISA.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
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ARTICLE 2. THE LOANS.
Section 2.01. Loans. Subject to the terms and conditions of this Agreement,
the Lender agrees to make an initial Loan to the Borrower on the Closing Date in
the amount of Three Million Five Hundred Thousand Dollars ($3,500,000.00). In
addition, at the request of Borrower, given on five Business Days' prior written
notice at any time after the Borrower has made the filings contemplated by
Section 2(a)(i) of the Purchase Agreement and the approval of the stockholders
of the Guarantor referred to in Sections 3 and 13 of the Purchase Agreement has
been obtained, the Lender shall make an additional Loan to the Borrower in the
amount of Two Million Dollars ($2,000,000.00). If the Lender, in its sole
discretion, extends the date before which the Purchase Agreement may not be
terminated to June 30, 1999, the Lender shall make a further Loan to the
Borrower and if the Lender, in its sole discretion, extends such date thereafter
to December 31, 1999, the Lender shall make a second further Loan to the
Borrower, each such Loan to be in the amount of Three Million Five Hundred
Thousand Dollars ($3,500,00.00), and, in each such instance, the Maturity Date
shall likewise be extended.
Section 2.02. The Notes. Each Loan shall be evidenced by a promissory note
(the "Notes") in favor of the Lender in the form of Exhibit A, dated the date on
which such Loan is advanced to the Borrower, and payable on the Maturity Date,
as the same may be extended pursuant to Section 2.01, duly completed and
executed by the Borrower and delivered by the Borrower to the Lender.
Section 2.03. Purpose. The Borrower shall use the proceeds of the Loans for
general corporate purposes, including working capital. Such proceeds shall not
be used for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U.
Section 2.04. Prepayments. The Loans may be prepaid at any time, without
premium or penalty, upon one Business Day's Notice. Any interest accrued on the
amounts so prepaid to the date of such payment must be paid at the time of any
such prepayment.
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Section 2.05. Interest and Principal.
(a) Interest shall accrue on the outstanding and unpaid principal amount of
the Loans for the period from the date on which it is advanced to the Borrower
to but excluding the Maturity Date, as the same may be extended pursuant to
Section 2.01. The Loans shall bear interest at a rate per annum equal to
eighteen percent, except that they shall bear interest at the rate of seven and
one-half percent per annum if the transactions contemplated by the Purchase
Agreement are consummated on or before the Maturity Date, as the same may be
extended pursuant to Section 2.01. If the principal amount of the Loans and any
other amount payable by any Obligor hereunder, under the Notes or under any
other Facility Document shall not be paid when due (at stated maturity, by
acceleration or otherwise), interest shall accrue on such amount to the fullest
extent permitted by law from and including such due date to but excluding the
date such amount is paid in full at the Default Rate. In no event shall the
interest rate exceed the maximum amount allowed by law.
(b) On the Maturity Date, as the same may be extended pursuant to Section
2.01, the Borrower shall pay the entire amount of the Loans together with
interest accrued thereon and all other sums outstanding hereunder and under the
Facility Documents. If, on or before the Maturity Date, as the same may be
extended pursuant to Section 2.01, the transactions contemplated by the Purchase
Agreement are consummated, payment shall be made by the offset by the Lender of
amounts due it hereunder and under the Notes against amounts payable by the
Lender pursuant to the Purchase Agreement.
ARTICLE 3. CONDITIONS PRECEDENT.
Section 3.01. Documentary Conditions Precedent. The obligations of the
Lender to make the initial Loan are subject to the condition precedent that the
Lender shall have received on or before the Closing Date each of the following,
in form and substance reasonably satisfactory to the Lender and its counsel:
(a) counterparts of this Agreement executed by each of the Borrower, the
Guarantor and the Lender;
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(b) a Note duly executed by the Borrower;
(c) the Security Agreement duly executed by the Borrower, the Guarantor and
the Lender together with (i) executed copies of the financing statements (UCC-1)
in recordable form necessary for filing under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Lender, desirable to perfect
the security interests of the Lender in and to the Collateral described in the
Security Agreement; (ii) stock certificates representing all of the capital
stock of CellularVision Capital Corp., a New Jersey corporation which is the
sole general partner of the Borrower; (iii) certificates representing all of the
outstanding limited partnership interests of the Borrower; and (iv) stock powers
executed in blank by the holders of the preceding items (ii) and (iii);
(d) certificates of the Secretary or Assistant Secretary of each of the
Borrower and the Guarantor, dated the Closing Date, (i) attesting to all
corporate action taken by such Borrower and the Guarantor, including resolutions
of its Board of Directors authorizing the execution, delivery and performance of
each of the Facility Documents to which it is a party and each other document to
be delivered by the Borrower and the Guarantor pursuant to this Agreement, (ii)
certifying the names and true signatures of the officers of the Borrower and the
Guarantor authorized to sign the Facility Documents to which it is a party and
each other document to be delivered by the Borrower and the Guarantor under this
Agreement and (iii) verifying that the agreement of limited partnership or the
charter and by-laws, as appropriate, of the Borrower and the Guarantor attached
thereto are true, correct and complete as of the date thereof;
(e) a certificate of a duly authorized officer of the Borrower and the
Guarantor, dated the Closing Date, stating that the representations and
warranties in Article 4 are true and correct on such date as though made on and
as of such date and that no event has occurred and is continuing which
constitutes a Default or Event of Default;
(f) good standing certificates, tax good standing certificates, and
certified copies of all charter documents with respect to the Borrower and the
Guarantor certified by the appropriate public official of its jurisdiction of
incorporation, and evidence that the Borrower and the Guarantor
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each is qualified as a foreign limited partnership or corporation in every other
jurisdiction in which it does business;
(g) a favorable opinion of Willkie Farr & Gallagher, counsel to each of the
Obligors, dated the Closing Date, in substantially the form of Exhibit C and as
to such other matters as the Lender may reasonably request; and
(h) the Borrower shall have made arrangements with its existing creditors
as the Lender shall deem appropriate.
The obligations of the Lender to make a Loan other than the initial Loan
shall be subject to the condition precedent that the Lender shall have received
on or before the date such Loan is to be advanced a certificate to the effect
set forth in paragraph (e), above.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
Each of the Obligors hereby represents and warrants that:
Section 4.01. Organization, Good Standing and Due Qualification. The
Borrower and the Guarantor each is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has the power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign limited
partnership or corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
Section 4.02. Power and Authority of Borrower; No Conflicts. The execution,
delivery and performance by the Borrower of this Agreement and the other
Facility Documents to which it is a party have been duly authorized by all
necessary partnership action and do not and will not: (a) require any consent or
approval of its partners not heretofore obtained; (b) contravene its agreement
of limited partnership; (c) violate any provision of, or require any filing
(other than the filing of financing statements required pursuant to the terms of
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the Security Agreement), registration, consent or approval under, any law, rule,
regulation (including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it; (d) subject to the completion of the arrangements referred
to in Section 3.01(h), result in a breach of or constitute a default or require
any consent under any indenture or loan or credit agreement, or any other
agreement, lease or instrument to which it is a party or by which it or its
Properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien (other than as created under the Security Agreement),
upon or with respect to any of the Properties now owned or hereafter acquired by
it; or (f) cause it to be in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 4.03. Corporate Power and Authority of Guarantor; No Conflicts. The
execution, delivery and performance by the Guarantor of this Agreement and the
other Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing (other than the filing of financing
statements required pursuant to the terms of the Security Agreement),
registration, consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to it; (d)
result in a breach of or constitute a default or require any consent under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which it is a party or by which it or its Properties may be bound
or affected; (e) result in, or require, the creation or imposition of any Lien
(other than as created under the Security Agreement), upon or with respect to
any of the Properties now owned or hereafter acquired by it; or (f) cause it to
be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
Section 4.04. Legally Enforceable Agreements. Each Facility Document to
which any Obligor is a party is, or when delivered under this Agreement will be,
a legal, valid and binding obligation of such Obligor enforceable against such
Obligor in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally.
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Section 4.05. Litigation. Except as listed in Schedule IV, there are no
material actions, suits or proceedings pending or, to the knowledge of any
Obligor, threatened, against or affecting such Obligor or any of its Affiliates
before any court, Governmental Authority or arbitrator.
Section 4.06. Ownership and Liens. The Borrower , the Guarantor and each
Affiliate has title to, or valid leasehold interests in, all of its Properties,
and none of the Properties owned or leased by any of them is subject to any
Lien, except as may be permitted hereunder and except for the Liens created by
the Security Agreement.
Section 4.07. Taxes. Each of the Obligors and its Affiliates has filed all
tax returns (federal, state and local) required to be filed and has paid all
taxes, assessments and governmental charges and levies thereon then due and
payable, including interest and penalties, if applicable.
Section 4.08. ERISA. Each Plan and, to the best knowledge of any Obligor,
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other applicable Federal or state law, and
no event or condition is occurring or exists concerning which the Borrower, the
Guarantor or any Affiliate would be under an obligation to furnish a report to
the Lender in accordance with Section 6.08(k) hereof. As of the most recent
valuation date for each Plan, each Plan was "fully funded", which for purposes
of this Section 4.08 shall mean that the fair market value of the assets of the
Plan is not less than the present value of the accrued benefits of all
participants in the Plan, computed on a Plan termination basis. To the best
knowledge of any Obligor, no Plan has ceased being fully funded as of the date
these representations are made with respect to any Loan under this Agreement.
Section 4.09. Subsidiaries and Affiliates. Schedule I sets forth the name
of each Subsidiary of the Guarantor and each Affiliate, in each case showing the
jurisdiction of its incorporation or organization and showing the percentage of
each Person's ownership of the outstanding stock of such Subsidiary or
Affiliate. All of the outstanding shares of capital stock of each Subsidiary,
either directly or indirectly, are validly issued, fully paid and nonassessable,
and all such shares or interests are owned free and clear of all Liens (other
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than as created under the Security Agreement). Except as set forth on Schedule
I, no Obligor or Affiliate owns or holds the right to acquire any shares of
stock or any other security or interest in any other Person.
Section 4.10. Agreements. Schedule II is a complete and correct list of all
credit agreements, indentures, purchase agreements (except for purchase
agreements of inventory in the ordinary course of business), guaranties, Capital
Leases and other investments, agreements and arrangements presently in effect in
excess of $50,000 (the "Loan Arrangements") providing for or relating to
extensions of credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which any Obligor
or any of its Affiliates is in any manner directly or contingently obligated;
and the maximum principal or face amounts of the credit in question, outstanding
and which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Section 4.11. Operation of Business. The Borrower, the Guarantor and each
Affiliate possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct the business
substantially as conducted and as presently proposed to be conducted, and
neither the Borrower, the Guarantor nor any Affiliate is in violation of any
valid rights of others with respect to any of the foregoing.
Section 4.12. No Default on Outstanding Judgments or Orders. Each of the
Obligors and its respective Affiliates has satisfied all judgments and no
Obligor or Affiliate is in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court, arbitrator or federal,
state, municipal or other Governmental Authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 4.13. No Defaults on Other Agreements. No Obligor or Affiliate is a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or other restriction which could have a
Material Adverse Effect. No Obligor or Affiliate is in default in any respect in
the performance, observance or fulfillment of any of the obligations, covenants
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or conditions contained in any agreement or instrument material to its business
to which it is a party.
Section 4.14. Labor Disputes and Acts of God. Neither the business nor the
Properties of the Borrower, the Guarantor or any Affiliate are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have a Material
Adverse Effect.
Section 4.15. Governmental Regulation. Neither the Borrower, the Guarantor
or any Affiliate is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act, the Federal Power Act or any statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby.
Section 4.16. No Forfeiture. Neither any Obligor nor any of its Affiliates
is engaged in or proposes to be engaged in the conduct of any business or
activity which could result in a Forfeiture Proceeding and no Forfeiture
Proceeding against any of them is pending or threatened.
ARTICLE 5. AFFIRMATIVE COVENANTS.
So long as the Notes shall remain unpaid, each Obligor and its respective
Affiliates shall:
Section 5.01. Maintenance of Existence. Preserve and maintain its existence
and good standing in the jurisdiction of its organization, and qualify and
remain qualified as a foreign corporation or limited partnership in each
jurisdiction in which such qualification is required.
Section 5.02. Conduct of Business. Continue to engage in the business of
the same general type as conducted by it on the date of this Agreement.
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Section 5.03. Maintenance of Properties. Maintain, keep and preserve all of
its Properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
Section 5.04. Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all financial transactions of Borrower, each Subsidiary Guarantor or
Affiliate.
Section 5.05. Maintenance of Insurance. Maintain business insurance,
liability insurance and insurance against fire and other risks with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated but no less than that required by law
and satisfactory to the Lender.
Section 5.06. Compliance with Laws. Comply in all respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property.
Section 5.07. Right of Inspection. Annually and at any other reasonable
time and from time to time, permit the Lender or any agent or representative
thereof, at Borrower's reasonable cost and expense to examine and make copies
and abstracts from the records and books of account of, and visit the Properties
and inspect the Collateral of, such Obligor, and to discuss the affairs,
finances and accounts of such Obligor with him, its officers and directors and
independent accountants, as applicable.
Section 5.08. Reporting Requirements. Furnish directly to the Lender:
(a) promptly after the commencement thereof, notice of all material
actions, suits, and proceedings before any court or Governmental Authority
affecting any Obligor or its Affiliates;
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(b) as soon as possible and in any event within 10 days after the
occurrence of each Default or Event of Default a written notice setting forth
the details of such Default or Event of Default and the action which is proposed
to be taken by the applicable Obligor with respect thereto;
(c) copies of all reports and forms filed with respect to all pension or
other employee benefit plans under ERISA, except as filed in the normal course
of business and that would not result in an adverse action to be taken by ERISA
and each annual report filed pursuant to Section 104 of ERISA with respect to
each Plan (including, to the extent required by Section 104 of ERISA, the
related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information referred to in Section
103) and each annual report filed with respect to each Plan under Section 4065
of ERISA; provided, however, that in the case of a Multiemployer Plan, such
annual reports shall be furnished only if they are available to any Borrower,
Subsidiary Guarantor or an ERISA Affiliate;
(d) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower, the Guarantor
or Affiliate sends to its stockholders or partners, and copies of all regular,
periodic and special reports, and all registration statements which the
Borrower, the Guarantor or Affiliate files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted therefor, or
with any national securities exchange except those as prepaid in the normal
course of business and that would not result in an adverse action to be taken by
any such agencies;
(e) promptly after the commencement thereof or promptly after any Obligor
knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
(f) within thirty (30) days of a request by the Lender, such other
information respecting the condition or operations, financial or otherwise, of
any Obligor or Affiliate as the Lender may from time to time reasonably request,
including but not limited to, schedules detailing operating costs, accounts
receivables agings, projections and inventory summary schedules.
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ARTICLE 6. NEGATIVE COVENANTS.
So long as the Notes shall remain unpaid, no Obligor or any of its
respective Affiliates shall directly or indirectly, without the prior written
consent of the Lender;
Section 6.01. Debt. Create, incur, assume, suffer or permit to exist any
Debt, except:
(a) Debt under this Agreement, the Notes and the other Facility Documents;
(b) Debt outstanding on the Closing Date and set forth on Schedule II;
(c) Debt consisting of Guaranties permitted pursuant to Section 6.02;
(d) Debt secured by a Purchase Money Lien for the purchase of equipment
after the date of this Agreement:
(e) Debt that is unsecured and fully subordinated to Debt owed to the
Lender in a manner satisfactory to the Lender in its sole discretion; and
(f) Debt owed to the Lender.
Section 6.02. Guaranties. Assume, guarantee, endorse or otherwise become
directly or contingently responsible or liable for any Guaranty except:
(a) the Unconditional Guaranty by the Guarantor hereunder;
(b) Guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(c) existing Guaranties of Debt set forth on Schedule III, which shall not
be increased or modified; and
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(d) Guaranties by the Borrower, the Guarantor or an Affiliate of an
obligation of a Subsidiary of the Borrower or a Subsidiary of the Guarantor or
Affiliate issuing the Guaranty, provided the obligation that is the subject of
the Guaranty is not an obligation that the Borrower, the Guarantor or Affiliate
is prohibited from entering into pursuant to the terms of any of the Facility
Documents.
Section 6.03. Liens. Create, incur, assume or suffer to exist any Lien,
upon or with respect to any of its Properties, now owned or hereafter acquired,
except:
(a) Liens in favor of the Lender;
(b) Liens for taxes or assessments or other government charges or levies if
not yet due and payable;
(c) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than 60 days;
(d) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Purchase Money Liens granted with respect to equipment purchased after
the date of this Agreement; and
(f) Existing Liens described on Schedule II.
Section 6.04. Sale and Leaseback. Sell, transfer or otherwise dispose of
any real or personal Property to any Person and thereafter directly or
indirectly lease back the same or similar Property.
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Section 6.05. Investments. Make any Investment, except:
(a) cash or Cash Equivalents;
(b) Property to be used or useful in the ordinary course of business of the
Borrower or the Guarantor or Affiliate; and
(c) for customary collection arrangements for accounts receivable.
Section 6.06. Distributions. Make any Distribution, except that:
(a) the Borrower may make Distributions payable solely in its common stock;
and
(b) any Subsidiary may make Distributions to the Borrower.
Section 6.07. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its now owned or hereafter acquired assets (including, without
limitation, shares of stock and indebtedness, receivables and leasehold
interests); except:
(a) the licenses to be sold pursuant to the Purchase Agreement;
(b) assets used exclusively in connection with Borrower's broadcast
television business;
(c) for inventory disposed of in the ordinary course of business; and
(d) the sale or other disposition of assets no longer used or useful in the
conduct of its business.
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Section 6.08. Subsidiary Capital Stock. Issue, sell or exchange, agree or
obligate itself to issue, sell or exchange, any additional shares of its capital
stock, sell or otherwise dispose of any shares of capital stock of any of its
Subsidiaries, or permit any such Subsidiary to issue any additional shares of
its capital stock, or form or acquire any additional Subsidiaries.
Section 6.09. Transactions with Affiliates and Subsidiaries. (a) Make any
Investment in an Affiliate or a Subsidiary of any Obligor; (b) transfer, sell,
lease, assign or otherwise dispose of any Property to any Affiliate or a
Subsidiary of the Borrower or the Guarantor; (c) merge into or consolidate with
or purchase or acquire Property from any Affiliate or a Subsidiary of the
Borrower or the Guarantor; or (d) enter into any other transaction directly or
indirectly with or for the benefit of any Affiliate or a Subsidiary of the
Borrower or the Guarantor (including, without limitation, guaranties and
assumption of obligations of any Affiliate or a Subsidiary of the Borrower or
the Guarantor); provided that (x) any Affiliate who is an individual may serve
as a director, officer or employee of the Borrower or the Guarantor and receive
reasonable compensation for his or her services in such capacity and (y) the
Borrower or the Guarantor may enter into transactions (other than Investments by
the Borrower or the Guarantor in any Affiliate or the Subsidiary of the Borrower
or the Guarantor) providing for the sale of inventory and other Property in the
ordinary course of business if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower or the
Guarantor as the monetary or business consideration which would obtain in a
comparable arm's length transaction with a Person not an Affiliate or a
Subsidiary of the Borrower or the Guarantor, provided that the Guarantor may
acquire issued and outstanding shares of VisionStar, Inc. in exchange for Debt
permitted pursuant to Section 6.01(e) and any Obligor may accept capital
contributions, in kind or in cash, from Affiliates.
Section 6.10. Mergers, Etc. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), except as may be set forth in the Purchase Agreement.
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Section 6.11. Acquisitions. Make any Acquisition other than the acquisition
of shares of VisionStar, Inc. and interests in CellularVision Technologies &
Telecommunications, L.P., its general partner, as a contribution to capital,
pursuant to Section 6.09.
Section 6.12. No Activities Leading to Forfeiture. Engage in or propose to
be engaged in the conduct of any business or activity which could reasonably be
expected to result in a Forfeiture Proceeding.
Section 6.13. Restrictions. Enter into or suffer to exist any agreement
with any Person that prohibits, requires the consent of such Person for or
limits the ability of (i) the Borrower or the Guarantor or Affiliate to pay
dividends or make other distributions or pay Debt owed to any other Obligor or
Affiliate, make loans or advances to any other Obligor or Affiliate or transfer
any of its Property which constitutes Collateral to any other Obligor or
Affiliate, (ii) any Obligor or Affiliate to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues which constitute Collateral
under the Security Agreement, whether now owned or hereafter acquired, or (iii)
any Obligor or Affiliate to enter into any modification or supplement of the
Facility Documents.
ARTICLE 7. EVENTS OF DEFAULT.
Section 7.01. Events of Default. Any of the following events shall be an
"Event of Default":
(a) the Borrower shall fail to pay the principal or interest of a Note on
or before the date when due and payable;
(b) any representation or warranty made or deemed made in this Agreement or
in any other Facility Document or which is contained in any certificate,
document, opinion, financial or other statement furnished at any time under or
in connection with any Facility Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made;
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(c) (i) any Obligor shall fail to observe any covenant on its part to be
observed in Article 6 of this Agreement and such failure shall continue for
fifteen (15) consecutive days; or (ii) any Obligor (other than as specifically
referred to elsewhere in this Section 7.01) fails to perform or observe any
term, covenant or agreement on its part to be performed or observed in any
Facility Document.
(d) any Obligor or Affiliate shall: (i) fail to pay any indebtedness in
excess of $50,000, including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of such Obligor or
Affiliate, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or (ii) fail
to perform or observe any term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any such
indebtedness, when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
indebtedness; or any such indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) any Obligor, or Affiliate: (i) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such debts become due;
or (ii) shall make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a period of 30 days
or more; or shall be the subject of any proceeding under which its assets may be
subject to seizure, forfeiture or divestiture; or (v) by any act or omission
shall indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
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receiver or trustee for all or any substantial part of its Property; or (vi)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 30 days or more;
(f) one or more judgments, decrees or orders for the payment of money in
excess of $50,000 in the aggregate shall be rendered against any Obligor, the
Individual Guarantor or Affiliate;
(g) The Unfunded Benefit Liabilities of one or more Plans have increased
after the date of this Agreement in an amount which is material;
(h) (i) CellularVision Capital Corp. shall have ceased to be the sole
general partner of the Borrower; or (ii) the Guarantor shall have ceased to own
all of the outstanding capital stock of CellularVision Capital Corp.;
(i) (i) any Forfeiture Proceeding shall have been commenced; or (ii) the
Lender has a good faith basis to believe that a Forfeiture Proceeding has been
threatened or commenced;
(j) the Security Agreement shall at any time after its execution and
delivery and for any reason cease: (i) to create a valid and perfected first
priority security interest in and to the Property purported to be subject to
such agreement; or (ii) to be in full force and effect or shall be declared null
and void, or the validity or enforceability thereof shall be contested by any
Obligor or other Person or any Obligor or other Person shall deny it has any
further liability or obligation under the Security Agreement or any Obligor or
other Person shall fail to perform any of its obligations thereunder; or
(k) the Purchase Agreement shall have been terminated or either of the
Borrower or the Guarantor shall be in material breach of any of its obligations
under the Purchase Agreement.
Section 7.02. Remedies. If any Event of Default shall occur and be
continuing, the Lender may by notice to the Borrower declare the outstanding
principal of all of the Notes, all interest thereon and all other amounts
payable under this Agreement and the Notes to be forthwith due and payable,
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whereupon the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower and
the Guarantor; provided that, in the case of an Event of Default referred to in
Section 7.01(e) or Section 7.01(k) above, the Notes, all interest thereon and
all other amounts payable under this Agreement shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantor.
ARTICLE 8. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS.
Section 8.01. Guarantied Obligations. The Guarantor, in consideration of
the execution and delivery of this Agreement by the Lender, hereby irrevocably
and unconditionally guarantees to the Lender, as and for the Guarantor's own
debt, until final payment has been made:
(a) the due and punctual payment by the Borrower of the principal of, and
interest on, the Notes at any time outstanding and all other amounts payable,
and all other indebtedness owing, by each of the Obligors under (i) each of the
Facility Documents to which it is a party and (ii) the Purchase Agreement (all
such obligations so guarantied are herein collectively referred to as the
"Guarantied Obligations"), in each case when and as the same shall become due
and payable, whether at maturity, pursuant to mandatory or optional prepayment,
by acceleration or otherwise, all in accordance with the terms and provisions
hereof and thereof, it being the intent of the Guarantor that the guaranty set
forth in this Section 8.01 (the "Unconditional Guaranty") shall be a guaranty of
payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by any Obligor of all duties, agreements, covenants and obligations
of such Obligor contained in each of the Facility Documents to which it is a
party and the Purchase Agreement.
Section 8.02. Performance Under This Agreement. In the event the Borrower
fails to make, on or before the due date thereof, any payment of the principal
of, or interest on, the Notes or of any other amounts payable, or any other
indebtedness owing, under any of the Facility Documents or the Purchase
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Agreement or if the Borrower shall fail to perform, keep, observe, or fulfill
any other obligation referred to in clause (a) or clause (b) of Section 8.01
hereof in the manner provided in the Notes or in any of the other Facility
Documents or the Purchase Agreement, the Guarantor shall cause forthwith to be
paid the moneys, or to be performed, kept, observed, or fulfilled each of such
obligations, in respect of which such failure has occurred.
Section 8.03. Waivers. To the fullest extent permitted by law, the
Guarantor does hereby waive:
(a) notice of acceptance of the Unconditional Guaranty;
(b) notice of any borrowings under this Agreement, or the creation,
existence or acquisition of any of the Guarantied Obligations, subject to the
Guarantor's right to make inquiry of the Lender to ascertain the amount of the
Guarantied Obligations at any reasonable time;
(c) notice of the amount of the Guarantied Obligations, subject to the
Guarantor's right to make inquiry of the Lender to ascertain the amount of the
Guarantied Obligations at any reasonable time;
(d) notice of adverse change in the financial condition of the Borrower,
any other Guarantor or any other fact that might increase the Guarantor's risk
hereunder;
(e) notice of presentment for payment, demand, protest, and notice thereof
as to the Notes or any other instrument;
(f) notice of any Default or Event of Default;
(g) all other notices and demands to which the Guarantor might otherwise be
entitled (except if such notice or demand is specifically otherwise required to
be given to the Guarantor hereunder or under the other Facility Documents);
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(h) the right by statute or otherwise to require the Lender to institute
suit against the Borrower or to exhaust the rights and remedies of the Lender
against the Borrower, the Guarantor being bound to the payment of each and all
Guarantied Obligations, whether now existing or hereafter accruing, as fully as
if such Guarantied Obligations were directly owing to the Lender by the
Guarantor;
(i) any defense arising by reason of any disability or other defense (other
than the defense that the Guarantied Obligations shall have been fully and
finally performed and indefeasibly paid) of the Borrower or by reason of the
cessation from any cause whatsoever of the liability of the Borrower in respect
thereof; and
(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
which, but for this waiver, might be applicable to any sale of Property of the
Guarantor made under any judgment, order or decree based on this Agreement, and
the Guarantor covenants that it will not at any time insist upon or plead, or in
any manner claim or take the benefit or advantage of such law.
Until all of the Guarantied Obligations shall have been paid in full, the
Guarantor hereby agrees to completely subordinate any right of subrogation,
reimbursement, or indemnity whatsoever in respect thereof and any right of
recourse to or with respect to any assets or Property of the Borrower. Nothing
shall discharge or satisfy the obligations of the Guarantor hereunder except the
full and final performance and indefeasible payment of the Guarantied
Obligations by the Guarantor as provided herein and the Facility Documents and
the Purchase Agreement, upon which the Lender agrees to transfer and assign its
interest in the Notes to the Guarantors without recourse, representation or
warranty of any kind (other than that the Lender owns the Notes and that the
Notes is free of Liens created by the Lender). All of the Guarantied Obligations
shall in the manner and subject to the limitations provided herein for the
acceleration of the Notes forthwith become due and payable without notice.
Section 8.04. Releases. The Guarantor consents and agrees that, without
notice to or by it and without affecting or impairing the joint and several
obligations of the Guarantor hereunder or under any other Facility Document, the
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the Lender, in the manner provided herein, by action or inaction, may:
(a) compromise or settle, extend the period of duration or the time for the
payment, or discharge the performance of, or may refuse to, or otherwise not,
enforce, or may, by action or inaction, release all or any one or more parties
to, the Notes or the other Facility Documents;
(b) grant other indulgences to the Borrower in respect thereof;
(c) amend or modify in any manner and at any time (or from time to time)
the Notes and the other Facility Documents in accordance with Section 9.01 or
otherwise;
(d) release or substitute any one or more of the endorsers or guarantors of
the Guaranteed Obligations whether parties hereto or any Facility Document or
not; and
(e) exchange, enforce, waive, or release, by action or inaction, any
security for the Guarantied Obligations (including, without limitation, any of
the collateral therefor) or any other guaranty of the Notes.
Section 8.05. Marshaling. The Guarantor consents and agrees that:
(a) the Lender shall be under no obligation to marshal any assets in favor
of the Guarantor or against or in payment of any or all of the Guarantied
Obligations; and
(b) to the extent the Borrower makes a payment or payments to the Lender,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required, for any of
the foregoing reasons or for any other reason, to be repaid or paid over to a
custodian, trustee, receiver, or any other party under any bankruptcy law,
common law, or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof intended to be satisfied thereby shall be revived
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and continued in full force and effect as if said payment or payments had not
been made and the Guarantor shall be primarily liable for such obligation.
Section 8.06. Liability. The Guarantor agrees that its liability shall not
be contingent upon the exercise or enforcement by the Lender of whatever
remedies the Lender may have against the Borrower or the Guarantor or the
enforcement of any Lien or realization upon any security the Lender may at any
time possess.
Section 8.07. Unconditional Obligation. The Unconditional Guaranty set
forth in this Article 8 is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full and final payment of the Guarantied Obligations
without respect to future changes in conditions, including change of law or any
invalidity or irregularity with respect to the issuance or assumption of any
obligations (including, without limitation, the Notes) of or by the Borrower, or
with respect to the execution and delivery of any agreement (including, without
limitation, the Notes and the other Facility Documents) of the Borrower.
Section 8.08. Election to Perform Obligations. Any election by the
Guarantor to pay or otherwise perform any of the obligations of the Borrower
under the Notes or under any of the other Facility Documents, whether pursuant
to this Article 8 or otherwise, shall not release the Borrower or the Guarantor
from such obligations or any of its other obligations under the Notes or under
any of the other Facility Documents.
Section 8.09. No Election. The Lender shall have the right to seek recourse
against the Guarantor to the fullest extent provided for herein for the
Guarantor's obligations under this Agreement (including, without limitation,
this Article 8) in respect of the Notes. No election to proceed in one form of
action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of the Lender's right to proceed in any other form of action
or proceeding or against other parties unless the Lender has expressly waived
such right in writing. Specifically, but without limiting the generality of the
foregoing, no action or proceeding by the Lender against the Borrower under any
document or instrument evidencing obligations of the Borrower to the Lender
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shall serve to diminish the liability of the Guarantor under this Agreement
(including, without limitation, this Article 8) except to the extent that the
Lender finally and unconditionally shall have realized payment by such action or
proceeding, notwithstanding the effect of any such action or proceeding upon the
Guarantor's right of subrogation against the Borrower.
Section 8.10. Severability. Subject to Article 7 hereof and applicable law,
each of the rights and remedies granted under this Article 8 to the Lender may
be exercised by the Lender without notice by the Lender to, or the consent of or
any other action by, the Lender.
Section 8.11. Other Enforcement Rights. The Lender may proceed, as provided
in Article 8 hereof, to protect and enforce the Unconditional Guaranty by suit
or suits or proceedings in equity, at law or in bankruptcy, and whether for the
specific performance of any covenant or agreement contained herein (including,
without limitation, in this Article 8) or in execution or aid of any power
herein granted; or for the recovery of judgment for the obligations hereby
guarantied or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.
Section 8.12. Delay or Omission; No Waiver. No course of dealing on the
part of the Lender and no delay or failure on the part of any such Person to
exercise any right hereunder (including, without limitation, this Article 8)
shall impair such right or operate as a waiver of such right or otherwise
prejudice such Person's rights, powers and remedies hereunder. Every right and
remedy given by the Unconditional Guaranty or by law to the Lender may be
exercised from time to time as often as may be deemed expedient by such Person.
Section 8.13. Restoration of Rights and Remedies. If the Lender shall have
instituted any proceeding to enforce any right or remedy under the Unconditional
Guaranty, the Notes, the Security Agreement or any other Facility Document or
the Purchase Agreement, and such proceeding shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Lender,
then and in every such case the Lender, the Borrower and each Guarantor shall,
except as may be limited or affected by any determination in such proceeding, be
restored severally and respectively to its respective former positions hereunder
and thereunder, and thereafter, subject as aforesaid, the rights and remedies
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of the Lender shall continue as though no such proceeding had been instituted.
Section 8.14. Cumulative Remedies. No remedy under this Agreement
(including, without limitation, this Article 8), the Notes or any of the other
Facility Documents is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given hereunder this Agreement (including, without limitation, this Article 8),
under the Notes or under any of the other Facility Documents or the Purchase
Agreement.
Section 8.15. Survival. So long as the Guarantied Obligations shall not
have been fully and finally performed and indefeasibly paid, the obligations of
the Guarantor under this Article 10 shall survive the transfer and payment of
the Notes.
ARTICLE 9. MISCELLANEOUS.
Section 9.01. Amendments and Waivers. No provision of this Agreement may be
amended, waived or modified unless such amendment, waiver or modification is
evidenced by an instrument in writing signed by the Obligors and the Lender. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.02. Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender.
Section 9.03. Expenses. Each Obligor shall reimburse the Lender on demand
for all reasonable costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel and costs allocated by
internal legal departments) incurred by the Lender in connection with the
performance or enforcement of this Agreement or the other Facility Documents or
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the Purchase Agreement. Each Obligor agrees to indemnify the Lender and its
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them arising out of or by reason of any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) relating to or arising out of this Agreement or the other Facility
Documents or the Purchase Agreement or any of the transactions contemplated
thereunder or any remedial or other action taken by any Obligor or the Lender in
connection with compliance by any Obligor, or any of their respective
Properties, with any law, including without limitation, the fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or wilful
misconduct of the Person to be indemnified).
Section 9.04. Survival. The obligations of the Obligors under Section 9.03
shall survive the repayment of the Loans.
Section 9.05. Assignment. This Agreement shall be binding upon, and shall
inure to the benefit of, Obligors and the Lender and their respective
successors, assigns, heirs and rep resentatives, as applicable except that no
Obligor may assign or transfer their rights or obligations hereunder. The Lender
may assign all or any part of its rights and obligations under this Agreement
(including, without limitation, all or a portion of the Loans and the Notes) to
any entity, in which event in the case of an assignment, upon notice thereof by
the Lender to the Borrower, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it were the Lender hereunder.
Section 9.06. Notices. Unless the party to be notified otherwise notifies
the other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be given to the Lender by telephone,
confirmed by telex, telecopy or other writing, and to the Obligors by ordinary
mail, return receipt requested, or telecopier addressed to such party at its
address on the signature page of this Agreement. Notices shall be effective: (a)
if given by mail, 72 hours after deposit in the mails with first class postage
prepaid, addressed as aforesaid; and (b) if given by telecopier, when the
telecopy is transmitted to the telecopier number as aforesaid; provided that
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notices to the Lender shall be effective upon receipt. A copy of any notices to
an Obligor relating to an Event of Default shall be delivered to Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York 10019-6099; Attention: Bruce
R. Kraus, Esq.; provided however, that failure to provide such copy to Willkie
Farr & Gallagher will not otherwise affect the validity or effectiveness of the
notice delivered to an Obligor.
Section 9.07. JURISDICTION; IMMUNITIES. (a) EACH OBLIGOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER FACILITY DOCUMENTS, AND EACH
OBLIGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
EACH OBLIGOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
OBLIGOR AT ITS ADDRESS SPECIFIED IN SECTION 9.06. EACH OBLIGOR AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. EACH OBLIGOR FURTHER WAIVES ANY OBJECTION TO VENUE IN THE STATE
OF NEW YORK AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN NEW YORK STATE ON
THE BASIS OF FORUM NON CONVENIENS. EACH OBLIGOR FURTHER AGREES THAT ANY ACTION
OR PROCEEDING BROUGHT AGAINST THE BANK SHALL BE BROUGHT ONLY IN NEW YORK STATE
OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK. EACH OBLIGOR WAIVES ANY
RIGHT IT MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 9.07 shall affect the right of the Lender to
serve legal process in any other manner permitted by law or affect the right of
the Lender to bring any action or proceeding against any Obligor or their
respective Properties in the courts of any other jurisdictions.
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(c) To the extent that any Obligor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its Property, each Obligor
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, the Notes and the other Facility Documents.
Section 9.08. Subordination. Each Obligor hereby agrees that any Debt or
other intercompany receivable or advance of any other Obligor, directly or
indirectly, in favor of such Obligor of whatever nature at any time outstanding
shall be completely subordinate in right of payment to the prior payment in full
of the Notes and all other obligations owing by such Obligor or any other
Obligor under each of the Facility Documents to which it is a party, and that no
payment on any such Debt or intercompany receivables or advances shall be made
except intercompany receivables and advances permitted pursuant to the terms of
this Agreement may be repaid in the ordinary course of business so long as no
Default or Event of Default shall have occurred and be continuing. In the event
that any payment on any such Debt or intercompany receivable or advance shall be
received by such Obligor other than as permitted by this Section 9.08 before
payment in full of the Notes and all other obligations owing by such Obligor or
any other Obligor under each of the Facility Documents to which it is a party,
such Obligor shall receive such payment and hold the same in trust for, and
shall immediately pay over to, the Lender all such sums to the extent necessary
so that the Lender shall have paid all obligations owed or which may become
owing to it under the Notes or any other Facility Document.
Section 9.09. Table of Contents; Headings. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 9.10. Severability. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
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hereof in any jurisdiction. Without limiting the foregoing, to the extent that
mandatory and non-waivable provisions of applicable law (including but not
limited to any applicable laws pertaining to fraudulent conveyance and any
applicable business corporation laws) otherwise would render the full amount of
any Obligor's obligations hereunder and under the other Facility Documents
invalid or unenforceable, such Obligor's obligations hereunder and under the
other Facility Documents shall be limited to the maximum amount which does not
result in such invalidity of the foregoing.
Section 9.11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 9.12. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
[The balance of this page is intentionally blank]
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Section 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
General Partner
By:_________________________________________
Name: Shant Hovnanian
Title: Chairman & Chief Executive Officer
CELLULARVISION USA, INC.
By:__________________________________________
Name: Shant Hovnanian
Title: Chairman & Chief Executive Officer
Address for Notices (for Borrower and Guarantor):
140 58th Street -- Lot 7E
Brooklyn, New York 11220
Telephone: 718-489-1227
FAX: 718-489-1235
WINSTAR COMMUNICATIONS, INC.
By:__________________________________________
Name: Timothy R. Graham
Title: Executive Vice President
Address for Notices:
230 Park Avenue, Suite 3126
New York, New York 10169
Telephone: 212-584-4000
FAX: 212-922-1637
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SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of July 10, 1998, by and
among CELLULARVISION OF NEW YORK, L.P., a Delaware limited partnership (the
"Company"), CELLULARVISION USA, INC., a Delaware corporation ("Parent"), and
WINSTAR COMMUNICATIONS, INC., a corporation organized under the laws of the
State of Delaware ("Lender").
WHEREAS, the Company, Parent and the Lender have entered into (i) a Loan
Agreement (as may be amended from time to time, the "Loan Agreement") dated as
of the date hereof, providing for, among other things, the making of loans (the
"Loans" and the promissory notes issued by the Company to the Lender pursuant
thereto are herein referred to as the "Notes"), in the aggregate principal
amount of up to $12,500,000, and (ii) a Purchase Agreement (as defined in the
Loan Agreement) providing for the sale by the Company to the lender of the "850
MHz License" (as defined in the Purchase Agreement);
WHEREAS, the Company, Parent and the lender have entered into this
Agreement for the purpose of granting a security interest in the Collateral (as
defined in this Agreement) in order to secure the Obligations (as defined in
this Agreement) for the benefit of the Lender;
NOW, THEREFORE, in consideration of the premises, the terms and conditions
set forth herein and other good and valuable consideration, the receipt and
sufficiency to which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. GENERAL DEFINITIONS.
1.1 Defined Terms. When used herein, the following terms have the
respective meanings set forth below or set forth in the Section of this
Agreement following such term:
Accounts -- Section 2.1 (a)(i).
Affiliate -- has the meaning given such term in the Loan Agreement.
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Agreement -- this Security Agreement, as may be amended from time to time.
Collateral -- Section 2.1 (c).
Company -- the first paragraph of this Agreement.
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.
850 MHz License -- has the meaning given such term in the Purchase
Agreement.
Event of Default -- Section 3.1.
Fair Market Value -- at any time with respect to any Property, means the
sale value of such Property that would be realized in an arm's-length sale at
such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.
FCC -- Federal Communications Commission.
Insurance Policies -- insurance policies covering loss or damage to the
Collateral by fire, theft, explosion, spoilage and all other hazards and risks
against which the Company insures the Collateral.
Interests -- Section 2.1(b)(i).
Inventory -- Section 2.1 (a)(ii).
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Investments -- all investments, made in cash or by delivery of Property,
whether by acquisition of stock, indebtedness or other obligation or Security,
or by loan, advance or capital contribution, or otherwise.
Lender -- the first paragraph of this Agreement.
Lien -- any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and including but not limited to
the security interest or lien arising from a mortgage, assignment, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property owned by a
Person. For the purposes of this Agreement, a Person shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
Loan Agreement - the first recital of this Agreement.
Loans -- the first recital of this Agreement.
Notes -- the first recital of this Agreement.
Obligations -- collectively, (i) the unpaid principal of, and interest
(including, without limitation, interest accruing at the default rate and
interest accruing at the applicable rate on or after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company or Parent, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) on the
Notes and all other obligations and liabilities of the Company and Parent to the
Lender, whether direct or indirect, absolute or contingent, due or to become
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due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Loan Agreement, the Notes, this Agreement and any other
document made, delivered or given in connection therewith or herewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel to the Lender) or otherwise and (ii) any and all payments due to the
Lender from the Company and Parent pursuant to the Purchase Agreement including,
without limitation, the "Expense Reimbursement" and the "Termination Fee" (as
each is defined therein).
Parent -- the first paragraph of this Agreement.
Person -- an individual, partnership, corporation, trust, limited liability
company, limited liability partnership or unincorporated association or
organization, joint venture or other entity, or a government or agency or
political subdivision thereof.
Pledged Securities -- Section 2.1 (b)(i).
Property -- any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Agreement -- the first recital of this Agreement.
Security -- shall have the same meaning as set forth in Section 2(1) of the
Securities Act of 1933, as amended.
Security Interest -- shall mean the security interest in the Collateral
granted to the Lender hereunder.
Shares -- Section 2.1 (b)(i).
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Subsidiary -- at any time means a corporation of which the Parent owns,
directly or indirectly, more than fifty percent (50%) of all of the equity
Securities (and Securities convertible into equity Securities) and Voting Stock.
Voting Stock -- means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
1.2 Other Terms. All other terms contained in this Agreement shall have,
when the context so indicates, the meanings provided for by the Uniform
Commercial Code of the State of New York to the extent the same are used or
defined therein.
2. COLLATERAL.
2.1 Security Interest in the Collateral. (a) To secure the prompt payment
and performance of the Obligations when and as due, the Company and Parent each
hereby grants to the Lender a continuing security interest in and to all
Property of each of the Company and Parent, including but not limited to, the
Property specified below in this Section 2.1 (a), whether now owned or existing
or hereafter acquired or arising and wheresoever located:
(i) all accounts, accounts receivable, contract rights related to or
arising from any account, notes, documents, chattel paper, instrument
acceptances, drafts or other forms of obligations and receivables arising
from the sale or lease of inventory or rendition of services in the
ordinary course of business or otherwise (collectively, the "Accounts");
(ii) all inventory (whether held for sale or lease or to be furnished
under contracts of service), raw materials, work in process, and materials
used or consumed in the conduct of business, including all goods, inventory
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and merchandise returned by or reclaimed or repossessed from customers
wherever such goods, inventory and merchandise are located (collectively,
the "Inventory");
(iii) all machinery, equipment, fixtures, furnishings, furniture,
appliances and motor vehicles (whether certificated or not);
(iv) all general intangibles, including but not limited to all
patents, patent applications, copyrights, trademarks, trade names,
licenses, permits, deposit accounts, contract rights, royalty rights, tax
refunds, unearned insurance premium refunds, insurance or condemnation
proceeds (whether or not representing proceeds of other Collateral
described in this Section 2.1 (a)), choses and rights-in-action, beneficial
interests in any trust, joint venture or partnership rights, warranty
rights, certificates, rights under consulting, service, non-compete or
other similar agreements, blueprints and drawings, but not including
licenses granted to the Company or Parent by the FCC;
(v) all moneys, investment property and Property of any kind, now or
at any time or times hereafter, in the possession or under the control of
the Lender or a bailee of the Lender;
(vi) all proceeds from the sale or other disposition of licenses
granted to the Company or Parent by the FCC;
(vii) all accessions to, substitutions for and all replacements,
products and proceeds of the Property described in clauses 2.1(a) (i),
(ii), (iii), (iv), (v) and (vi) above, including, without limitation,
proceeds of the Insurance Policies; and
(viii) all books and records (including, without limitation, customer
lists, credit files, computer programs, printouts, and other computer
materials and records) pertaining to any of the Property described in
clauses 2.1 (a) (i), (ii), (iii), (iv), (v), (vi) and (vii) above.
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(b) To secure the prompt payment and performance of the Obligations when
and as due, Parent hereby grants to the Lender a continuing security interest in
and to all Property of the Parent specified below in this Section 2.1 (b)
whether now owned or existing or hereafter acquired or arising and wheresoever
located:
(i) (A) the shares of stock described in Exhibit A hereto (the
"Shares"), which shares represent one hundred percent (100%) of the issued
and outstanding shares of capital stock of CellularVision Capital Corp. and
all securities convertible or exchangeable into such capital stock, (B) all
limited partnership interests in the Company (the "Interests") (the Shares
and the Interests being referred to herein collectively as the "Pledged
Securities"), (C) the certificates and instruments representing the Pledged
Securities and (D) subject to Section 2.5 hereof, all dividends, cash,
securities (including, without limitation, any securities issued in
connection with stock dividends or stock splits), instruments and other
Property from time to time paid, payable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Securities;
(ii) all substitutions for and all replacements, products and proceeds
of the Property described in clause 2.1 (b)(i) above; and
(iii) all books and records pertaining to any of the Property
described in clauses 2.1 (b)(i) and (ii) above.
(c) All of the Property described in these Sections 2.1(a) and (b) and all
other Property which shall, from time to time, secure the Obligations are herein
collectively referred to as the "Collateral."
2.2 Representations and Warranties. The Company and Parent each hereby
represents and warrants that:
(a) Except for the Pledged Securities owned by Parent, all other Collateral
is owned by the Company or Parent. Parent is the sole owner of the Pledged
Securities.
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No other Person has any right, title, interest, claim, or Lien therein,
thereon, or thereto to the Collateral other than Liens permitted to
exist by the Loan Agreement.
(b) It has executed and will file and will execute and cause to be filed
Uniform Commercial Code financing statements hereof in the appropriate public
offices of the states where the Collateral is presently located, such that the
Lender, upon such filings, will have a perfected first priority Security
Interest in such of the Collateral as to which perfection is obtained by such
uniform commercial code filings.
(c) the Shares constitute one hundred percent (100%) of the issued and
outstanding shares of capital stock of CellularVision Capital, Inc. and the
Interests constitute one hundred percent (100%) of the issued and outstanding
limited partnership interests in the Company, and there exist no outstanding
options, warrants, convertible securities or other rights, contingent or
absolute, to acquire such capital stock or limited partnership interests.
(d) It has not, during the preceding five (5) years, been known by or used
any other corporate, fictitious or trade names. It has not, during the preceding
five (5) years, been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
(e) The chief executive office of the Company and Parent is located at 140
58th Street, Lot 7E, Brooklyn, New York 11220.
(f) The tangible Collateral of the Company and Parent is now located at the
locations set forth in Exhibit B hereto.
2.3 Covenants. The Company and Parent each hereby covenants as follows:
(a) It shall keep the Collateral free of all Liens and the claims of all
Persons, except Liens permitted to exist on the Property by the Loan Agreement.
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(b) It shall pay and discharge when due all taxes, levies, and other
charges upon the Collateral and upon the goods evidenced by any documents
constituting Collateral and shall indemnify and defend the Lender against and
save it harmless from all liabilities arising from such taxes, levies and other
charges. This indemnity shall include reasonable attorneys' fees and legal
expenses.
(c) Except as allowed or permitted by the Loan Agreement, it shall not
sell, lease, transfer or otherwise dispose of any Collateral, and shall not move
any tangible Collateral from its location other than the sale and removal of
inventory in the ordinary course of business, without the written consent of the
Lender.
(d) It shall give the Lender written notice (and, in any event, no later
than thirty (30) days after the date thereof) of (i) any change in its name,
chief executive office or the office where it maintains its books and records
pertaining to Accounts and (ii) the movement or location of any Collateral to or
at, as the case may be, a location other than as set forth in Exhibit B hereto.
2.4 Further Assurances. The Company and Parent will, from time to time and
at its own expense, promptly execute, acknowledge, witness and deliver and file
and record, as appropriate, such specific and further assignments of all or any
portion of the Collateral and such other documents or instruments, and shall
take or cause to be taken such other action as the Lender may reasonably request
for the perfection against it and all other Persons whomsoever of the Security
Interest, or for the continuation and protection thereof, and promptly furnish
to the Lender evidence satisfactory to the Lender of such action. Without
limiting the generality of the foregoing, the Company and Parent shall execute,
acknowledge, witness and/or deliver such financing and continuation statements,
instruments, documents, notices and additional security agreements, make such
notations on its records and take such other action as may be requested by the
Lender. Unless prohibited by law, the Company and parent each hereby authorizes
the Lender to execute and file or record, if necessary, any such financing
statement, instrument, document, notice and agreement on its behalf, as
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applicable. The parties agree that a carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement.
2.5 Voting Rights, Dividends, etc. with respect to Pledged Securities.
(a) So long as no Event of Default shall have occurred and be continuing,
Parent shall be entitled to exercise any and all voting and other consensual
rights pertaining to the Pledged Securities or any part thereof for any purpose
not prohibited by the terms of this Agreement, including, without limitation,
the right to have the Pledged Securities registered in the name of Parent, to
the extent the Pledged Securities may be so registered.
(b) Parent hereby delivers the certificates evidencing the Pledged
Securities to the Lender. Upon the occurrence and during the continuance of an
Event of Default, at the option of the Lender, all rights of Parent to exercise
the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 2.5(a) hereof shall cease, and all such rights
shall thereupon become vested in the Lender, who shall thereupon have the sole
right to exercise such voting and other consensual rights.
(c) So long as no Event of Default shall have occurred and be continuing,
subject to Section 2.5(f) hereof and except as otherwise provided in Section
2.5(d) hereof, Parent shall be entitled to receive and retain any dividends,
cash, securities, instruments and other Property from time to time paid, payable
or otherwise distributed in respect to the Pledged Securities.
(d) Upon the occurrence and during the continuance of an Event of Default,
all rights of Parent to receive dividends, cash, securities, instruments and
other Property that it would otherwise be authorized to receive and retain
pursuant to Section 2.5(c) hereof shall cease and all rights to dividends, cash,
securities, instruments and other Property shall thereupon be vested in the
Lender, who shall thereupon have the sole right to receive and hold as
Collateral such dividends, cash, securities, instruments and other Property. All
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dividends, cash, securities, instruments and other Property that are received by
Parent in contravention of the provisions of this Section 2.5(d) shall be
received in trust for the benefit of the Lender, shall be segregated from other
Property or funds of Parent and shall be forthwith delivered to the Lender, as
Collateral in the same form as so received (with any necessary endorsement and
documents of transfer).
(e) Parent hereby irrevocably appoints the Lender, upon the occurrence and
during the continuance of an Event of Default, as its proxy holder with respect
to the Pledged Securities with full power and authority, pursuant to the written
instructions of the Lender, to vote the Pledged Securities and otherwise act
with respect to the Pledged Securities on behalf of Parent. This proxy is
coupled with an interest and shall be irrevocable for so long as any of the
Obligations remain in existence.
(f) Parent agrees that it will cause the issuers of the Pledged Securities
not to issue any capital stock or limited partnership interests or options,
warrants, convertible securities or other rights, contingent or absolute, to
acquire any capital stock, whether in addition to, by stock dividend or other
distribution upon, or in substitution for, the Pledged Securities, or otherwise,
unless such stock, instruments or securities are forthwith pledged as herein
provided.
2.6 Insurance. All insurers under all Insurance Policies will be directed
to pay all proceeds payable thereunder in respect of the Collateral directly to
the Lender to be held as Collateral. The Company and Parent each irrevocably
makes, constitutes and appoints the Lender (and all Persons designated by the
Lender) as its true and lawful attorney and agent-in-fact for the purposes of
making, settling and adjusting all claims under all Insurance Policies,
endorsing its name on any check, draft, instrument or other item of payment for
the proceeds of the Insurance Policies and for making all determinations and
decisions with respect thereto to the extent the Insurance Policies relate to
the Collateral, in each case, as directed pursuant to the written instructions
of the Lender. In the event that at any time or times hereafter any of the
Insurance Policies required above is not obtained or maintained, or any Person
fails to perform any obligation or pay any premium in whole or in part relating
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thereto, then the Lender may obtain and maintain such Insurance Policies, pay
such premiums and take any other action with respect thereto as the Lender
determines in its sole discretion. All sums so disbursed by the Lender,
including, without limitation, attorneys' fees, court costs, expenses and other
charges relating thereto, shall be additional Obligations hereunder, payable on
demand and secured by the Collateral.
2.7 Protection of Collateral; Reimbursement. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining, and shipping the
Collateral, and any and all excise, property, sales, and use taxes imposed by
any state, federal, or local authority on any of the Collateral or in respect of
the sale thereof shall be borne and paid by the Company and Parent, as
applicable. If the Company or Parent, as applicable, fails to pay promptly any
portion thereof when due, the Lender may pay the same. All sums so disbursed by
the Lender, including, without limitation, attorneys' fees, court costs,
expenses and other charges relating thereto, shall be additional Obligations
hereunder, payable on demand and secured by the Collateral. The Lender shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or other
Person whomsoever, but the same shall be at the Company's and Parent's sole
risk.
3. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
3.1 Events of Default. An "Event of Default" under this Agreement shall
exist if at any time an Event of Default (as defined in the Loan Agreement)
shall exist.
3.2 Remedies. The Lender shall have the following rights and remedies upon
the occurrence of an Event of Default:
(a) all of the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New York, and all other legal and
equitable rights to which the Lender may be entitled under this Agreement, or
under other applicable law, including the right to have a receiver appointed for
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all of the property of the Company or Parent, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive;
(b) the right to take immediate possession of the Collateral, and (i)
require the Company to assemble each item of Collateral, at the Company's
expense, and make it available to the Lender at a place to be designated by the
Lender which is reasonably convenient to both parties, and (ii) enter any of the
premises wherever the Collateral shall be located, with or without force or
process of law, and to keep and store the same on said premises until sold (and
if said premises be the property of a Person executing this Agreement, such
Person agrees not to charge the Lender for storage thereof for a period of at
least ninety (90) days after sale or disposition of said Collateral);
(c) the right to sell or otherwise to dispose of all or any Collateral in
its then condition, or after any further manufacturing or processing thereof, at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit (without any assumption of credit risk),
or any combination thereof, and at such locations as may be stated in such
notice, all as the Lender, in its sole discretion, may deem advisable (the
Company and Parent each hereby agreeing that ten (10) days' prior written notice
to any of them of any public or private sale or other disposition of Collateral
shall be reasonable notice thereof);
(d) the right to conduct any such sales on the premises of any Person
executing this Agreement, without charge therefor, and to adjourn such sales
from time to time in accordance with applicable law;
(e) a license or other right to use, without charge, the labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in advertising for sale and selling any Collateral, and the
rights under all licenses and all franchise agreements; and
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(f) the right to proceed by a suit or suits at law or in equity to
foreclose the security interest granted under this Agreement and to sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction.
3.3 Pledged Securities.
(a) Parent agrees that the Lender shall not be required to register or
qualify any of the Pledged Securities under any applicable state or federal
securities laws in connection with any sale thereof if such sale is effected in
a manner that complies with all applicable federal and state securities laws. In
effecting any such sale, the Lender shall be authorized (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to three
(3) Persons, who will represent and agree that they are purchasing the Pledged
Securities for their own account for investment and not with a view to the
distribution or sale thereof. In the event that any such Pledged Securities are
sold at private sale after the Lender has sought bids by the method approved in
the preceding sentence, so long as one of such bids was accepted, Parent agrees
that
(i) the sale shall be deemed to be commercially reasonable in all
respects,
(ii) Parent shall not be entitled to a credit against the Obligations
in an amount in excess of the purchase price, and
(iii) the Lender shall not incur any liability or responsibility to
Parent in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale.
(b) Parent recognizes that a ready market may not exist for the Pledged
Securities if it is not regularly traded on a recognized securities exchange,
and that a sale by the Lender of any of the Pledged Securities for an amount
substantially less than a pro rata share of the Fair Market Value of the
issuer's assets minus the amount of such issuer's liabilities may be
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commercially reasonable in view of difficulties that may be encountered in
attempting to sell Pledged Securities that is privately traded.
(c) Upon the occurrence of an Event of Default and the sale of the Pledged
Securities, the Company and Parent will fully cooperate with the Lender to
comply with the rules and regulations of the FCC and other requirements of law
to effectuate such sale, including the giving of requisite notices to the FCC
and the solicitation of consents therefrom.
3.4 Purchase by the Lender. In the event that the Lender shall purchase all
or any portion of the Collateral at any such sale, the Lender may elect to apply
a portion of the Obligations owing to it in satisfaction of part of the purchase
price of all or such portion of the Collateral so purchased. Such part of the
purchase price shall be equal to the amount that would be distributed to the
Lender pursuant to Section 3.5 as a result of such purchase if the Lender had
paid such purchase price entirely in cash.
3.5 Application of Proceeds. All proceeds realized by the Lender from any
sale or other realization on the Collateral shall be applied to the Obligations
as follows:
First, to the payment of reasonable costs and expenses of foreclosure
or suit, if any, and of such sale or other exercise of rights, and of all
proper expenses, liabilities and advances, including legal expenses and
attorneys' fees (including, without limitation, the allocated costs of
staff counsel of the Lender), incurred or made hereunder by the Lender, or
any other amounts then due but unpaid to the Lender and of all taxes,
assessments or liens superior to the Security Interest, except any taxes,
assessments or superior liens subject to which said sale or other
disposition may have been made;
Second, to the payment of unpaid principal of the Obligations;
Third, to the payment of unpaid interest on the principal of the
Obligations;
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Fourth, to the payment of unpaid fees with respect to the Obligations
and all other amounts owing under the Loan Agreement to the Persons
entitled to payment thereunder; and
Fifth, to the payment of the surplus, if any, arising from an exercise
of rights with respect to the Collateral, to the Company or Parent, as
applicable, their successors and assigns, or to whomsoever may be lawfully
entitled to receive the same.
The Company and Parent shall remain liable hereunder for payment of any
deficiency on the Obligations after application of such proceeds.
3.6 Remedies Cumulative. All covenants, conditions, provisions, warranties,
guaranties, indemnities and other undertakings contained in this Agreement, or
in any document referred to herein or contained in any agreement supplementary
hereto, shall be deemed cumulative to and not in derogation or substitution of
any of the terms, covenants, conditions or agreements herein contained. The
failure or delay of the Lender to exercise or enforce any rights, powers or
remedies hereunder or under any of the aforesaid agreements or other documents
shall not operate as a waiver of such rights, powers and remedies, but all such
rights, powers and remedies shall continue in full force and effect until all of
the Obligations shall have been fully satisfied, and all rights, powers and
remedies herein provided for are cumulative and none is exclusive. No single or
partial exercise by the Lender of any right, power or remedy under this
Agreement shall preclude the exercise of any other right, power or remedy.
4. APPOINTMENT OF LENDER AS LAWFUL ATTORNEY.
Upon the occurrence and during the continuance of an Event of Default, the
Company and Parent each irrevocably designates, makes, constitutes and appoints
the Lender (and all Persons designated by Lender) as their respective true and
lawful attorney (and agent-in-fact); and the Lender, or the Lender's agent,
without notice to any of them, and at such time or times as the Lender or said
agent, in its sole discretion, may determine in its or the Bank's name, at its
option, may (i) demand payment of the Accounts; (ii) enforce payment of the
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Accounts, by legal proceedings or otherwise; (iii) exercise all of its rights
and remedies with respect to the collection of the Accounts and any other
Collateral; (iv) settle, adjust, compromise, extend or renew the Accounts; (v)
settle, adjust or compromise any legal proceedings brought to collect the
Accounts; (vi) if permitted by applicable law, sell or assign the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
the Lender deems advisable; (vii) discharge and release the Accounts and any
other Collateral; (viii) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (ix) prepare, file and sign its name on a
proof of claim in bankruptcy or similar document against any account debtor; (x)
prepare, file and sign its name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts; (xi)
do all acts and things necessary, in the Bank's sole discretion, to fulfill its
obligations under this Agreement; (xii) endorse its name upon any of the items
of payment or proceeds relating to any Collateral and deposit the same to the
account of the Lender on account of the Obligations; (xiii) endorse its name
upon any chattel paper, document, instrument, invoice, freight bill, bill of
lading or similar document or agreement relating to the Accounts, Inventory or
any other Collateral; (xiv) use its stationery and sign its name to
verifications of the Accounts and notices thereof to account debtors; (xv) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory and any other
Collateral to which it has access; and (xvi) exercise any and all of its rights
under each contract to which it is a party or under which it has rights
(including the right to enter into possession of and use any and all Property
leased or licensed it, as lessee or licensee, the right to use any or all of the
facilities made available to it and the right to make all waivers and
agreements, to give all notices, consents and releases, to take all action upon
the happening of any default giving rise to a right in favor of it under any of
such contracts, and to do any and all other things whatsoever which it is or may
become entitled to do under any of such contracts).
5. MISCELLANEOUS.
5.1 Modification of Agreement. This Agreement may not be modified, altered
or amended, and no provision may be waived, except by an agreement in writing
signed by the party against whom enforcement would be sought.
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5.2 Expenses and Indemnity. Each Person, except the Lender, executing this
Agreement will upon demand pay to the Lender the amount of any and all
reasonable expenses, including the fees and expenses of its counsel and of any
experts and agents, which it may incur in connection with
(a) the preparation, execution, or administration of this Agreement, or any
amendments, or proposed amendments, hereto,
(b) the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral,
(c) the exercise or enforcement of any of its rights or responsibilities
hereunder, or
(d) the failure by each Person, except the Lender, executing this Agreement
to perform or observe any of the provisions hereof.
In addition, each Person, except the Lender, executing this Agreement
agrees to indemnify, and hold harmless, the Lender, on demand, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, reasonable costs (including the allocated costs to it of
in-house legal services) and fees, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
in any way relating to or arising out of this Agreement or any action taken or
omitted by it under this Agreement, provided that no such Person shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, fees, expenses or disbursements resulting from
the Lender's gross negligence, willful misconduct or bad faith.
Any amounts payable under this Section 5.2, and any other amounts that
become Obligations pursuant to any provision of this Agreement, shall bear
interest from the date such amounts shall be paid by the Lender at the Default
Rate provided in the Loan Agreement on demand, and shall constitute additional
Obligations secured by the Collateral.
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5.3 Waiver and Estoppel.
(a) The Company and Parent each agrees, to the extent it may lawfully do
so, that it will not at any time in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension,
moratorium, turnover or redemption law, or any law permitting it to direct the
order in which the Collateral shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance or
enforcement of this Agreement, and hereby waives all benefit or advantage of all
such laws.
(b) The Company and Parent each to the extent it may lawfully do so, on
behalf of itself and all who may claim through or under it, including without
limitation any and all subsequent creditors, vendees, assignees and lienors,
waives and releases all rights to demand or to have any marshalling of the
Collateral upon any sale, whether made under any power of sale granted herein or
pursuant to judicial proceedings or upon any foreclosure or any enforcement of
this Agreement and any documents or instruments executed in connection
therewith.
(c) The Company and Parent each waives, to the extent it may lawfully do
so, presentment, demand, protest and any notice of any kind or nature including,
without limitation, notice of default, notice of any assertion of any right by
the Lender or notice of action or inaction on the part of the Lender or any
other Person (except notices explicitly required hereunder) in connection with
this Agreement or the Collateral.
(d) The Company and Parent each waives, to the extent it may lawfully do
so, any right to require the Lender to proceed against any Person, to exhaust
any other collateral or security interests or guaranties, to pursue any other
remedy, or to pursue any of such rights in any particular order or manner, and
waives any defenses arising by reason of any disability or other defense of any
other Person. The Lender may act against the Company or Parent to enforce their
respective obligations and liabilities hereunder, whether or not any action is
brought against the others or any other Person and whether or not any other
Person is joined in any such action or actions.
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5.4 Termination. This Agreement shall terminate when all the Obligations
have been fully and indefeasibly paid and performed, provided that each of the
Company and Parent shall be solvent immediately after satisfaction of the
Obligations. If any of them shall not be solvent, this Agreement shall not
terminate and the Lender shall take no action under this Section 5.4 until 91
days after the satisfaction of the Obligations.
Upon such termination, the Lender shall reassign and redeliver (or cause to be
reassigned and redelivered) to the Company and Parent, as applicable, or to such
Person or Persons as the Company and Parent, as applicable, shall designate or
to whomever may be lawfully entitled thereto, against receipt, such of the
Collateral (if any) as shall not have been sold or otherwise applied by the
Lender pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be without recourse upon or warranty by the Lender and at the
expense of the Company and Parent, as applicable.
5.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH NEW YORK LAW.
5.6 Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective. If any provisions of this
Agreement or any Lien or other right of the Lender hereunder shall be held to be
invalid, illegal or unenforceable under applicable law, such invalidity,
illegality or unenforceability shall not affect any other provision herein or
any Lien or other right granted hereby.
5.7 Section Headings. The section headings contained in this Agreement
appear as a matter of convenience only, do not constitute a part of this
Agreement and shall not affect the construction hereof.
5.8 Restoration of Rights and Remedies. If the Lender shall have instituted
any proceeding to enforce any right or remedy under this Agreement and such
proceeding shall have been discontinued or abandoned for any reason, or shall
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have been determined adversely to the Lender, then and in every such case the
Lender, as the case may be, and the Company and Parent, shall, except as may be
limited or affected by any determination in such proceeding, be restored
severally and respectively to their respective former positions hereunder, and
thereafter all rights and remedies of the Lender, and the rights and remedies of
the Company and Parent, shall continue as though no such proceeding had been
instituted.
5.9 Duplicate Originals; Execution in Counterpart. Two or more duplicate
originals of this Agreement may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or more counterparts and shall
be effective when at least one counterpart shall have been executed by each
party hereto, and each set of counterparts which, collectively, show execution
by each party hereto shall constitute one duplicate original.
5.10 Notice. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered either when actually received by the addressee or upon
deposit in the United States mail, first class, with proper postage prepaid, and
addressed to the party to be notified as follows:
(a) if to the Company and Parent, at:
140 58th Street
Lot 7E
Brooklyn, New York 11220
With a copy of any notice relating to an Event of Default to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: Bruce R. Kraus, Esq.
(b) if to Lender, at:
WinStar Communications, Inc.
230 Park Avenue -- Suite 3126
New York, New York 10169
Attention: Timothy R. Graham
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With a copy of any notice relating to an Event of Default to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller
or to such other address as each party may designate by like notice given in
accordance with this Section 5.10. Failure to provide a copy of a notice to
Willkie Farr & Gallagher will not otherwise affect the validity or effectiveness
of such notice.
5.11 Waiver of Trial by Jury; Set-off or Counterclaim. The Company and
Parent each waives trial by jury, and the right to interpose any set-off or
counterclaim of any nature or description in any litigation in any court with
respect to, in connection with, or arising out of, this Agreement or any
instrument or document delivered pursuant hereto or the validity,
interpretation, collection or enforcement hereof.
5.12 Certain Refundings. The provisions of this Agreement shall continue to
apply to amounts outstanding under the Loan Agreement following any repayment
and reborrowing of the Loans contemplated by the Loan Agreement.
5.13 Certain Bankruptcy Matters. The obligations of the parties hereto
shall not be affected by the bankruptcy or insolvency of the Company or Parent
or by the invalidity, disallowance or subordination of any of the Obligations
under Section 548 of the Federal Bankruptcy Code, under the Uniform Fraudulent
Conveyance Act as in effect in any state or under any similar statute or rule of
law (whether asserted by a creditor, a trustee in bankruptcy or a debtor in
possession).
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
General Partner
By:_______________________________________________
Name: Shant Hovnanian
Title: Chairman & Chief Executive Officer
CELLULARVISION USA, INC.
By:_______________________________________________
Name: Shant Hovnanian
Title: Chairman & Chief Executive Officer
WINSTAR COMMUNICATIONS, INC.
By:_______________________________________________
Name: Timothy R. Graham
Title: Executive Vice President
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WinStar To Acquire 850 MHz of Bandwidth in New York City From CellularVision
USA; Purchase Will Increase WinStar's Spectrum Holdings in Largest U.S.
Telecommunications Market to 1,750 MHz
NEW YORK--(BUSINESS WIRE)--July 13, 1998--WinStar Communications, Inc. (NASDAQ -
WCII) today announced it has agreed to purchase 850 MHz of bandwidth in New York
City from CellularVision USA, Inc. (NASDAQ - CVUS). The bandwidth is being
disaggregated from CellularVision's LMDS license for the New York area, and will
be combined with WinStar's existing 38 GHz licenses to establish a total
spectrum position of 1,750 MHz.
"Through this transaction, WinStar will have an unprecedented capability to
bring 21st century communications services to the most important business and
financial market in the world," said William J. Rouhana, Jr., WinStar's Chairman
and Chief Executive Officer. "This is the largest amount of spectrum ever held
in a single city, and we expect it will enable us to provide a comprehensive
range of high-speed voice, video and data services. Additionally, when the
company's point-to-multipoint network architecture is deployed in New York, it
will leverage these spectrum assets and enable WinStar to bring fiber-equipment
broadband services to thousands of office buildings and multiple dwelling units
which have not been directly connected to the emerging information
superhighway," added Rouhana. The purchase further solidifies WinStar's industry
leadership at a national level, raising the company's average bandwidth in the
top 50 U.S.
markets above 750 MHz.
WinStar's enhanced bandwidth holdings in New York will cover a population of
more than 8 million and total approximately 145 million channel pops (covered
population times the number of 100 MHz equivalent channels). WinStar has agreed
to pay CellularVision $32.5 million in cash for the additional spectrum. The
transaction is expected to close in the fourth quarter of 1998, after FCC
approval has been obtained. Additionally, WinStar has agreed to lend $3.5
million to CellularVision as soon as lenders' consents are obtained, and an
additional $2.0 million upon the receipt of the approval of the transaction by
CellularVision's stockholders and the completion of required FCC filings. The
acquired spectrum will not be used to support any of the ongoing services or
operations of CellularVision.
WinStar Communications, Inc. is a national local communications company, serving
business customers, long distance carriers, fiber-based competitive access
providers, mobile communications companies, local telephone companies, and other
customers with broadband local communications needs. The company provides its
Wireless Fiber (SM) services using its licenses in the 28 and 38 GHz spectrum.
The company also provides long distance, Internet, data and information
services.
WinStar is a registered trademark, and Wireless Fiber is a service mark of
WinStar Communications, Inc.
CONTACT:
<PAGE>
Financial Community Press
Frank Jepson Beth-Ellen Keyes
SVP Capital Markets (212) 584-4098
(212) 584-4021
KEYWORD: NEW YORK
