EXHIBIT 10.6
THIRD AMENDED AND RESTATED
GUARANTY OF COMMNET CELLULAR INC.
to
COBANK, ACB
(for itself and as Agent Bank)
dated as of September 6, 1995
TABLE OF CONTENTS
I. RECITALS............................................................... 1
1. Guaranty......................................................... 1
2. Guaranty of Payment; Waiver of Defenses, Etc..................... 2
(a) General................................................. 2
(b) Waivers................................................. 3
(c) Subrogation............................................. 4
3. Recovery of Payment.............................................. 4
4. Information Regarding Borrower................................... 4
5. Security......................................................... 4
(a) General................................................. 4
(b) Transfer Restrictions................................... 5
6. Representations and Warranties................................... 6
(a) Good Standing........................................... 6
(b) Corporate Authority..................................... 6
(c) Title to Collateral..................................... 6
(d) Litigation.............................................. 6
(e) Conflicting Documents or Agreements..................... 7
(f) Financial Statements; No Material Adverse .............. 7
(g) Payment of Taxes........................................ 7
(h) Licenses................................................ 8
(i) Employee Benefit Plans.................................. 8
(j) Equity Investments...................................... 9
(k) Real Property........................................... 10
(l) Systems, Contiguous Systems and Paging.................. 10
(m) No Contingent Liabilities............................... 11
(n) 6 3/4 Notes............................................. 11
(o) Disclosure.............................................. 11
7. Affirmative Covenants of Guarantor............................... 11
(a) Financial and Other Reports............................. 12
(b) Maintenance of Existence................................ 13
(c) Compliance with Legal Requirements; ERISA............... 14
(d) Taxes................................................... 15
(e) Insurance............................................... 15
(f) Title to Assets and Maintenance......................... 16
(g) Payment of Liabilities.................................. 16
(h) Real Property Security Interests........................ 16
(i) Basic Documents......................................... 16
(j) Licenses................................................ 16
(k) Completion of Systems and Paging Systems................ 17
i
(l) Financial Covenants..................................... 17
(i) Equity to Capitalization......................... 17
(ii) Consolidated Funded Debt Coverage................ 18
(iii) Debt Service Coverage............................ 18
(iv) Cash Interest Coverage........................... 18
(v) Working Capital.................................. 18
(m) Changes to Underlying Borrower Maximum.................. 18
(n) Funding of the Underlying Borrower Maximum.............. 19
(o) Redemption Notice....................................... 19
(p) Notice of Default Under Indenture....................... 19
8. Negative Covenants of Borrower................................... 19
(a) Borrowing............................................... 19
(b) No Other Business....................................... 20
(c) Liens................................................... 20
(d) Sale of Assets.......................................... 21
(e) Liabilities of Others................................... 21
(f) Dividends, Repurchases and Distributions;............... 22
(g) Merger; Sale of All Assets; Stock Sales................. 22
(h) Loans, Advances and Investments......................... 24
(i) Property and Services from Guarantor.................... 25
(j) Redemption Rights Under the Indenture................... 25
(k) Acceleration of Notes................................... 25
(l) Defeasance or Covenant Defeasance....................... 25
9. Indemnification.................................................. 25
(a) General................................................. 25
(b) Indemnification Relating to Hazardous................... 26
10. Defined Terms.................................................... 27
11. Subordination of Junior Debt..................................... 30
(a) Subordination........................................... 30
(b) Distributions........................................... 30
(c) Enforcement of Rights of Guarantor...................... 30
(d) Further Assurances...................................... 30
(e) Payments Received by Guarantor.......................... 31
(f) Instrument Legend and Notation.......................... 31
12. Miscellaneous.................................................... 31
(a) Syndication............................................. 31
(b) Loan Agreement.......................................... 32
(c) No Waiver by Bank....................................... 32
(d) Assignment.............................................. 32
(e) Severability............................................ 32
(f) Amendments.............................................. 32
(g) Service of Process and Consent to....................... 32
ii
(h) Notices................................................. 33
iii
EXHIBITS
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EXHIBIT A Schedule of Litigation
EXHIBIT B Employee Benefit Arrangements
EXHIBIT C Schedule of Equity Investments
EXHIBIT D Schedule of Real Property
EXHIBIT E Compliance Certificate
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THIRD AMENDED AND RESTATED
GUARANTY OF COMMNET CELLULAR INC.
This THIRD AMENDED AND RESTATED GUARANTY ("Guaranty") is made and given as
of September 6, 1995, by CommNet Cellular Inc., a Colorado corporation, formerly
known as Cellular, Inc. ("Guarantor"), to CoBank, ACB, formerly known as
National Bank for Cooperatives, for itself and as Agent Bank for the benefit of
all present and future Syndication Parties ("Bank"). This Third Amended and
Restated Guaranty amends and restates the Amended and Second Restated Guaranty
dated as of March 31, 1993 between Guarantor and Bank and does not constitute a
novation or discharge of the obligations of Guarantor thereunder.
RECITALS:
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A. Guarantor desires to finance the development and operation of cellular
telephone systems through Cellular, Inc. Financial Corporation, a Colorado
corporation ("Borrower"), a wholly-owned subsidiary of Guarantor. Guarantor and
Borrower have furnished Bank with project budgets and other financial
information regarding the capital requirements for the cellular telephone
systems.
B. Guarantor wishes Bank and the Syndication Parties (as defined below)
to extend credit to Borrower under the Consolidated Loan Agreement, dated as of
September 6, 1995, between Borrower and Bank (as amended from time to time, the
"Loan Agreement"), which Loan Agreement replaces and supersedes the Loan
Agreement for RSAs and the Loan Agreement for MSAs, each dated as of March 15,
1989, between Borrower and Bank, which have been amended and restated as of
March 31, 1993 and as subsequently amended. Bank and the Syndication Parties are
willing to extend such credit to Borrower pursuant to the provisions of the Loan
Agreement upon the condition, among others, that this Guaranty be executed by
Guarantor and delivered to Bank.
C. At the date hereof, Guarantor owns and holds 100% of all outstanding
shares of capital stock of Borrower. Guarantor will benefit from the extension
of such credit.
NOW THEREFORE, for value received, and intending to be legally bound
herein, and to induce Bank and the Syndication
Parties to extend credit and make advances to Borrower pursuant to the terms of
the Loan Agreement, Guarantor covenants and agrees with Bank and the Syndication
Parties as follows:
1. Guaranty. Guarantor hereby guarantees absolutely and unconditionally
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to Bank, and its successors and assigns, and any person or entity acquiring an
interest in the Bank Debt pursuant to the Syndication Agreement or otherwise
("Syndication Party"), and to Bank in its role as Agent Bank for the Syndication
Parties under the Syndication Agreement (and any Successor Agent Bank under the
Syndication Agreement), and becomes surety for: (i) the due and punctual payment
of all the Bank Debt under the Loan Agreement and the Syndication Party Notes
(and including amounts reflected therein which were originally advanced under
the Loan Agreement for RSAs and/or the Loan Agreement for MSAs), including
indebtedness, principal, interest, Loan Fees, Certificate purchase obligations
and Funding Losses, all as defined in the Loan Agreement, and all expenses,
charges and other amounts payable by Borrower pursuant to the Loan Agreement and
the Syndication Party Notes and all related security agreements, related notes
and other related documents, and any renewal, amendment, extension or
replacement thereof, whether now existing or hereafter contracted or incurred,
as and when any of the foregoing shall become due and payable in accordance with
the terms thereof at stated maturity, by acceleration or otherwise; (ii) the
full and timely performance of any and all obligations or liabilities of
Borrower to Bank and to each Syndication Party, whether now existing or
hereafter contracted or incurred, arising directly or indirectly out of or with
respect to the Loan Agreement or any related security agreement, related note
(including the Syndication Party Notes) or other related document (including
without limitation liability for breach of any covenant); and (iii) the full and
timely performance of any and all other obligations, indebtedness or liabilities
contracted or incurred pursuant to any waiver or change of any provision of the
Loan Agreement or any related security agreement, related note or other related
document. Guarantor shall also pay all attorneys' fees and other expenses
incurred by Bank, in its role as Agent Bank or otherwise, in enforcing any of
the above-described indebtedness, obligations or liabilities of Borrower and in
enforcing or collecting the obligations of this Guaranty, or protecting the
Syndication Parties' or Bank's rights with respect
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thereto. The term "Guaranteed Obligations" as used in this Guaranty shall mean
such indebtedness, obligations or liabilities of Borrower and of Guarantor
described above in this Section 1. Unless the context would clearly prohibit
such construction, (a) any reference herein to "Bank" shall include Bank in its
role as Agent Bank for the Syndication Parties and any successor to Bank
appointed in accordance with the provisions of the Syndication Agreement
("Successor Agent Bank") and (b) any reference herein to the rights or powers
of, or waiving any obligation to take certain action by, "Bank" shall be deemed
to provide such rights and powers to, and waive any obligation to take such
action by, any such Successor Agent Bank.
2. Guaranty of Payment; Waiver of Defenses, Etc.
---------------------------------------------
(a) General. This Guaranty is a guarantee of payment and not of
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collection, and Guarantor waives any right to require that any action be brought
against Borrower or to require that resort be had at any time to any direct or
indirect security. Guarantor's obligations hereunder are continuing obligations
and are absolute and unconditional irrespective of the genuineness, validity or
enforceability of any instrument or instruments now or hereafter evidencing any
Guaranteed Obligation or any part thereof (including but not limited to the Loan
Agreement) or of any other agreement now or hereafter entered into by Bank and
Borrower pursuant to which any Guaranteed Obligation or any part thereof is
issued, or of any other circumstance which might otherwise constitute a legal or
equitable discharge of a guarantor or surety. Guarantor's obligations hereunder
shall continue in full force and effect as long as any Guaranteed Obligation or
any part thereof remains outstanding and unpaid or Bank or any Syndication Party
has any obligation to make advances pursuant to the Loan Agreement.
(b) Waivers. With respect to its obligations under this Guaranty,
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Guarantor waives any and all defenses and discharges available to a guarantor,
surety, endorser or accommodation party, dependent upon its character as such.
Guarantor hereby waives presentment for payment, notice of nonpayment, demand
and protest. Guarantor agrees that its obligations hereunder shall not be
affected or impaired in any way by any of the following acts or things (which
Bank or a
3
Syndication Party may do from time to time without notice to Guarantor): (i) Any
amendment, modification or extension of the Loan Agreement, or of any related
security agreements, notes (including the Syndication Party Notes) and other
documents, or any waiver of compliance by Borrower with the terms thereof, (ii)
any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, modification or other
disposition of any Guaranteed Obligation or any collateral therefor, (iii) any
acceptance or release of collateral for or guarantors of any Guaranteed
Obligation, (iv) any inability, failure, neglect or omission to realize upon or
protect any Guaranteed Obligation, or to obtain, perfect, enforce or realize
upon any collateral therefor, or to exercise any lien upon or right of
appropriation of any moneys, credits or property to the liquidation of any
Guaranteed Obligation, or to pursue or obtain any deficiency judgment against
Borrower following any foreclosure of any mortgage or deed of trust granted by
Borrower to Bank on its own behalf or as Agent Bank, or (v) any application of
payments or credits upon the Guaranteed Obligations or any other indebtedness of
Borrower under the Loan Agreement. Bank shall not be required, before exercising
its rights under this Guaranty, to first resort for the payment of any
Guaranteed Obligation to Borrower, or other persons or entities or any
collateral, property, liens or other remedies or rights whatsoever. With respect
to its obligations under this Guaranty, Guarantor agrees not to exercise any
right of contribution, recourse, subrogation or reimbursement available to
Guarantor against Borrower or any other person or entity or property unless and
until all the Guaranteed Obligations have been indefeasibly paid in full and
there is no obligation of Bank or any Syndication Party to make advances under
the Loan Agreement. Guarantor hereby waives any rights it may have at equity or
in law to require Bank to apply any rights of marshalling or other equitable
doctrines in the circumstances.
(c) Subrogation. After all Guaranteed Obligations have been
-----------
indefeasibly paid in full and there is no obligation of Bank or any Syndication
Party to make advances under the Loan Agreement, Guarantor shall have and may
exercise rights of subrogation against Borrower.
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3. Recovery of Payment. If any payment received by Bank or any
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Syndication Party and applied to the Guaranteed Obligations is subsequently set
aside, recovered, rescinded or required to be returned for any reason against
(including, without limitation, the bankruptcy, insolvency or reorganization of
Borrower), the Guaranteed Obligations to which such payment was applied shall
for the purposes of this Guaranty be deemed to have continued in existence,
notwithstanding such applications, and this Guaranty shall be enforceable as to
such Guaranteed Obligations as fully as if such applications had never been
made.
4. Information Regarding Borrower. Guarantor assumes full responsibility
------------------------------
for keeping fully informed of the financial condition of Borrower and all other
circumstances affecting Borrower's ability to pay and perform the Guaranteed
Obligations and agrees that neither Bank nor any Syndication Party shall have
any duty to report to Guarantor any information which Bank or any Syndication
Party shall receive about the financial condition of Borrower or any
circumstances bearing on its ability to perform, and Guarantor hereby expressly
and unconditionally waives any defense based on the failure of Bank or any
Syndication Party to report such information.
5. Security.
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(a) General. As security for the payment and performance of the
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Guaranteed Obligations, Guarantor shall grant to Bank, for itself and as Agent
Bank for the benefit of the present and future Syndication Parties, and maintain
for Bank, a first lien and security interest in all of its assets and
properties, both real and personal, tangible or intangible, whether now owned or
held or hereafter acquired (the "CCI Collateral"), except to the extent such
lien and security interest granted to Bank may be junior to any Lien permitted
by Section 8(c). Guarantor has executed and delivered to Bank the Guarantor
Security Agreement as required under this Guaranty to evidence the security
interest of Bank in the CCI Collateral, together with such financing statements
or other documents as Bank shall request. The terms, provisions and conditions
of the Guarantor Security Agreement and such financing statements or other
documents are hereby incorporated in this Guaranty and made a part hereof.
Guarantor shall also execute such further
5
security agreements, mortgages, deeds of trust, financing statements,
assignments or other documents as Bank shall request, in form and substance as
Bank shall specify, to establish, confirm, perfect or provide notice of Bank's
security interest in the CCI Collateral; provided, however, Guarantor shall not
be required to provide to Bank collateral assignments for the following
contracts: interconnect agreements; agent agreements for sales of cellular
services; GTE Telecommunication Services or other clearinghouse agreements;
roaming agreements; leases of office space at annual rentals of less than
$10,000.00; and office operations agreements. However the parties confirm that
the security interests and liens granted under the Guarantor Security Agreement
as to these and all other contracts and contract rights shall not be adversely
affected by Bank's not obtaining a collateral assignment for any contract.
(b) Transfer Restrictions. The CCI Collateral includes Guarantor's
---------------------
equity interests in various entities. Except as otherwise consented to by Bank
in writing, Guarantor shall obtain the consent, in form and content satisfactory
to Bank in its sole discretion, of any and all persons or entities necessary to
pledge and grant a security interest in each such equity interest and to allow
Bank to transfer, subject to any applicable rights of first refusal (a copy of
which has previously been furnished to Bank), such equity interest after
foreclosing upon its security interest therein (or obtaining such interest by
transfer in lieu of foreclosure), notwithstanding any applicable transfer
restrictions ("Partner Consents"). If any such transfer restrictions apply to
equity interests held by Guarantor and included within the CCI Collateral:
(i) Guarantor represents and warrants that (A) a true, correct,
and complete copy of any document containing such transfer restrictions has been
furnished to Bank by Guarantor, or, if not presently in existence, shall be
furnished by Guarantor to Bank at or prior to the latter of the first Advance by
Bank under the Loan Agreement or the time of Guarantor's acquisition of the
interest for which the consent is required, except as otherwise waived in
writing by Bank; (B) no equity interest included in the CCI Collateral is
subject to any transfer restrictions other than those as to which Bank has been
furnished with copies; and (C) no such transfer restrictions will
6
apply (either because of the language thereof or because all necessary waivers
have been obtained) to the transfer or granting of a security interest therein
to Bank, including Bank in its role of Agent Bank for the other Syndication
Parties, provided, however, that rights of first refusal (a copy of which has
previously been furnished to Bank) may be applicable to the foreclosure on, or
transfer in lieu of foreclosure, by Borrower or Bank and the subsequent transfer
by Borrower or Bank to a third party of, such Licensee Equity Interests and
except as otherwise consented to by Bank in writing.
(iii) Guarantor agrees not to amend, or vote in favor of or consent to any
amendment or addition to, any transfer restrictions affecting any equity
interest held by Guarantor and included within the CCI Collateral which would
materially affect such equity interest, or Bank's security interest therein,
without the prior written consent of Bank, which consent may be withheld for any
reason.
Notwithstanding the foregoing, as used in this paragraph 5(b), transfer
restrictions do not refer to or include (a) any requirement for approval of the
FCC or any state or local regulatory agency to the extent, if any, required for
the transfer of control concerning a FCC License, Paging License or a state or
local license or authorization for a System, Contiguous System or Paging System
and (b) any restrictions imposed by securities laws because equity interests
have not been registered under any securities law.
6. Representations and Warranties. Guarantor represents, covenants and
------------------------------
warrants to Bank, for its own benefit and, in its role as Agent Bank, for the
benefit of the present and future Syndication Parties that:
(a) Good Standing. Guarantor and all CCI Entities are duly
-------------
organized, existing and in good standing under the laws of their respective
states or other jurisdiction of incorporation or formation. Guarantor and all
CCI Entities have the power to own their properties and to carry on their
businesses as now being conducted. Guarantor and all CCI Entities are duly
qualified to do business and are in good standing in each jurisdiction in
7
which the transaction of their businesses makes such qualification necessary and
in which failure to qualify would have a material adverse effect on such entity.
(b) Corporate Authority. Guarantor has full power and authority to
-------------------
execute, deliver and perform this Guaranty and all other documents and
agreements as contemplated by the Loan Agreement, all of which have been duly
authorized. All consents or approvals of any Person which are necessary for, or
are required as a condition of, the execution, delivery and performance of this
Guaranty have been obtained.
(c) Title to Collateral. Guarantor has good and marketable title to
-------------------
all of the CCI Collateral, free and clear of all liens, pledges, restrictions
and encumbrances except the security interest of Bank (for itself and as Agent
Bank), those permitted by Section 8(c) and the restrictions satisfying the
requirements of Section 5(b) hereof.
(d) Litigation. Except as set forth in Exhibit A attached hereto,
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there are no pending legal or governmental actions, proceedings or
investigations to which Guarantor or any of the CCI Entities is a party, or
which affects any properties of Guarantor or any of the CCI Entities, which
might result in any material adverse change in the business or financial
condition of Guarantor or any of the CCI Entities and, to the best of
Guarantor's knowledge, no such actions or proceedings are threatened or
contemplated by governmental authorities or any other Person. If the CCI Entity
is a corporation or a limited liability company and Guarantor does not own a
controlling interest in or manage such corporation or limited liability company
or if the CCI Entity is a partnership and the Guarantor is only a limited
partner and does not manage the partnership, this warranty is only to the best
of Guarantor's knowledge in regard to matters concerning such CCI Entity.
(e) Conflicting Documents or Agreements. There is no provision of
-----------------------------------
Guarantor's articles of incorporation or bylaws, or of any CCI Entity's articles
of incorporation, bylaws or partnership agreement (as the case may be), and no
provision of any existing real estate mortgage, indenture, lease, security
agreement, contract, note, instrument or any other agreements or
8
documents binding on Guarantor or any of the CCI Entities, or affecting their
respective properties, which would conflict with or in any way prevent the
execution, delivery or performance of this Guaranty by Guarantor. If the CCI
Entity is a corporation or a limited liability company and Guarantor does not
own a controlling interest in or manage such corporation or limited liability
company or if the CCI Entity is a partnership and Guarantor is only a limited
partner and does not manage the partnership, this warranty is only to the best
of Guarantor's knowledge in regard to matters concerning such CCI Entity.
(f) Financial Statements; No Material Adverse Change. All
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consolidated financial statements, schedules, and other written documents
relating to the financial condition and results of operations of Guarantor as of
September 30, 1994, and the consolidated financial statements of Guarantor as
contained in its Annual Report on Form 10-K for the year ended September 30,
1994 and as contained in its Quarterly Report on Form 10-Q for the period ended
December 31, 1994, which have been submitted by Guarantor to Bank prior to the
execution of this Guaranty, present fairly the financial condition and results
of operations of Guarantor and those CCI Entities which are consolidated with
the Guarantor for financial reporting purposes, and are prepared in accordance
with GAAP. Since September 30, 1994, there has been no material adverse change
in the financial condition, results of operations, business or prospects of
Guarantor or any of the CCI Entities. If the CCI Entity is a corporation or a
limited liability company and the Guarantor does not own a controlling interest
in or manage such corporation or limited liability company or if the CCI Entity
is a partnership and the Guarantor is only a limited partner and does not manage
the partnership, this warranty is only to the best of Guarantor's knowledge in
regard to matters concerning such CCI Entity.
(g) Payment of Taxes. Guarantor and all CCI Entities have filed all
----------------
required federal, state and local tax returns and have paid all taxes as shown
on such returns as they have become due. Guarantor and all CCI Entities have
paid when due all other taxes, assessments or impositions levied or assessed
against Guarantor or the CCI Entities, or their respective businesses or
properties. If the CCI Entity is a corporation or a limited liability company
and the Guarantor does not own a controlling
9
interest in or manage such corporation or limited liability company or if the
CCI Entity is a partnership and Guarantor is only a limited partner and does not
manage the partnership, this warranty is only to the best of Guarantor's
knowledge in regard to matters concerning such CCI Entity.
(h) Licenses. Guarantor and each of the CCI Entities have duly and
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lawfully obtained, and are duly and lawfully maintaining, any and all licenses,
certificates, permits, qualifications, authorizations, approvals and the like
which are or may be required or necessary to the operation of their respective
businesses, in every aspect thereof, under the appropriate governmental
regulatory agency or agencies, whether federal, state, or local. If the CCI
Entity is a corporation or a limited liability company and the Guarantor does
not own a controlling interest in or manage such corporation or limited
liability company or if the CCI Entity is a partnership and the Guarantor is
only a limited partner and does not manage the partnership, this warranty is
only to the best of Guarantor's knowledge in regard to matters concerning such
CCI Entity.
(i) Employee Benefit Plans. Exhibit B contains a list of all written
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or oral "employee benefit plans," including without limitation any
"multiemployer plan," which are currently in effect, are subject to Employee
Retirement Income Security Act of 1974, as amended, and cover employees, former
employees or independent contractors of Guarantor (each such being a "Benefit
Arrangement"). Guarantor has provided to Bank true and complete copies of the
Benefit Arrangements (including without limitation all amendments thereto and
any related trust instruments and insurance contracts) or, in the case of each
Benefit Arrangement not existing in a written form, a complete and accurate
description of such Benefit Arrangement. Where applicable, each Benefit
Arrangement (A) has been administered in material compliance with the terms of
such Benefit Arrangement and the requirements of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"), the Internal
Revenue Code of 1986, as amended from time to time (the "Code") and the Age
Discrimination in Employment Act and all regulations issued under each of those
laws; (B) is in material compliance with the reporting and disclosure
requirements of ERISA and the Code; and (C) has not had a "reportable event"
that has not been
10
properly reported. There are no facts that (i) have resulted in a "prohibited
transaction" or have resulted or could result in the imposition of an excise tax
pursuant to Section 4975 of the Code, (ii) have resulted in a material breach of
fiduciary duty or violation of Part 4 of Title I of ERISA, or (iii) have
resulted in a material liability (whether or not asserted as of the date hereof)
of the Guarantor pursuant to Title IV of ERISA arising under or related to any
event, act or omission occurring prior to the date hereof. Each Benefit
Arrangement that is intended to qualify under Section 401(a) or to be exempt
under Section 501(c)(9) of the Code is so qualified or exempt as of the date
hereof, or, if such qualification or exemption has not been confirmed by the
Internal Revenue Service, the Guarantor shall file an Application for
Determination expeditiously (and in any event within the remedial amendment time
period relating to the initial adoption of such Benefit Arrangement) and shall
take such steps as are reasonably required to confirm such qualification or
exemption. No Benefit Arrangement has an "accumulated funding deficiency" as of
the date hereof, whether or not waived, and no waiver has been applied for.
There are no pending or, to the best knowledge of Guarantor, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against the Guarantor or any trusts or fiduciaries related to the Benefit
Arrangements. The Guarantor does not have any commitment or obligation to
establish or adopt any new or additional Benefit Arrangements or to materially
increase the benefits under any existing Benefit Arrangement. None of the
Benefit Arrangements provide for the continuation of medical or health benefits
except for continuation coverage required pursuant to the Code and ERISA. As
used in this Section 6(i), all technical terms enclosed in quotation marks shall
have the meanings set forth in ERISA.
(j) Equity Investments. Guarantor does not currently have any
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Subsidiaries (except Borrower, Cellular Network of South Dakota, Inc., ▇▇▇▇▇▇▇▇
Cellular, Inc., Cellular Inc. Network Corporation, Cellular Inc. LP Holding Co.,
Cellular Investments, Inc., ASN Corporation, Terre Haute Cellular, Inc., Castle
Rock Cellular, Inc., San ▇▇▇▇▇▇ Cellular, Inc., Southwest Utah Cellular, Inc.,
▇▇▇▇▇▇ Cellular, Inc., Teton Cellular, Inc. and the Underlying Borrowers); and
except as set forth on Exhibit C, Guarantor does not own stock or other voting
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or equity interest,
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directly or indirectly, in any Person. Exhibit C sets forth as of the date of
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this Guaranty for Guarantor and each CCI Entity the name of the entity, its form
of organization, the authorized stock, the authorized voting or equity
interests, the number of shares of such stock or such interests which are issued
and outstanding or held in treasury, and the identity of each record and
beneficial owner of more than five percent (5%) of such outstanding stock or
interests of any class. Such stock and interests shown as outstanding of each
CCI Entity are duly authorized, validly issued and outstanding, fully-paid and
non assessable, and were not issued in violation of the preemptive or similar
rights of any Person. Guarantor or a CCI Entity owns all shares of such stock
and all such interests set forth in Exhibit C as being so owned, in each case
---------
free and clear of any Lien or restriction on transfer (other than restrictions
generally applicable under securities laws and those restrictions satisfying the
requirements of Section 5(b) hereof).
Neither Guarantor nor any CCI Entity has outstanding or has any commitment
to issue any right, option, warrant, convertible security or other instrument or
security representing a right to acquire any shares of stock or any equity or
voting interest of Guarantor or any CCI Entity except as disclosed in Exhibit C
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hereof. Exhibit C shall be revised from time to time by Guarantor so that such
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Exhibit remains accurate and complete. If the CCI Entity is a corporation or a
limited liability company and Guarantor does not own a controlling interest in
or manage such corporation or limited liability company or if the CCI Entity is
a partnership and the Guarantor is only a limited partner and does not manage
the partnership, this warranty is only to the best of Guarantor's knowledge in
regard to matters concerning such CCI Entity.
(k) Real Property. Except as shown on Exhibit D, Guarantor does not
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now own any title or any other interest in real property, including without
limitation any fee interest, leasehold interest or fixture. Guarantor and each
CCI Entity has good and marketable title to all property and leasehold interests
which it purports to own or hold. Exhibit D shall be revised from time to time
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by Guarantor so that such Exhibit remains accurate and complete. If the CCI
Entity is a corporation or a limited liability company and the Guarantor does
not own a
12
controlling interest in or manage such corporation or limited liability company
or if the CCI Entity is a partnership and Guarantor is only a limited partner
and does not manage the partnership, this warranty is only to the best of
Guarantor's knowledge in regard to matters concerning such CCI Entity.
(l) Systems, Contiguous Systems and Paging Systems. To the best
----------------------------------------------
knowledge and belief of Guarantor, the contents of each of the following as
previously provided from time to time to Bank by Guarantor and/or Borrower for
each System, Contiguous System or Paging System, as applicable, are accurate and
complete: Acquisition Cost, Contiguous System Information, Paging System
Information, Paging System Cost and each Ten Year Plan. Without limiting the
generality of the foregoing, each of the Contiguous System Information, Paging
System Information, and each Ten Year Plan submitted to Bank accurately sets
forth (or when submitted to Bank will accurately set forth) the financial
prospects and the complete capital requirements for the acquisition, or
construction, and operation of each Contiguous System, Paging System and System
described therein. Each Contiguous System, Paging System and System will be or
is operational, will be or is in compliance with all requirements of the FCC,
and can be or has been acquired or constructed, as applicable, for the cost
estimates or statements provided to Bank as part of the information described
above.
(m) No Contingent Liabilities. Except for obligations among
-------------------------
Borrower, Guarantor, Underlying Borrowers, and except liabilities arising by
reason of the fact that a CCI Entity is a general partner of a partnership, each
of Guarantor and the CCI Entities (i) does not have any direct or contingent
liability for any obligation of any Person other than itself, except Lewiston-
Auburn Cellular, Inc. may have direct or contingent liabilities for the
obligations under the Revolving Credit and Term Loan Agreement, dated as of
March 24, 1988, and as heretofore amended, among Portland Cellular Partnership,
Bank of New England, N.A. and Maine National Bank (with any amendments), except
that Guarantor may have contingent liability under Letter of Credit
Reimbursement Agreement dated October 26, 1990 and Letter of Credit dated
December 19, 1990 issued by Bank in favor of St. ▇▇▇▇ Bank for Cooperatives, and
except that Guarantor may have direct or contingent liabilities for obligations
of other
13
Persons which obligations do not exceed at any time the aggregate amount of
$100,000, and (ii) has no obligation to make a loan or advance to any Person or
to own, purchase or acquire any stock, obligations or securities of, or any
other interests in, or to make any capital contribution to, any Person, except
loans or advances by Guarantor to the extent permitted by Section 8(h)(v)
hereof. If the CCI Entity is a corporation or a limited liability company and
the Guarantor does not own a controlling interest in or manage such corporation
or limited liability company or if the CCI Entity is a partnership and Guarantor
is only a limited partner and does not manage the partnership, this warranty is
only to the best of Guarantor's knowledge in regard to matters concerning such
CCI Entity.
(n) 6 3/4% Notes. Guarantor has called for redemption the 6 3/4%
------------
Notes (as defined below) and the proceeds of the Notes (as defined below) were
used, to the extent necessary, to fund the redemption of the 6 3/4% Notes and to
satisfy the 6 3/4% Notes in full.
(o) Solvency. As of the date of the Closing and after giving effect
--------
to the transactions contemplated by the Loan Documents, (i) the property of
Guarantor, at a fair valuation, will exceed its debt; (ii) the capital of
Guarantor will not be unreasonably small to conduct its business; (iii)
Guarantor will not have incurred debts, or have intended to incur debts, beyond
its ability to pay such debts as they mature; and (iv) the present fair, salable
value of the assets of Guarantor will be materially greater than the amount that
will be required to pay its probable liabilities (including debts) as they
become absolute and matured. For purposes of this Section 6(o), "debt" means any
liability on a claim, and "claim" means (x) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (y)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured
or unsecured.
(p) Disclosure. Neither the representations and warranties of this
----------
Section 6 nor any information, exhibit or report furnished by Guarantor to Bank
in connection with the
14
negotiation and preparation of the Loan Agreement and this Guaranty, contains,
nor did any representations and warranties contained in Section 6 of any
predecessor to this Guaranty, nor any information, exhibit or report furnished
by Guarantor to Bank in connection with the negotiation and preparation of any
predecessors to the Loan Agreement or this Guaranty contain, any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
7. Affirmative Covenants of Guarantor. From and after the date of this
----------------------------------
Guaranty and until the Guaranteed Obligations are indefeasibly paid in full and
neither Bank nor any Syndication Party has any obligation to make any advances
under the Loan Agreement, Guarantor agrees that it will observe and comply with
the following covenants, and if Guarantor is the managing general partner,
manager or controlling stockholder of the CCI Entity, Guarantor shall also cause
each such CCI Entity to observe and comply with the following covenants set off
in brackets:
(a) Financial and Other Reports.
---------------------------
(i) Guarantor [and CCI Entities] shall at all times keep proper
books of record and account, in which correct and complete entries shall be made
of all its dealings, in accordance with GAAP. Bank shall from time to time and
upon reasonable notice be entitled to visit and inspect any of the properties
and financial records of Guarantor [and CCI Entities] during normal business
hours and to discuss Guarantor's [and any CCI Entity's] business and finances
with Guarantor's [or the CCI Entity's] officers.
(ii) As soon as available, but in no event later than one
hundred and twenty (120) days after the end of any fiscal year of Guarantor
occurring during the term hereof, Guarantor shall deliver to Bank (A) annual
financial statements of Guarantor on a consolidated basis, prepared in
accordance with GAAP consistently applied which shall: (1) be audited by
independent certified public accountants selected by Guarantor which are
reasonably acceptable to Bank; (2) be accompanied by a report of such
accountants containing an opinion reasonably acceptable to Bank; (3) be
accompanied by a compliance
15
Certificate; (4) be prepared in reasonable detail and in comparative form; and
(5) include a balance sheet, an income statement, a statement of cash flows, a
statement of stockholders' equity, and all notes and schedules relating thereto;
and (B) a "Combined," "Financed Proportionate," and "Company Proportionate"
income statement of Guarantor.
(iii) As soon as available but in no event more than sixty (60)
days after the end of each of the first three quarters in Guarantor's fiscal
year, Guarantor shall deliver to Bank (A) the following financial statements of
Guarantor on a consolidated basis prepared in accordance with GAAP consistently
applied: a balance sheet, an income statement, a statement of cash flows, a
statement of stockholders' equity, for such Quarter and for the year to date,
and such other quarterly statements as Bank may specifically request, which
quarterly statements shall include any and all notes and schedules thereto; and
(B) a "Combined," "Financed Proportionate," and "Company Proportionate" income
statement of Guarantor. Such quarterly financial statements of Guarantor
required pursuant to (A) above shall be accompanied by a Compliance Certificate.
(iv) As soon as the existence of any default in the observance
or performance of the covenants in this Section 7 and in Section 8 hereof
becomes known to any officer of Guarantor, Guarantor shall promptly give Bank
notice of such default, the nature and status thereof, and the action being
taken or proposed to be taken with respect thereto.
(v) Guarantor shall also deliver to Bank, with reasonable
promptness, such additional financial information or documentation as Bank may
reasonably request.
(vi) Guarantor [and CCI Entity] shall send to Bank, no later
than the fifteenth day of each month, the items listed below with respect to
filings made during the previous month, provided however, that if not otherwise
required to be provided Guarantor and [CCI Entity] shall promptly provide copies
of such items if requested by Bank: (A) a complete listing of all reports filed
by Guarantor [or any CCI Entity] with any state or federal agency, including,
but not limited to, a complete listing of all filings with any state public
utilities commission
16
or similar organization, (B) a complete listing of all filings with or notices
received from the Internal Revenue Service, other than income tax returns,
except that Guarantor and [CCI Entity] shall provide complete copies of notices
relating to fines, penalties or interest payments, and (C) complete copies of
every filing or report filed with the Securities and Exchange Commission.
(vii) Guarantor shall promptly notify Bank in writing of any
change in its [or any CCI Entity's] directors or executive officers.
(viii) Guarantor shall promptly notify Bank in writing of all
litigation in which Guarantor, Borrower [or any CCI Entity] is a party and which
either involves an amount of $500,000 or more singly or in the aggregate at any
time or is material to the financial condition, results of operation, business
or prospects of Guarantor, Borrower [or any CCI Entity].
(ix) Guarantor shall give prompt notice to Bank of any material
adverse change in the financial condition, business, results of operation or
prospects of Guarantor, Borrower [or any CCI Entity].
(b) Maintenance of Existence. Guarantor shall maintain its corporate
------------------------
existence in good standing under the laws of Colorado. [Guarantor will cause
each of the CCI Entities to maintain its corporate or partnership existence in
good standing under the laws of the state or jurisdiction of its formation to
the extent such existence is necessary or desirable in view of Guarantor's
business, operations and properties.] Guarantor will qualify and remain
qualified [, and will cause each of the CCI Entities to qualify and remain
qualified,] as a foreign corporation or partnership in each jurisdiction in
which such qualification is necessary or desirable in view of its business,
operations and properties.
(c) Compliance with Legal Requirements; ERISA. Guarantor [and each of
-----------------------------------------
the CCI Entities] shall comply with all laws, rules, regulations and orders
applicable to Guarantor [or the CCI Entity] or their respective businesses;
provided, however, that the failure of Guarantor [or the CCI Entity] to
17
comply with this sentence in any instance shall not be a default hereunder
unless such failure would have a material adverse impact on the financial
condition, results of operation, business or prospects of Guarantor [or the CCI
Entity]. Guarantor shall meet one of the following at all times, and at the
written request of Bank which, after the first request, will only be made when
Bank in good faith has concerns about the status of Guarantor under the
Investment Company Act of 1940, as amended, and not more frequently than once a
year, Guarantor shall furnish to Bank an opinion of a law firm acceptable to
Bank to the effect of one of the following: Guarantor is not an investment
company as defined in the Investment Company Act of 1940, as amended (the
"Act"); or Guarantor is exempt from all provisions of the Act applicable to
investment companies as such; or the Guarantor is registered as an investment
company under the Act; or Guarantor has pending an application for exemption
pursuant to Section 3(b)(2) of the Act pursuant to which Guarantor is exempt
from all provisions of the Act applicable to investment companies as such for a
period of 60 days from the date of filing of such application or such longer
period as the Commission may determine. Guarantor and each ERISA Affiliate shall
(i) comply in all material respects with ERISA; (ii) cause any "employee pension
benefit plan" adopted, established or maintained by Guarantor or an ERISA
Affiliate to continue to qualify under ERISA and the Code; (iii) prepare and
deliver each material report, statement or other document required by ERISA and
the Code within the period specified therein and conforming in form and
substance to the provisions thereof; and (iv) administer each "employee benefit
plan" adopted, established, or maintained by Guarantor or an ERISA Affiliate in
all material respects in accordance with the terms of such plan and with ERISA
and the Code. Guarantor and each ERISA Affiliate shall not (a) engage in or
permit any transaction which could result in a "prohibited transaction" or in
the imposition of an excise tax pursuant to Section 4975 of the Code; (b) fail
to make full payment when due of all amounts which, under the provisions of any
"employee benefit plan," Guarantor or an ERISA Affiliate is required to pay as
contributions thereto; (c) permit to exist any "accumulated funding deficiency,"
whether or not waived, with respect to any "pension plan" adopted, established
or maintained by Guarantor or an ERISA Affiliate; or (d) fail to make any
payments to any "multiemployer plan" that Guarantor or ERISA Affiliate may be
18
required to make under any agreement relating to such "multiemployer plan" or
any law pertaining thereto. Guarantor and each ERISA Affiliate shall not permit
the "present value" of vested and nonvested "accrued benefits" under any
"pension plan" to exceed the "current value" of the assets of such "pension
plan" allocable to such "accrued benefits" by an amount in excess of $50,000.
All actuarial assumptions and methods used to make each determination required
by the preceding sentence shall be reasonable and shall comply with all
requirements of law. Guarantor and each ERISA Affiliate shall not terminate any
"pension plan" so as to result in any liability to the Pension Benefit Guaranty
Corporation. Guarantor and each ERISA Affiliate shall furnish to Bank, within
ten days after filing, copies of each annual report filed pursuant to Section
104 or Section 4065 of ERISA with respect to each "pension plan" adopted,
established or maintained by Guarantor or an ERISA Affiliate (including, to the
extent required to be filed by Section 103 of ERISA, the related financial and
actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103). As used
in this Section 7(c), the term "ERISA Affiliate" shall mean any trade or
business, whether or not incorporated, which together with Guarantor would be
deemed a single employer within the meaning of Section 4001 of ERISA. As used in
this Section 7(c), all technical terms enclosed in quotation marks shall have
the meanings set forth in ERISA.
(d) Taxes. [Each of] Guarantor [and the CCI Entities] shall cause to
-----
be paid when due all taxes, assessments, and other governmental charges upon it,
its income, its sales, its properties, and federal and state taxes withheld from
its employees' earnings, unless such taxes, assessments, or other governmental
charges shall be contested in good faith by appropriate actions or legal
proceedings and Guarantor [and the CCI Entity] shall establish adequate reserves
therefor in accordance with GAAP.
(e) Insurance. [Each of] Guarantor [and the CCI Entities] shall keep
---------
all insurable property, real and personal, now owned or hereafter acquired,
insured at all times against loss or damage by fire and extended coverage risks
and other hazards of the kinds customarily insured against and in amounts
19
customarily carried by parties engaged in comparable businesses and comparably
situated; maintain fidelity bond coverage on such officers and employees and in
such amounts as customarily carried by parties engaged in comparable businesses
and comparably situated; effect all such insurance and bonds under valid and
enforceable policies issued by insurers of recognized responsibility; and upon
request of Bank, deliver to Bank a summary schedule indicating all insurance
then in effect. All policies of insurance maintained by Guarantor in accordance
with this Section shall name Bank, for its own benefit and, in its role as Agent
Bank, for the benefit of the present and future Syndication Parties, as an
additional insured and shall provide that the policies cannot be cancelled or
terminated without at least ten days prior written notice to Bank.
(f) Title to Assets and Maintenance. [Each of] Guarantor [and the
-------------------------------
CCI Entities] shall defend and maintain title to all its material properties and
assets. [Each of] Guarantor [and the CCI Entities] shall keep its assets, both
real and personal, in good order and condition consistent with industry practice
and shall make all necessary repairs, replacements and improvements so that its
business may be properly and advantageously conducted.
(g) Payment of Liabilities. [Each of] Guarantor [and the CCI
----------------------
Entities] shall pay all liabilities as they become due unless (with the
exception of the Guaranteed Obligations) they are contested in good faith by
appropriate actions or legal proceedings and Guarantor [or the CCI Entity]
establishes adequate reserves therefor in accordance with GAAP. In any event,
each of Guarantor [and the CCI Entities] shall pay as they become due all
indebtedness for borrowed money or for the deferred purchase price of property
or services and all obligations under leases which have or should have been
characterized as capital leases as determined in accordance with GAAP.
(h) Real Property Security Interests. [Each of] Guarantor [and the
--------------------------------
CCI Entities] shall, as may be required from time to time by Bank, provide such
documents as may be necessary or desirable in the judgment of Bank to confirm
Bank's security interest in the CCI Collateral. Promptly after the purchase or
20
other acquisition of any real estate, or interest in real estate, Guarantor
shall grant to Bank a first deed of trust or mortgage on such real estate, such
deed of trust or mortgage to be in form and substance as specified by Bank. In
connection with the delivery of any mortgage or deed of trust, Guarantor shall
deliver to Bank a mortgagee's title policy, in such amount as Bank shall
specify, to be obtained at Guarantor's sole cost. In connection with entering
into any lease, Guarantor shall deliver to Bank a Leasehold Assignment and
Consent together with such additional consents or estoppels of lessor as Bank
shall specify.
(i) Basic Documents. Guarantor shall take all such actions as are
---------------
necessary to maintain and renew each Management Agreement relating to a CCI
Entity, Underlying Borrower, or Licensee so that such Management Agreement
remains in full force and effect. Guarantor shall observe and perform all
obligations and covenants under the Guarantor Loan Agreement. Without the
consent of Bank, Guarantor shall not amend, supplement, grant consents under,
otherwise modify or waive compliance with any provision of the Guarantor Loan
Agreement or any Management Agreement.
(j) Licenses. [Each of] Guarantor [and the CCI Entities] shall
--------
acquire and maintain in effect any and all licenses, certificates, permits,
qualifications, authorizations, approvals and the like which are or may be
required or necessary to the operation of its business, and every aspect
thereof, under the appropriate governmental regulatory agency or agencies,
whether federal, state, or local, and shall faithfully comply with any reporting
requirement of any such agency (including, without limitation, the FCC Licenses
and Paging Licenses and any other licenses or authorizations required by the FCC
and any state public utilities commission with respect to the Systems,
Contiguous Systems and Paging Systems). [Each of] Guarantor [and the CCI
Entities] shall not dispose of any interest in any such license, certificate,
permit, qualification, authorization, approval or the like, except in a
transaction permitted by Section 8(g) hereof.
(k) Completion of Systems and Paging Systems. With respect to the
----------------------------------------
Paging System and any System managed by Guarantor, Guarantor shall (i)
expeditiously cause the completion of
21
construction of such System or the Paging System in accordance with the Ten Year
Plan for such System or the Paging System, as applicable; (ii) cause the
construction of each such System and the Paging System to be in a good and
▇▇▇▇▇▇▇-like manner; (iii) cause each System and the Paging System to be in
compliance in all material respects with all applicable laws, regulations,
codes, permits and licenses, as well as any covenants, conditions, restrictions
and reservations applicable thereto; (iv) upon completion and commencement of
operation of each System and the Paging System, continuously cause each such
System and the Paging System to be operated in a manner consistent with industry
practice.
(l) Financial Covenants. Guarantor shall maintain or cause to be
-------------------
maintained the following financial covenants:
(i) Equity to Capitalization. Consolidated Equity plus the
------------------------
aggregate principal amount of all Subordinated Debt due and payable more than
five years from the date of determination hereunder divided by Consolidated
Capitalization as of the end of each quarter of the Guarantor's fiscal year for
the indicated period as follows:
Period Beginning Period Ending greater than
---------------- ------------- ------------
10/1/94 9/30/97 .50
10/1/97 9/30/98 .20
10/1/98 9/30/99 .30
10/1/99 9/30/00 .15
10/1/00 thereafter .25
(ii) Consolidated Funded Debt Coverage. Consolidated Funded
---------------------------------
Debt divided by Financed Proportionate Operating Cash Flow as of the end of each
quarter of the Guarantor's fiscal year for the indicated period as follows:
Period Beginning Period Ending less than
---------------- ------------- ---------
10/1/94 3/31/95 20.00:1
4/1/95 6/30/95 17.50:1
7/1/95 9/30/95 15.00:1
22
10/1/95 3/31/96 12.00:1
4/1/96 6/30/96 9.50:1
7/1/96 9/30/96 8.50:1
10/1/96 9/30/97 5.50:1
10/1/97 9/30/98 4.30:1
10/1/98 thereafter 3.50:1
(iii) Debt Service Coverage. Financed Proportionate Operating
---------------------
Cash Flow divided by Consolidated Adjusted Debt Service as of the end of each
quarter of the Guarantor's fiscal year for the indicated period as follows:
Period Beginning Period Ending Greater than
---------------- ------------- ------------
10/1/94 9/30/96 1.00
10/1/96 9/30/98 1.25
10/1/98 9/30/99 1.10
10/1/99 thereafter 1.25
(iv) Cash Interest Coverage. Cash Interest Coverage as of the
----------------------
end of each of the quarters of the Guarantor's fiscal year for the indicated
period as follows:
Period Beginning Period Ending Greater than
---------------- ------------- ------------
10/1/94 9/30/95 1.20
10/1/95 3/31/96 1.50
4/1/96 9/30/96 1.75
10/1/96 thereafter 2.00
(v) Working Capital. Maintain positive Working Capital.
---------------
(m) Changes to Underlying Borrower Maximum Financing Need. If at any
-----------------------------------------------------
time the Guarantor's estimate of the Underlying Borrower Maximum Financing Need
with respect to a System, a Contiguous System, or a Paging System shall change
from the amount previously represented to Bank, in a Ten Year Plan or otherwise,
Guarantor shall immediately provide Bank with written notice of such change and
the reasons therefor.
23
(n) Funding of the Underlying Borrower Maximum Financing Need for the
-----------------------------------------------------------------
Paging System. With respect to the Paging Loan, Guarantor will promptly fund to
-------------
Borrower the difference between the Underlying Borrower Maximum Financing Need
for the Paging System and the Paging System Loan Commitment ("Guarantor Paging
Funds"), or any portion thereof, as Paging's need for the Guarantor Paging
Funds, or any portion thereof, arises.
(o) Redemption Notice. In the event that Guarantor sends a
-----------------
redemption notice under Section 1105 of the Indenture (as defined below),
Guarantor shall cause a copy of such notice to be promptly sent to Bank.
(p) Notice of Default Under Indenture. Guarantor shall give prompt
---------------------------------
notice to Bank of any event of default or default which with the passage of time
or giving of notice, or both, would become an event of default under the
Indenture.
8. Negative Covenants of Guarantor. From and after the date of this
-------------------------------
Guaranty until the Guaranteed Obligations are indefeasibly paid in full and
neither Bank nor any Syndication Party has any obligation to make any advances
under the Loan Agreement, Guarantor agrees that it will observe and comply with,
and will cause its Subsidiaries to observe and comply with, the following
covenants for the benefit of Bank, for itself and as Agent Bank for the benefit
of the present and future Syndication Parties:
(a) Borrowing. Each of Guarantor and its Subsidiaries shall not
incur, assume or suffer to exist any Consolidated Liabilities, except for the
following Consolidated Liabilities, when in compliance with financial and other
covenants of this Guaranty, (i) Consolidated Liabilities which are incurred or
exist in the ordinary course of business, are not indebtedness for borrowed
money or for the deferred purchase price of property and are not obligations
under leases which have or should have been characterized as capital leases as
determined in accordance with GAAP, (ii) CCI Subordinated Debt, (iii)
Consolidated Liabilities to Borrower or Bank, (iv) leases of, and purchase money
financing of, office furnishings and office equipment required in the ordinary
course of Guarantor's business and leases (with options to purchase) existing at
the date hereof
24
for computers, (v) the indebtedness owed to St. ▇▇▇▇ Bank for Cooperatives in
connection with the lease by Borrower of a mainframe computer with a software
and maintenance package ("Computer Package") from Farm Credit Leasing which
indebtedness shall not exceed $114,000.00, and (vi) the indebtedness owed to
Amplicon, Inc. ("Amplicon") in connection with the lease by Guarantor of certain
computer hardware and software ("Computer Equipment") pursuant to that certain
Lease Agreement No. OL-7953 dated June 23, 1994 by and between Guarantor and
Amplicon ("Amplicon Lease").
(b) No Other Business. Except for the lease of the Computer Package
-----------------
by Borrower to Guarantor, each of Guarantor and its Subsidiaries shall not
transact or engage in any business other than the design, construction,
development and operation of or ownership of interests in cellular and other
telecommunication systems. Guarantor and each of its Subsidiaries shall not
acquire assets which are unrelated to such business, other than equity interests
in B-Side L.L.C., B-Side Carriers, L.P. and TVX, Inc.
(c) Liens. Each of Guarantor and its Subsidiaries shall not create,
incur, assume or suffer to exist any mortgage, pledge, lien, charge or other
encumbrance on, or any security interest in (collectively sometimes called
"Liens") any of its property or assets, tangible or intangible, now owned or
held or hereafter acquired, except:
(i) the Liens resulting from this Guaranty;
(ii) liens to Guarantor, Borrower or Bank;
(iii) purchase money liens or security interests (including
without limitation conditional sales agreements) upon or in cellular equipment
acquired by Guarantor after March 15, 1989; provided, however, that any such
lien or security interest extends to and covers only the cellular equipment then
being acquired, and provided, further, that any such lien or security interest
is terminated for an item of equipment on or prior to acceptance of such
equipment by Guarantor or by any Underlying Borrower or Licensee or final
payment of the purchase price of
25
such equipment by Guarantor or by any Underlying Borrower or Licensee (whichever
is earliest).
(iv) liens for taxes or other governmental charges which are not
due or remain payable without penalty, or are being contested in good faith by
appropriate actions or proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required by GAAP, shall have been
made for such taxes or other governmental charges;
(v) deposits or pledges to secure workmen's compensation,
unemployment insurance, old age benefits or other social security obligations or
in connection with or to secure the performance of bids, tenders, trade
contracts or leases or to secure statutory obligations or surety or appeal bonds
or other pledges or deposits of like nature and all in the ordinary course of
business;
(vi) mechanics', carriers', workmen's, repairmen's or other like
liens arising in the ordinary course of business in respect of obligations not
yet due or which are being contested in good faith and by appropriate
proceedings;
(vii) easements, rights-of-way, restrictions and other similar
matters incidental to the ownership of property which do not in the aggregate
materially detract from the value of such property or assets or materially
impair their use in the operation of the business of Guarantor or a Subsidiary;
(viii) purchase money security interests in, or leases (with
options to purchase) for, office furnishings and office equipment (including
without limitation the telephone equipment used solely at Guarantor's principal
executive office and computers for office use) required in the ordinary course
of Guarantor's business; provided that such security interests shall attach only
to, and such leases shall only concern, the office furnishings and office
equipment so purchased or leased;
(ix) the interest of St. ▇▇▇▇ Bank for Cooperatives in a
computer pursuant to the Letter of Credit Reimbursement Agreement dated October
26, 1990 and Letter of
26
Credit dated December 19, 1990 issued by Bank in favor of St. ▇▇▇▇ Bank for
Cooperatives; or
(x) the interest of Amplicon in certain computer hardware and
software pursuant to the Amplicon Lease and any financing statements which
describe the Computer Equipment as collateral filed by Amplicon for the purpose
of securing Guarantor's obligations under the Amplicon Lease.
(d) Sale of Assets. Each of Guarantor and its Subsidiaries shall not
--------------
dispose of any Substantial Part of its assets to any Person except (i) to
Guarantor, (ii) in a transaction permitted by Section 8 (g) hereof, or (iii) the
sale or other disposition of office furnishings or office equipment in the
ordinary course of Guarantor's business. If any transaction occurs which
requires prepayment of an Underlying Loan, then Guarantor shall cause to be made
the prepayment of such Underlying Loan. Guarantor shall further cause to be made
the mandatory prepayment required by the Loan Agreement upon the prepayment of
such Underlying Loan.
(e) Liabilities of Others. Each of Guarantor and its Subsidiaries
---------------------
shall not assume, guaranty, endorse or otherwise become directly or contingently
liable in connection with any obligation of any Person other than Guarantor or a
Wholly-Owned Subsidiary, except for (i) obligations among Guarantor, Borrower,
and Underlying Borrowers; (ii) liabilities arising by reason of the fact that
Guarantor or a Subsidiary is a general partner of a partnership; and (iii) in
addition to the previous exceptions, direct or contingent liabilities of
Guarantor for obligations of other Persons which obligations do not exceed at
any time the aggregate amount of $100,000.
(f) Dividends, Repurchases and Distributions; Subordinated Debt.
-----------------------------------------------------------
Each of Guarantor and its Subsidiaries will not declare or pay or set aside for
payment any dividends upon any shares of their respective capital stock (except
dividends payable in shares of such stock) or purchase, redeem or retire, or
make any other distribution on any shares of their respective capital stock or
other equity interests; and shall not make any prepayment on, redeem, or
purchase any CCI Subordinated Debt of Guarantor or any Subsidiary (except any
prepayment, redemption or
27
purchase payable in shares of Guarantor's capital stock); provided, however,
that (i) a Licensee which is not an Underlying Borrower may make distributions
to its equity holders, and (ii) Guarantor may declare dividends or make payments
of CCI Subordinated Debt in an aggregate amount not to exceed one-half of net
cash distributions received by Guarantor, less an amount equal to funds which
have been provided by Guarantor to Borrower, whether by way of equity
contribution or loan, for the purpose of any principal payment on indebtedness
for Subordinated Funds, so long as no Event of Default or Potential Default
exists before or after such distribution or payment is made by Guarantor. As
used in this provision, "net cash distributions" mean the aggregate of all cash
received by Guarantor from all Underlying Borrowers from and after March 31,
1989 as distributions on equity interests in such Underlying Borrowers from the
net income thereof (minus any losses) since the inception of such Underlying
Borrowers (for this purpose, all cash distributions by an Underlying Borrower
shall be deemed to come first from any net income, and net income shall be
determined in accordance with GAAP).
(g) Merger; Sale of All Assets; Stock Sales
---------------------------------------
(i) Each of Guarantor and its Subsidiaries shall not (A)
liquidate, merge, consolidate or reorganize with or into any Person, or (B)
dispose of all or any Substantial Part of its assets, except that:
(A) Guarantor may merge, consolidate or reorganize with or
into any Person or dispose of all or substantially all of its assets if (x) the
successor which results from such merger, consolidation or reorganization or to
which such disposition shall have been made (the "surviving party") shall
expressly assume in writing the due and punctual payment and performance and
observance of all the covenants of this Guaranty to be performed or observed by
Guarantor, and the surviving party shall furnish to Bank, and the other
Syndication Parties, an opinion of counsel satisfactory to Bank to the effect
that the instrument of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding agreement of the
surviving party enforceable in accordance with its terms; and (y) immediately
after the consummation of the transaction and after giving effect thereto,
28
no default in respect of any of the covenants in this Guaranty shall exist;
(B) Any Subsidiary may merge, consolidate, or reorganize
with Guarantor or a Wholly-Owned Subsidiary so long as in any such merger,
consolidation or reorganization involving Guarantor, Guarantor shall be the
surviving or continuing corporation and so long as in any merger, consolidation
or reorganization involving any other Subsidiary the surviving or continuing
party shall continue to be a Subsidiary;
(C) Any Subsidiary may dispose of all or a substantial part
of its assets to Guarantor or any Wholly Owned Subsidiary.
(D) Any Subsidiary may dispose of all or a substantial part
of its assets if: simultaneously all Consolidated Liabilities of such Subsidiary
at the time owned by Guarantor and every other Subsidiary shall be disposed of
as an entirety; the Board of Directors of Guarantor shall have determined, as
evidenced by a resolution, that the retention of such assets is no longer in the
best interest of Guarantor; such assets are disposed of to a Person for a
consideration and on terms reasonably deemed by the Board of Directors of
Guarantor to be adequate and satisfactory; such Subsidiary shall have as part of
its assets no continuing investment in Guarantor or any other Subsidiary not
being simultaneously disposed of; and such disposition does not involve a
Substantial Part of the assets of Guarantor.
(ii) Guarantor shall not dispose of any shares of stock of any
class or any equity or voting interest in any Subsidiary (except to a Wholly-
Owned Subsidiary or for the purpose of qualifying directors) or any Consolidated
Liabilities of such Subsidiary owned by Guarantor, and shall not permit any
Subsidiary to dispose of (except to Guarantor or any Wholly Owned Subsidiary)
any shares of stock of any class or Consolidated Liabilities of any other
Subsidiary, unless: (A) simultaneously all shares of stock, any equity or voting
interests and Consolidated Liabilities of such Subsidiary at the time owned by
Guarantor and every other Subsidiary shall be disposed of as an entirety; (B)
the Board of Directors of Guarantor shall have
29
determined, as evidenced by a resolution, that the retention of such stock,
interests and Consolidated Liabilities is no longer in the best interest of
Guarantor; (C) such stock, interests and Consolidated Liabilities are disposed
of to a Person, for a consideration and on terms reasonably deemed by the Board
of Directors of Guarantor to be adequate and satisfactory; (D) such Subsidiary
being disposed of shall not have any continuing investment in Guarantor or any
other Subsidiary not being simultaneously disposed of; and (E) such disposition
does not involve a Substantial Part of the assets of Guarantor.
(h) Loans, Advances and Investments. Each of Guarantor and its
-------------------------------
Subsidiaries will not make or permit to remain outstanding any loan or advance
to, or own, purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person other than
Bank and Borrower, except that Borrower may make the Underlying Loans, Guarantor
may make short-term loans and capital investments which aggregate no more than
$8.5 million in entities related to the telecommunications industry, entities
operating primarily in the geographical markets currently managed by Guarantor,
or in entities which will create synergies with Guarantor's current operations,
and, in addition, Guarantor or any Subsidiary may make, own, purchase or
acquire:
(i) commercial paper maturing not in excess of one year from the
date of acquisition and rated P1 by ▇▇▇▇▇'▇ Investors Service, Inc. or A1 by
Standard & Poor's Corporation on the date of acquisition;
(ii) certificates of deposit in North American commercial banks
rated C or better by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. or 3 or better by ▇▇▇▇▇
Consulting Analysts, maturing not in excess of one year from the date of
acquisition;
(iii) obligations of the United States government or any agency
thereof, the obligations of which are guaranteed by the United States
government, maturing, in each case, not in excess of one year from the date of
acquisition;
(iv) repurchase agreements of any bank or trust company
incorporated under the laws of the United States of
30
America or any state thereof and fully secured by a pledge of obligations issued
or fully and unconditionally guaranteed by the United States government;
(v) Loans or advances by Guarantor to Lewiston-Auburn Cellular,
Inc., provided that such loans or advances to Lewiston-Auburn Cellular, Inc. do
not exceed $3,000,000; loans or advances to Steamboat Springs Cellular General
Partnership, provided that such loans or advances to Steamboat Springs Cellular
General Partnership do not exceed $2,500,000; advances by Guarantor to a CCI
Entity pursuant to the terms of the Management Agreement between Guarantor and
such CCI Entity; and investments by Guarantor in the Subsidiaries set forth in
Section 6(j), B-Side L.L.C., TVX, Inc., Liberty Cellular, Inc., B-Side Carriers,
L.P., Underlying Borrowers, and corporations whose sole business is to own
interests in Underlying Borrowers or Licensees in which an Underlying Borrower
owns a Licensee Equity Interest; or capital contributions by Guarantor with
respect to partnership interests in Underlying Borrowers or partnerships whose
sole business is to invest in Underlying Borrowers or Licensees in which an
Underlying Borrower owns a Licensee Equity Interest; and
(vi) investments in accordance with the Investment Policy of
Guarantor dated as of October 26, 1994, and adopted by Guarantor's Board of
Directors, a correct and complete copy of which has been provided by Guarantor
to Bank; provided, however that any amendments thereto shall be satisfactory to
Bank in its sole discretion.
(i) Property and Services from Guarantor. Each of Guarantor and its
------------------------------------
Subsidiaries shall not sell to any CCI Entity, or Underlying Borrower any
equipment, other personal property, real property or services except in the
ordinary course of their respective businesses and upon fair and reasonable
terms no less favorable to the CCI Entity or Underlying Borrower than would be
obtained by the CCI Entity or Underlying Borrower in a comparable arm's-length
transaction with an unrelated Person. Bank acknowledges and agrees that the fees
charged by Guarantor for the services provided under the Management Agreements
do not violate this Section.
31
(j) Redemption Rights Under the Indenture. Guarantor shall not
-------------------------------------
exercise its redemption rights pursuant to Article 11 of the Indenture if such
redemption would constitute a breach of Guarantor's covenants contained in
Section 8(f) of this Guaranty.
(k) Acceleration of Notes. Guarantor shall not cause or permit the
---------------------
Notes to become or to be declared due and payable prior to the date on which
they otherwise would have become due and payable because of a default under the
Indenture.
(l) Defeasance or Covenant Defeasance. Guarantor shall not institute
---------------------------------
a Defeasance or a Covenant Defeasance (as those terms are defined in the
Indenture) under Article 15 of the Indenture.
9. Indemnification.
---------------
(a) General. Guarantor agrees to indemnify and hold Bank and each
-------
Syndication Party and their respective directors, officers, employees, agents,
professional advisers and representatives ("Indemnified Parties" or each an
"Indemnified Party") harmless from and against any and all claims, damages,
losses, liabilities, costs or expenses whatsoever which any such Indemnified
Party may incur (or which may be claimed against any such Indemnified Party by
any Person), including attorney's fees incurred by any such Indemnified Party,
arising out of or resulting from (i) the inaccuracy of any representation or
warranty of Borrower or Guarantor in the Loan Agreement or this Guaranty, (ii)
the failure of Borrower or Guarantor to perform or comply with any covenant or
obligation of Borrower or Guarantor under the Loan Agreement or this Guaranty,
or (iii) the exercise by any such Indemnified Party of any right or remedy set
forth in the Loan Agreement or this Guaranty, provided that Guarantor shall have
no obligation to indemnify any Indemnified Party against claims, damages,
losses, liabilities, costs or expenses to the extent caused by the willful
misconduct or gross negligence of such Indemnified Party. The obligation to
indemnify set forth in this Section 9(a) shall survive the termination of this
Guaranty and other covenants of this Guaranty.
32
(b) Indemnification Relating to Hazardous Substances.
------------------------------------------------
(i) Each of Guarantor and the CCI Entities shall not locate,
produce, treat, transport, incorporate, discharge, emit, release, deposit or
dispose of any Hazardous Substance in, upon, under, over or from any property
owned or held by Guarantor or the CCI Entity, except in accordance with all
Environmental Regulations; each of Guarantor and the CCI Entities shall not
permit any Hazardous Substance to be located, produced, treated, transported,
incorporated, discharged, emitted, released, deposited, disposed of or to escape
in, upon, under, over or from any property owned or held by Guarantor or the CCI
Entity, except in accordance with Environmental Regulations; and each of
Guarantor and the CCI Entities shall comply with all Environmental Regulations
which are applicable to such property. If Bank, acting for its own benefit or in
its role as Agent Bank for the benefit of the present and future Syndication
Parties, reasonably believes that an Environmental Regulation has been violated
by Guarantor or CCI Entity upon property owned or held by Guarantor or any CCI
Entity, if Bank so requests, Guarantor shall have prepared an environmental
review, audit, assessment and/or report relating to the subject property, at
Guarantor's sole cost and expense, by an engineer or scientist acceptable to
Bank. If, however, the environmental review, audit, assessment and/or report
reveals that no Environmental Regulation has been violated, Bank shall reimburse
Guarantor for the costs and expenses of such engineer or scientist in completing
such audit or report. This clause (i) shall apply only to a CCI Entity which
Guarantor manages, or in which Guarantor has a general partner interest or a
controlling interest, or which receives any loan from Borrower.
(iii) Guarantor shall indemnify each Indemnified Party against, and shall
reimburse each Indemnified Party for, any and all claims, demands, judgments,
penalties, liabilities, costs, damages and expenses, including court costs and
attorneys' fees incurred by such Indemnified Party (prior to trial, at trial and
on appeal) in any action against or involving such Indemnified Party, resulting
from any breach of the foregoing covenants, or from the discovery of any
Hazardous Substance in, upon, under or over, or emanating from, property owned
or held by Guarantor or
33
any CCI Entity, it being the intent of Guarantor and Bank that none of the
Indemnified Parties shall have any liability or responsibility for damage or
injury to human health, the environmental or natural resources caused by, for
abatement and/or clean-up of, or otherwise with respect to, Hazardous Substances
by virtue of the interest of any Indemnified Party in the property created by
any documents securing the Guaranteed Obligations (including without limitation
the Guarantor Security Agreement) or as the result of any such Indemnified Party
exercising any of its rights or remedies with respect thereto, including but not
limited to becoming the owner thereof by foreclosure or conveyance in lieu of
foreclosure.
(v) The foregoing covenants of this paragraph (b) shall be deemed continuing
covenants for the benefit of each of the Indemnified Parties, and any successors
and assigns thereof, including but not limited to the holder of any certificate
of purchase, any transferee of the title of Bank or any subsequent owner of the
property, and shall survive the satisfaction or release of any lien, any
foreclosure of any lien and/or any acquisition of title to the property or any
part thereof by Bank, or any Syndication Party, Guarantor or any CCI Entity, or
anyone claiming by, through or under Bank, any Syndication Party, Guarantor or
any CCI Entity by deed in lieu of foreclosure or otherwise. Any amounts covered
by the foregoing indemnification shall bear interest from the date incurred at
the Default Interest Rate, shall be payable on demand, and shall be secured by
the Guarantor Security Agreement. The indemnification and covenants of this
Section 9(b) shall survive termination of this Guaranty and any other covenants
of this Guaranty.
(10) Defined Terms. As used in this Guaranty, the following terms shall
-------------
have the meanings set forth below (and such meaning shall be equally applicable
to both the singular and plural form of the terms defined, as the context may
require):
"Agent Bank Rights": As defined in Section 12(a).
-----------------
"Benefit Arrangement": As defined in Section 6(i).
-------------------
34
"CCI Entity": Any corporation or partnership in which Guarantor
----------
owns, directly or indirectly, an equity or ownership interest. The
CCI Entities shall include any Subsidiary or Wholly-Owned
Subsidiary, but shall exclude Bank.
"CCI Collateral": As defined in Section 5(a).
--------------
"CCI Subordinated Debt": Guarantor's 8.75% Convertible Senior
---------------------
Subordinated Notes due January 15, 2001, issued pursuant to the Note
Purchase Agreement dated January 15, 1993; Guarantor's 11 3/4% Senior
Subordinated Discount Notes due 2003 ("Senior Discount Notes");
Guarantor's 11 1/4% Subordinated Notes due 2005 ("Notes") issued
under the Indenture dated as of July 6, 1995 ("Indenture"), in an
aggregate principal amount not to exceed $80,000,000 notwithstanding
the fact that the Indenture governs the issuance of Notes in a total
principal amount of $100,000,000.
"Compliance Certificate": A certificate of the chief financial
----------------------
officer of Guarantor acceptable to Bank and in the form attached
hereto as Exhibit E, setting forth in reasonable detail the data and
---------
calculations showing compliance with the financial covenants set
forth in Section 7(l) hereof.
"Consolidated Liabilities": An amount equal to the aggregate amount
------------------------
of all liabilities of Guarantor and Guarantor's consolidated
entities.
"Consolidated Net Income": The aggregate net income for Borrower,
-----------------------
Guarantor and Guarantor's consolidated entities (decreased by any
losses), determined in accordance with GAAP for the most recently
completed four Quarters.
"Consolidated Net Worth": The consolidated stockholders' equity of
----------------------
Borrower, Guarantor and Guarantor's consolidated entities, to be
determined both as to classification of items and amounts in
accordance with GAAP.
35
"Guaranteed Obligations": As defined in Section 1.
----------------------
"Guarantor": CommNet Cellular Inc., a Colorado corporation, and its
---------
permitted successors and assigns under this Guaranty.
"Guarantor Loan": the loan made by Guarantor to Borrower pursuant to
--------------
the Guarantor Loan Agreement.
"Indemnified Party": As defined in Section 9(a).
-----------------
"Junior Debt": As defined in Section 11(a).
-----------
"Loan Agreement": As defined in the Recitals.
--------------
"Lien": As defined in Section 8(c).
----
"Partner Consent": As defined in Section 5(b).
---------------
"Senior Debt": As defined in Section 11(a).
-----------
"Subsidiary": A corporation or partnership of which Guarantor owns,
----------
directly or indirectly, more than 50% of the voting securities. For
this purpose, voting securities means securities or interests of any
class or classes of a corporation or partnership, 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.
"Substantial Part": In reference to a disposition of assets, assets
----------------
which are not being sold in the ordinary course of business and the
book value of which when added to the book value of all other assets
disposed of by Guarantor and its Subsidiaries (other than in the
ordinary course of business) during the same fiscal year, exceeds ten
percent (10%) of the Consolidated Net Worth determined as of the end
of the immediately preceding fiscal year or contributed more than ten
36
percent (10%) of the Consolidated Net Income of Guarantor for such
fiscal year.
"Successor Agent": As defined in Section 1.
---------------
"Syndication Agreement": That certain Syndication and Agent Bank
----------------------
Agreement dated as of September 6, 1995 by and between Bank, as a
Syndication Party and as Agent Bank, and those entities who acquire
interests in the Advances made pursuant to the Loan Agreement as such
entities are designated in, and become parties to, such Syndication
and Agent Bank Agreement.
"Syndication Party Notes": Those promissory notes payable by
-----------------------
Borrower to each individual Syndication Party, as they may be
amended, restated, extended, or replaced from time to time.
"Wholly-Owned Subsidiary": Any Subsidiary of which all equity,
-----------------------
securities or interests and all voting securities (except directors,
qualifying shares), with voting securities having the meaning
specified in the definition of "Subsidiary", are owned directly by
Guarantor and/or Guarantor's other Wholly-Owned Subsidiaries.
"6 3/4% Notes": Guarantor's 6 3/4% Convertible Subordinated
------------
Debentures due 2009 issued under that certain Indenture dated as of
July 15, 1989.
Capitalized terms used, but not defined, herein shall have the meaning
given to such terms in the Loan Agreement.
37
(11) Subordination of Junior Debt.
----------------------------
(a) Subordination. Guarantor hereby subordinates its right to
-------------
payment and satisfaction of all indebtedness of Borrower to Guarantor arising
out of the Guarantor Loan and the Principal Reduction Loan (together, the
"Junior Debt") and the payment thereof, directly or indirectly, by any means
whatsoever, to the indefeasible payment and satisfaction in full of all Bank
Debt (owed to Bank or to any Syndication Party) and all other indebtedness of
Borrower to Bank (collectively, "Senior Debt"); provided, however, that Borrower
may make payments to Guarantor in respect of the Junior Debt as permitted under
Section 13.6(b) of the Loan Agreement.
(b) Distributions. In the event of any distribution, division, or
-------------
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of Borrower or the proceeds
thereof to the creditors of Borrower, whether by reason of liquidation,
bankruptcy, arrangement, receivership, assignment for the benefit of creditors,
marshalling of assets of Borrower or any other action or proceeding involving
the readjustment of all or any part of indebtedness of Borrower or the
application of the assets of Borrower to the payment or liquidation thereof, or
upon the dissolution or other winding up of Borrower's business, or upon the
sale of all or substantially all of Borrower's assets, then, and in any such
event, (i) Bank and all Syndication Parties (as their interests may appear)
shall first receive indefeasible payment in full in cash of the Senior Debt
prior to the payment of all or any part of the Junior Debt, and (ii) prior to
the indefeasible payment in full of the Senior Debt, Bank and all Syndication
Parties (as their interests may appear) shall be entitled to receive, for
application to the Senior Debt, any payment or distribution of any kind or
character, whether in cash, securities or other property, which may be payable
or deliverable in respect of any or all of the Junior Debt.
(c) Enforcement of Rights of Guarantor. In order to enable Bank to
----------------------------------
enforce its rights under Section 11 (a) and (b) above, Bank, as Agent Bank, is
hereby irrevocably authorized and empowered (in its own name or in the name of
Guarantor or otherwise), but shall have no obligation, to enforce claims
38
comprising any of the Junior Debt by proof of debt, proof of claim, suit or
otherwise and take generally any action which Guarantor might otherwise be
entitled to take, as Bank may deem necessary or advisable for the enforcement of
its rights or interests hereunder.
(d) Further Assurances. To the extent necessary for Bank and the
------------------
Syndication Parties to realize the benefits of the subordination of the Junior
Debt provided for herein (including the right to receive any and all payments
and distributions which might otherwise be payable or deliverable with respect
to Guarantor in any proceeding described in Section 11(b) above, Guarantor shall
execute and deliver to Bank, for the benefit of Bank and the Syndication
Parties, such instruments or documents (together with such assignments or
endorsements as Bank shall deem necessary), as may be requested by Bank.
(e) Payments Received by Guarantor. Except for payments received by
------------------------------
Guarantor as provided in Section 11(a) above, should any payment or distribution
or security or instrument or proceeds thereof be received by Guarantor in
respect of the Junior Debt, Guarantor shall receive and hold the same in trust,
as trustee, for the benefit of Bank and the Syndication Parties, segregated from
other funds and property of Guarantor and shall forthwith deliver the same to
Bank (together with any endorsement or assignment of Guarantor where necessary),
for application to any of the Senior Debt. In the event of the failure of
Guarantor to make any such endorsement or assignment to Bank, Bank, as Agent
Bank, or any of its officers or employees, are hereby irrevocably authorized on
behalf of Guarantor to make the same.
(f) Instrument Legend and Notation. Any instrument at any time
------------------------------
evidencing the Junior Debt, or any portion thereof, shall be permanently marked
on its face with a legend conspicuously indicating that payment thereof is
subordinate in right of payment to the Senior Debt and subject to the terms and
conditions of this Section 11. In the event any legend or endorsement is
omitted, Bank, as Agent Bank, or any of its officers or employees, are hereby
irrevocably authorized on behalf of Guarantor to make the same. No specific
legend, further assignment or endorsement or delivery of notes,
39
guarantees or instruments shall be necessary to subject any Junior Debt to the
subordination provisions of this Section 11.
(12) Miscellaneous.
-------------
(a) Syndication. Guarantor has received and reviewed the
-----------
Syndication Agreement. Guarantor acknowledges, agrees, and consents to (i)
Bank's transfer, assignment, and syndication of a portion of the Bank Debt to
the Syndication Parties (and any further such transfers or acquisitions in the
future) under the terms and conditions set forth in the Syndication Agreement,
and (ii) Borrower's execution of the Syndication Party Notes (now and in the
future in the event portions of the Bank Debt are acquired by other entities who
become Syndication Parties). Guarantor further agrees and acknowledges (iii)
that Bank is acting hereunder in its own benefit and, in its role as Agent Bank,
for the benefit of the present and future Syndication Parties; (iv) that, except
where the context clearly requires a different construction, the rights, powers
and duties granted to Bank in Articles 9, 14, 15, 16, and 18 of the Loan
Agreement are granted to it in its role as Agent Bank ("Agent Bank Rights"); and
(v) that in the event that, pursuant to the provisions of the Syndication
Agreement, a successor is appointed for Bank in its capacity as Agent Bank
("Successor Agent Bank"), such Successor Agent Bank shall be entitled to
exercise all the Agent Bank Rights hereunder. If a Successor Agent Bank is
appointed, Bank shall provide Guarantor with a written notice identifying such
Successor Agent Bank. The Syndication Parties may have an agreement among
themselves as to notices, amendments, waivers, consents, actions, decisions and
other matters under this Guaranty; however, in no event shall Guarantor be
required to provide notice to other than the Agent Bank (or Successor Agent
Bank) or to deal with other than the Agent Bank (or Successor Agent Bank) with
respect to any amendments, waivers, consents, actions, decisions or other
matters under this Guaranty.
(b) Loan Agreement. Guarantor has received and reviewed the Loan
--------------
Agreement and acknowledges, agrees, and consents to the terms and conditions set
forth therein.
40
(c) No Waiver by Bank. No delay or failure by Bank to exercise any
-----------------
right or remedy against Borrower or Guarantor will be construed as a waiver of
that right or remedy. All remedies of Bank against Borrower and Guarantor are
cumulative.
(d) Assignment. Guarantor may not assign this Guaranty without the
----------
written consent of Bank. Subject to the foregoing and Section 8(g) above, the
provisions of this Guaranty shall be binding upon Guarantor, its successors and
assigns.
(e) Severability. The invalidity or unenforceability of any one or
------------
more provisions of this Guaranty will not affect any other provision.
(f) Amendments. This Guaranty may not be amended without the
----------
written consent of Bank, for itself and as Agent Bank. Guarantor agrees that it
shall reimburse Bank for all fees and expenses incurred by Bank in retaining
outside legal counsel in connection with any amendment or modification to this
Guaranty requested by the Guarantor.
(g) Service of Process and Consent to Jurisdiction. Guarantor hereby
----------------------------------------------
agrees that any litigation with respect to this Guaranty or to enforce any
judgment obtained against Guarantor for breach of this Guaranty may be brought
in the courts of the State of Colorado and in the United States District Court
for the District of Colorado (if applicable subject matter jurisdictional
requirements are present), as Bank may elect; and, by execution and delivery of
this Guaranty, Guarantor irrevocably submits to such jurisdiction. With respect
to litigation concerning this Guaranty within the jurisdiction of the courts of
the State of Colorado or the United States District Court for the District of
Colorado, Guarantor hereby irrevocably appoints The Corporation Company, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the agent of Guarantor to receive for and
on behalf of Guarantor, service of process, which service may be made by mailing
a copy of any summons or other legal process to Guarantor in care of such agent.
Guarantor agrees that Guarantor shall maintain a duly appointed agent for
service of summons and other legal process as long as Guarantor remains
obligated under this Guaranty and shall keep Bank advised in writing of the
identity and location of such agent. The receipt by such agent and/or by
Guarantor of such
41
summons or other legal process in any such litigation shall be deemed personal
service and acceptance by Guarantor for all purposes of such litigation.
(h) Notices. Any notice or other communication in connection with
-------
this Guaranty (including any modifications of, or waivers or consents under,
this Guaranty) shall be deemed to be delivered if in writing (or in the form of
a telex or facsimile transmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), either (i) on the Business Day actually
delivered in fully legible form to such address (as confirmed electronically in
the case of a facsimile transmission or evidenced by receipt of the correct
answer back in the case of a telex) if received during the normal business hours
of the recipient or on the next Business Day if received after normal business
hours of the recipient, or (ii) in the case of a letter, five (5) days after the
same was deposited in the United States mails, with first-class postage prepaid
and registered or certified:
If to Bank (for itself and in its role as Agent Bank):
CoBank, ACB
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Credit Manager, Rural Utilities Banking Group
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
If to Guarantor:
CommNet Cellular Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
42
Guarantor and Bank have executed this Third Amended and Restated Guaranty,
all as of the day and year first above written.
GUARANTOR:
COMMNET CELLULAR INC., a Colorado
corporation
By:_______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
BANK:
COBANK, ACB (for itself and as Agent Bank)
By:_______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
43