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EXHIBIT 10.21.2
NOVATION AND ASSUMPTION
OF PAYMENT OBLIGATION AGREEMENT
U.S.$22,000,000 Dated: April 19, 1999
FOR VALUE RECEIVED, the undersigned, Chilesat Telefonia Personal S.A., a
corporation organized under the laws of the Republic of Chile (the "Debtor"),
HEREBY PROMISES TO PAY to the order of Chilesat S.A., a corporation organized
under the laws of the Republic of Chile or its assigns (the "Holder") the
principal amount of TWENTY-TWO MILLION UNITED STATES DOLLARS (U.S.$22,000,000)
on April 19, 2002 payable in Chilean Pesos at the Observed Exchange Rate on the
day preceding the date of payment.
THIS NOVATION AND ASSUMPTION OF PAYMENT OBLIGATION AGREEMENT (this
"Agreement") is dated as of April 19, 1999 and is entered into by and among (i)
the Debtor, as assignee and obligor hereunder, (ii) Inversiones Leap Wireless
Chile S.A., a corporation organized under the laws of Chile, as assignor of the
payment obligations hereunder ( "Leap Chile"), and (iii) the Holder, as holder
of this Obligation and in order to consent to the assignment and assumption of
the payment obligations.
DEFINITIONS
Defined Terms As used in this Agreement, the terms listed below shall have
the respective meanings set forth below.
"Acquisition" means the acquisition on the date hereof by Leap Chile or its
designee of all of the shares of common stock of the Debtor held by Telex-Chile
and Chilesat S.A.
"Additional Shares of Capital Stock" shall mean all shares of capital stock
(whether common or preferred) of the Debtor issued or sold (or, pursuant to
Section 2.04 (b), deemed to be issued) by the Debtor after the date hereof.
"Affiliate" means, with respect to any Person, (i) each other Person of
which an economic interest of more than twenty-five percent (25%) is held by
such Person, directly or indirectly, whether by ownership of capital stock,
contract or otherwise and (ii) each other Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person
(excluding any trustee under, or any committee with responsibility for
administering, any pension plan or employee benefit plan). A Person shall be
deemed to be "controlled by" another Person if such other Person possesses,
directly or indirectly, power (i) to vote more than twenty-five percent (25%) or
more of the securities (on a fully diluted basis) having ordinary voting power
for the election of directors, managing general partners or managing members or
(ii) to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
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"Base Price" shall have the meaning set forth in Section 2.03 (d).
"Business Day" means any day other than a Saturday or a Sunday or other day
on which commercial banks in New York City or Santiago, Chile are authorized or
required by law to close.
"Chilean GAAP" means generally accepted accounting principles in Chile as
in effect from time to time.
"Chilesat S.A." means Chilesat S.A., a corporation organized under the laws
of Chile.
"Debtor" shall have the meaning set forth in the headings hereto.
"Deferred Payment Agreement" means the Amended and Restated Deferred
Payment Agreement, dated June 24, 1998, among the Debtor, Telex-Chile, XXXXXXXX
Xxxxxxxxxxxx and Leap Wireless (as assignee of Xxxxxxxx Xxxxxxxxxxxx), as
amended, modified or supplemented from time to time.
"Dollar," "Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Event of Default" means any of the events specified in Section 5.01,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Financial Statements" means, with respect to any accounting period for a
Person, statements of income and cash flows of said Person for such period, and
balance sheets of said Person as of the end of such period, setting forth in
each case in comparative form figures for the corresponding period in the
preceding fiscal year if such period is less than a full fiscal year or, if such
period is a full fiscal year, corresponding figures from the preceding annual
audit, all prepared in reasonable detail and in accordance with Chilean GAAP
consistently applied and which shall fairly present the financial condition of
such Person.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Holder" shall have the meaning set forth in the headings hereto.
"Indebtedness" means as to any Person, (a) indebtedness of such Person for
borrowed money, (b) all capitalized leases of such Person, (c) all obligations
of such Person for the deferred purchase price of property or services (other
than trade or other accounts payable in the ordinary course of business in
accordance with customary industry terms).
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"Leap Chile" means Inversiones Leap Wireless Chile S.A., a corporation
organized under the laws of Chile.
"Leap Credit Agreement" means the Loan Agreement dated June 24, 1998, among
the Debtor, Telex-Chile and Leap Chile, as amended, modified or supplemented
from time to time.
"Leap Wireless" means Leap Wireless International, Inc., a corporation
organized under the laws of Delaware.
"Libor" applicable to any calendar month means the rate per annum (rounded
upward, if necessary, to the next higher 1/16 of 1%) equal to the rate reported
on the Telerate Screen, page 3750, as the rate at which deposits in Dollars are
offered by major banks in the London interbank market at approximately 11:00
a.m. (London time) two London Business Days before the first day of such
calendar month in an amount approximately equal to the aggregate principal
amount of the outstanding principal due under this Agreement and subject to such
Interest and for a one month period. Libor so determined shall apply to all
principal outstanding under this Agreement and in default during the applicable
calendar month regardless of changes in the Libor occurring during such month.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
agreement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, or any financing lease
having substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" shall mean (a) a material adverse change in, or a
material adverse effect upon, the operations, business, assets, properties,
condition (financial or otherwise) or prospects of the Debtor and its
Subsidiaries taken as a whole that results in a material impairment of the
ability of the Debtor to perform its obligations hereunder; or (b) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Debtor of this Agreement.
"Observed Exchange Rate" means, at any date of determination, the rate of
exchange of U.S. dollars and Chilean pesos calculated with reference to the
"dolar observado," as published for such date by the Central Bank of Chile in
accordance with paragraph 6 of Chapter I of Title 1 of the Compendium of Foreign
Exchange Rules of the Central Bank of Chile, or if no such rate is published by
the Central Bank or reported in Chile, then published or announced rate of
Citibank (of if Citibank does not publish or announce such rate, the rate
published or announced by Bank of America) or if neither such bank announces or
publishes a rate than to the foreign exchange spot mid-rates for such day
reported in The Wall Street Journal, or, if not so reported, to the mid-market
foreign exchange spot closing rates for such day reported in the Financial
Times, or, if not so reported, to
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spot foreign exchange mid-market rates for trading among banks in amounts of
US$1,000,000 or more.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture, limited
liability company, Governmental Authority or other entity of whatever nature.
"Requirements of Law" means, as to any Person, the articles of
incorporation, bylaws, estatutos sociales or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Restricted Payment" shall mean (i) any payment of a dividend or
distribution (whether in cash, securities or other property) with respect to any
shares of any class of capital stock of the Debtor, or (ii) any payment (whether
in cash, securities or other property), on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such shares of
capital stock of the Debtor, or (iii) any payment with respect to any option,
warrant or other right to acquire any such shares of capital stock of the
Debtor.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated April
12, 1999, among Leap Chile, as Purchaser, and Telex-Chile and Chilesat S.A., as
Sellers.
"Subsidiary" means, as to any Person, an entity of which fifty percent
(50%) of the shares of stock (or similar equity interests) having ordinary
voting power (other than stock having such power only by reason of the
occurrence of a contingency) are at the time owned or controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person.
"Telex-Chile" means Telex-Chile S.A., a corporation organized under the
laws of Chile.
ARTICLE I
NOVATION OF PAYMENT OBLIGATION
SECTION 1.01. Novation. Leap Chile hereby sells, transfers, conveys and
sets over unto the Debtor its payment obligations pursuant to Section 1.2(c) of
the Stock Purchase Agreement. The Debtor for valuable consideration as effected
by Section 1.02 hereof, the receipt of which is hereby acknowledged, does hereby
irrevocably and unconditionally assume such payment obligations, as evidenced by
this Agreement, subject to the terms and conditions set forth herein. The
assignment and assumption set forth in this section shall constitute a novation
of Leap Chile's payment obligations under Section 1.2(c) of the Stock Purchase
Agreement and shall release the Seller from any and all further liability
thereunder.
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The Debtor agrees that it shall not challenge the validity or enforceability of
this Agreement.
SECTION 1.02. Value Given. In order to induce the Debtor to enter into and
issue this Agreement, Leap Chile hereby agrees to cause Leap Wireless to reduce
by U.S.$10,000,000 the Debtor's obligations pursuant to the Deferred Payment
Agreement.
SECTION 1.03. Consent and Acknowledgment. The Holder hereby consents to and
acknowledges the novation effected pursuant to this Article. Leap Chile and the
Debtor acknowledge and agree that the unconditional and irrevocable assumption
of this Agreement by the Debtor is an essential element of the Holder's
agreement to the Acquisition.
ARTICLE II
TERMS OF PAYMENT
SECTION 2.01. Interest. All sums payable hereunder shall be without
interest, except for default interest in accordance with Section 2.06.
SECTION 2.02. Optional Prepayments. The Debtor may at any time prepay this
Agreement in whole or in part.
SECTION 2.03. Mandatory Prepayments (a) If the Debtor shall (i) make any
Restricted Payment to Leap Chile, Leap Wireless or any of their respective
Subsidiaries or (ii) make any Restricted Payment to a Person other than Leap
Chile, Leap Wireless or any of their respective Subsidiaries, successors or
assigns except out of retained earnings or profits, the Debtor shall on the date
of such Restricted Payment first prepay this Agreement in full.
(b) If the Debtor shall make a payment, repurchase, or redemption of any
principal due under any Indebtedness of the Debtor held by Leap Chile, Leap
Wireless, their respective Subsidiaries or, in the case of Indebtedness
outstanding as of March 29, 1999, to Leap Chile and/or to Leap Wireless or to
any of their respective successors, assigns or transferees, the Debtor shall on
the date of such payment first prepay this Agreement in full.
(c) After the Debtor shall have issued any Additional Shares of Capital
Stock or incurred any Indebtedness and received net proceeds (whether in cash,
securities, other property, but not including forgiveness of Indebtedness) in an
aggregate amount (in combination with all issuances of capital stock or
incurrences of Indebtedness from the date hereof) in excess of U.S.$200,000,000,
the Debtor shall apply on the date of each such issuance or incurrence an amount
equal to 50% of the net proceeds thereof in excess of the amount of
U.S.$200,000,000 toward the prepayment of this Agreement.
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(d) If at any time on or before March 19, 2000 the Debtor or Leap Chile
sells capital stock (whether common or preferred) of the Debtor to any Person
for more than the Base Price per share (as defined and adjusted from time to
time as provided in Section 2.04 (the "Base Price")), the Debtor shall, on the
date of such sale, (i) if the sale occurs on or before June 30, 1999, apply an
amount equal to 50% of the excess net proceeds over the Base Price per share
realized in such sale multiplied by the number of shares sold toward the
prepayment of this Agreement and (ii) if the sale occurs after June 30, 1999 and
on or before March 19, 2000, apply an amount equal to 25% of the excess net
proceeds over the Base Price per share realized in such sale multiplied by the
number of shares sold toward the prepayment of this Agreement. Any sale of
shares of a holding company of Debtor established between Leap Chile and Debtor
which does not have material assets and/or liabilities other than the shares of
Debtor shall be treated as a sale of the underlying shares of Debtor (with
appropriate proportional adjustments to the applicable Base Price to reflect any
differences in the number of shares outstanding in such holding company and the
number of shares outstanding in Debtor (e.g. if the applicable Base Price is
$5.00 per share and Debtor has 20 Million shares outstanding before the sale and
the holding company has 10 Million shares outstanding before such sale, the Base
Price applicable to the holding company shall be $10 per share)).
(e) Notwithstanding anything to the contrary in this Section 2.03, the
conversion of the loans under the Leap Credit Agreement or the Deferred Payment
Agreement into equity of the Debtor shall not under any circumstances require
the Debtor to prepay this Agreement or affect the Base Price.
SECTION 2.04 Adjustment of Base Price. (a) On the date of this Agreement,
the Base Price for common shares shall be U.S.$5.00 per share and the Base Price
for preferred shares shall be U.S.$5.00 plus such sum as determined by the board
of directors of the Debtor in good faith to be the amount of the increased value
of the preferred shares over common shares as a result of the rights,
preferences and privileges of the preferred shares. Thereafter, in case the
Debtor at any time or from time to time after the date hereof shall issue or
sell Additional Shares of Common Stock (including Additional Shares of Capital
Stock deemed to be issued pursuant to Section 2.04 (b)) for a consideration per
share less than the Base Price in effect immediately prior to such issue or
sale, then, and in each such case, such Base Price shall be adjusted,
concurrently with such issue or sale to a price per share (calculated to the
nearest .001 of a cent) determined by multiplying such Base Price by a fraction
(i) the numerator of which shall be (A) the number of shares of capital
stock of the Debtor outstanding immediately prior to such issue or sale, plus
(B) the number of shares of capital stock of the Debtor which the aggregate
consideration received by the Debtor for the total number of such Additional
Shares of Capital Stock so issued or sold would purchase at such Base Price,
plus (c) the number of shares of capital stock of the Debtor sold to a Person
other than Leap Chile, Leap Wireless or any of their respective Affiliates, and
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(ii) the denominator of which shall be the number of shares of capital
stock of the Debtor outstanding immediately after such issue or sale, provided
that, for purposes of this Section 2.04, (X) immediately after any Additional
Shares of Capital Stock are deemed to have been issued pursuant to Section
2.04(b), such Additional Shares shall be deemed to be outstanding, and (Y)
treasury shares shall not be deemed to be outstanding.
(b) In case the Debtor at any time or from time to time after the date
hereof shall declare or pay any dividend on its capital stock payable in capital
stock, or shall effect a subdivision of the outstanding shares of its capital
stock into a greater number of shares of capital stock (by reclassification or
otherwise than by payment of a dividend in capital stock), then, and in each
such case, Additional Shares of Capital Stock shall be deemed to have been
issued (i) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or (ii) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
(c) For the purposes of this Section 2.04,
(i) the consideration for the issue or sale of any Additional Shares of
Capital Stock shall, irrespective of the accounting treatment of such
consideration,
(A) insofar as it consists of cash, be computed at the net amount of
cash received by the Debtor,
(B) insofar as it consists of property (including securities) other
than cash, be computed at the fair market value thereof at the time of such
issue or sale, as determined in good faith by the Board of Directors of the
Debtor, and
(C) in case Additional Shares of Capital Stock are issued or sold
together with other stock or securities or other assets for consideration which
covers both, be the portion of such consideration so received, computed as
provided in clauses (A) and (B) above, allocable to such Additional Shares of
Capital Stock, all as determined in good faith by the Board of Directors of the
Debtor; and
(ii) Additional Shares of Capital Stock deemed to have been issued pursuant
to Section 2.04(b), relating to stock dividends, stock splits, etc., shall be
deemed to have been issued for no consideration.
SECTION 2.05. Payments and Computations(a) The Debtor shall make each
payment hereunder not later than 12:00 Noon (Santiago time) on the day when due
in the amount of Chilean Pesos (equivalent to the U.S. dollars due converted at
the Observed Exchange Rate on the day before the date of payment) in same day
funds to the Holder at its address referred to in Section 6.02 or to the account
of the Holder designated in writhing by the Holder.
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(b) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
SECTION 2.06. Default Interest. Any overdue principal or other amount
payable under this Agreement shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to Libor (as defined below) plus five
percent (5%) on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
SECTION 2.07. The Debtor is hereby authorized, to the fullest extent
permitted by law, to set off and apply any amounts payable by Telex-Chile or
Chilesat S.A. to the Debtor and/or Leap Chile on account of the indemnities set
forth in the Stock Purchase Agreement against any and all of the obligations of
the Debtor under this Agreement; provided, however, that if a right of set off
is claimed in bad faith, damages shall be payable to Holder equivalent to fifty
percent (50%) of the amount of the set off that is so asserted. Any such damages
shall be in addition to any costs and expenses payable pursuant to Section 6.04
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Debtor. The Debtor
represents and warrants as follows:
(a) Corporate Existence. The Debtor (i) is a corporation duly incorporated
and validly existing under the laws of Chile and (ii) has the corporate power
and authority to own its property and carry on its business as now being
conducted.
(b) Corporate Power; Authorization. The execution, delivery and performance
by the Debtor of this Agreement are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Debtor's estatutos sociales, (ii) violate any law or any contractual restriction
binding on or affecting the Debtor, except where such violation may not
reasonably be expected to have a Material Adverse Effect, or (iii) result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties.
(c) Approvals. To the Debtor's best knowledge following consultation with
Grasty, Quintana, Majlis y Cia, no consent, order, authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required for (i) the due execution, delivery and performance
by the Debtor of this Agreement, or (ii) the legality, validity, binding effect
or enforceability hereof.
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(d) Enforceability. This Agreement is the legal, valid and binding
obligation of the Debtor, enforceable against the Debtor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally and by
equitable principles.
ARTICLE IV
COVENANTS OF THE DEBTOR
SECTION 4.01. Affirmative Covenants. So long as any amount under this
Agreement shall remain unpaid, the Debtor shall, unless the Holder shall
otherwise consent in writing:
(a) Reporting Requirements. Furnish to the Holder copies of each of the
following:
(i) as prepared in the ordinary course of business (A) quarterly
Financial Statements of the Debtor and (B) audited annual Financial Statements
of the Debtor and each of its Subsidiaries accompanied, in the case of (B) by an
audit opinion letter by an accounting firm of recognized international standing;
(ii) at the time of delivery of audited annual Financial Statements
Debtor shall deliver to Holder (x) a certificate from the Chief Financial
Officer of the Debtor certifying (A) that the Financial Statements attached were
prepared in accordance with Chilean GAAP and fairly present the financial
condition of such Person, and (B) that such officer is familiar with the terms
of this Agreement and that no Event of Default has occurred and is continuing
under this Agreement, or if such an Event of Default has occurred and is
continuing, containing a statement as to the nature thereof and the steps being
taken with respect thereto, and (y) a certificate of accountants of the Debtor
stating that in making the examination necessary for their certification they
have obtained no knowledge of any Event of Default which has occurred and is
continuing, or if, in the opinion of such accountants, an Event of Default has
occurred and is continuing, a statement as to the nature thereof; and
(iii) promptly after the sending or filing thereof, copies of all
reports which the Debtor and its Subsidiaries send to any of their securities
holders and any and all press releases issued by the Debtor and each of its
Subsidiaries.
(b) Insurance. Maintain, and cause each Subsidiary to maintain, insurance
with such insurance companies and associations, in such amounts and covering
such risks as may be determined in good faith by the board of directors of the
Debtor to be commercially reasonable. The Holder agrees that continuing existing
insurance coverage shall be commercially reasonable.
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(c) Financial Records. Keep and maintain, and cause each of its
Subsidiaries to keep and maintain, accurate books and records of account in
accordance with Chilean GAAP consistently applied. Upon reasonable request and
with the consent of the Debtor, which consent will not be unreasonably withheld,
the Holder may request a certificate of accountants of Debtor stating that they
have made a reasonable examination necessary for their certificate and that they
have obtained no knowledge of an event of default which has occurred and is
continuing or, if in the opinion of such accountants, an event of default has
occurred and is continuing, a statement as to the nature thereof. Upon receipt
of such request, the Debtor, may at its option, either (i) provide such
certificate of the Debtor or (ii) permit the Holder or its representatives
during customary business hours to inspect and examine the Debtor's books and
records and to discuss its affairs, finances and accounts with its principal
officers. If the Debtor elects to provide the certificate as described in
Subparagraph (i) above, and the auditors certify that no event of default has
occurred which has not previously been disclosed to the Holder, the Holder shall
pay all costs and expenses associated with providing such certificate.
SECTION 4.02. Negative Covenants. So long as any amount under this
Agreement shall remain unpaid, the Debtor shall not, without the written consent
of the Holder enter into any transaction, including without limitation, the
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliates,
unless such transaction is (i) in the ordinary course, and (ii) upon fair and
reasonable terms comparable to those obtainable in an arm's-length transaction
with a Person not an Affiliate.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
(a) The Debtor shall fail to pay the principal amount of this Agreement
when the same becomes due and payable or shall fail to pay any other amounts
payable under this Agreement when the same become due and payable and any such
failure shall continue for five (5) Business Days; or
(b) A representation or warranty made by the Debtor under or in connection
with this Agreement shall prove to have been incorrect in any material respect
when made; or
(c) The Debtor shall fail to perform or observe (i) any term, covenant or
agreement contained in Section 4.02, or (ii) any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
and such failure shall continue for ten (10) Business Days after the Debtor has
notice of such failure from Holder; or
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(d) The Debtor shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) be dissolved or liquidated in full or in part, (iv) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such relief or to
the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it; or
(e) Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of the Debtor or of all or a substantial part of its properties, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Debtor, under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
ninety (90) days after commencement thereof; or
(f) The Debtor and its Subsidiaries shall sell all or substantially all its
assets or property or shall otherwise cease to engage in a wireless
telecommunication business.
SECTION 5.02. Remedies. Upon the occurrence and continuance of any Event of
Default, the Holder may, upon the expiration of any applicable grace period,
exercise all rights and remedies granted to it by this Agreement or by
applicable law, in equity or otherwise.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Debtor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Holder and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic and facsimile
communication) and sent by reliable courier, telegraphed, facsimiled or
delivered, and addressed to the Debtor or the Holder at its address shown below,
or at such other address as such party may, by written notice received by the
other party, have designated as its address for such purposes.
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Debtor: CHILESAT TELEFONIA PERSONAL S.A.
Rinconada Xx Xxxxx 000
Xxxxxxxxxx
Xxxxxxxx
XXXXX
Attention: Chief Financial Officer
Fax No. 000-000-000-0000
With copy to:
LEAP WIRELESS INTERNATIONAL, INC.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX
XXX
Attention: General Counsel
Fax No. 0-000-000-0000
Holder: TELEX-CHILE S.A.
Rinconada El Salto 202
Huechuraba
Xxxxxxxx
CHILE
Attention: Gerente General
Fax No. 011-562-382-
With Copy to: General Counsel
All such notices and communications shall, when sent via courier, telexed,
telegraphed or facsimiled, be effective, if sent via courier, five Business Days
after delivery to the courier, if sent by telex, upon confirmation of receipt,
if telegraphed, upon delivery by the telegraph company, or if facsimiled, upon
being telecopied, with receipt telephonically confirmed by sender, respectively,
addressed as aforesaid.
SECTION 6.03. No Waiver; Remedies. No failure on the part of the Holder to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided in this Agreement are cumulative and not exclusive
of any remedies provided by law.
SECTION 6.04. Costs and Expenses. The Debtor agrees to pay the Holder on
demand all reasonable costs and expenses, if any (including, without limitation,
reasonable attorneys' fees and expenses) incurred by the Holder in connection
with the enforcement of this Agreement.
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SECTION 6.05. Binding Effect; Assignments; Governing Law
(a) This Agreement shall be binding upon and inure to the benefit of the
Debtor, the Holder and their respective successors and assigns. The Debtor shall
remain primarily liable under this Agreement notwithstanding any assignment or
transfer of its assets or any purported delegation of duties under this
Agreement.
(b) The Debtor and the Holder hereby agree that the Holder shall be
entitled to sell, transfer or assign, through the sale of participation
interests or otherwise, all or any part of its rights, obligations and interests
that arise under this Agreement, in addition to this Agreement itself, without
any limitation whatsoever. The Debtor hereby grants its unconditional
authorization to the Holder to execute any such assignment, and agrees that it
shall be sufficient that there exist only an agreement between the Holder and
its assignee. The Holder shall notify the Debtor of the assignment in writing,
pursuant to the provisions of Section 6.02. The Debtor and the Holder hereby
agree that in the event of any such assignment, the rights and interests in and
to the Debtor's payment and performance of its obligations under this Agreement
shall be assigned in favor of the one or several assignees, to be shared jointly
with the Holder or such other assignees if the assignment is in part. The Holder
may disclose the Agreement and any financial or other information relating to
Debtor to any potential assignee or participant provided that such potential
assignee or participant agrees not to disclose the Agreement and such
information to other third parties except (i) to its Affiliates and to those
Persons with which a confidential relationship is maintained (including
regulators, legal counsel, accountants, or designated agent(s); (ii) where
required by law, regulation or legal process, provided that to the extent
practicable such potential assignee or participant shall give the Holder and
Debtor prior notice of any such legally required disclosure; (iii).with respect
to any such information that has become generally available other than through
any breach of this Agreement; or (iv) with the prior written consent of the
Holder and the Debtor.
(c) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE REPUBLIC OF CHILE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
SECTION 6.06. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 6.07. Resolution of Disputes; Submission to Arbitration. The
parties hereto hereby agree that any legal action or proceeding brought by the
Holder with respect to this Agreement may be brought, at the Holder's sole and
exclusive option, in the ordinary courts of Chile, sitting in the Comuna xx
Xxxxxxxx, or, in the form of arbitration, before the Camara de Comercio xx
Xxxxxxxx. By
14
execution hereof, the Debtor accepts and consents to, for itself and with
respect to its property, generally and unconditionally, the non-exclusive
jurisdiction of such courts and submission to such arbitral proceeding and form;
provided, however, that upon the commencement and pendency of an arbitral
proceeding pursuant to Article 6 of the Stock Purchase Agreement, the Debtor's
payment obligations hereunder shall be suspended in an amount up to such amount
as shall be contended in good faith in such arbitral proceeding by the Debtor or
Assignor as subject to reduction in accordance with the right of set-off granted
pursuant to Section 2.07 herein and Section 4.2 in the Stock Purchase Agreement.
Subject to the right of set-off, all amounts owing shall be reinstated upon the
resolution or termination of any such arbitral proceeding commenced pursuant to
the Stock Purchase Agreement.
SECTION 6.08. Right of Suspension. If, following the closing of the
Acquisition, the validity of the Acquisition is challenged in any litigation,
arbitration or other legal proceeding, by a party other than Leap Chile, Leap
Wireless or any of their respective Affiliates, then until such proceeding is
finally resolved or settled, the Debtor shall be entitled to suspend payments
under this Agreement, and the due dates of any such payments shall be deferred
accordingly until the date on which such proceeding is finally resolved or
settled. All parties hereto agree not to take any action or position in any such
proceeding contrary to the validity of the Acquisition or this Agreement and
agree to cooperate in any such proceeding in order to resolve the matters
contested therein in favor of the validity of the Acquisition and this
Agreement.
SECTION 6.9. Headings. Headings in this Agreement are for convenience of
reference only and are not part of the substance hereof.
SECTION 6.10. Joint Preparation. This Agreement is to be deemed to have
been prepared jointly by the Debtor and the Holder and any uncertainty or
ambiguity existing herein, if any, shall not be interpreted against either
party, but shall be interpreted according to the application of the rules of
interpretation for arm's length agreements.
SECTION 6.11. Survival. All indemnities herein shall survive the execution
and delivery of this Agreement and the repayment of the principal amount
thereof.
SECTION 6.12. Effectiveness. This Agreement shall become effective on the
date on which the Debtor shall have signed a copy hereof.
15
IN WITNESS WHEREOF, the Debtor has caused this Agreement to be executed by
its duly authorized officer as of the date first above written.
As Debtor of this Agreement and assignee of the Payment Obligations:
CHILESAT TELEFONIA PERSONAL S.A.
By: /s/ XXXXXXX XXXXXX
-------------------------------
Print Name: XXXXXXX XXXXXX
Title: REPRESENTATIVE
By: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------
Print Name: XXXXXXX X. XXXXXXXXXX
Title: GENERAL MANAGER
As Holder: As Assignor:
CHILESAT S.A. INV. LEAP WIRELESS CHILE S.A.
By: /s/ XXXX XXXXXXX XXXXXX By: /s/ XXXXXXX XXXXXX
------------------------------- -------------------------------
Print Name: XXXX XXXXXXX XXXXXX Print Name: XXXXXXX XXXXXX
Title: PRESIDENT Title: GENERAL MANAGER
By: /s/ XXXXX XXXXXXXXXX
-------------------------------
Name: XXXXX XXXXXXXXXX
Title: GENERAL MANAGER
16
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...............................................1
SECTION 1.01. Defined Terms.............................................1
ARTICLE II TERMS OF PAYMENT..........................................4
SECTION 2.02. Optional Prepayments......................................4
SECTION 2.03. (a) Mandatory Prepayments.................................4
SECTION 2.04. Adjustment of Base Price..................................5
SECTION 2.05. Payments and Computations.................................6
SECTION 2.06. Default Interest..........................................7
SECTION 2.07.............................................................7
Right of Set-off.......................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES............................7
SECTION 3.01. Representations and Warranties of the Debtor..............7
ARTICLE IV COVENANTS OF THE DEBTOR...................................8
SECTION 4.01. Affirmative Covenants.....................................8
(a) Compliance With Laws, Etc....................................8
(a) Transactions With Affiliates................................10
(b) Dividends; Distributions....................................10
(c) Prepayments of Certain Indebtedness.........................11
(d) Limitation on Modifications.................................11
ARTICLE V EVENTS OF DEFAULT........................................11
SECTION 5.01. Events of Default........................................11
SECTION 5.02. Remedies.................................................12
ARTICLE VI MISCELLANEOUS............................................12
SECTION 6.01. Amendments, Etc..........................................12
SECTION 6.02. Notices, Etc.............................................12
SECTION 6.03. No Waiver; Remedies......................................13
SECTION 6.04. Costs and Expenses.......................................14
SECTION 6.05. Binding Effect; Assignments; Governing Law...............14
SECTION 6.06. Severability.............................................14
SECTION 6.07. Resolution of Disputes; Submission to Arbitration. .....14
SECTION 6.08. Waiver of Immunities.....................................15
SECTION 6.09. Judgment Currency........................................15
SECTION 6.10. Right of Suspension......................................15
SECTION 6.11. WAIVERS OF JURY TRIAL....................................15
SECTION 6.12. Headings.................................................16
SECTION 6.13. .........................................................16
SECTION 6.14. Survival.................................................16
SECTION 6.15. Effectiveness............................................16
