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EXHIBIT 10.32
AGREEMENT FOR PURCHASE AND SALE OF LICENSES
This Agreement for Purchase and Sale of Licenses (the "Agreement") is
entered into as of this 7th day of January, 2000 (the "Effective Date"), by and
between Radiofone PCS, L.L.C., a Louisiana limited liability company with its
principal place of business located at 0000 X. X-00 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxx 00000 ("Seller"), and Leap Wireless International, Inc., a Delaware
corporation with its principal place of business located at 00000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Buyer").
WHEREAS, Seller has acquired the authorization of the Federal
Communications Commission (the "FCC") to construct and operate personal
communication services ("PCS") wireless telecommunications systems ("Systems")
in the Basic Trading Areas ("BTAs") listed on Exhibit A, which is attached
hereto (collectively referred to herein as the "Licenses");
WHEREAS, Seller desires to sell, assign and transfer to Buyer,
and Buyer desires to purchase from Seller, the Licenses described on Exhibit A
on the terms and subject to the conditions set forth herein; and
WHEREAS, the prior consent of the FCC to the transfer of the
respective Licenses from Seller to Buyer is required, and the parties intend
that the transfer of each License contemplated by this Agreement will be
consummated only if such consent to the transfer of each License is obtained.
NOW, THEREFORE, in consideration of the mutual covenants herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, each intending to be legally bound,
do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Court Order" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Denver License" means the License for the Denver BTA described
on Exhibit A attached hereto.
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"Encumbrance" means any lien, claim, charge, security interest,
mortgage, pledge, easement, right of first offer or first refusal, conditional
sale or other title retention agreement, defect in title, covenant or other
restriction of any kind.
"Expenses" means any fees or expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against under Article X hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals).
"FCC Consent" means the consent of the FCC to the assignment of
the Licenses described herein from Seller to Buyer.
"FCC Note and Security Agreement" means that certain Promissory
Note and Security Agreement executed by Seller in favor of the United States
Federal Government, representing installment payment obligations on the Denver
License obtained in the FCC's F-Block auction of PCS spectrum, copies of which
are attached hereto as Exhibit B.
"Final Order" means action by a regulatory authority as to which
(i) no request for stay by such authority of the action is pending, no such stay
is in effect, and, if any deadline for filing any such request is designated by
statute or regulation, it has passed; (ii) no petition for rehearing or
reconsideration of the action is pending before such authority, and the time for
filing any such petition has passed; (iii) such authority does not have the
action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of such authority's action is pending or in effect, and, if any
deadline for filing any such appeal or request is designated by statute or rule,
it has passed.
"Governmental Body" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"IRS" means the Internal Revenue Service.
"Licenses" shall have the meaning set forth in the Recitals to
this Agreement.
"Losses" means any loss, cost, obligation, liability, settlement
payment, award, judgment, fine, penalty, damage, expense, deficiency or other
charge.
"Material Adverse Change" means any material adverse change in
the assets, liabilities, business, condition (financial or otherwise),
operations, results of operations or prospects of Seller.
"Pittsburgh License" means the License for the Pittsburgh BTA
described on Exhibit A attached hereto.
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"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Requirements of Laws" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body or common law.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase of Licenses. On the Pittsburgh Closing Date (as defined
below), upon the terms and subject to the representations, warranties and
conditions of this Agreement, Seller shall sell, transfer, convey, assign, and
deliver to Buyer, and Buyer shall purchase and accept from Seller, the
Pittsburgh License described on Exhibit A, free and clear of all Encumbrances.
On the Denver Closing Date (as defined below), upon the terms and subject to the
representations, warranties and conditions of this Agreement, Seller shall sell,
transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase and
accept from Seller, the Denver License described on Exhibit A, free and clear of
all Encumbrances, except for the FCC Note and Security Agreement related
thereto.
2.2 Purchase Price Payable at Closings.
(a) At the Pittsburgh Closing, Buyer shall pay and deliver to
Seller, in immediately available funds, Eighteen Million Three Hundred Seventy
Thousand U.S. Dollars ($18,370,000) in exchange for the Pittsburgh License.
(b) At the Denver Closing, Buyer shall pay and deliver to Seller,
in exchange for the Denver License: (i) 232,755 (Two Hundred Thirty Two Thousand
Seven Hundred Fifty Five) shares of its Common Stock, $.0001 par value per share
(as adjusted for stock splits, stock combinations and the like occurring prior
to the Denver Closing Date), registered in the name of Seller (the "Leap
Shares"), and (ii) in immediately available funds, an amount equal to $3,430,000
(Three Million Four Hundred Thirty Thousand U.S. Dollars) less the amount of the
Assumed Liabilities (as defined in Section 2.3 below).
2.3 Assumed Liabilities. At the Denver Closing, Buyer shall assume
Seller's obligations under the FCC Note and Security Agreement accruing from and
after the Denver Closing Date in accordance with the terms and subject to the
conditions thereof, but in no event in an amount that exceeds the amount set
forth on Exhibit A adjacent to the Denver License (the "Assumed Liabilities").
Notwithstanding any other provision of this Agreement, except for the Assumed
Liabilities expressly specified in this Section 2.3, Buyer shall not assume, or
otherwise be responsible for any liabilities, obligations or indebtedness of
Seller and its affiliates, whether direct or indirect, liquidated or
unliquidated, known or unknown, whether accrued, absolute, contingent, matured,
unmatured or otherwise, and whether arising out of occurrences prior to, at or
after the date hereof.
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ARTICLE III
CLOSING
3.1 Closings.
(a) Subject to the fulfillment or waiver of the parties'
respective conditions to closing set forth in Article XIII and Article IX, the
closing of the transfer of the Pittsburgh License (the "Pittsburgh Closing")
shall occur at the offices of Seller, at 10:00 A.M., local time, on a date to be
specified by Buyer to Seller which closing date will not be more than ten (10)
business days after the date on which the FCC, and all other state and federal
regulatory authorities, if any, shall have issued a Final Order consenting to
the transfer of the Pittsburgh License from Seller to Buyer, or such other time
and place as the parties may agree (such date, the "Pittsburgh Closing Date").
(b) Subject to the fulfillment or waiver of the parties'
respective conditions to closing set forth in Article XIII and Article IX, the
closing of the transfer of the Denver License (the "Denver Closing" and together
with the Pittsburgh Closing, the "Closings") shall occur at the offices of
Seller, at 10:00 A.M., local time, on a date to be specified by Buyer to Seller
which closing date will not be more than ten (10) business days after the date
on which the FCC, and all other state and federal regulatory authorities, if
any, shall have issued a Final Order consenting to the transfer of the Denver
License from Seller to Buyer, or such other time and place as the parties may
agree (such date, the "Denver Closing Date" and together with the Pittsburgh
Closing Date, the "Closing Dates").
(c) The parties will use reasonable efforts to conduct the
Closings concurrently. The parties understand and agree, however, that the
respective Closings of the purchase and sale of the Pittsburgh License and the
Denver License are not conditioned upon one another and may occur separately and
independently from one another. The respective Closings shall occur in
accordance with Sections 3.1(a) and (b), regardless of whether the other Closing
is ready to occur or may not occur at all.
3.2. Closing Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article VIII, at each respective Closing, Buyer shall
deliver to Seller all of the following:
(a) immediately available funds in the respective amounts set
forth in Section 2.2 above, and at the Denver Closing only, the Leap Shares;
(b) at the Denver Closing only, an instrument of assumption of
the FCC Note or at Buyer's sole option, an instrument necessary to arrange for
such debt to be extinguished and replaced with debt to the FCC, for which Buyer
shall be responsible;
(c) A certificate of good standing of Buyer issued within thirty
(30) days prior to the respective Closing Dates by the Secretary of State of the
State of Delaware;
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(d) A certificate of the Secretary of Buyer dated as of the
respective Closing Dates, as to the resolutions of the Board of Directors of
Buyer or written consent of the members thereof authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby;
(e) a certificate of an officer of Buyer, dated the respective
Closing Dates, certifying that as of such Closing Date, each representation and
warranty of Buyer contained in this Agreement is true and correct in all
material respects and that Buyer has complied in all material respects with all
of its obligations under this Agreement; and
(f) an opinion of Buyer's general counsel, dated as of such
respective Closing Dates, substantially in the form of Exhibit E attached
hereto.
3.3. Seller Closing Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article IX, at each respective Closing, Seller shall
deliver to Buyer all of the following:
(a) As of the respective Closing Dates, written consent of the
members of Seller authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
(b) a certificate of an authorized member of Seller, dated the
respective Closing Dates, certifying that as of such Closing Date, each
representation and warranty of Seller contained in this Agreement is true and
correct in all material respects and that Seller has complied in all material
respects with all of its obligations under this Agreement;
(c) an assignment of the applicable License in a form reasonably
acceptable to Buyer;
(d) an opinion of Seller's FCC regulatory counsel, dated as of
such respective Closing Dates, substantially in the form of Exhibit C attached
hereto;
(e) all required third party consents to the consummation by
Seller of the transactions contemplated by this Agreement; and
(f) such other documents as Buyer may reasonably request or as
may be otherwise necessary to evidence and effect the transactions contemplated
by this Agreement.
In addition to the above deliveries, Seller shall take all steps and actions as
Buyer may reasonably request or as may otherwise be reasonably necessary to put
Buyer in actual possession and control of the Licenses.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the
statements contained in this Article IV are true and correct as of the date of
this Agreement and will be true and correct as of each Closing Date (as though
then made):
4.1 Organization of Seller. Seller is a limited liability
company, duly organized and validly existing under the laws of the state of its
formation. Seller has all requisite limited liability company power and
authority to conduct the business contemplated by it and to own, lease and
operate any properties or assets in connection therewith, and has applied for
qualification or is duly qualified to do business as a foreign limited liability
company in good standing in those jurisdictions, other than the state of its
organization, in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing would not materially adversely affect the ability
of Seller to consummate the transactions contemplated by this Agreement.
4.2 Authority of Seller. Seller has full power and authority to
own and to operate the Licenses. Seller has full power and authority to execute,
deliver and perform this Agreement and any agreement, document or instrument
executed and delivered pursuant to this Agreement or in connection with this
Agreement. The execution, delivery and performance of this Agreement and any
agreement, document or instrument executed and delivered pursuant to this
Agreement or in connection with this Agreement by Seller have been duly
authorized and approved by all necessary corporate, board, shareholder and
member action of Seller and its members, managers and affiliates. This Agreement
is the legal, valid and binding obligation of Seller enforceable in accordance
with its terms except for the effect thereon of any applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting the rights of
creditors generally, and general principles of equity.
4.3 No Conflicts. Except for the FCC Consent and the filing
under, and the expiration or termination of applicable waiting period under, the
HSR Act, neither the execution or delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby or compliance with
or fulfillment of the terms, conditions and provisions hereof will (i) result in
the creation or imposition of any Encumbrance upon any of the Licenses, or (ii)
violate or conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination, modification or cancellation or a loss of
rights under, or require any notice to, authorization or approval of, filing
with or consent under (1) Seller's certificate of formation or limited liability
company operating agreement or by-laws; (2) the FCC Note and Security Agreement;
(3) any other material note, indenture, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which Seller is a party or any of the Licenses is subject or by
which Seller is bound; (4) any Court Order to which Seller or its members or
managers is a party or any of the Licenses is subject or by which Seller is
bound; or (5) any Requirements of Law affecting Seller or its members or
managers or the Licenses.
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4.4 The Licenses. Seller validly holds the Licenses. Seller has
not commenced or otherwise undertaken any system build-out activities with
respect to the Licenses and has conducted no operations with respect thereto.
Seller has performed as of the Effective Date, and will have performed as of the
respective Closing Dates (other than any required buildout activities), all of
its obligations required to have been performed under the Licenses, and, except
as described in Exhibit D, no event has occurred or condition or state of facts
exists which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under any of the Licenses or the FCC Note and
Security Agreement which permits or, after notice or lapse of time or both,
would permit revocation or termination of any of the Licenses, or which might
adversely affect in any material respect the rights of Seller under any of the
Licenses; no notice of cancellation, of default or of any dispute concerning any
of the Licenses, or of any event, condition or state of facts described in the
preceding clause, has been received by, or is known to, Seller; and each License
is valid, subsisting and in full force and effect and may be assigned and
transferred to Buyer in accordance with this Agreement and will continue in full
force and effect thereafter, in each case without (1) the occurrence of any
breach, default or forfeiture of rights thereunder, or (2) except for the FCC
Consent, the execution by Buyer of a note and security agreement with the FCC
for the Denver License, and the filing under, and expiration or termination of
the applicable waiting period under, the HSR Act, the consent, approval, or act
of, or the making of any filing with, any Governmental Body. Seller has no
reason to believe that the Licenses are not likely to be renewed in the ordinary
course or that the holder of such Licenses would not be entitled to renewal
expectancy as contemplated by FCC rules and regulations. Each of the Licenses
(i) was granted on the grant date specified on Exhibit A, (ii) expires on the
expiration date specified on Exhibit A, and (iii) is subject to the five-year
construction milestone date occurring on the date specified on Exhibit A.
4.5 Title to Licenses. Seller has good and marketable title to
all of the Licenses, free and clear of all Encumbrances, except for the FCC Note
and Security Agreement relating to the Denver License. Upon delivery to Buyer on
each Closing Date, Seller will transfer to Buyer good and marketable title to
the respective License, subject to no Encumbrances, except for the FCC Note and
Security Agreement.
4.6 No Violation, Litigation or Regulatory Action.
(a) The Licenses comply in all material respects with all
applicable Requirements of Law;
(b) Except for the FCC consent and the execution by Buyer of a
Note and Security Agreement with the FCC for the Denver License, Seller and its
managers and members have complied in all material respects with all
Requirements of Law which are applicable to the Licenses; and
(c) There is no investigation, claim, action, suit or other
proceeding pending or, to the best knowledge of Seller, threatened against
Seller, relating to Seller or the Licenses which, if adversely determined,
either would result in the revocation, cancellation, suspension or adverse
modification of any of the Licenses or would have a material adverse effect on
the ability of Seller to perform its obligations hereunder or upon the financial
condition, assets, business,
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prospects or results of operations of Seller, nor is Seller aware of any
reasonable basis for any such investigation, claim, action, suit or proceeding.
4.7 No Finder. No broker or finder has acted on behalf of Seller
in connection with the transactions contemplated hereby.
4.8 Restricted Securities.
(a) Seller understands that the Leap Shares are characterized as
"restricted securities" under the Securities Act of 1933 (as amended and
together with the rules and regulations promulgated thereunder, the "Securities
Act") and that, under the Securities Act and applicable regulations thereunder,
such securities may not be resold, pledged or otherwise transferred without
registration under the Securities Act except in certain limited circumstances.
Seller understands that (i) the Leap Shares are being offered in a transaction
not involving any public offering in the United States within the meaning of the
Securities Act, and the Leap Shares have not yet been registered under the Act,
and (ii) such Leap Shares may be offered, resold, pledged or otherwise
transferred only in a transaction registered under the Securities Act, or
meeting the requirements of Rule 144, or in accordance with another exemption
from the registration requirements of the Act (and based upon an opinion of
counsel if Buyer so requests) and in accordance with any applicable securities
laws of any State of the United States or any other applicable jurisdiction.
(b) Seller understands that (i) the registrar or transfer agent for the
Leap Shares will not be required to accept for registration of transfer any Leap
Shares except upon presentation of evidence satisfactory to Buyer that the
restrictions on transfer under the Securities Act have been complied with and
(ii) any Leap Shares in the form of definitive physical certificates will bear a
legend substantially as set forth below:
"THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX
XXXXXX XXXXXX SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
APPLICABLE STATE SECURITIES LAWS, AND THE SECURITIES EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. THE HOLDER OF THE SECURITIES EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE CORPORATION THAT (A) SUCH SECURITIES MAY
NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (1) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE CORPORATION SO REQUESTS), (2) TO THE
CORPORATION, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
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STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
4.9 Investment. Seller (a) understands that the Leap Shares have
not been registered under the Securities Act, or under any state securities
laws, and are being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (b) is acquiring
the Leap Shares solely for its own account for investment purposes, and not with
a view to the distribution thereof in a transaction that would violate the
Securities Act or the securities laws of any State of the United States or any
other applicable jurisdiction, (c) is a sophisticated purchaser with such
knowledge and experience in business and financial matters that Seller is
capable of evaluating the merits and risks of purchasing the Leap Shares, (d)
has received certain information concerning Buyer and its subsidiaries and has
had the opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding the Leap Shares, (e) is
able to bear the economic risk and lack of liquidity inherent in holding the
Leap Shares, and (f) is an "accredited investor" within the meaning of Rule
501(a) under the Securities Act.
4.10 FCC Matters.
(a) The Licenses are validly issued in the name of Seller. Seller
and its subsidiaries applied for and obtained the Licenses in compliance
with FCC law, and Seller is, and on each applicable Closing Date will
be, the exclusive holder of the Licenses. The Licenses have been granted
by Final Order. The Licenses are in full force and effect, are
unimpaired by any acts or omissions of the Seller and its affiliates,
are free and clear of any restrictions which might limit the full
operation of the Licenses, other than such restrictions as are imposed
on PCS licensees and/or the wireless telecommunications industry
generally. All reports and other documents required to be filed by
Seller and its affiliates with the FCC and with state regulatory
authorities have been filed. All such reports and documents are correct
in all material respects.
(b) None of the Seller or its subsidiaries have engaged in any
course of conduct which would impair the Seller's ability to remain the
holder of the FCC licenses and such persons are not aware of any reason
why such Licenses might be revoked, canceled, suspended or otherwise
transferred as a result of the transactions contemplated hereby. All
material fees of Seller and its subsidiaries due and payable to
governmental authorities pursuant to the Licenses have been paid
(subject to late fees paid). Subject to obtaining the consent of the FCC
to assign the Licenses to Buyer, Seller has, and on the Closing Date
will have, the absolute and unrestricted right, power and authority
under FCC law to hold the Licenses.
(c) Seller and its subsidiaries are in compliance with Section
310(b) of the Communications Act, and all rules, regulations or policies
of the FCC promulgated thereunder with respect to alien ownership.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to Seller that the
statements contained in this Article V are true and correct as of the date of
Agreement and will be true and correct as of each Closing Date (as though then
made):
5.1 Organization of Buyer. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 Authority of Buyer. Buyer represents and warrants that it has
full power and authority to execute, deliver and perform this Agreement and any
agreement, document or instrument executed and delivered pursuant to this
Agreement or in connection with this Agreement. The execution, delivery and
performance of this Agreement and any agreement, document or instrument executed
and delivered pursuant to this Agreement or in connection with this Agreement by
Buyer have been duly authorized and approved by Buyer. This Agreement is the
legal, valid and binding agreement of Buyer enforceable in accordance with its
terms except for the effect thereon of any applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the rights of creditors
generally, and general principles of equity.
5.3. No Conflicts. Except for the FCC Consent, the execution by
Buyer of a note and security agreement with the FCC for the Denver License, and
the filing under and expiration or termination of the applicable waiting period
under the HSR Act, neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby nor compliance with
or fulfillment of the terms, conditions and provisions hereof will:
(a) Conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under:
(1) the Articles of Incorporation or By-laws of Buyer; (2) any material note,
indenture instrument, agreement, license, permit or other right or obligation to
which Buyer is a party or any of its properties is subject or by which Buyer is
bound; (3) any Court Order to which Buyer is a party or by which it is bound; or
(4) any Requirements of Laws affecting Buyer.
(b) Require the approval, consent, authorization or act of, or
the making by Buyer of any declaration, filing or registration with any Person
other than Buyer's registrations and filings pursuant to Section 6.5 below.
5.4. No Finder Fees. No broker or finder has acted on behalf of
Buyer in connection with the transactions contemplated hereby, except for
Xxxxxxxxx Xxxxxxx, whose fees shall be the responsibility of Buyer.
5.5. Litigation. Except as disclosed in Buyer's periodic reports
filed with the SEC and press releases, there is no investigation, claim, action,
suit or other proceeding pending
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or, to Buyer's knowledge, threatened against Buyer, which if adversely
determined, would have a material adverse effect on the ability of Buyer to
perform its obligations hereunder, or upon the financial condition, assets,
business, prospects or results of operations of Buyer, nor is Buyer aware of any
reasonable basis for any such investigation, claim, suit or proceeding.
5.6. Qualification. Buyer or its designated subsidiary is legally
qualified to be an FCC licensee generally and specifically with regard to the
Licenses and to Buyer's knowledge, to receive any authorization from any state
or local regulatory authority necessary for it to acquire the Licenses.
5.7 Leap Shares. The Leap Shares to be issued to Seller in
exchange for the consideration set forth in this Agreement, when issued and
delivered in accordance with the terms and conditions hereof, will be duly
authorized, fully paid, validly issued and non-assessable.
ARTICLE VI
ACTION PRIOR TO THE CLOSING DATE
The parties hereto covenant and agree to take the following
actions between the date hereof and the final Closing Date:
6.1 Investigation by Buyer. Seller shall afford to Buyer and its
authorized representatives reasonable access during normal business hours to the
Licenses and Seller to the extent Buyer shall deem reasonably necessary or
desirable and shall furnish to Buyer or its authorized representatives such
additional information concerning the Licenses and Seller as shall be reasonably
requested, including all such information as shall be necessary to enable Buyer
or its representatives to verify the accuracy of the representations and
warranties contained in this Agreement, to verify that the covenants of Seller
contained in this Agreement have been complied with and to determine whether the
conditions set forth in Article VIII have been satisfied. No investigation made
by Buyer or its representatives hereunder shall affect the representations and
warranties of the Seller hereunder.
6.2 Preserve Accuracy of Representations and Warranties. Each of
the parties hereto shall refrain from taking any action that would render any
representation or warranty contained in this Agreement inaccurate in any
material respect as of any Closing Date. Each party shall promptly notify the
other in writing (a) of any action, suit or proceeding that shall be instituted
or threatened against such party to restrain, prohibit or otherwise challenge
the legality of any transaction contemplated by this Agreement, (b) of any
development causing a breach of any of the representations and warranties of
such party in Articles IV or V above, as applicable, or (c) of any lawsuit,
claim, proceeding or investigation that may be threatened, brought, asserted or
commenced against such party which would have been disclosed if such lawsuit,
claim, proceeding or investigation had arisen prior to the date hereof. No
disclosure by any party pursuant to this Section 6.2, however, shall be deemed
to amend or supplement this Agreement or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant therein.
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6.3 Consents of Third Parties; Governmental Approvals.
(a) Consents. Seller will act diligently and reasonably to
secure, before each applicable Closing Date, any consent, approval or waiver, in
form and substance reasonably satisfactory to Buyer, from any party as required
to be obtained to assign or transfer the respective License to Buyer or to
otherwise satisfy the conditions set forth herein; provided that neither Seller
nor Buyer shall have any obligation to offer or pay any consideration in order
to obtain any such consent, or approval; and provided, further, that Seller
shall not make any agreement or understanding affecting the Licenses as a
condition for obtaining any such consent, approval or waiver except with the
prior written consent of Buyer. During the period prior to each applicable
Closing Date, Buyer shall act diligently and reasonably to cooperate with Seller
to obtain the consents, approvals and waivers contemplated by this Section
6.3(a).
(b) FCC Consents. Seller and Buyer shall, as promptly as
practicable from the date of this Agreement, file with the FCC an FCC Form 603
(or other appropriate form) applications seeking consent to assign each
respective License from Seller to Buyer or Buyer's subsidiary. The parties shall
cooperate and use their respective reasonable efforts to prosecute such
applications to a favorable conclusion and shall share equally any filing fees.
(c) HSR Filing. Following the execution and delivery of this
Agreement, Buyer and Seller will take such action, if any, as may be required to
be taken by them under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") in connection with the transactions contemplated
hereby. Each party will cooperate in the preparation of, will file complete and
accurate notification and report forms with respect to the transactions
contemplated hereby, pursuant to the HSR Act and the rules and regulations
promulgated thereunder, and will file on a timely basis such additional
information and documentary materials as may be requested by any governmental
authority pursuant to the HSR Act. Each party will request early termination of
the waiting period under the HSR Act. Each party shall promptly inform the other
of any inquiries or communications from any such governmental authority and
provide copies of any written communication relating thereto. Each party shall
respond with reasonable diligence and dispatch to any request for additional
information made in response to such filings. Except for the application fee of
Buyer, which shall be paid in full by the Buyer, each of Buyer and Seller shall
bear their respective costs for such compliance under this Section 6.3(c).
6.4 Operations Prior to the Closing Dates. At all times prior to
the final License Closing, Seller shall keep and maintain the Licenses current
and in good standing, including without limitation, making any payment of
principal, accrued interest, penalties or other indebtedness due to the FCC with
respect to the Denver License on a timely basis. Seller shall retain control of
the Licenses at all times prior to the respective Closing. Seller shall not:
(i) Sell, lease, transfer or otherwise dispose of, or
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any of
the Licenses, and/or
(ii) Take or agree to take any other action inconsistent
with the consummation of the transactions contemplated by this Agreement.
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6.5 Registration Statement for Resale of Leap Shares.
(a) Shelf Registration Statement. Not later than sixty (60) days
prior to the expected Denver Closing Date, Buyer will file with the Securities
and Exchange Commission (the "SEC") a shelf registration statement under the
Securities Act of 1933 (as amended and together with the rules and regulations
promulgated thereunder, the "Securities Act") registering the Leap Shares for
resale to the public by Seller pursuant to such registration statement and the
prospectus included therein (the "Registration Statement"), free and clear of
any restrictions under the Securities Act except for prospectus delivery
requirements. Buyer shall use all reasonable efforts to cause such Registration
Statement to become effective as promptly as practicable thereafter and, subject
to Section 6.5(b), to remain effective until the expiration of the Resale Period
(as defined in Section 6.5(b) below). Seller agrees to cooperate with and
provide assistance to Buyer, as Buyer may reasonably request, in connection with
any registration and sale of the Leap Shares.
(b) Buyer Obligations. From time to time during the period
commencing on the Denver Closing Date and ending upon the earlier of (x) the
first anniversary of the Denver Closing Date, or (y) such time as Seller shall
have advised Buyer in writing that it has completed its resale of the Leap
Shares delivered hereunder (the "Resale Period") , Buyer shall do the following:
(i) Prepare and deliver to Seller as many copies of the
Prospectus (as hereafter defined) and other documents incident thereto,
including any amendment or supplement to the Prospectus, as Seller may
from time to time reasonably request;
(ii) Use its reasonable efforts to comply with all requirements
imposed upon it by the Securities Act, by the Securities Exchange Act of
1934 (as amended and together with the rules and regulations promulgated
thereunder, the "Exchange Act"), and by the undertakings in the
Registration Statement (including but not limited to the undertakings
required by Item 512(g) of Regulation S-K) so far as is necessary to
permit the continuance of resales of Leap Shares by Seller to the
public, free and clear of any restrictions under the Securities Act
except for prospectus delivery requirements, including the preparation
and filing with the SEC of such amendment and supplements to such
Registration Statement as may be necessary to comply with the provisions
of the Securities Act. If, at any time during the Resale Period, an
event shall occur which makes it necessary to amend or supplement the
Registration Statement or the Prospectus to comply with law or with the
rules and regulations of the SEC, Buyer shall forthwith notify Seller of
the proposed amendment or supplement and prepare and furnish to Seller
such number of copies of an amended or supplemented Registration
Statement or Prospectus that complies with law and with such rules and
regulations as Seller may reasonably request. Seller shall suspend its
sales of Leap Shares pending the preparation and delivery of such
amendment or supplement and until such time as each such amendment or
amendments to the Registration Statement has been declared effective by
the SEC. Buyer authorizes Seller, and any brokers or dealers effecting
sales of the Leap Shares for the account of Seller, to use the
Prospectus, as from time to time amended or supplemented,
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in connection with the sale of the Leap Shares in accordance with
applicable provisions of the Securities Act and state securities laws.
For purposes of this Agreement, the term "Prospectus" means the final
prospectus relating to the Leap Shares most recently included in the
Registration Statement or filed by Buyer pursuant to Rule 424 of the
Securities Act and any amendments or supplements thereto filed by Buyer
pursuant to Rule 424 of the Securities Act and shall include all
documents or information incorporated in any such prospectus by
reference;
(iii) Promptly advise Seller (A) when any post-effective
amendment of the Registration Statement is filed with the SEC and when
any post-effective amendment becomes effective; (B) of any request made
by the SEC for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information relating
thereto; (C) of any suspension or threatened suspension of the use of
any Prospectus in any state; and (D) of any proceedings commenced or
threatened to be commenced by the SEC or any state securities commission
which would result in the issuance of any stop order or other order or
suspension of use. Buyer agrees to use its reasonable efforts to prevent
or promptly remove any stop order or other order preventing or
suspending the use of the Prospectus during the Resale Period at the
earliest practicable date, and to comply with any such request by the
SEC to amend or supplement the Prospectus;
(iv) Take such action as shall be necessary to qualify and
maintain the qualification of the Leap Shares covered by such
registration under such state securities or "blue sky" laws of those
jurisdictions within the United States and Puerto Rico as shall be
reasonably required to effect offers and sales to the public during the
Resale Period as Seller shall reasonably request; provided, however,
that Buyer shall not be obligated to qualify as a foreign corporation to
do business under the laws of or become subject to taxation in, any
jurisdiction in which it shall not be then qualified, or to file any
general consent to service of process;
(v) Cause the Leap Shares to be registered pursuant to Section
12(b) or 12(g) of the Exchange Act and continually listed, subject to
notice of issuance, on the NASDAQ-NMS or a national securities exchange,
if such exchange is the principal market on which the Leap Shares are
traded, and not subject to any restriction or suspension from trading on
the NASDAQ-NMS or such national securities exchange; provided, however,
that Buyer may deregister the Leap Shares registered pursuant to Section
12(b) or 12(g) of the Exchange Act if such deregistration is in
connection with a merger, dissolution or other transaction in which the
shareholders of Buyer receive prior to such deregistration either cash
or securities that are listed on the NASDAQ-NMS or a national securities
exchange or some combination of cash and such securities; provided,
further, that Buyer may delist the Leap Shares from trading on the
NASDAQ-NMS or national securities exchange if Buyer is concurrently
listing such stock on the New York Stock Exchange or the American Stock
Exchange;
(vi) Provide a transfer agent and registrar for the Leap Shares
registered pursuant to such Registration Statement, not later than the
effective date of such
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registration; and
(vii) Otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to
security holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than 45 days after the end
of any 12-month period (or 90 days, if such period is a fiscal year),
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement, which
earnings statements shall cover said 12-month periods.
(c) Indemnification of Seller. Buyer shall indemnify, defend and
hold harmless Seller, its officers and its directors and any controlling persons
of Seller against and in respect of any losses, claims, damages or liabilities,
joint or several (including legal or other fees and expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage or liability) to which Seller or any of them may become subject under the
Securities Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions with respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except to the extent
that any such untrue statement or omission is based upon written information
supplied by Seller or by any of its representatives for use in such Registration
Statement; provided, however, this indemnity agreement shall not inure to the
benefit of Seller, its officers or its directors or any controlling persons of
Seller on account of any loss, claim, damage, liability or action arising from
the sale of Leap Shares to any person if Seller fails to send or give a copy of
the Prospectus (as amended or supplemented) to such person.
(d) Indemnification of Buyer. Seller shall indemnify, defend and
hold harmless Buyer, its officers and its directors and any controlling persons
of Buyer against and in respect of any losses, claims, damages or liabilities,
joint or several (including legal or other fees and expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage or liability) to which Buyer or any such persons may become
subject under the Securities Act or otherwise insofar as such losses, claims,
damages or liabilities (or actions with respect thereto) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that any such untrue statement or omission is based upon
written information with respect to the plan of distribution of Seller supplied
by Seller or its representatives for use in such Registration Statement.
(e) Contribution. If for any reason the indemnification provided
for in the preceding clauses (c) and (d) is unavailable to an indemnified party
as contemplated by the such clauses, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party,
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as well as any other relevant equitable considerations.
(f) Procedure for Indemnification The procedure for
indemnification shall be as follows:
(i) Notice. The indemnified party shall promptly give notice to
the indemnifying party of any pending or threatened claim giving rise to
indemnification under subsections 6.5(c) or (d) (a "Claim"), specifying
the factual basis for the Claim and the approximate amount thereof.
(ii) Control of Claim and Settlement. With respect to any Claim
as to which a person is entitled to indemnification hereunder, the
indemnifying party shall have the right at its own expense to
participate in or assume control of the defense of the Claim, and the
indemnified party shall cooperate fully with the indemnifying party,
subject to reimbursement for actual out-of-pocket expenses incurred by
the indemnified party as the result of a request by the indemnifying
party. If the indemnifying party elects to assume control of the defense
of any Claim, the indemnified party shall have the right to participate
in the defense of the Claim at its own expense. If the indemnifying
party does not elect to assume control or otherwise participate in the
defense of any Claim, it shall be bound by the results obtained by the
indemnified party with respect to the Claim. No indemnifying party shall
be liable for any settlement effected without its written consent, not
to be unreasonably withheld or delayed.
(g) Survival. Notwithstanding any other provision of this
Agreement, the indemnification obligations of the parties hereunder shall
survive indefinitely. The provisions set forth in Article X hereof shall not
apply to any facts or circumstances, which are the subject of indemnification
pursuant to Sections 6.5(c) or 6.5(d).
(h) Expenses. Buyer shall pay all expenses incident to the
registration of the Leap Shares under this Section 6.5, including without
limitation, all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, and the fees and disbursements of counsel for Buyer and its
independent public accountants. With respect to sales of Leap Shares, Seller
shall pay all underwriting discounts and commissions and fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Leap Shares, the fees and disbursements of
counsel retained by Seller and transfer taxes, if any.
(i) Seller Information. Notwithstanding anything in this
Agreement to the contrary, if Seller shall have failed to provide all
information to Buyer required to be included in the Registration Statement as to
Seller in sufficient time prior to the Denver Closing Date to enable Buyer to
fulfill its filing obligations under Section 6.5(a) on a timely basis, then (A)
the condition set forth in Section 9.4 shall not be a condition precedent to the
Denver Closing and (B) the date by which Buyer must file the Registration
Statement under Section 6.5(a) shall be extended a reasonable period of time to
reflect the delay caused by Seller's failure to deliver the requisite
information to Buyer.
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(j) Compliance. Seller will observe and comply with the
Securities Act and the general rules and regulations thereunder, as now in
effect and as from time to time amended and including those hereafter enacted or
promulgated, in connection with any offer, sale, pledge, transfer or other
disposition of the Leap Shares or any part thereof.
6.6 Exclusivity. Until the termination of this Agreement, Seller
will not (and the Seller will cause each of its members, managers and affiliates
not to) (a) solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of the Licenses or (b)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Seller will notify Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing, which
notice shall include the identity of the Person making the proposal, offer,
inquiry or contact, and a summary of the principal terms thereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Non-Competition. Effective at and as of the Closing:
(a) Seller, its members, executive officers and principals
covenant and agree, for themselves and their respective affiliates, that for a
period of two (2) years after the respective Closing, such persons, and their
respective affiliates shall not, directly or indirectly, engage in any
activities that may compete with Buyer within the BTAs covered by the respective
License. If, in any judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this Section 7.1, then such
unenforceable covenant shall be deemed eliminated from these provisions to the
extent necessary to permit the remaining separate covenants to be enforced.
(b) The words "directly or indirectly" as they relate to any
activity prohibited by the terms of this Section 7.1, mean (i) acting as an
agent, representative, consultant, officer, director, partner, employee or
independent contractor of any entity or enterprise that engages in any such
activity; or (ii) participating in any such entity or enterprise as an owner,
partner, limited partner, joint venturer, creditor or stockholder (except as a
stockholder holding less than one percent (1%) interest in a corporation whose
shares are actively traded on a regional or national securities exchange or in
the over-the-counter market).
7.2 Reasonable Efforts. Subject to the terms and conditions
herein, each of the parties hereto agrees to use all commercially reasonably
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable. In case at any time after a
Closing any further action is reasonably necessary to carry out the purposes of
this Agreement, the proper agents, officers and directors of each party hereto
shall take such action.
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7.3 Governmental Authorizations. Seller shall not cause or
permit, by any act or failure to act, any of its governmental authorizations or
Licenses to expire or to be surrendered or modified, or take any action that
would cause any governmental authority to institute proceedings for the
suspension, revocation, or material and adverse modification of any of such
governmental authorizations or fail to prosecute with due diligence any pending
applications for any governmental authority in connection with the Licenses.
7.4 Market Stand-Off. If at any time Buyer conducts an
underwritten public offering of its Common Stock or other securities, Seller
agrees that it will not, without the prior consent of the underwriters of such
public offering, during the period commencing on the date of the pricing of such
public offering and ending on the earlier of ninety (90) days after the date of
the final prospectus relating to such public offering or June 30, 2000, (a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Leap Common Stock or any securities convertible into or exercisable or
exchangeable for Leap Common Stock or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Leap Common Stock, whether any such transaction
described in clause (a) or (b) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The provisions of this
Section 7.4 shall also be for the benefit of Buyer's underwriters in any such
public offering, who shall be deemed to be express third party beneficiaries of
this Section 7.4. Seller agrees to execute and deliver a customary "lock-up"
agreement with Buyer's underwriters in any such public offering containing
substantially the same terms and conditions as this Section 7.4 if requested by
Buyer's underwriters to do so.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall be, at the
option of the Buyer, subject to the satisfaction of the conditions set forth
below, on or prior to each respective Closing Date. These conditions are for
Buyer sole benefit and may be waived by Buyer at any time in its sole
discretion.
8.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Seller contained or referred to herein shall be true and correct in all
material respects, on such Closing Date as though made on such Closing Date,
except for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Buyer.
8.2 No Restraint or Litigation. No action, suit, investigation or
proceeding shall have been instituted to restrain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
8.3 Final Order and HSR Approval. The FCC, and all appropriate
state and other governmental authorities, if any, shall have issued a Final
Order granting their consent to (1)
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the transfer of the respective License to Buyer without any additional expenses
or unreasonable requirements imposed on Buyer as a condition to transfer and (2)
with respect to the Denver Closing only, to Buyer's assumption of the FCC Note
and Security Agreement without any conditions materially adverse to Buyer, and
on terms no more onerous to Buyer than are the terms to Seller under the
existing FCC Note and Security Agreement. The applicable waiting period under
the HSR Act, if applicable, shall have expired or been terminated. With respect
to the Denver Closing only, the FCC shall not have issued any adverse changes to
the July 22, 1999 conditional order setting forth the FCC's ruling that Leap is
a "designated entity" qualified to hold C-Block and F-Block licenses.
8.4 Necessary Consents and Corporate Approval. Seller shall have
delivered all third party consents required for Seller to consummate the
transaction contemplated by this Agreement.
8.5 Closing Deliveries. Seller shall have made all of its Closing
Deliveries.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of the Seller under this Agreement shall be, at
the option of the Seller, subject to the satisfaction of the conditions set
forth below, on or prior to each respective Closing Date. These conditions are
for Seller's sole benefit and may be waived by Seller at any time in its sole
discretion.
9.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Buyer in the performance of any of
its covenants and agreements herein and each of the representations and
warranties of Buyer contained or referred to in this Agreement shall be true and
correct in all material respects, on each Closing Date as though made on each
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing by
Seller or any transaction contemplated by this Agreement.
9.2 No Restraint or Litigation. No action, suit or proceeding by
any Governmental Body shall have been instituted to restrain, prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
9.3 Closing Deliveries. Buyer shall have made all of its Closing
Deliveries.
9.4 Shelf Registration Statement. For the Denver Closing only,
the Registration Statement shall have been declared effective by the SEC and
shall remain effective as of the Denver Closing Date.
9.5 FCC and HSR Approval. The FCC shall have granted its consent
and approval to (1) transfer the respective License from Seller to Buyer, and
(2) with respect to the
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Denver Closing only, to Buyer's assumption of the FCC Note and Security
Agreement. The applicable waiting period under the HSR Act, if applicable, shall
have expired or been terminated.
ARTICLE X
INDEMNIFICATION
10.1 Survival. All of the representations and warranties of the
Parties contained in Article IV or Article V shall survive the final Closing
hereunder (even if the other Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of such Closing) and shall
continue in full force and effect until the three (3) year anniversary of the
final Closing Date, except that the representations and warranties set forth in
Sections 4.2, 4.5 and 4.6 shall survive the final Closing and continue in full
force and effect forever thereafter.
10.2 Indemnification by Seller. In the event Seller breaches (or
in the event any third party alleges facts that, if true, would mean the Seller
has breached) any of its representations, warranties, and covenants contained
herein and, if there is an applicable survival period pursuant to Section 10.1
above and the Buyer makes a written claim against Seller within such period, or
in the event of any actual or threatened claim, action, suit or proceeding
against Buyer or any of its subsidiaries arising from Seller's ownership or
operation of any License prior to the respective Closing therefor, then the
Seller agrees to indemnify the Buyer and its directors, officers, stockholders,
agents, successors and assigns from and against the entirety of any Losses or
Expenses any such person may incur through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach), or such claim, action suit or
proceeding.
10.3 Indemnification by Buyer. In the event Buyer breaches (or in
the event any third party alleges facts that, if true, would mean Buyer has
breached) any of its representations, warranties, and covenants contained herein
and, if there is an applicable survival period pursuant to Section 10.1 above
and the Seller makes a written claim against Buyer within such period, or in the
event of any actual or threatened claim, action, suit or proceeding against
Seller or any of its subsidiaries arising from Buyer's ownership or operation of
PCS Systems under the Licenses following the respective Closings therefor, then
Buyer agrees to indemnify Seller and its directors, officers, stockholders,
agents, successors and assigns from and against the entirety of any Losses or
Expenses any such person may incur through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach), or such claim, action, suit or
proceeding.
10.4 Certain Limitations. Notwithstanding any provision of this
Agreement to the contrary:
(a) The maximum aggregate liability of Seller or Buyer pursuant
to its indemnification obligations under Section 10.2 or Section 10.3,
respectively, shall be $33,400,000; provided, that such amount shall be reduced
by $15,030,000 if this Agreement is terminated with respect to the Denver
License prior to the Closing thereof, or by $18,370,000 if
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this Agreement is terminated with respect to the Pittsburgh License prior to the
Closing thereof; and
(b) The provisions of Article X shall not apply to any Claims,
Losses or Expenses incurred arising from or related to any material misstatement
contained in or material omission from the Registration Statement or Prospectus
contemplated by Section 6.5 hereof. The indemnification and contribution
provisions under Section 6.5 shall apply exclusively to any such Claims, Losses
or Expenses.
10.5 Notice of Claims.
(a) Any party (the "Indemnified Party") seeking indemnification
under this Article X shall give to the party obligated to provide
indemnification to such Indemnified Party (the "Indemnitor") a notice (a "Claim
Notice") describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any agreement, document or
instrument executed pursuant hereto or in connection herewith upon which such
claim is based; provided, that a Claim Notice in respect of any action at law or
suit in equity by or against a third Person as to which indemnification will be
sought shall be given promptly after the action or suit is commenced; provided
further that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been prejudiced by such
failure.
(b) Subject to Section 10.4, after the giving of any Claim Notice
pursuant hereto, the amount of indemnification to which an Indemnified Party
shall be entitled under this Article X shall be determined: (i) by the written
agreement between the Indemnified Party and the Indemnitor; or (ii) by a final
judgment or decree of any court of competent jurisdiction. The judgment or
decree of a court shall be deemed final when the time for appeal, if any, shall
have expired and no appeal shall have been taken or when all appeals taken shall
have been finally determined. The Indemnified Party shall have the burden of
proof in establishing the amount of Losses and Expenses suffered by it.
10.6 Third Person Claims.
(a) Subject to Section 10.6(b), the Indemnified Party shall have
the right to conduct and control, through counsel of its choosing, the defense,
compromise or settlement of any third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder, and in any such case the Indemnitor shall
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnified Party in
connection therewith; provided, that the Indemnitor may participate, through
counsel chosen by it and at its own expense, in the defense of any such claim,
action or suit as to which the Indemnified Party has so elected to conduct and
control the defense thereof; and provided, further, that the Indemnified Party
shall not, without the written consent of the Indemnitor (which written consent
shall not be unreasonably withheld), pay, compromise or settle any such claim,
action or suit, except that no such consent shall be
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required if, following a written request from the Indemnified Party, the
Indemnitor shall fail, within fourteen (14) days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) if any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where the Seller is the
Indemnitor will have no continuing effect in any material respects on the
Licenses, then the Indemnitor shall have the right to conduct and control,
through counsel of its choosing, the defense, compromise or settlement of any
such third Person claim, action or suit against such Indemnified Party as to
which indemnification will be sought by any Indemnified Party from any
Indemnitor hereunder if the Indemnitor has acknowledged and agreed in writing
that, if the same is adversely determined, the Indemnitor has an obligation to
provide indemnification to the Indemnified Party in respect thereof, and in any
such case the Indemnified Party shall cooperate in connection therewith and
shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnitor in connection therewith; provided, that
the Indemnified Party may participate, through counsel chosen by it and at its
own expense, in the defense of any such claim, action or suit as to which the
Indemnitor has so elected to conduct and control the defense thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
10.7 Amount of Indemnification Payments. In calculating any Loss
or Expense there shall be deducted (i) any insurance recovery in respect thereof
(and no right of subrogation shall accrue hereunder to any insurer) and (ii) the
net present value of any actual tax benefit to the Indemnified Party (or any of
its affiliates) with respect to such Loss or Expense (after taking into account
the actual tax effect of receipt of the indemnification payments).
ARTICLE XI
TERMINATION
11.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated:
(a) by the mutual written consent of Seller and Buyer;
(b) by either Buyer or Seller upon written notice to the other,
in the event the other party (the "Breaching Party") has materially breached its
representations, warranties or covenants contained in this Agreement and failed
to cure such breach within the 30-day cure
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period specified in this subsection; provided, however, that the party claiming
such breach (i) is not itself in material breach of its representations,
warranties or covenants contained herein, (ii) promptly notifies the Breaching
Party in writing (the "Termination Notice") of its intention to terminate this
Agreement, (iii) specifies in such Termination Notice the representation,
warranty or covenant of which the Breaching Party is allegedly in material
breach, and (iv) provides the Breaching Party with thirty (30) days within which
to cure such alleged breach, unless such alleged breach may not reasonably be
cured within such 30-day period;
(c) by either Buyer or Seller upon written notice to the other,
upon the other party's filing, or having filed against it and remaining pending
for more than thirty (30) days, a petition under Title 11 of the United States
Code or similar state law provision seeking protection from creditors or the
appointment of a trustee, receiver or debtor in possession;
(d) by either Buyer or Seller upon written notice to the other,
if a court of competent jurisdiction shall have issued an order, decree or
ruling permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and non-appealable;
(e) by Buyer upon written notice to Seller upon the occurrence of
a "Seller Default" (as defined below); or
(f) by either Buyer or Seller upon twenty (20) days' prior
written notice of such termination, if the Pittsburgh Closing or the Denver
Closing, or both of them, shall not have occurred on or before the nine (9)
month anniversary of the Effective Date of this Agreement; provided, however,
that if one of the Closings has occurred prior to such termination, this
Agreement shall continue in full force and effect in accordance with its terms
with respect to the particular License for which the Closing already had been
consummated.
For purposes of Section 11.1(e) above, "Seller Default" means: (1) Seller or any
of its subsidiaries has failed to make any payments when due of any principal,
interest, fees, lease rentals, or any and all other amounts owed to third
parties in an aggregate amount in excess of $50,000; (2) Seller or any of its
subsidiaries have breached the Licenses, have failed to make payments of
principal or accrued interest such that Seller cannot deliver good title to the
respective Licenses to Buyer, or have failed to continue to hold the Licenses,
directly or indirectly free and clear of all liens and Encumbrances; (3) the
occurrence of a Material Adverse Change with respect to Seller and its
subsidiaries; (4) Seller or any of its subsidiaries have suffered a material
lapse in the customary types and amounts of insurance coverage carried for their
business, (5) Seller or any of its subsidiaries has defaulted on any of its
outstanding indebtedness to third parties having a principal amount exceeding
$250,000, whether as a result of the failure to pay money or otherwise; (6)
Seller or any of its subsidiaries becomes insolvent, or is unable to pay its
debts as they become due, or makes an assignment for the benefit of creditors,
or files a voluntary petition in bankruptcy, or suffers the filing of an
involuntary petition in bankruptcy, or seeks protection from creditors under any
state law provision, or becomes subject to the appointment of a trustee or
receiver over its assets; or (7) one or more judgments have been entered against
Seller or any of its subsidiaries involving an aggregate amount of greater than
$250,000.
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11.2 Effect of Termination. In the event of termination of this
Agreement by either party, except as otherwise provided herein, all rights and
obligations of the parties under this Agreement shall terminate without any
liability of any party to any other party (except for any liability of any party
then in breach). The provisions of Sections 6.5(c)-(g), Article X and Sections
11.2, 12.1, 12.6, 12.7, 12.11, 12.12, 12.13, and 12.14 shall expressly survive
the expiration or termination of this Agreement. Nothing is this Section 11.2
shall be deemed to release any party from any liability for breach by such party
of the terms and provisions of this Agreement or from any obligations that exist
under separate agreements between the parties.
ARTICLE XII
GENERAL PROVISIONS
12.1 Confidential Nature of Information. Each party agrees that
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents. Such documents, materials and information shall not be communicated
to any third Person except to employees, representatives or partners of Buyer or
Seller with a need to know and such persons shall be informed of the
confidential nature of such information. No party shall use any confidential
information in any manner whatsoever except solely for the purpose of evaluating
the proposed purchase and sale of the Licenses. The obligation of each party to
treat such documents, materials and other information in confidence shall not
apply to any information which (i) is or becomes available to a party hereto
from a source other than another party hereto, (ii) is or becomes available to
the public other than as a result of disclosure by a party or its agents, (iii)
is required to be disclosed under applicable law or judicial process, but only
to the extent it must be disclosed, or (iv) is independently developed by such
party without reference to the confidential information of the other party; (v)
a party reasonably deems necessary to disclose to in order to obtain any of the
consents or approvals contemplated hereby. To the extent the provisions of this
paragraph conflict with the existing Non-Disclosure Agreement ("NDA") between
the parties, the provisions of the NDA shall prevail.
12.2 No Public Announcement. No party shall, without the approval
of the other, make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by law, in which case the other party shall
be advised and the parties shall use their reasonable efforts to cause a
mutually agreeable release or announcement to be issued; provided that the
foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with accounting and
Securities and Exchange Commission disclosure obligations or applicable FCC
disclosure obligations.
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12.3 Notices. All notices, certifications, requests, demands,
payments and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if mailed, by certified mail, first
class postage prepaid, or delivered personally, or if sent by facsimile, with
transmission confirmed by telephone and simultaneously followed by the original
instructions by first class mail, postage prepaid:
If to Seller:
Radiofone PCS, L.L.C.
0000 X. X- 00 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxxxx
Xxxxxxx & Xxxxxx, L.L.C.
2200 Energy Centre, 0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer:
Leap Wireless International, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others. Notices given by United States
certified mail as aforesaid shall be effective on the third business day
following the day on which they were deposited in the mail. Notices delivered in
person shall be effective upon delivery. Notices given by facsimile shall be
effective when transmitted, provided facsimile notice is confirmed by telephone
and is transmitted on a business day during regular business hours.
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12.4 Successors and Assigns.
(a) The rights of any party under this Agreement shall not be
assignable by such party hereto prior to the Closing without the written consent
of the other, except that the rights of Buyer hereunder may be assigned prior to
the Closing, without the consent of Seller, to any of its affiliates,
subsidiaries, successors and assigns ("Permitted Assignees").
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include without limitation, in the case
Buyer, any Permitted Assignees as well as the successors in interest to such
Permitted Assignee. Except pursuant to Section 7.4, nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties and successors and Permitted Assignees, any right,
remedy or claim under or by reason of this Agreement.
12.5 Entire Agreement; Amendments. This Agreement and the
Exhibits referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or letters of intent between or among any of the parties hereto, including the
Memorandum of Understanding entered into as of December 7, 1999 by and between
the parties. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the parties hereto.
12.6 Waivers. Any failure of either Buyer or Seller to comply
with any obligation, covenant, agreement or condition herein may be waived by
the other party only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
12.7 Expenses. Each party hereto will pay all of its own costs
and expenses incident to its negotiation and preparation of this Agreement and
the consummation of the transactions contemplated hereby and thereby, including
the fees, expenses and disbursements of its counsel and advisors. In the event
either party shall bring an action in connection with the performance, breach or
interpretation of this Agreement, the prevailing party in any such action shall
be entitled to recover from the losing party all reasonable costs and expenses
of such action, including attorneys' fees.
12.8 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such provision or provisions or any other provisions hereof,
unless such a construction would be unreasonable; provided, however, that if the
removal of such offending term or provision materially alters the burdens or
benefits of any of the parties under this Agreement, the parties agree to
negotiate in good faith such modifications to this Agreement as are appropriate
to ensure
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the burdens and benefits of each party under such modified Agreement are
reasonably comparable to the burdens and benefits originally contemplated and
expected.
12.9 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the other parties hereto.
12.10 Further Assurances. From time to time following the
Closing, Seller shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, Buyer and put the Buyer in possession of,
any part of the Licenses.
12.11 Resolution of Disputes. Except with respect to a breach of
the obligations of confidentiality, non-competition and actions detrimental to
the acquisition of the Licenses contemplated hereunder, as to which the
non-breaching party shall have the right to seek injunctive remedy or other
equitable remedies, senior management employees of Buyer and Seller shall meet
and negotiate in good faith to reach a satisfactory resolution to any dispute
arising in connection with this Agreement. If such negotiations do not result in
a resolution within five (5) days after the first meeting of such
representatives, then any dispute, claim or controversy arising under this
Agreement or in any way related to this Agreement, or its interpretation,
enforceability or inapplicability shall be submitted to binding arbitration at
the election of either party. The arbitration shall be conducted by a single
arbitrator. The arbitration shall be conducted in New York City in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitration award shall be final and binding, and judgment on the award may
be entered in any court having jurisdiction thereof.
12.12 Governing Law. This Agreement shall be governed by,
enforced and construed in accordance with the laws of the State of New York, -
without regard to choice of law principles.
12.13 Specific Performance. Notwithstanding anything herein to
the contrary, if either Buyer or Seller fails to perform any of its obligations
under this Agreement, the other party shall have the right, in addition to all
other rights or remedies, to specific performance of the terms hereof.
12.14 Headings. Subject headings are included for convenience
only and shall not effect the interpretation of any provisions of this
Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
Radiofone PCS, L.L.C. Leap Wireless International, Inc.
By LG PCS, Inc. an
authorized member
By: /s/ Xxxxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------
Name: Xxxxxxxx Xxxxxx Name: Xxxxxx Xxxxx
Its: President Its: Chairman and CEO
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