Exhibit 10.27
STOCK PURCHASE AGREEMENT
among
XXXXX WIRELESS HONOLULU INC.,
XXXXX WIRELESS NEVADA INC.,
XXXXX WIRELESS SYSTEMS INC.,
and
FIXED WIRELESS HOLDINGS, LLC
Dated as of September 30, 2004
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS ................................................... 1
ARTICLE 2 PURCHASE AND SALE OF SHARES ................................... 7
Section 2.1 Purchase and Sale of the Shares ...................... 7
Section 2.2 Purchase Price ....................................... 7
Section 2.3 Payment of Purchase Price ............................ 7
Section 2.4 Closing .............................................. 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY .......... 7
Section 3.1 Organization and Power; Subsidiaries and
Investments .......................................... 7
Section 3.2 Authorization; Enforceability ........................ 8
Section 3.3 Capitalization. ...................................... 8
Section 3.4 No Breach ............................................ 9
Section 3.5 No Conflict of Interest .............................. 9
Section 3.6 Financial Statements ................................. 10
Section 3.7 FCC Matters. ......................................... 10
Section 3.8 Leases ............................................... 12
Section 3.9 Tower Leases. ........................................ 12
Section 3.11 Brokers .............................................. 14
Section 3.12 Litigation; Proceedings .............................. 14
Section 3.13 Tax Returns and Payments ............................. 14
Section 3.14 Environmental Protections ............................ 15
Section 3.15 Disclosure ........................................... 16
Section 3.16 Purchaser's Acknowledgement .......................... 16
ARTICLE 4 ............................................................... 17
REPRESENTATIONS AND WARRANTIES OF EACH RELATED PARTY .................... 17
Section 4.1 Authorization of Transactions ........................ 17
Section 4.2 Absence of Conflicts ................................. 17
Section 4.3 Litigation ........................................... 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER ................... 17
Section 5.1 Organization and Power ............................... 17
Section 5.2 Authorization; Enforceability ........................ 18
Section 5.3 Absence of Conflicts ................................. 18
Section 5.4 Litigation ........................................... 18
Section 5.5 Brokers .............................................. 18
ARTICLE 6 COVENANTS AND OTHER AGREEMENTS ................................ 18
Section 6.1 Covenants of Seller .................................. 18
Section 6.2 Exclusivity .......................................... 19
Section 6.3 Consummation of Transactions ......................... 19
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Section 6.4 Compliance with Law .................................. 20
Section 6.5 Certain Notices ...................................... 20
Section 6.6 Confidentiality ...................................... 20
Section 6.7 Further Assurances ................................... 21
Section 6.8 FCC Qualifications ................................... 21
Section 6.9 Consents ............................................. 21
Section 6.10 Employee Matters ..................................... 21
Section 6.11 U.S. Reorganization .................................. 21
Section 6.12 Assumed Liabilities .................................. 22
Section 6.13 Change of Name ....................................... 22
Section 6.14 Canadian Reorganization .............................. 22
ARTICLE 7 CONDITIONS TO CLOSING ......................................... 22
Section 7.1 Conditions to the Obligations of Both Parties ........ 22
Section 7.2 Conditions to the Obligations of Seller .............. 23
Section 7.3 Conditions to the Obligations of Purchaser ........... 23
ARTICLE 8 ............................................................... 24
TERMINATION ............................................................. 24
Section 8.1 Termination .......................................... 24
Section 8.2 Effect of Termination ................................ 25
ARTICLE 9 SURVIVAL AND REMEDIES ......................................... 25
Section 9.1 Survival ............................................. 25
Section 9.2 Seller Indemnification ............................... 25
Section 9.3 Purchaser Indemnification ............................ 27
Section 9.4 Tax Matters. ......................................... 27
Section 9.5 Indemnification Procedures ........................... 29
Section 9.6 Offset Against Equipment Lease Agreement Obligation. . 30
ARTICLE 10 MISCELLANEOUS ................................................ 30
Section 10.1 Entire Agreement ..................................... 30
Section 10.2 Amendments and Waivers ............................... 30
Section 10.3 Remedies Cumulative .................................. 30
Section 10.4 Assignment ........................................... 30
Section 10.5 Notices .............................................. 30
Section 10.6 Governing Law; Jurisdiction; Waiver of Jury Trial. ... 31
Section 10.7 Expenses ............................................. 32
Section 10.8 Invalidity ........................................... 32
Section 10.9 Counterparts ......................................... 32
Section 10.10 Headings ............................................. 32
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SCHEDULES AND EXHIBITS
Exhibit A - Canadian Reorganization
Schedule A - Leases
Schedule B - Tower Sites
Schedule 3.3 - Capitalization
Schedule 3.4 - No Breach
Schedule 3.5 - No Conflict
Schedule 3.7(a) - Licenses and Leases
Schedule 3.7(b) - Applications
Schedule 3.7(c) - Claims
Schedule 3.7(d) - Interference
Schedule 3.8 - Leases
Schedule 3.9 - Tower Leases
Schedule 3.10 - Agreements
Schedule 3.14 - Environmental Protections
Schedule 6.12 - Assumed Liabilities
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September 30, 2004 (the "Effective
Date"), by and among Xxxxx Wireless Honolulu Inc., a Hawaii corporation (the
"Company"), Xxxxx Wireless Nevada Inc., a Nevada corporation ("Seller"), Xxxxx
Wireless Systems Inc., a Canadian federal corporation ("CWS"), and Fixed
Wireless Holdings, LLC, a Delaware limited liability company ("Purchaser").
Seller, the Company, CWS and Purchaser may be referred to herein as "Parties" or
each a "Party."
A. The Company owns and operates a wireless cable system using MMDS and
ITFS channels (each as defined below) to serve the Island of Oahu ("System").
B. Seller owns all of the issued and outstanding shares of the capital
stock of the Company (the "Shares"). CWS owns all of the outstanding shares of
the capital stock of Seller.
C. Seller desires to sell to Purchaser (or Purchaser's designee), and
Purchaser desires to acquire from Seller, all of the Shares, all on the terms
and subject to the conditions set forth herein.
D. Prior to the Closing, the Company intends to sell all its equipment,
settle certain of its accounts payable, terminate its employees and operations
and transfer any excess cash to the Seller and the Buyer acknowledges such
intended actions.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth or referenced below:
"Actual Knowledge" means (i) in the case of Seller, the Company or any
Related Party, the actual knowledge of Xxxx Xxxxx and Xxxx Xxxxxxxxx, without
having made due enquiry (ii) in the case of Purchaser, the actual knowledge of
Xxxxxx Beams without having made due enquiry.
"Acquisition Proposal" means any offer or proposal for, or any indication
of interest in (i) a merger, consolidation, share exchange, business
combination, reorganization, recapitalization or other similar transaction
involving the Company or (ii) the acquisition, directly or indirectly, of (A) an
interest in the voting securities of the Company or (B) any interest in the
Licenses or Leases, other than the Transactions.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, alone or through one or more intermediaries, controls,
is controlled by or is under common control with that Person. For purposes of
this definition, "control" (including the
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terms "controlling" and "controlled") means the power to direct or cause the
direction of the management and policies of a Person, directly or indirectly,
whether through the ownership of securities or partnership or other ownership
interests, by contract or otherwise.
"Agreement" means this Purchase Agreement and all Exhibits and Schedules
hereto, as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Agreement Regarding Manitoba Operations" means the Agreement Regarding
Manitoba Operations dated on or about the Effective Date, among the Parties to
this Agreement.
"Ancillary Documents" means the Loan Documents, the Equipment Lease
Agreement, the Investment Documents, and any documents executed or delivered by
a Party pursuant thereto.
"Assumed Liabilities" is defined in Section 6.12.
"Balance Sheet" is defined in Section 3.6.
"Balance Sheet Date" is defined in Section 3.6.
"Best of the Knowledge" means (i) in the case of Seller, the Company or any
Related Party, the knowledge of Xxxx Xxxxx and Xxxx Xxxxxxxxx, after due enquiry
(ii) in the case of Purchaser, the knowledge of Xxxxxx Beams after due enquiry.
"Business" means the Company's business of operating the System.
"Business Day" means any day, other than a Saturday or Sunday, on which
commercial banks and foreign exchange markets are open for business in Seattle,
Washington.
"Canadian Reorganization" means the steps described in the attached Exhibit
A.
"Channels" means the ITFS Channels and the MMDS Channels.
"Claim" is defined in Section 9.5(a).
"Closing" is defined in Section 2.4.
"Closing Date" is defined in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" is defined in the preamble.
"Confidential Information" means any and all information regarding the
business, finances, operations, products, services, business plans, market
launch schedules, product
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pricing, and customers of either Party or its Affiliates, in written or oral
form or in any other medium.
"Consents" means all consents and approvals of Governmental Authorities or
other third parties necessary to authorize, approve or permit the Parties hereto
to consummate the Transactions.
"Damages" means any and all losses, claims, demands, liabilities,
obligations, actions, suits, orders, statutory or regulatory compliance
requirements, or proceedings asserted by any Person, and all damages, costs,
expenses, assessments, judgments, recoveries and deficiencies, including
interest, penalties, investigatory expenses, consultants' fees, and reasonable
attorneys' fees and costs, of every kind and description, contingent or
otherwise.
"Disclosing Party" is defined in Section 6.6.
"Effective Date" is defined in the introductory paragraph.
"Equipment Lease Agreement" means the Equipment Lease Agreement between
Purchaser or its designee and the Joint Venture with respect to the Joint
Venture's lease or use of NextNet Base Station Equipment, in form and substance
satisfactory to Purchaser in its sole discretion.
"Employees" means the employees of the Company.
"FCC" means the Federal Communications Commission or any successor agency
thereof.
"Final Order" means an action or decision of the FCC as to which (i) no
request for a stay or similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time within
which it may effect such reconsideration has passed, and (iv) no appeal is
pending, including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed.
"Financial Statements" is defined in Section 3.6.
"GAAP" means Generally Accepted Accounting Principles in the United States.
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including the United States Department of
Justice), commission or regulatory or administrative authority or
instrumentality.
"Indebtedness" means, with respect to any Person at any date, without
duplication: (i) all obligations of such Person for borrowed money or in respect
of loans or advances;
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(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments (including, without limitation, any seller notes,
deferred purchase price obligations or earn-out obligations issued or entered
into in connection with any acquisition undertaken by such Person); (iii) all
obligations in respect of letters of credit, whether or not drawn, and bankers'
acceptances issued for the account of such Person; (iv) all capitalized lease
liabilities of such Person, but not leases characterized as operating leases on
such Person's financial statements; (v) all interest rate protection agreements
of such Person (valued on a market quotation basis); (vi) all obligations of
such Person secured by a contractual lien; (vii) all guarantees of such Person
in connection with any of the foregoing; (viii) all outstanding checks that will
ultimately be funded through such Person's line of credit or other borrowed
money and (ix) any accrued interest, prepayment premiums or penalties related to
any of the foregoing.
"Indemnification Threshold" is defined in Section 9.5(d).
"Investment Documents" means the agreements pursuant to which Purchaser, or
Purchaser's designee, acquires an ownership interest in the Joint Venture.
"ITFS" means Instructional Television Fixed Service to be known as the
Educational broadband Service on the effective date of the FCC's new rules
adopted in Docket 03-66.
"ITFS Channels" means each channel listed in the ITFS Licenses.
"ITFS Licenses" means the licenses granted by the FCC authorizing the
construction and operation of ITFS Channels in the markets listed in Schedule
3.7(a), covering the households per ITFS Channel listed therein.
"Joint Venture" means the entity in which Seller is, or will be, an
investor, that will be used to develop wireless spectrum opportunities in
Manitoba, Canada.
"Law" means applicable common law and any statute, ordinance, code or other
law, rule, permit, permit condition, regulation, order, decree, technical or
other standard, requirement or procedure enacted, adopted, promulgated, applied
or followed by any Governmental Authority.
"Leases" means the lease agreements pursuant to which the Company holds the
rights under the ITFS Licenses and which are listed in Schedule A.
"Licenses" means the the MMDS Licenses and any other FCC authorizations
held by the Company.
"Liens" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement, encumbrance, lien, easement, option, debt,
charge, claim or restriction of any kind.
"Loan" is defined in Section 2.3.
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"Loan Documents" means the Loan Agreement between the Parties and the other
agreements and documents that relate to the Loan and that are referred to in the
Loan Agreement.
"Material Adverse Effect" means any event, circumstance, change, occurrence
or effect (collectively, "Events") that, individually or taken together with all
other Events, has or would be reasonably anticipated to have in the future a
material and adverse effect upon the assets, liabilities, financial condition,
operating results of the Company.
"MMDS" means Multipoint Distribution Service to be known as the Broadband
Radio Service upon the effective date of the FCC's new rules adopted in Docket
03-66.
"MMDS Channels" means each channel listed in the MMDS Licenses.
"MMDS Licenses" means the licenses granted by the FCC authorizing the
Company to construct and operate MMDS Channels in the markets listed in Schedule
3.7(a), covering the households per MMDS Channel listed therein.
"NextNet Base Station Equipment" means the equipment identified in the
Equipment Lease Agreement.
"Noncompete Agreement" means the Noncompete Agreement between the Joint
Venture and Seller, CWS and their Affiliates (the "Noncompete Parties") entered
into in connection with the Joint Venture and the Investment Agreements,
pursuant to which the Noncompete Parties agree not to compete with the business
of the Joint Venture.
"Party" or "Parties" is defined in the preamble.
"Person" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
Governmental Authority, cooperative, association, individual or other entity,
and the heirs, executors, administrators, legal representatives, successors, and
assigns of such person as the context may require.
"Pre-Closing Tax Period" is defined in Section 9.4.
"Proceeding" means any action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving any court or
other Government Agency or any arbitrator or arbitration panel.
"Purchase Price" is defined in Section 2.2.
"Purchaser" is defined in the preamble.
"Purchaser Indemnified Parties" is defined in Section 9.2.
"Receiving Party" is defined in Section 6.6.
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"Rejected Liabilities" is defined in Section 6.12.
"Related Party" means CWS and, following the execution and delivery of
joinders to this Agreement as contemplated under Section 6.11, each of CWI and
Newco and, subsequent to the Canadian Reorganization, and following the
execution and delivery of a joinder to this Agreement as contemplated under
Section 6.14, means New Holdco as referred to therein.
"Seller" is defined in the preamble.
"Seller Indemnified Parties" is defined in 9.3.
"Shares" is defined in Recital B.
"System" is defined in Recital A.
"Taxes" means all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limitation, all income or profits taxes (including but not
limited to federal and state income taxes), real property gains taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums, and other
taxes or similar governmental charges.
"Tower Leases" means the agreements relating to the use by the Company of
Transmission Towers or other transmission equipment (and the embedded software
and intellectual property rights incorporated therein) on the Tower Sites.
"Tower Sites" means any real property used or occupied by the Company on
which Transmission Towers used by the Company are located, which may include
separate towers, building roof-tops and other locations and which are listed in
Schedule B.
"Tower Subleases" means the agreements under which the Company is a lessor,
sublessor or licensor of, or makes available for use to any Person, any Tower
Site or portion thereof that is the subject of a Tower Lease.
"Transmission Towers" means any towers or other "antenna structures" as
defined by the FCC in Part 17 of the FCC Rules.
"Transactions" means the transactions contemplated by this Agreement and
the Ancillary Documents.
"U.S. Reorganization" shall mean the transactions described below and any
transaction in furtherance thereof:
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(a) Xxxxx Wireless Systems Inc. will incorporate a new subsidiary
("Newco") under the Canada Business Corporations Act;
(b) CWS will transfer the shares it holds in Xxxxx Wireless Nevada Inc. to
Newco in exchange for shares of Newco;
(c) Xxxxx Wireless International Inc. ("CWI") will transfer the shares it
holds in SkyCable International Inc. ("SkyCable") to Newco in exchange
for shares of Newco;
(d) Seller and SkyCable will merge; and
(e) The proceeds of the sale of the equipment owned by the Company will be
distributed to Seller.
ARTICLE 2
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of the Shares. Subject to the terms and
conditions set forth herein and on the basis of the representations, warranties,
covenants and agreements contained herein, at the Closing, the Seller shall sell
to Purchaser, and Purchaser shall purchase from the Seller, the Shares, free and
clear of all Liens (other than any restrictions under the Securities Act of
1933, as amended).
Section 2.2 Purchase Price. The purchase price for the Shares shall be Ten
Million Dollars ($10,000,000) (the "Purchase Price").
Section 2.3 Payment of Purchase Price. The Purchaser is making a loan to
Seller prior to the Closing, in the amount of $10,000,000 (the "Loan"), upon the
terms and subject to the conditions stated in the Loan Documents. The Purchase
Price shall be payable at the Closing by means of a credit against the
outstanding balance of the Loan.
Section 2.4 Closing. Upon the terms and subject to the conditions hereof,
the closing of the sale of the Shares ("Closing") shall take place at the
offices of Xxxxx Xxxxxx Xxxxxxxx LLP, 0000 Xxxxxxx Xxxxxx, 0000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000, within five (5) Business Days following the date on which the
last condition under Article 7 has been satisfied or waived, or at such other
time and place as the Parties may mutually agree. The date on which Closing
occurs is called the "Closing Date."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
As a material inducement to Purchaser to enter into this Agreement and
purchase the Shares to be purchased by it hereunder, Seller and the Company
represents and warrants to Purchaser that:
Section 3.1 Organization and Power; Subsidiaries and Investments. Each of
Seller and the Company is a corporation duly organized, validly existing and in
good
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standing under the laws of the jurisdiction of its organization. Hawaii is the
only jurisdiction in which the ownership of properties or the conduct of the
Business requires the Company to be so qualified, except where the failure to be
so qualified would not have a Material Adverse Effect. Seller and the Company
have all requisite power and authority and all licenses, permits and
authorizations necessary to own and operate their respective assets and to carry
on the Business as now conducted. Seller and the Company have all requisite
power and authority to execute and deliver this Agreement and the Ancillary
Documents and to perform their respective obligations hereunder and thereunder.
The Company does not own or control (directly or indirectly) any stock,
partnership interest, joint venture interest, equity participation or other
security or interest in any other Person. The articles of incorporation and
bylaws of the Company that have previously been furnished to Purchaser reflect
all amendments thereto and are correct and complete. The corporate records and
minute books of the Company (complete and up-to-date copies of which were
provided to the Purchaser and its counsel for review) contain complete and
accurate minutes of all meetings of the directors and shareholders of the
Company held since its incorporation, and original signed copies of all
resolutions and by-laws duly passed or confirmed by the directors or
shareholders of the Company other than at a meeting. The stock ledgers and
register of directors and any similar corporate records of the Company are
complete and accurate.
Section 3.2 Authorization; Enforceability. The execution, delivery and
performance by Seller and the Company of this Agreement, the Ancillary Documents
and each of the Transactions have been duly and validly authorized by Seller and
the Company and, other than the Consents, no other act or proceeding on the part
of Seller and the Company or their boards of directors or stockholders is
necessary to authorize the execution, delivery or performance by Seller and the
Company of this Agreement or any Ancillary Document or the consummation of any
of the Transactions. This Agreement has been duly executed and delivered by
Seller and the Company, and this Agreement constitutes, and the Ancillary
Documents upon execution and delivery by Seller and/or the Company, as
applicable, will each constitute, a valid and binding obligation of Seller
and/or the Company, respectively, enforceable against each in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 3.3 Capitalization.
(a) The attached Schedule 3.3 accurately sets forth the authorized and
outstanding equity of the Company and the name and number of shares held by
Seller as at the Effective Date.
(b) All of the issued and outstanding shares of the Company (i) have
been duly authorized, are validly issued, fully paid and nonassessable, (ii) are
not subject to, nor were they issued in violation of, any preemptive rights, and
(iii) are owned of record and beneficially by Seller.
(c) Except for this Agreement and as may be set forth on Schedule 3.3,
there are no outstanding or authorized options, warrants, rights, contracts,
pledges, calls, puts, rights to subscribe, conversion rights or other agreements
or commitments to which the
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Company is a party or which is binding upon the Company providing for the
issuance, disposition or acquisition of any of its equity or any rights or
interests exercisable therefor.
(d) There are no outstanding or authorized equity appreciation,
phantom stock or similar rights with respect to the Company.
(e) Except as set forth on Schedule 3.3, there are no voting trusts,
proxies or any other agreements or understandings with respect to the voting of
the equity of the Company.
(f) The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its equity. At
the Closing, Purchaser shall receive all capital stock of the Company free and
clear of all Liens (other than restrictions on transfer arising under the
Securities Act of 1933, as amended, and state or foreign securities laws and
restrictions on transfer imposed or regulated by the FCC).
(g) Except as set forth on Schedule 3.3, there are no statutory or
contractual preemptive rights, rights of first refusal or similar rights or
restrictions with respect to the sale of the Shares hereunder.
(h) The Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and the offer and sale of the Shares hereunder does not require
any registration under any applicable federal or state securities laws.
Section 3.4 No Breach. Except as set forth on Schedule 3.4, the execution,
delivery and performance by Seller and the Company of this Agreement and the
Ancillary Documents and the consummation of each of the Transactions (including,
without limitation, the purchase and sale of the Shares) do not and will not (a)
violate or conflict with any of their respective certificates or articles of
incorporation, bylaws or other organizational documents; (b) violate or conflict
with in any material respect, result in any material breach of, constitute a
default under, result in the termination or acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any Lease, License, Tower Lease, Tower Sublease or other agreement listed
on Schedule 3.10; (c) result in the creation or imposition of any Lien upon any
assets or any of the equity of the Company; (d) require any authorization,
consent, approval, exemption or other action by or notice to any court, other
Governmental Authority or other Person or entity, other than the Consent of the
FCC, under the provisions of (i) any Law to or by which the Company or any of
the Company's assets are subject or bound or (ii) any Lease, License, Tower
Lease, Tower Sublease or other agreement listed on Schedule 3.10; or (e) violate
in any material respect any law, statute, regulation, rule, judgment, decree,
order, stipulation, injunction, charge or other restriction of any Governmental
Authority to or by which Seller or the Company or any of their assets are
subject or bound.
Section 3.5 No Conflict of Interest. Except as set forth in Schedule 3.5,
the Company is not indebted, directly or indirectly, to any of its officers,
directors, stockholders or Employees or to their respective Affiliates, spouses
or children, in any amount whatsoever
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other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of Employees. None of the
Company's officers, directors, stockholders or any members of their immediate
families are, directly or indirectly, indebted to the Company or have any direct
or indirect ownership interest in any firm or corporation with which the Company
is affiliated or with which the Company has a business relationship, or any firm
or corporation which competes with the Company except that officers, directors
and/or stockholders of the Company may own stock in (but not exceeding two
percent of the outstanding capital stock of) any publicly traded companies that
may compete with the Company. None of the Company's officers, directors or
stockholders or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company. Except as set
forth on Schedule 3.5, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
Section 3.6 Financial Statements. The Company has provided to Purchaser the
following financial statements ("Financial Statements"): (a) a balance sheet at
December 31, 2003, together with the related statements of operations,
stockholders' equity and cash flows for the fiscal year then ended, and the
report thereon of Deloittes LLP, chartered accountants and (b) an unaudited
balance sheet (the "Balance Sheet") at August 31, 2004 (the "Balance Sheet
Date"), and the related statements of income and cash flows for the twelve
months then ended, prepared by the Company. Such financial statements (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company at the balance sheet dates and the results of
its operations for the periods therein specified, and (iii) have, in all
material respects, been prepared in accordance with GAAP applied on a basis
consistent with prior accounting periods (except as may be indicated in the
notes thereto and except for, with respect to unaudited financial statements,
the absence of footnotes). Specifically, but not by way of limitation, the
Balance Sheet discloses all of the debts, liabilities and obligations of any
nature (whether absolute, accrued or contingent and whether due or to become
due) of the Company at the Balance Sheet Date which, individually or in the
aggregate, are material and which in accordance with GAAP would be required to
be disclosed in the Balance Sheet. The Balance Sheet includes appropriate
reserves for all Taxes and other liabilities accrued at the Balance Sheet Date
but not yet payable. The Company's books and records are, in all material
respects, maintained in accordance with GAAP. Nothwithstanding the foregoing,
the amounts set forth in the Financial Statements relating to indebtedness owing
to Wellington West promissory notes may not be accurate as they do not take into
account the exchange rate or the interest rate charged on such notes.
Section 3.7 FCC Matters.
(a) The information set forth on Schedule 3.7(a) is true, correct, and
complete. True and complete copies of the Licenses and Leases have been
delivered to Purchaser. There is no condition imposed by the FCC as part of any
of the MMDS Licenses, or to the Seller's Actual Knowledge, the ITFS Licenses,
that is neither set forth on the face of the MMDS or ITFS Licenses as issued by
the FCC nor contained in the FCC Rules applicable generally to stations of the
type, nature and class or location of the Station. The Licenses and the ITFS
Licenses, constitute all authorizations from the FCC necessary or required for
and/or used in the operations of the Business as of the Effective Date. The
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MMDS Licenses, and to the Seller's Knowledge, the ITFS Licenses, have been
granted to the Company by Final Order and are (and will be on the Closing Date)
in full force and effect.
(b) Except as set forth on Schedule 3.7(b), no application, action or
proceeding is pending for the modification of the MMDS Licenses, or to the
Seller's Actual Knowledge, the ITFS Licenses. Except for actions or proceedings
affecting MMDS and ITFS facilities generally, no application, action or
proceeding is pending, or to the Actual Knowledge of Seller and the Company,
threatened, against Seller or the MMDS Licenses, the ITFS Licenses or Leases
which could result in (i) the denial of an application for renewal for the MMDS
Licenses, or to the Seller's Actual Knowledge, the ITFS Licenses, (ii)
revocation, forfeiture, non-renewal or suspension of the MMDS Licenses, or to
the Seller's Actual Knowledge, the ITFS Licenses, (iii) issuance of a
cease-and-desist order, or (iv) the imposition of any fines, penalty, damages or
other sanctions by a Governmental Authority relating to the operation of the
MMDS Licenses, or to the Seller's Actual Knowledge, the ITFS Licenses. There are
no facts or circumstances existing that would give rise to any such denial,
revocation, suspension or any proceeding with the FCC or any other Governmental
Authority.
(c) Except as set forth on Schedule 3.7(c), no Person other than the
Company has any right, title, interest or claim in or to the MMDS Licenses and,
to the Actual Knowledge of the Seller, no person other than the applicable ITFS
licencee and the Company has any right, titles, interest or claim in or to the
ITFS Licenses.
(d) Except as set forth on Schedule 3.7(d), the Company has not agreed
to accept or allowed any electromagnetic interference from any other FCC
licensees, permittees or applicants with respect to the MMDS Licenses, and to
the Seller's Actual Knowledge, the ITFS Licenses and/or Channels. Except as set
forth on Schedule 3.7(d), no such licensees, permittees or applicants have
agreed to accept electromagnetic interference from the Company with respect to
their respective facilities.
(e) The Company is in compliance with all applicable Laws except for
any non-compliance that, individually or in the aggregate, will not have a
material adverse effect on the MMDS Licenses, and to the Seller's Actual
Knowledge, the ITFS Licenses, or the Leases, or on Seller's or the Company's
ability to consummate the Transactions. Since the filing of the initial
application for the Licenses, the Company has complied in all material respects
with FCC Laws applicable to the Licenses, including without limitation the
Communication Act of 1934, as amended. Since the issuance of the Licenses, the
Company has complied in all material respects with all of the terms and
conditions of the Licenses. Except as set forth in Schedule 3.7(a), the Licenses
are free and clear of all Liens and are unimpaired by any acts or omissions of
the Company, its agents, assignees and licensees. Except as set forth in
Schedule 3.7(a), all material documents, FCC applications and notifications and
annual reports required to be filed at any time by the Company with the FCC with
respect to the Licenses have been timely filed or the time period for such
filing has not lapsed. All such documents filed since the date that the Licenses
were issued are correct in all material respects. All amounts owed to the FCC in
connection with the Licenses have been timely paid.
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(f) The facilities subject to the Licenses for which certification or
modification of completion of construction has been filed with the FCC are
operating and have been operating, without interruption, except where such
interruption would not be material and would not put the Licenses at any risk
before the FCC, in material compliance with the Licenses therefore and the FCC
Laws. The Company has not deconstructed any station since notifying the FCC that
such station was constructed. The Company is not transmitting from or otherwise
operating any facility that is not the subject of a license of the FCC. None of
the facilities subject to the Licenses, (i) is authorized pursuant to an
authorization which is subject to successful challenge before the FCC or any
court of competent jurisdiction or (ii) is subject to any lease, sublease or any
agreement to make it available to a third party. None of the facilities subject
to the Licenses are operating pursuant to special temporary or developmental
authority. To the Company's Actual Knowledge, the ITFS Licenses are in
compliance with the FCC's educational programming requirements.
Section 3.8 Leases. The Company has delivered to Purchaser true and
complete copies of the Leases. Except as set forth on Schedule 3.8, the Leases
are in full force and effect, are free from any claims, liabilities or Liens and
are unimpaired by any acts or omissions of the Company, its Affiliates, agents,
assignees and licensees. The Company has valid leasehold interests in the
Leases. Except as set forth on Schedule 3.8, since entering into the Leases, the
Company has complied in all material respects with all of the terms and
conditions of the Leases. Except as set forth on Schedule 3.8, neither the
Company nor, to the Actual Knowledge of Seller and the Company, any other party
to any of the Leases has failed to comply with or is in material breach or
material default thereunder; and, to the Actual Knowledge of Seller and the
Company, no condition exists or event has occurred and is continuing as of the
date hereof and the Closing which, with or without the lapse of time or the
giving of notice, or both, would constitute a material default by any party
under any Lease.
Section 3.9 Tower Leases.
(a) Schedule 3.9 sets forth a true and complete list of the following
information in relation to each of the Tower Leases: (i) the market in which the
lease is used, (ii) the expiration date of the lease, (iii) the name of the
lessor, (iv) the antenna structure registration number, (v) the address or
location of the leased premises or Tower Site, and (vi) the monthly, quarterly
or annual rent, as applicable, payable under such Tower Lease. True and complete
copies of the Tower Leases have been provided by the Company to Purchaser. The
Tower Leases set forth on Schedule 3.9 are all of the Tower Leases that are
necessary to use the equipment associated with each Tower Site, and to access
such equipment in connection with such use.
(b) Except as set forth in Schedule 3.9(b), with respect to the Tower
Leases, (i) each of the Tower Leases is valid, binding on the Company and, to
the Actual Knowledge of Seller and the Company, each other party thereto and in
full force and effect, enforceable by the Company in accordance with its terms;
(ii) except as set forth on Schedule 3.9 and as contemplated by this Agreement,
the Company has not assigned, pledged, transferred, or otherwise disposed of or
granted any Lien on its rights, titles and interests under any of the Tower
Leases to any other Person, nor, to the Actual Knowledge of Seller
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and the Company, has any other party to the Tower Leases so assigned, pledged,
transferred, granted any Lien on, or otherwise disposed of any of its rights,
title and interests thereunder; (iii) neither the Company nor, to the Actual
Knowledge of Seller and the Company, any other party to any of the Tower Leases
has failed to comply with or is in material breach or material default
thereunder; and (iv) except as set forth on Schedule 3.9, to the Actual
Knowledge of Seller and the Company, no condition exists or event has occurred
and is continuing as of the date hereof and the Closing which, with or without
the lapse of time or the giving of notice, or both, would constitute a material
default by any party under any Tower Lease.
(c) There are no Tower Subleases.
(d) To the Actual Knowledge of Seller and the Company, all of the
Transmission Towers located on the Tower Sites are obstruction-marked and
lighted to the extent required by, and in accordance with, the rules and
regulations of the Federal Aviation Administration (the "FAA") and the FCC
Rules. To the Actual Knowledge of Seller and the Company, appropriate
notification to the FAA and registration with the FCC has been made for each
Transmission Tower located on the Tower Sites and owned, leased or used by
Seller where required by the rules and regulations of the FAA or the FCC Rules,
as applicable.
Section 3.10 Agreements.(a) Except as set forth in Schedule 3.5, and except
as contemplated by the U.S. Reorganization, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, Affiliates or any Affiliate thereof.
(b) Except as set forth on Schedule 3.10, there are no agreements,
understandings, instruments, contracts or proposed transactions to which the
Company is a party or by which it is bound that involve (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of $10,000,
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, (iii) the grant of rights to market, distribute or
sell the Company's services to any other Person or affect the Company's
exclusive right to market, distribute or sell the Company's services, or (iv)
the provision of products or services to customers.
(c) Except for those agreements described in reasonable detail in
Schedule 3.10, the Company is not a party to or bound by any non-competition
agreement or any other similar agreement or obligation which purports to limit
in any respect the manner in which, or the localities in which, any portion of
the business of the Company, is or may be conducted or which purports to limit
the freedom of the Company to compete in any line of business or with any
Person. Except for those agreements described in reasonable detail in Schedule
3.10, there are no agreements, understandings, instruments or proposed
transactions of the Company in which the Company has granted or offered to any
other Person most-favored-nation or similar preferential pricing with respect to
its products and/or services. Except for those agreements described in
reasonable detail in Schedule 3.10, there are no agreements, understandings,
instruments or proposed transactions of the Company pursuant to which the
Company has granted any other Person an exclusive right to market, distribute or
sell the Company's services.
13
(d) The Company is not a party to and is not bound by any contract,
agreement or instrument, or subject to any restriction under its articles of
incorporation or bylaws that contains, to the Actual Knowledge of Seller and the
Company or the Company, terms and conditions more onerous than those usual and
customary in the industry under similar business or market conditions current at
the time and that adversely affects its business as now conducted.
(e) For the purposes of subsections (b) above, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same person or entity (including persons or entities
the Company has reason to believe are affiliated therewith) shall be aggregated
for the purpose of meeting the individual minimum dollar amounts of such
subsections.
Section 3.11 Brokers. If the Company has engaged a broker in connection
with the Transactions, Seller shall be solely responsible for all fees,
commissions and expenses of such broker in connection with the Transactions.
Section 3.12 Litigation; Proceedings. Except as disclosed in Schedule 3.12,
there are no Proceedings pending or, to the Actual Knowledge of Seller and the
Company, threatened by or against, or relating to Seller, the Company, any of
their respective assets or the Business, or to or by which Seller, the Company,
any of their respective assets or the Business may be subject or bound, at law
or in equity, and no facts, events or circumstances exist or have occurred which
could result in such an Proceeding following the Closing.
Section 3.13 Tax Returns and Payments.
(a) The Company has timely filed all Tax returns and reports as required by
law. These returns and reports are true and correct in all material respects.
The Company has disclosed on its federal income Tax return all positions taken
therein that could give rise to a substantial understatement penalty under Code
Section 6662. Except as disclosed in Schedule 3.13, the Company has paid all
Taxes and other assessments due in a timely manner (whether or not shown on any
Tax return). The Company has never had any Tax deficiency assessed against it
and has not executed any waiver of any statute of limitations on the assessment
or collection of any Tax or governmental charge. None of the Company's federal
income tax returns and none of its state income or franchise tax or sales or use
tax returns has ever been audited by governmental authorities and Seller does
not expect any authority to assess any additional Taxes for any period for which
tax returns have been filed. Since the Balance Sheet Date, the Company has not
incurred any Taxes, assessments or governmental charges other than in the
ordinary course of business and the Company has made adequate provisions on its
books of account for all Taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. The Company
has withheld or collected from each amount paid to any employee, independent
contractor, creditor, stockholder, or other third party, the amount of all Taxes
(including, but not limited to, federal income Taxes, Federal Insurance
Contribution Act Taxes and Federal Unemployment Tax Act Taxes) required to be
withheld or collected therefrom, and has paid the same when due to the proper
tax receiving officers or authorized depositories.
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(b) Each affiliated group of corporations filing consolidated Tax returns
of which the Company is or has been a member ("Affiliated Group") has filed all
income Tax returns that it was required to file for each taxable year during
which the Company was a member of the group. All such Tax Returns were true and
correct in all material respects. All income Taxes owed by any Affiliated Group
(whether or not shown on any Tax return) have been paid for each taxable period
during which the Company was a member of the group The Company is not a party to
or bound by any Tax allocation or Tax sharing agreement. The Company has no
liability for the Taxes of any Person other than the Company (A) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), (B) as a transferee or successor, (C) by contract, or (D)
otherwise.
(c) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any:
(i) change in method of accounting for a taxable period ending on or
prior to the Closing Date;
(ii) intercompany transaction or excess loss account described in
Treasury Regulations under Code Section 1502 (or any corresponding or
similar provision of state, local or foreign income Tax law);
(iii) installment sale or open transaction disposition made on or
prior to the Closing Date; or
(iv) prepaid amount received on or prior to the Closing Date.
(d) Seller has delivered to Purchaser correct and complete copies of all
Tax returns filed by the Company (including pertinent sections of any
consolidated federal income Tax returns in which the operations of the Company
were included).
Section 3.14 Environmental Protections. The Company is in compliance with
all applicable Environmental Laws. There is no pending or, to the Actual
Knowledge of Seller and the Company, threatened civil or criminal litigation,
written notice of violation, formal administrative proceeding, or investigation,
inquiry or information request by any Governmental Authority, relating to any
Environmental Law involving the Company. The Company has not caused, arranged or
allowed, or contracted with any party for, the transportation, treatment,
storage or disposal of any Hazardous Substance in connection with the operation
of their business or otherwise. No Hazardous Substance has been released into
the environment on or from the Leased Real Property by the Company, which
release is required under applicable Environmental Laws to be abated or
remediated by the Company. There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions or
plans that can reasonably be expected to form the basis of any claim, action,
suit, proceeding, hearing, investigation or inquiry against or involving the
Company, allegedly or actually based on or related to any violation of any
Environmental Law or that is reasonably likely to require the Company to incur
any Losses in connection
15
therewith. Set forth on Schedule 3.14 is a list of all governmental
authorizations currently held by the Company pursuant to Environmental Laws. For
purposes of this Agreement, the term "Environmental Laws" shall mean any
federal, state, local or foreign law (including without limitation common law),
treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, or governmental restriction or requirement or any agreement
with any governmental authority or other third party, relating to health or
safety of Persons, natural resources, conservation, wildlife, waste management,
Hazardous Substances, and pollution (including without limitation, regulation of
releases and disposals to air, soil, land water and groundwater), and includes,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 6901 et seq., Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et
seq., Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.,
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. Section 1251 et seq., Toxic Substances Control Act of 1976, 15 U.S.C.
Section 2601 et seq., Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. Section 651 et seq., Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. Section 11001 et seq., National Environmental Policy Act of
1975, 42 U.S.C. Section 4321 et seq., Safe Drinking Water Act of 1974, as
amended, 42 U.S.C. Section 300 (f) et seq., and any similar or implementing
state, local and foreign law, and all successor statutes, amendments, rules,
regulations, guidance documents and publications promulgated thereunder. For
purposes of this Agreement, the term "Hazardous Substances" shall include any
chemical, wastes, compounds, byproducts, pollutants, contaminants, flammable
materials, petroleum, polychlorinated biphenyls, explosives, radioactive
materials, hazardous wastes, toxic substances, asbestos containing material or
any other substance or material now or hereafter defined as hazardous or toxic
pursuant to Environmental Laws, and any other material that, because of its
quantity, concentration or physical, chemical or infectious characteristics, may
cause or pose a present or potential hazard to human health or the environment
when improperly used, treated, stored, disposed, generated, manufactured,
transported or otherwise handled.
Section 3.15 Disclosure. No representation or warranty by the Company
contained in this Agreement, nor any certificate furnished or to be furnished by
the Company to Purchaser or its representatives pursuant to the terms of this
Agreement, taken together and not individually, contains any untrue statement of
a material fact, or omits or will omit to state any material fact required to
make the statements herein or therein contained, in light of the circumstances
under which they are or will be made, not misleading.
Section 3.16 Purchaser's Acknowledgement. Notwithstanding anything herein
contained, the Purchaser acknowledges that it is aware of and consents to the
Company and the Seller entering into agreements or taking other actions relating
to the Company transferring its subscribers, disposing of or transferring its
equipment, terminating its employees, terminating agreements other than the
Licenses, Tower Leases and Leases, settling its accounts and distributing the
proceeds of any or all of the above-noted transactions to Seller.
16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EACH RELATED PARTY
As a material inducement to Purchaser to enter into this Agreement and
purchase the Shares to be purchased by it hereunder, each Related Party
represents and warrants to Purchaser that:
Section 4.1 Authorization of Transactions. Such Related Party has full
legal capacity to enter into this Agreement and the other documents contemplated
hereby to which such Related Party is a party, and to perform his or its
obligations hereunder and thereunder. This Agreement and the other documents
contemplated hereby to which such Related Party is a party have been or will be
duly executed and delivered by such Related Party and constitute, or when
executed and delivered will constitute, the valid and binding agreements of such
Related Party, enforceable in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally and
general equitable principles.
Section 4.2 Absence of Conflicts. Neither the execution and the delivery of
this Agreement and the Ancillary Documents to which such Related Party is a
party, nor the consummation of the Transactions, will (a) conflict with, result
in a breach of any of the provisions of; (b) constitute a default under; (c)
result in the violation of; (d) give any third party the right to terminate or
to accelerate any obligation under; (e) result in the creation of any Lien upon
the equity of the Company under; or (f) other than Consents from the FCC,
require any authorization, consent, approval, execution or other action by or
notice to any Governmental Authority under, any indenture, mortgage, lease, loan
agreement or other material agreement or instrument to which such Related Party
is bound or affected, or any Law to which such Related Party is subject.
Section 4.3 Litigation. Other than with respect to the Consents from the
FCC as otherwise disclosed herein, there are no Proceedings pending, or to
Related Party's Actual Knowledge, after due inquiry, threatened by or against or
relating to such Related Party, at law or in equity, or before or by any
Governmental Authority, which would adversely affect such Related Party's
performance under this Agreement, the Ancillary Documents to which such Related
Party is a party or the consummation of the Transactions.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 Organization and Power. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. Purchaser is qualified to do business as a
foreign entity and is in good standing in each jurisdiction in which the
ownership of properties or the conduct of its business requires Purchaser to be
so qualified, except where the failure to be so qualified would not have a
Material Adverse Effect. Purchaser has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Documents and to perform
its obligations hereunder and thereunder.
17
Section 5.2 Authorization; Enforceability. The execution, delivery and
performance by Purchaser of this Agreement, the Ancillary Documents and each of
the Transactions have been duly and validly authorized by Purchaser and no other
act or proceeding on the part of Purchaser or its managers or members is
necessary to authorize the execution, delivery or performance by Purchaser of
this Agreement or any Ancillary Document or the consummation of any of the
Transactions. This Agreement has been duly executed and delivered by Purchaser,
and this Agreement constitutes, and the Ancillary Documents upon execution and
delivery by Purchaser will each constitute, a valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 5.3 Absence of Conflicts. Neither the execution and the delivery of
this Agreement and the Ancillary Documents to which Purchaser is a party, nor
the consummation of the Transactions, will (a) conflict with, result in a breach
of any of the provisions of; (b) constitute a default under; (c) result in the
violation of; (d) give any third party the right to terminate or to accelerate
any obligation under; or (e) require any authorization, consent, approval,
execution or other action by or notice to any Governmental Authority under, any
indenture, mortgage, lease, loan agreement or other material agreement or
instrument to which Purchaser is bound or affected, or any Law which Purchaser
is subject.
Section 5.4 Litigation. There are no Proceedings pending, or to the Actual
Knowledge of Purchaser, threatened by or against or relating to Purchaser, at
law or in equity, or before or by any Governmental Authority, which would
adversely affect Purchaser's performance under this Agreement, the Ancillary
Documents to which Purchaser is a party or the consummation of the Transactions.
Section 5.5 Brokers. Purchaser has not employed any broker or finder or
incurred any liability for any brokerage or finder's fees or commissions in
connection with the Transactions.
ARTICLE 6
COVENANTS AND OTHER AGREEMENTS
Section 6.1 Covenants of Seller. During the period from the date of this
Agreement to the Closing or until any earlier termination of this Agreement in
accordance with its terms:
(a) except for a Lien in favor of Purchaser in connection with the
Loan or as consented to in writing by an authorized representative of Purchaser,
Seller shall not deliver, sell, grant, pledge or otherwise encumber or subject
to any Lien any of the Shares or any rights or options to acquire any of such
Shares or authorize, commit or agree to take any of the foregoing actions;
18
(b) Seller shall not amend or otherwise modify the Company's articles
of incorporation or bylaws, without Purchaser's prior written consent;
(c) except as specifically set forth on Schedule 6.1, Seller shall not
take any action or fail to take any action that would cause the representations
and warranties set forth in Article 3 to no longer be true and correct in all
material respects; and
(d) Seller shall use commercially reasonable efforts to preserve its
relationships with the lessors under the Leases and the Tower Leases.
Section 6.2 Exclusivity. From and after the date of this Agreement until
the Closing or the termination of this Agreement in accordance with its terms,
each of the Seller and the Company will not, nor will either authorize or permit
any of its officers, directors, Affiliates, Employees, agents or any investment
banker, attorney or other advisor or representative (or any of their respective
Affiliates) to, directly or indirectly:
(a) take any action to initiate, solicit, facilitate, encourage or
induce the making, submission or announcement of any Acquisition Proposal;
(b) participate in any discussions or negotiations regarding, furnish
to any Person any nonpublic information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
(c) engage in discussions or negotiations with any Person with respect
to any Acquisition Proposal;
(d) amend or grant any waiver or release under any standstill or
similar agreement with respect to equity securities of the Company (a
"Standstill Agreement"); or
(e) approve, endorse or recommend any Acquisition Proposal;
The Company will immediately cease any and all existing activities, discussions
or negotiations with any parties (other than Purchaser) conducted heretofore
with respect to any Acquisition Proposal. The Company shall notify Purchaser
immediately (but in any event within 48 hours) after receipt by the Company (or
any of its advisors) of any Acquisition Proposal, or of any request for
information relating to the Company for access to the properties, books or
records of the Company by any Person for the purpose of making an Acquisition
Proposal. The Company shall provide such notice orally and in writing and shall
identify the terms and conditions of any such Acquisition Proposal or request
for information. The Company will keep Purchaser informed on a prompt basis (but
in any event within 48 hours) of the material developments (including amendments
or proposed amendments) of any such Acquisition Proposal request.
Section 6.3 Consummation of Transactions. From and after the date of this
Agreement, each Party shall use its reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable and consistent with applicable Law to perform its
obligations under this Agreement and to
19
consummate the Transactions as soon as reasonably practicable. The Parties
acknowledge and agree that an application for consent to carry out certain
aspects of the U.S. Reorganization will be required to be filed either prior to
or concurrently with the application for consent to the sale of the Shares to
Purchaser. The Parties agree that in no event shall the Transactions be
consummated prior to receiving any requisite approvals from Governmental
Authorities.
Section 6.4 Compliance with Law. Prior to Closing, Seller shall comply in
all material respects with Laws applicable to the Licenses.
Section 6.5 Certain Notices. Each Party shall promptly notify the other
Party in reasonable detail:
(a) upon the commencement of, or the impending or threatened
commencement of, or upon obtaining Knowledge of any facts that would give rise
to, any claim, action or proceeding brought to enjoin the consummation of the
Transactions, or against or relating to (i) the notifying Party or its
properties or assets, which could materially adversely affect the Transactions
or its ability to perform its obligations hereunder, or (ii) the Licenses or
Leases or their use;
(b) upon the occurrence of, or the impending or threatened occurrence
of, or upon obtaining Knowledge of any facts that would give rise to, any event
which could cause or constitute a material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement, and shall use
commercially reasonable efforts to prevent or promptly remedy such breach; and
(c) upon the occurrence or existence of any event, condition,
circumstance or state of facts known to the notifying Party, which has had or
could have a material adverse effect on the Transactions or its ability to
perform its obligations hereunder, or could materially adversely affect the
Licenses or Leases or their use.
Section 6.6 Confidentiality. Pursuant to this Agreement and the performance
thereof, each Party (the "Receiving Party") may receive certain Confidential
Information from the other Party (the "Disclosing Party"). The Receiving Party
shall not use for itself, except in performance of the Agreement, or disclose to
any Person this Agreement or any Confidential Information of the Disclosing
Party, except (a) information that was gained independent of the Receiving
Party's relationship with the Disclosing Party and that has become publicly
available through no breach of any obligation of confidentiality by the
Receiving Party; (b) information that is communicated to a third party with the
prior written consent of the Disclosing Party; or (c) information that is
required to be disclosed pursuant to the lawful order of any Governmental
Authority or disclosure that is required by operation of Law, but in such event,
only to the extent such disclosure is required and, to the extent reasonably
practicable, prior written notice must be given to allow the Disclosing Party to
seek a protective order or other appropriate remedy. In the event of a beach or
threatened breach of the terms of this section, the Disclosing Party shall be
entitled to seek an injunction prohibiting any such breach. Any such injunctive
relief shall be in addition to, and not in lieu
20
of, any appropriate relief in the way of money damages or any other remedies
available at law or in equity.
Section 6.7 Further Assurances. Each Party shall forthwith upon request
execute and deliver such documents and take such actions as may reasonably be
requested by the other Party in order to effectuate the purposes of this
Agreement and the Ancillary Documents.
Section 6.8 FCC Qualifications. The Company hereby covenants and agrees
that prior to the Closing it shall maintain all necessary qualifications to hold
and to obtain renewal in the ordinary course of the Licenses and Leases, and
further covenants that it shall not knowingly or negligently take any action, or
fail to take any action, which action or failure to act creates a material risk
that Company would not be qualified to hold the Licenses or Leases or that FCC
would revoke the Licenses or Leases.
Section 6.9 Consents. The Parties shall use commercially reasonable efforts
and shall cooperate to prepare and file with Governmental Authorities and other
Persons, no later than ten (10) days following the Effective Date, all
applications, notices, petitions and other documentation necessary or advisable
to obtain the Consents (it being understood that the failure to file within such
period shall not constitute a breach of this Agreement if the Parties are acting
in compliance with this Section 6.9). Each Party shall furnish to the other
party all information concerning such party and its Affiliates reasonably
required for inclusion in any application to be made in connection with the
Transactions or to determine compliance with FCC Laws. Purchaser shall promptly
reimburse Seller and the Company for any costs and expenses which they incur in
connection with the preparation, review and filing of applications for such
Consents, which are unrelated to the U.S. Reorganization.
Section 6.10 Employee Matters. On or before 12:01 am on the Closing Date,
Seller shall cause the Company to terminate the employment with the Company of
all of the Employees. Seller and each Related Party acknowledges and agrees that
Purchaser shall be permitted, but not required, to offer employment to any of
the Employees at any time on or after the Closing Date.
Section 6.11 U.S. Reorganization. Purchaser acknowledges that Seller, CWS
and their Affiliates intend to effectuate the U.S. Reorganization after the
Effective Date, but prior to the Closing. Purchaser agrees that Seller and CWS
may take any and all actions necessary to effectuate the U.S. Reorganization;
provided, that (i) Seller and CWS shall obtain the written consent of Purchaser,
which may be withheld by Purchaser in its sole discretion, acting reasonably,
prior to taking any action in connection with the U.S. Reorganization which
would potentially cause a breach by Seller of any of its covenants under this
Article 6, including its agreement to prepare and file with Governmental
Authorities and other Persons, no later than ten (10) Business Days following
the Effective Date, all applications, notices, petitions and other documentation
necessary or advisable to obtain the Consents, (ii) upon the merger of SkyCable
and Seller, the surviving entity (the "Surviving Entity") shall execute and
deliver to Purchaser an assumption agreement, which shall be in a form
acceptable to Purchaser in its sole discretion, pursuant to which the Surviving
Entity expressly acknowledges and agrees that it has assumed all of the
obligations of Seller hereunder and
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that each of the representations and warranties set forth in Article 3 of this
Agreement are true and correct immediately following the merger as though made
by the Surviving Entity on and as of such date, and (iii) each of CWI and Newco
shall execute joinders to this Agreement, which shall be in a form acceptable to
Purchaser, acting reasonably, pursuant to which CWI and Newco each agree to
become bound by and assume the obligations of a Related Party under this
Agreement, including without limitation the indemnification obligations of a
Related Party under Article 9.
Section 6.12 Assumed Liabilities. The Company shall not have any obligation
or liability of any nature whatsoever, whether accrued or fixed, absolute or
contingent, known or unknown, or determined or determinable, and whether
incurred prior to, on or after the Closing Date, other than the following
(collectively, the "Assumed Liabilities"): (a) all liabilities and obligations
of the Company under the Leases, Licenses and the Tower Leases arising or to be
performed after the Closing and relating to the time period on and after the
Closing Date; and (b) the liabilities and obligations of the Company described
on Schedule 6.12 attached hereto. Seller and the Company shall cause all
obligations or liabilities of the Company of any nature whatsoever (other than
the Assumed Liabilities) (the "Rejected Liabilities") to be terminated,
satisfied, discharged or waived by the Company and each of the other Persons
that are a party thereto on or before the Closing. Provided that the Company
complies with this section, Purchaser shall cause the Company to pay to Seller
the amount of any accounts receivable accrued prior to Closing but received by
the Company following Closing. Purchaser shall have no obligation to take, or to
cause the Company to take, any action to collect on any accounts receivable
accrued prior to Closing. The Company may assign the accounts receivable to or
to the order of the Seller prior to the Closing
Section 6.13 Change of Name. Forthwith following the Closing, the Purchaser
shall cause the Company to change its name and to cease using the name "Xxxxx"
in any of its operations.
Section 6.14 Canadian Reorganization. New Holdco shall execute a joinder to
this Agreement, which shall be in a form acceptable to Purchaser, acting
reasonably, pursuant to which NewHoldco agrees to become bound by and assume the
obligations of a Related Party under this Agreement, including without
limitation the indemnification obligations of a Related Party under Article 9.
ARTICLE 7
CONDITIONS TO CLOSING
Section 7.1 Conditions to the Obligations of Both Parties. Each Party's
obligation to consummate the Transactions contemplated by this Agreement is
subject to the satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions, as applicable to the Party specified:
(a) The FCC shall have approved the application for consent to the
sale of the Shares to Purchaser (or its designee) as required, such approval
shall have become a Final Order, and such Final Order shall be in full force and
effect; and all other notices, filings and Consents required to be made or
obtained prior to the Closing by either Party or
22
any of its respective Affiliates with or from any Governmental Authority or
other Person in connection with the execution and delivery of this Agreement and
the consummation of the Transactions shall have been made or obtained.
(b) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or enacted by
any Governmental Authority, shall be in effect that would impose material
limitations on the ability of either Party to consummate the Transactions.
Section 7.2 Conditions to the Obligations of Seller. Seller's obligation to
consummate the Transactions contemplated by this Agreement is subject to the
satisfaction or waiver on or prior to the Closing Date of each of the following
conditions:
(a) The representations and warranties of Purchaser contained herein
and in the Ancillary Documents shall be true and correct in all material
respects (except for representations and warranties that are qualified as to
materiality, which shall be true and correct) as of the Closing as if made on
and as of such Closing Date (except that representations and warranties that are
made as of a specific date need be so true and correct only as of such date),
and Seller shall have received a certificate to such effect dated as of such
Closing Date and executed by a duly authorized officer of Purchaser.
(b) The covenants and agreements of Purchaser to be performed under
this Agreement and the Ancillary Documents on or prior to a Closing shall have
been duly performed in all material respects, and Seller shall have received a
certificate to such effect dated as of such Closing Date and executed by a duly
authorized officer of Purchaser.
(c) The transactions contemplated by the U.S. Reorganization and the
Canadian Reorganization shall have received FCC approval, if such approval is
required.
Section 7.3 Conditions to the Obligations of Purchaser. Purchaser's
obligation to consummate the Transactions contemplated by this Agreement are
subject to the satisfaction or waiver on or prior to the Closing Date of each of
the following conditions:
(a) The representations and warranties of Seller, the Company and each
Related Party contained herein and in the Ancillary Documents shall be true and
correct in all material respects (except for representations and warranties that
are qualified as to materiality, which shall be true and correct) as of the
Closing as if made on and as of such Closing Date (except that representations
and warranties that are made as of a specific date need be so true and correct
only as of such date), and Purchaser shall have received certificates to such
effect dated as of such Closing Date and executed by a duly authorized officer
of Seller, the Company and each Related Party.
(b) The covenants and agreements of Seller, the Company and each
Related Party to be performed under this Agreement and the Ancillary Documents
on or prior to a Closing shall have been duly performed in all material
respects, and Purchaser shall have received certificates to such effect dated as
of such Closing Date and executed by a duly authorized officer of Seller, the
Company and each Related Party.
23
(c) Seller and each of its Affiliates that are a party to any of the
Loan Documents shall have complied in all material respects with each of the
terms and conditions of the Loan Documents through and including the Closing
Date.
(d) Seller shall have executed and delivered to Purchaser (or its
designee) stock certificates representing all of its Shares, endorsed in blank
or accompanied by duly executed assignment documents.
(e) Seller and Purchaser, or Purchaser's designee, shall have entered
into the Investment Documents required by Purchaser in connection with the
acquisition by Purchaser, or Purchaser's designee, of a 15% ownership interest
in the Joint Venture.
(f) Seller and Purchaser, or Purchaser's designee, shall have entered
into the Equipment Lease Agreement.
(g) Seller, each Related Party and their Affiliates shall have entered
into the Noncompete Agreement.
(h) Seller shall have delivered evidence, in a form reasonably
satisfactory to Purchaser, of the termination of all of the Employees of the
Company in accordance with Section 6.10.
(i) The Purchaser shall have received documentation evidencing the
termination, satisfaction, discharge or waiver of all Rejected Liabilities as
required under Section 6.12, which documentation shall be in a form reasonably
satisfactory to Purchaser.
(j) The Purchaser shall have received evidence, including estoppel
certificates from the parties to all Leases and Tower Leases, in a form
reasonably satisfactory to Purchaser, that (i) the Purchaser has received a
complete and accurate copy of the Leases and Tower Leases, including any
amendments, (ii) the Leases and Tower Leases are in full force and effect and
there are no uncured breaches or defaults by the Company under any Lease or
Tower Lease, (iii) all payments to be made by the Company under the Leases and
Tower Leases have been made as of the date of such estoppel certificate, (iv)
the parties to the Leases and Tower Leases have not imposed any restrictions
that would prevent the Company from using the ITFS Channels and Tower Sites for
any purpose permitted under applicable law.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller if (i) there shall be any Law that
makes consummation of the Transactions illegal or otherwise prohibited, or (ii)
any judgment,
24
injunction, order or decree of any court or other Governmental Entity having
competent jurisdiction enjoining Purchaser and Seller from consummating the
Transaction is entered and such judgment, injunction or order shall have become
final and non-appealable;
(c) by either Party upon the material breach of the other party if
such breach is not cured within thirty (30) days following written notice by the
non-breaching party which notice shall describe the breach ; provided, however,
such thirty (30) day period shall be extended to ninety (90) days if the breach
by its nature cannot be cured within such thirty (30) day period and if the
breaching party promptly commences to cure the breach within such thirty (30)
day period and continues to proceed thereafter with reasonable diligence;
(d) by either the Purchaser or Seller, if the Closing has not occurred
within eighteen (18) months of the date of this Agreement, provided that the
failure to close on or before such date is not the fault of the terminating
Party; or
(e) by Seller if the FCC does not consent to the U.S. Reorganization
within eighteen (18) months of the date of this Agreement, provided that Seller
shall have the right to terminate this Agreement under this Section 8.1(e) only
if such FCC consent is required by applicable law and Seller has exercised its
best efforts, acting in good faith, to obtain such FCC consent.
Section 8.2 Effect of Termination. In the event of a termination of this
Agreement in accordance with its terms, neither Party shall have any liability
or further obligation to the other, except that
(a) nothing herein will relieve a Party from liability for any breach
by such Party of this Agreement; and
(b) the provisions of this Article 8, Article 9 and Article 10 shall
survive the termination of this Agreement.
Whether or not Closing occurs, subject to Section 6.9, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the Party incurring such expenses.
ARTICLE 9
SURVIVAL AND REMEDIES
Section 9.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing until two (2) years after the Closing Date
and shall expire at such time. The covenants and other agreements contained in
this Agreement shall survive the Closing until the date or dates specified
therein or the expiration of the applicable statute of limitations (including
any waivers or extensions thereof) with respect to such matters, whichever is
later.
Section 9.2 Seller Indemnification. Seller and each Related Party (which,
following the Canadian Reorganization, shall not include CWS or Manalta
Investment
25
Company Ltd. but, rather, New Holdco) shall jointly and severally
indemnify Purchaser, its representative members, managers, officers, employees,
agents, successors and assigns and Affiliates (the "Purchaser Indemnified
Parties") and hold the Purchaser Indemnified Parties harmless from and against
any and all Damages based upon, attributable to or resulting from:
(a) the failure of any representation or warranty of Seller, the
Company or any Related Party set forth in this Agreement or the Ancillary
Documents, or any representation or warranty contained in any certificate
delivered by pursuant to this Agreement, to be true and correct as of the dates
made;
(b) the breach of any covenant or other agreement on the part of
Seller, the Company or any Related Party under this Agreement or the Ancillary
Documents;
(c) any acts, errors, omissions, operations or other activities of or
relating to the Company and its Business with respect to periods prior to the
Closing Date;
(d) any Rejected Liabilities;
(e) any and all of items which are listed in Schedule 3.12 hereto;
(f) the employment, termination of employment, compensation or
employee benefits of any nature owed to any Employees (or the beneficiary of any
Employee) that arises out of or relates to the employment relationship between
the Company and any such employee or former employee prior to the Closing Date
or the termination of such relationship. Without limiting the foregoing, Seller
shall be responsible for (1) the payment of any severance payment or benefits
that become due to any Employee or former employee as a result of the
termination of such Employee or former employee by the Company on or before the
Closing Date, (2) all legally mandated continuation coverage, including "COBRA"
coverage required under Sections 601 to 608 of ERISA and 4980B of the Code, for
Employees of the Business and their covered dependents who had or have a loss of
coverage due to a " qualifying event" (within the meaning of Section 603 of
ERISA) due to a termination of employment by Seller, and (3) any contributions
due under any benefit plans of the Company on or prior to Closing, as well as
the payment of any withdrawal liability that exists on or prior to Closing, or
which would exist if a complete withdrawal were to occur immediately prior to
the Closing; and
(g) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including, without limitation,
reasonable legal fees and expenses, and travel costs and expenses) incident to
any of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof, or in enforcing this indemnity.
For certainty, in the event that the licence of station WNC261 at Honolulu,
Hawaii utilizing the D-Group Channels 1-4 is not renewed by the FCC, Purchaser
acknowledges and agrees that it shall not be entitled to any indemnification for
any claim resulting from such non-renewal.
26
Section 9.3 Purchaser Indemnification. Purchaser shall indemnify Seller and
its agents, successors and assigns and Affiliates (the "Seller Indemnified
Parties") and hold the Seller Indemnified Parties harmless from and against any
and all Damages based upon, attributable to or resulting from:
(a) the failure of any representation or warranty of Purchaser set
forth in this Agreement or the Ancillary Documents, or any representation or
warranty contained in any certificate delivered by pursuant to this Agreement,
to be true and correct as of the dates made; and
(b) the breach of any covenant or other agreement on the part of
Purchaser under this Agreement or the Ancillary Documents.
Section 9.4 Tax Matters.
(a) Seller and each Related Party shall jointly and severally
indemnify each of the Purchaser Indemnified Parties and hold them harmless from
and against, any Damages attributable to (i) all Taxes (or the non-payment
thereof) of the Company for (A) any taxable period ending on or before the
Closing Date and (B) the portion up to and including the Closing Date of the
taxable period that includes (but does not end on) the Closing Date (the periods
covered by (A) and (B) the "Pre-Closing Tax Period"), (ii) all Taxes of any
member of an affiliated, consolidated, combined or unitary group of which the
Company (or any predecessor of the foregoing) is or was a member on or prior to
the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or
any analogous or similar state, local, or foreign Law and (iii) any and all
Taxes of any person (other than the Company) imposed on the Company as a
transferee or successor, by contract or any Law, which Taxes relate to an event
or transaction occurring prior to the Closing. For greater certainty, in the
case of any taxable period that includes (but does not end on) the Closing Date,
the amount of the income of the Company and the amount of any Taxes for such
period shall be determined based on an interim closing of the books as of the
close of business on the Closing Date.
(b) Seller shall include the income of the Company recognized on or
before the Closing Date (including any deferred items triggered into income by
Treasury Regulation Section 1.1502-13 and any excess loss account taken into
income under Treasury Regulation Section 1.1502-19) on the consolidated federal
income Tax returns filed by the Seller for all periods ending on or before or
including the Closing Date and shall pay any federal income Taxes attributable
to such income. For all taxable periods ending on or before the Closing Date,
Seller shall cause the Company to join in Seller's consolidated federal income
Tax return for such period and, in jurisdictions requiring separate reporting
from Seller, to file separate company state and local income Tax returns. All
Tax returns described in the immediately preceding sentence shall be prepared
and filed in a manner consistent with prior practice, except as required by a
change in applicable law and the Purchaser shall have the right to review and
comment on any such Tax returns prepared by Seller that are filed after the
Closing Date. Purchaser shall cause the Company to furnish information to Seller
as reasonably requested by Seller to allow Seller to satisfy its obligations
under this section in accordance with past custom and practice. The Company
27
and Purchaser shall consult and cooperate with Seller as to any elections to be
made on returns of the Company for periods ending on or before the Closing Date.
Purchaser shall cause the Company to be included in the Clearwire Corporation
combined or consolidated income Tax returns for all periods other than periods
ending on or before the Closing Date, and shall include the income of the
Company recognized after the Closing Date on such income Tax returns.
(c) Seller shall timely prepare and submit to Purchaser for review,
approval (which approval shall not be unreasonably withheld), and filing (A) any
income Tax returns for the Company for the taxable period that includes the
Closing Date (other than income Tax returns with respect to periods for which a
consolidated, unitary or combined income Tax return of Seller and its affiliates
will include the operations of the Company) and ends on December 31, 2004 (the
fiscal year the Company will be required to adopt following its acquisition by
Purchaser), (B) any sales and use Tax returns with respect to the Pre-Closing
Tax Period that are filed after the Closing Date, (C) any property Tax returns
with respect to the Pre-Closing Tax Period that are filed after the Closing
Date, and (D) any excise Tax returns (including the Hawaii general excise Tax
return) with respect to the Pre-Closing Tax Period that are filed after the
Closing Date. Seller shall make such revisions to the Tax returns described in
the preceding sentence as are reasonably requested by Purchaser.
(d) Purchaser, the Company and Seller shall cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with the
filing of Tax returns pursuant to this Section 9.4 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party's request) the provision of records and
information that are reasonably relevant to the preparation of any such Tax
return or to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and Seller agree (A)
to retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
Purchaser or Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other Party so requests, the Company or Seller, as the case may be, shall allow
the other Party to take possession of such books and records.
(e) In the event that Seller is merged into or consolidated with
another entity, (i) Seller's successor shall likewise be bound by the foregoing
provisions of this Section 9.4 and (ii) references to Seller herein shall be
construed as references to Seller's successor, as appropriate to give effect to
the intent of this Section 9.4.
28
Section 9.5 Indemnification Procedures.
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Sections 9.2, 9.3 or 9.4 hereof
(each, a "Claim"), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has Actual Knowledge
which is covered by this indemnity to be forwarded to the indemnifying party.
The indemnifying party shall have the right, at its sole option and expense, to
be represented by counsel of its choice, which must be reasonably satisfactory
to the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Damages indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Damages indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Damages indemnified against hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Damages
under this Agreement, the indemnified party may defend against, negotiate,
settle or otherwise deal with such Claim. If the indemnified party defends any
Claim, then the indemnifying party shall reimburse the indemnified party for the
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
party if (i) so requested by the indemnifying party to participate, or (ii) in
the reasonable opinion of counsel to the indemnified party, a conflict or
potential conflict exists between the indemnified party and the indemnifying
party that would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more than
one such counsel for all indemnified parties in connection with any Claim. The
parties hereto agree to cooperate fully with each other in connection with the
defense, negotiation, or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party shall
have arrived at a mutually binding agreement with respect to a Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
(d) An indemnifying party shall not have any liability under Section
9.2(a) or Section 9.3(a) hereof unless the aggregate amount of Claims to the
29
indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any representation or warranty
to be true and correct in all material respects, exceeds $100,000 (the
"Indemnification Threshold") and, in such event, the indemnifying party shall be
required to pay the amount of such Claims including those used to compute the
Indemnification Threshold.
Section 9.6 Offset Against Equipment Lease Agreement Obligation. At the
election of a Purchaser Indemnified Party, any amount payable to such Purchaser
Indemnified Party by Seller under this Article 9 may be satisfied by a
corresponding reduction in the amount of equipment to be leased to the Joint
Venture pursuant to the Equipment Lease Agreement.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Entire Agreement. This Agreement and the Ancillary Documents
constitute the entire agreement between the Parties pertaining to the subject
matter hereof and thereof and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties with respect to the subject matter hereof and thereof.
Section 10.2 Amendments and Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed (in the case of an amendment) by Seller and Purchaser or (in the case of
a waiver) by the Party against whom the waiver is to be effective. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 10.3 Remedies Cumulative. Except as otherwise provided herein, all
rights, powers and remedies provided under this Agreement or otherwise available
in respect hereof at law or in equity shall be cumulative and not alternative,
and the exercise or beginning of the exercise of any thereof by a Party shall
not preclude the simultaneous or later exercise of any other such right, power
or remedy by such Party.
Section 10.4 Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement may not be assigned by either Party without
the prior written consent of the other Party; provided, however, that Purchaser
may, at any time prior to the closing, assign this Agreement, or Purchaser's
right to receive assignment of one or more of the Licenses, or Leases, or
Related Assets, to any Affiliate of Purchaser, without the consent of Seller.
Section 10.5 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given or made (i) upon
delivery if delivered personally (by courier service or otherwise), as evidenced
by written receipt or other written proof of delivery (which may be a printout
of the tracking information of a courier service that made such delivery), or
(ii) upon confirmation of dispatch if sent by facsimile
30
transmission (which confirmation shall be sufficient if shown by evidence
produced by the facsimile machine used for such transmission), in each case to
the applicable addresses set forth below (or such other address which either
Party may from time to time specify):
If to Seller or any Related Party:
0xx Xxxxx, 000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX X0X 0X0
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, XxxXxxxx & Thorvaldson LLP
30th Floor, 000 Xxxx Xxxxxx
Xxxxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
If to Purchaser:
Fixed Wireless Holdings, LLC
00000 X.X. Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: (000) 000.0000
With a copy to:
Xxxxx Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Section 10.6 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Washington, without reference to the
choice of law principles thereof.
(b) The Parties submit to the jurisdiction of the state and federal
courts located in King County, Washington. THE PARTIES HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.
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Section 10.7 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the Transactions are consummated, the Parties shall
bear their respective expenses (including, but not limited to, all compensation
and expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
Transactions. All filing fees required to be paid to any Governmental Authority
in connection with satisfying the conditions set forth in Section 7 will be
borne by Purchaser, except for fees in connection with the U.S. Reorganization
or the Canadian Reorganization.
Section 10.8 Invalidity. In the event that any of the provisions contained
in this Agreement or in any other instrument referred to herein, shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or such other instrument and such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforceability, unless the consummation of the Transactions is impaired
thereby.
Section 10.9 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 10.10 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.
XXXXX WIRELESS NEVADA INC.
By: /s/ T. Xxxx Xxxxx
------------------------------------
Name: T. Xxxx Xxxxx
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Title: President
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XXXXX WIRELESS HONOLULU INC.
By: /s/ T. Xxxx Xxxxx
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Name: T. Xxxx Xxxxx
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Title: President
---------------------------------
XXXXX WIRELESS SYSTEMS INC.
By: /s/ T. Xxxx Xxxxx
------------------------------------
Name: T. Xxxx Xxxxx
----------------------------------
Title: President
---------------------------------
FIXED WIRELESS HOLDINGS, LLC
By:
------------------------------------
Name:
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Title:
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33
AMENDMENT TO STOCK PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT, dated as of November 30, 2004, by
and among Xxxxx Wireless Honolulu Inc., a Hawaii corporation (the "Company"),
Xxxxx Wireless Nevada Inc., a Nevada corporation ("Seller"), Xxxxx Wireless
Systems Inc., a Canadian federal corporation ("CWS"), and Fixed Wireless
Holdings, LLC, a Delaware limited liability company ("Purchaser"). Seller, the
Company, CWS and Purchaser may be referred to herein as "Parties" or each a
"Party."
WHEREAS the Parties are parties to a Stock Purchase Agreement dated as of
September 30, 2004 (the "Stock Purchase Agreement");
AND WHEREAS the parties hereto wish to make certain amendments to the Stock
Purchase Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto hereby covenant
and agree each with the other as follows:
1. INTERPRETATION
1.1 Defined Terms
The term "Amending Agreement" refers to this agreement. Capitalized terms
used in this Amending Agreement and not otherwise defined shall have the
meaning attributed thereto in the Stock Purchase Agreement.
2. AMENDMENTS TO STOCK PURCHASE AGREEMENT
2.1 Amendment to Exhibit A of Stock Purchase Agreement
The Stock Purchase Agreement be and is hereby amended by deleting Exhibit A
attached to the Stock Purchase Agreement in its entirety and replacing that
Exhibit with Exhibit A attached hereto.
2.2 Amendment to Article 1 of Stock Purchase Agreement
Article 1 of the Stock Purchase Agreement be and is hereby amended by
deleting the definition of "Related Party" in its entirety and replacing
that definition with the following:
"Related Party" means CWS and, following the execution and delivery of
joinders to this Agreement as contemplated under Section 6.11, each of
CWI and Newco and, subsequent to the Canadian Reorganization, and
following the execution and delivery of a joinder to this Agreement as
contemplated
1
under Section 6.14, means New Holdco or AmalgCo., as applicable, as
referred to therein.
Article 1 of the Stock Purchase Agreement shall be amended by adding the
following three definitions at the end of Article 1:
"Part 1 of the Canadian Reorganization" means the series of
transactions described in Part 1 of Exhibit A attached hereto, being
steps 1 and 2.
"Part 2 of the Canadian Reorganization" means the series of
transactions described in Part 2 of Exhibit A attached hereto, being
steps 3 to 9.
"AmalgCo" identified on Exhibit A attached hereto shall mean Manalta
Investment Company Ltd., formed by the amalgamation which is part of
Part 1 of the Canadian Reorganization.
2.3 Amendment to Section 9.4 of Stock Purchase Agreement
Section 6.6 of the Stock Purchase Agreement be and is hereby deleted in its
entirety and replaced with the following:
"Section 6.6 Confidentiality. Pursuant to this Agreement and the
performance thereof, each Party (the "Receiving Party") may receive certain
Confidential Information from the other Party (the "Disclosing Party"). The
Receiving Party shall not use for itself, except in the performance of this
Agreement, or disclose to any Person this Agreement or any Confidential
Information of the Disclosing Party, except (a) information that was gained
independent of the Receiving Party's relationship with the Disclosing Party
and that has become publicly available through no breach of any obligation
of confidentiality by the Receiving Party; (b) information that is
communicated to a third party with the prior written consent of the
Disclosing Party; or (c) information that is required to be disclosed
pursuant to the lawful order of any Governmental Authority or disclosure
that is required by operation of Law, but in such event, only to the extent
such disclosure is required and, to the extent reasonably practicable,
prior written notice must be given to allow the Disclosing Party to seek a
protective order or other appropriate remedy. In the event of a breach or
threatened breach of the terms of this section, the Disclosing Party shall
be entitled to seek an injunction prohibiting any such breach. Any such
injunctive relief shall be in addition to, and not in lieu of, any
appropriate relief in the way of money damages or any other remedies
available at law or in equity. Notwithstanding the foregoing: (i) a
Receiving Party may disclose this Agreement and Confidential Information to
any Person who (a) is a potential investor in, lender to, or purchaser of
securities or assets of, a Party or its Affiliate, or a Person with which a
merger or similar transaction is proposed to be entered into (including,
but not limited to, any disclosure made in connection with the U.S.
Reorganization and the Canadian Reorganization), (b) has requested access
to Confidential Information, and (c) has entered into a confidentiality
agreement pursuant to which it will be required to maintain such
2
Confidential Information in confidence in accordance with terms and
conditions customary in such circumstances; (ii) a Receiving Party may
disclose this Agreement and Confidential Information to a Governmental
Authority or any other Person (whose consent is required under this
Agreement) in connection with any applications, notices, petitions and
other documentation, to the extent necessary or advisable to obtain the
Consents."
2.4 Amendment to Section 6.14 of Stock Purchase Agreement
Section 6.14 of the Stock Purchase Agreement be and is hereby deleted in
its entirety and replaced with the following:
Section 6.14 Canadian Reorganization. At the time of completion of
Part 1 of the Canadian Reorganization, and continuing in effect until
the completion of Part 2 of the Canadian Reorganization, AmalgCo.
shall execute a joinder to this Agreement, which shall be in a form
acceptable to Purchaser, acting reasonably, pursuant to which AmalgCo.
agrees to become bound by and assume the obligations of a Related
Party under this Agreement, including without limitation the
indemnification obligations of a Related Party under Article 9. At the
time of completion of Part 2 of the Canadian Reorganization, New
Holdco shall execute a joinder to this Agreement, which shall be in a
form acceptable to Purchaser, acting reasonably, pursuant to which
NewHoldco agrees to become bound by and assume the obligations of a
Related Party under this Agreement, including without limitation the
indemnification obligations of a Related Party under Article 9.
2.5 Amendment to Section 9.2 of Stock Purchase Agreement
Section 9.2 of the Stock Purchase Agreement be and is hereby amended by
deleting the initial paragraph in its entirety (the first six (6) lines of
that section) and replacing that initial paragraph with the following:
Section 9.2 Seller Indemnification. Seller and each Related Party
(which, following Part 1 of the Canadian Reorganization, shall include
AmalgCo., and which, following Part 2 of the Canadian
Reorganization, shall not include AmalgCo. but, in its place, New
Holdco) shall jointly and severally indemnify Purchaser, its
representative members, managers, officers, employees, agents,
successors and assigns and Affiliates (the "Purchaser Indemnified
Parties") and hold the Purchaser Indemnified Parties harmless from and
against any and all Damages based upon, attributable to or resulting
from:
2.6 Amendment to Section 9.4 of Stock Purchase Agreement
Section 9.4 of the Stock Purchase Agreement be and is hereby amended by
deleting the first two (2) lines of the initial paragraph (a) and replacing
those two (2) lines with the following:
3
Section 9.4 Tax Matters.
(a) Seller and each Related Party shall jointly and
severally indemnify each of the Purchaser Indemnified Parties and hold
them harmless from and against, any
3. NO OTHER AMENDMENTS
3.1 In all other respects, except as provided for in this Amending Agreement,
the parties hereby confirm that the terms and conditions of the Stock
Purchase Agreement remain unamended and in full force and effect as of the
date hereof.
IN WITNESS WHEREOF, the Parties have duly executed this Amending Agreement
as of the date first above written.
XXXXX WIRELESS NEVADA INC.
By: /s/ T. XXXX XXXXX
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Name: T. XXXX XXXXX
Title: PRESIDENT
XXXXX WIRELESS HONOLULU INC.
By: /s/ T. XXXX XXXXX
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Name: T. XXXX XXXXX
Title: PRESIDENT
XXXXX WIRELESS SYSTEMS INC.
By: /s/ T. XXXX XXXXX
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Name: T. XXXX XXXXX
Title: PRESIDENT
FIXED WIRELESS HOLDINGS, LLC
By: /s/ Xxx Xxxxx
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Name: Xxx Xxxxx
Title: Executive Vice President
4
EXHIBIT A
CANADIAN REORGANIZATION-STEPS
Part 1
1. Prior to or immediately following the amalgamation referred to below: (a)
SaskTel Investments Ltd. ("SaskTel") will dispose of its interest in CWII
and in return be given an option to acquire an agreed upon percentage of
the shares in the appropriate Newco; (b) SaskTel will sell its shares of
CWII to Manalta Investment Company Ltd. ("Manalta"); or (c) SaskTel's
shares will be redeemed by CWII.
2. CWII, CWBC, Manalta, Xxxxx Music & Entertainment Inc., and CWSI will be
amalgamated to form AmalgCo.
Part 2
3. AmalgCo will incorporate a new subsidiary ("New Holdco").
4. New Holdco will incorporate a new subsidiary for the purpose of holding the
Canadian wireless assets ("New CanCo").
5. New CanCo will incorporate two new wholly owned subsidiaries (each a
"Newco" and respectively "New MB" and "NewBC").
6. AmalgCo. will enter into a purchase and sale agreement with New Holdco
pursuant to which it will agree to transfer all of its operating assets and
liabilities (other than related party liabilities) to New Holdco in return
for shares of New Holdco, such transfer to be conditional upon receiving
CRTC approval, and will transfer its shares of Look Communications to New
Holdco.
7. New Holdco will enter into a purchase and sale agreement with New CanCo
pursuant to which it will agree to transfer all of its operating assets and
liabilities (other than related party liabilities) to New CanCo in return
for shares of New CanCo, such transfer to be conditional upon receiving
CRTC approval, and will transfer its shares of Look Communications to New
CanCo.
8. Subject to CRTC approval, New CanCo will transfer the assets and
liabilities (other than related party liabilities) used in the Manitoba
wireless business to New MB and will transfer the assets and liabilities
(other than related party liabilities) used in the British Columbia
wireless business to New BC.
9. Following receipt of CRTC approval, the assets and liabilities (other than
related party indebtedness) identified above will be transferred to the
appropriate Newco.
Note: The exact order in which the steps will be completed will depend on
when CRTC
approval to the reorganization is obtained. Further, to accomplish certain
of the steps, it may be necessary to continue certain of the corporations
into other jurisdictions.