ADVANCED RADIO TECHNOLOGIES CORPORATION
-address-
October 10, 1996
Gentlemen:
This letter outlines our proposal and, when signed, your agreement with us
regarding a technology sharing and license relationship between Advanced Radio
Technologies Corporation ("ART") and Advantage Telecom, Inc. ("ATI").
Attached to this letter is a Memorandum of Terms (the "Memorandum") of
various terms of the proposed relationship between ART and ATI. Many terms
in addition to those set forth in the Memorandum must still be developed and
agreed upon, and the Memorandum does not purport to include the conditions,
covenants, representations, warranties, indemnities, and other terms which
would be contained in definitive documents for the relationship, all of which
must be satisfactory to us and our counsel and to you and your counsel prior
to consummation of the proposed transaction. You and we agree to negotiate
in good faith to resolve such terms and execute definitive documents as soon
as is reasonably practical, and otherwise use our respective best efforts to
consummate the relationship contemplated hereby on an expeditious basis.
You understand that we plan to conduct a due diligence review of ATI. In
order to facilitate such review, ATI agrees to provide a few key representatives
of ART with reasonable access to ATI's corporate records and any other matters
and information that ART may reasonably request.
Conditions to closing the proposed transaction will include conditions
customary for transactions of this type, including without limitation the
absence of any material adverse condition or circumstances in the business,
prospects or products of ATI, as revealed by our diligence review or otherwise.
The parties will each bear their own expenses in connection with the
transactions contemplated hereby.
If the foregoing is in accordance with your understanding, please sign this
letter in the space indicated below and return it to us as soon as possible, and
in any event by overnight courier within two days of the date of this letter,
whereupon this letter, together with the Memorandum and its attachments, will
become a binding agreement among the parties. Promptly after we have received
this letter signed by you, we will proceed with our diligence investigation and
begin to draft definitive documents for the transaction. Pending closing of the
transaction, none of the parties will without the consent of the other parties
make any announcement about such transaction to the public, or to any other
person or entity.
The proposal contained herein will expire unless we have received this
letter signed by you within the time period provided in the previous paragraph.
This letter may be signed in counterparts, all of which shall constitute the
same agreement, shall be governed by the domestic substantive laws of the State
of Delaware, and shall bind and inure to the benefit of the parties and their
respective successors and assigns.
Very truly yours,
ADVANCED RADIO TECHNOLOGIES
CORPORATION
By:
----------------------
The foregoing is hereby
agreed to and accepted:
ADVANTAGE TELECOM, INC.
By:
---------------------------
President
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DRAFT No. 3 10/01/96
MEMORANDUM OF TERMS
STRATEGIC RELATIONSHIP FOR MICROWAVE SERVICES IN CANADA
PARTIES
Advantage Telecom, Inc. ("ATI"), and affiliates, and Advanced Radio
Technologies Corporation ("ART"), Advanced Radio Telecom, Corp. and their
affiliates.
PURPOSE OF STRATEGIC RELATIONSHIP
ATI and ART intend to enter into a relationship for the ownership,
construction, operation and management of radio systems located in Canada
primarily using 38 and 23 Ghz millimetric microwave transceivers through all
regions of Canada, for local fixed wireless voice, data and multimedia services
to commercial and residential customers. Where desirable and efficient, other
microwave bands including but not limited to 25 Ghz, and fiber optic and other
wired facilities, may be employed.
The strategic relationship will consist of two components: (i) a Management
Agreement between ATI and ART (the "Management Agreement") pursuant to which ART
shall be entitled to construct, operate and manage the 23 Ghz and 38 Ghz radio
systems pursuant to the Canadian Spectrum Licenses (defined below), and (ii) an
equity investment by ART and ATI in preferred stock of ATI (the "Preferred Stock
Investment").
CANADIAN SPECTRUM LICENSES
ATI has applications on file with Industry Canada for one paired 50 MHZ
duplex channel at 23 Ghz, two paired 50 MHZ duplex channels at 38 Ghz and one 50
MHZ simplex channel at 38 Ghz in each of the 66 markets of Canada (all of which
applications/licenses are collectively referred to as "Canadian Spectrum
Licenses") designated by Industry Canada Telecommunications Policy Branch,
"Spectrum Policy and Licensing Considerations, Fixed Radio Systems in the 23 Ghz
and 38 Ghz Frequencies Bands," effective September 1996 ("Policy Statement").
ATI has been informed by Industry Canada that it will be granted licenses
covering these applications in each of the 66 markets, subject to the Policy
Statement, for commercial operations. Under the terms of the Policy Statement,
ATI can commence commercial operations, pending completion of the outstanding
rulemaking proceeding by Industry Canada, on one of the paired 38 Ghz
frequencies.
MANAGEMENT AGREEMENT
ART'S RESPONSIBILITIES. ART shall have exclusive rights to construct,
operate and manage of 23 Ghz and 38 Ghz radio systems pursuant to the Canadian
Spectrum Licenses.
ATI'S RESPONSIBILITIES. ATI shall use its best efforts to obtain the
unfettered right to use and exploit the Canadian Spectrum Licenses and to
maintain any licenses that are granted in good standing with all Canadian
regulatory bodies having jurisdiction. ATI shall exercise reasonable efforts to
obtain access to additional service areas that are indicated by future market
research and sales efforts to be potential customer locations. ATI promptly
shall create and implement a business plan, secure initial funding and recruit
management and initial staffing.
EXCLUSIVITY. During the term of the Management Agreement and for a period
of two years after expiration or termination thereof, the parties agree that
neither they nor any of their
affiliates will provide or participate in the provision of microwave services,
regardless of the end use application, in Canada outside of the terms of this
Agreement and that they will not negotiate with or enter into any agreement with
any other entity for the provision of such services outside the terms of this
Agreement. This provision shall be inapplicable to ART in the event that
substantially all of the Canadian Spectrum Licenses are not granted to ATI by
October 31, 1997, or if ATI withdraws the application for any Canadian Spectrum
Licenses, or ATI becomes ineligible to hold the Canadian Spectrum Licenses.
OTHER TERMS. The other material terms of the Management Agreement are set
forth in the attached form of Management Agreement.
PREFERRED STOCK INVESTMENT
ART shall be issued preferred stock in ATI and a to-be-formed holding
company ("Parent Co."), such that the following the issuance, the corporate
structure and ownership of ATI and Parent Co. will be as follows:
PARENT CO.
CLASSES OF EQUITY: Parent Co. shall have four classes of equity:
1. Voting Preferred Stock
2. Voting Common Stock
Together, Voting Preferred Stock and Voting Common Stock
represent 50 percent of equity on a fully-diluted basis.
3. Non-voting Preferred Stock
4. Non-voting Common Stock
Together, Non-voting Preferred Stock and Non-voting Common Stock
represent 50 percent of equity on a fully-diluted basis.
SHAREHOLDERS: Parent Co. shareholders will be ART and existing
shareholders of ATI.
1. ART ART will hold the following equity in Parent Co.:
Voting Preferred Stock - number of shares equal to:
33 1/3 percent of voting equity (on a fully diluted basis)
16 2/3 percent of total equity (on a fully diluted basis)
Non-Voting Preferred Stock - number of shares equal to:
64 2/3 percent of non-voting equity (on a fully diluted basis)
32 1/3 percent of total equity (on a fully diluted basis)
2. EXISTING SHAREHOLDERS The existing ATI shareholders will hold
the following equity in Parent Co.:
Voting Common Stock - number of shares equal to:
66 2/3 percent of voting equity (on a fully diluted basis)
33 1/3 percent of total equity (on a fully diluted basis)
Non-Voting Common Stock - number of shares equal to:
35 1/3 percent of non-voting equity (on a fully diluted basis)
17 2/3 of total equity (on a fully diluted basis)
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ADVANTAGE TELECOM, INC.
CLASSES OF EQUITY: ATI will have four classes of equity:
1. Voting Preferred Stock
2. Voting Common Stock
Together, Voting Preferred Stock and Voting Common Stock
represent 50 percent of equity on a fully-diluted basis.
3. Non-voting Preferred Stock
4. Non-voting Common Stock
Together, Non-voting Preferred Stock and Non-voting Common Stock
represent 50 percent of equity on a fully-diluted basis.
SHAREHOLDERS: ATI shareholders will be ART and Parent Co.
1. ART ART will hold the following equity in ATI:
Voting Preferred Stock - number of shares equal to:
20 percent of voting equity (on a fully diluted basis)
16 2/3 percent of total equity (on a fully diluted basis)
Non-Voting Preferred Stock - number of shares equal to:
64 2/3 percent of non-voting equity (on a fully diluted basis)
32 1/3 percent of total equity (on a fully diluted basis)
2. PARENT CO. Parent Co. shall hold the following equity in ATI:
Voting Common Stock - number of shares equal to:
66 2/3 percent of voting equity (on a fully diluted basis)
33 1/3 percent of total equity (on a fully diluted basis)
Non-Voting Common Stock - number of shares equal to:
35 1/3 percent of non-voting equity (on a fully diluted basis)
17 2/3 of total equity (on a fully diluted basis)
The goal of the above structure is to issue to ART the maximum amount of
equity allowable under Canadian law.
OTHER TERMS OF PREFERRED STOCK INVESTMENT. The other material terms of the
Preferred Stock Investment are set forth in the Term Sheet attached hereto as
Exhibit A.
FUNDING
ATI's present intention is to raise funds, in an unknown combination of
debt and equity, from both Canadian and United States sources to fund
operations. ATI shall determine the amount of funds, the identity of the
funding sources and the ownership interests granted to the funders, provided
that, without the consent of ART, the aggregate amount of such initial financing
shall not be less than Thirty-five Million ($35,000,000). Upon completion of a
funding plan, ATI shall present such plan to ART in writing. At any time prior
to implementation of such plan, and in any event during the thirty days
following presentation of such plan to ART, ART shall have the right to require
ATI to use alternative funding sources designated by ATI provided that the terms
and timing of such funding is at least as favorable to ATI as the funding
proposed by ATI. The exercise of this right shall be similar to customary
practice for rights of first refusal.
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Exhibit A
ADVANTAGE TELECOM, INC.
PREFERRED STOCK INVESTMENT BY
ADVANCED RADIO TECHNOLOGIES, INC.
TERM SHEET
DRAFT OCT. 8, 1996
This Term Sheet is attached as Exhibit A to a Memorandum of Terms between
ATI and ART dated October 10, 1996 (the "Memorandum").
SECURITIES Voting Preferred Stock
Non-voting Preferred Stock
(together, the "Preferred Stock")
CONSIDERATION Consideration in cash and in kind previously advanced to
ATI.
PERCENTAGE OF
EQUITY See the Memorandum.
DIVIDENDS Annual five percent dividend, payable if and when declared
by the Board; dividends are cumulative. For any other
dividends or distributions, Preferred Stock participates
with Common Stock on an as-converted basis.
LIQUIDATION First, pay liquidation reference (equal to fair market
PREFERENCE value of consideration) plus accrued dividends on each share
of Preferred Stock. Thereafter, Preferred and Common Stock
share pro-rata on an as-converted basis.
A merger, reorganization, or other transaction in which
control of the company is transferred will be treated as a
liquidation. Such treatment may be waived upon the consent
of 2/3 of the outstanding Preferred Stock holders (voting as
a single class).
REDEMPTION No other capital stock of the Company is redeemable prior to
the Preferred Stock without the prior written consent of
holders of a majority of the Preferred Stock.
CONVERSION Convertible into Common Stock at the Conversion Ratio at the
option of the holder. The Conversion Ratio is initially
one-to-one, but is subject to the antidilution adjustments
described below.
ANTI-DILUTION Conversion Ratio is adjusted as necessary in connection with
any issuances of equity to maintain existing percentage
ownership of voting and non-voting equity by ART until
original ownership by existing ATI stockholders (excluding
subsequent dispositions or acquisitions by such
stockholders) is reduced to twenty percent; thereafter,
Preferred Stock and Common Stock are diluted pro-rata by new
issuances. Proportional adjustments for stock splits and
stock dividends.
VOTING RIGHTS Voting Preferred votes on an as-converted basis, but Voting
Preferred also has class vote as provided by law and on(i)
the transfer of all or substantially all of the Canadian
Spectrum Licenses (as defined in the Memorandum), (ii) the
transfer of all or substantially all of the assets of ATI,
(iii) the creation of any senior or PARI PASSU security,
(iv) payment of dividends on Common Stock, (v) repurchase
of Common Stock except upon termination of employment Company
may repurchase shares issued pursuant to stock option plan,
(vi) any transaction in which control of the Company is
transferred, (vii) an increase in the number of authorized
shares of any Series of Preferred, and (viii) any amendment
of charter documents adversely affecting the rights,
preferences or privileges of Preferred Stock.
REPRESENTATIONS Representation and warranties by the Company satisfactory
AND WARRANTIES to ART.
ASSIGNMENT OF All employees and consultants shall enter into Company's
INVENTIONS, standard form inventions and proprietary information
CONFIDENTIALITY agreement.
AND NONCOMPETE
AGREEMENTS
DOCUMENTS ART's counsel will draft documents.
REGISTRATION (a) Beginning earlier of November 1, 2006 of 180 days
RIGHTS after initial registration, two demand registrations
upon initiation by holders of at least a majority of
the Preferred Stock covering at least 40% of
outstanding Registrable Securities. Expenses paid by
Company.
(b) Unlimited piggyback registration rights subject to pro
rata cutback at the underwriter's discretion. Full
cutback upon IPO, 30% minimum inclusion thereafter.
Expenses paid by Company.
(c) Unlimited S-3 registrations of at least $500,000 each.
Expenses paid by Company.
Registration rights terminate seven years after initial
public offering.
No future registration rights may be granted without consent
of a majority of investors unless subordinate to investors'
rights.
Preferred stockholders lock-up any shares not included in
offering for 180 days after IPO and not less than 90 days
after subsequent offering.
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RIGHT OF FIRST ART, or its designee, shall have a pro rata right, based on
REFUSAL ON the percentage equity ownership of Preferred Stock, to
ISSUANCE OF participate in subsequent equity financings of the Company
EQUITY (subject to limited exclusions).
SALE OF EQUITY BY ART, or its designee, shall have a right of first refusal to
EXISTING purchase equity proposed to be sold by existing shareholders
SHAREHOLDERS and a pro-rata tag along right upon sales of equity by
existing shareholders.
DRAG ALONG RIGHT ART drag along right???
RIGHT OF FIRST ART, or its designee, shall have a right of first refusal
REFUSAL UPON to purchase any Canadian Spectrum Licenses proposed to be
SALE OF LICENSES sold by ATI.
FINANCIAL ART shall receive standard information rights including
INFORMATION audited annual financial reports, quarterly unaudited
financial reports, monthly unaudited financial reports and
annual budget and business plan, as well as standard
inspection rights.
BOARD OF Board shall consist of five persons. Voting Preferred shall
DIRECTORS have the right to elect one director, provided that this
shall be increased to two directors if permitted by Canadian
law.
Voting of director elected by Voting Preferred required to:
approve budget; transfer any telecommunications licenses or
applications; transfer material assets related to Canadian
Spectrum Licenses (defined in the Memorandum); issuances of
equity that reduce the percentage ownership of ART; enter
into material contracts other than purely customer
contracts.
KEY PERSON Company to maintain a key person life insurance policy in
INSURANCE the amount of $1,000,000 on Xxxxx Xxxxxxx, with the Company
as beneficiary.
OPTION POOL [ ] shares are reserved for options to employees.
EXPENSES Each party shall bear its own expenses related to the
Preferred Stock Investment.
ART CONDITIONS 1. Satisfactory legal documents.
TO CLOSING 2. No material adverse changes or disclosures.
3
ART / ATI MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") between Advantage Telecom, Inc.
("Licensee"), a [ ] corporation, and Advanced Radio Technologies
Corporation and Advanced Radio Telecom Corp. (together "Manager"), a Delaware
corporation, is entered into as of the dates set forth next to the signatures
below and is effective as of October __, 1996.
WHEREAS, Licensee has applied to the Department of Industry of the Canadian
federal government ("Industry Canada") for certain licenses (collectively, the
"Authorizations") for 38 and 23 Ghz frequency radio systems (the "Systems") in
various locations ("Markets"); and
WHEREAS, Licensee and Manager desire to enter into an exclusive agreement
for the construction, operation, and management by Manager of the Systems,
including without limitation those listed in Exhibit A hereto, consistent with
Licensee's obligations in connection with the Authorizations under all of the
federal and state laws, rules, and regulations;
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
set forth, and for other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. TERM OF AGREEMENT AND TERMINATION. This Agreement becomes effective
on the date set forth above. Unless it is terminated earlier pursuant to the
provisions of this Section, the term of this Agreement ("Term") shall extend for
twenty years and shall renew automatically for additional twenty year terms,
unless either party terminates this Agreement as of the end of any such term on
at least 12 months written notice prior to the end of such term.
2. LICENSEE'S RESPONSIBILITIES. Licensee shall exercise reasonable
efforts to obtain the unfettered right to use and exploit, for the purposes
stated in its applications, the Canadian Spectrum and to maintain any licenses
that are granted in good standing with all Canadian regulatory bodies having
jurisdiction. Licensee shall exercise reasonable efforts to obtain access to
additional service areas that are indicated by future market research and sales
efforts to be potential customer locations. Licensee promptly shall create and
implement a business plan, secure initial funding and recruit management and
initial staffing.
3. SYSTEM CONSTRUCTION AND MANAGEMENT: EQUIPMENT LEASE. Licensee hereby
grants Manager the exclusive right to manage the Systems under the following
terms and conditions. Licensee agrees that it shall not grant any other party
the right to manage its Systems and Authorizations during the term hereof.
Subject to Licensee's supervision and control, Manager will use its reasonable
efforts to undertake the planning, design, construction, installation,
marketing, sales and operations of the Systems.
In particular, the parties agree as follows:
(a) Manager shall propose a schedule of construction to Licensee that
will identify the proposed date for each System to become operational in a
manner designed to satisfy all Industry Canada and other regulatory
requirements. Licensee shall have ten business days in which to approve or
reject such proposed schedule, not to be unreasonably withheld.
(b) Once the schedule has been approved, Manager shall use its
reasonable efforts to construct the Systems in accordance with such schedule.
(c) Manager shall acquire, lease, or otherwise obtain the right to
use all assets (collectively, the "Equipment"), necessary for the operation of
the Systems, including any expansion, modification or reduction thereof.
(d) On behalf of Licensee, Manager shall bill and collect, from the
users of the Systems, all fees, charges, or other compensation arising from such
use, and shall pay all expenses and fees incurred or payable by the Systems.
(e) Subject to Licensee's ultimate supervision and control, Manager
shall generally manage the day-to-day operations of the Systems and do or assist
with any and all other acts and shall execute such other agreements, documents
or instruments, as are consistent with Industry Canada rules and regulations
and, in the good faith judgment of Manager, are necessary to carry out the
development, construction and operation of the Systems, whether or not
specifically enumerated herein.
(f) All Equipment shall be acquired and constructed by Manager and
shall be the property of Manager. The Equipment shall be leased to Licensee
for the consideration described in Section 5 hereof during the term of this
Agreement and solely for the purposes described herein. During the term of
such lease, Licensee shall have full and unfettered access to all the
Equipment used in Licensee's System. Such lease shall terminate
simultaneously with the termination of this Agreement for any reason. Upon
such termination, the Equipment shall remain the property of the Manager, and
Manager may take immediate possession thereof.
4. REGULATORY COMPLIANCE. The parties agree that Licensee is in sole
control of the Authorizations and that it is required by Industry Canada
regulations to be in sole control of the licensed facilities so long as it is
the Licensee. Manager acknowledges and agrees that Licensee has ultimate
control over all decisions affecting System, notwithstanding any other provision
of this Agreement. Manager will assist Licensee in complying with all
applicable federal, state and local regulations. This assistance includes, but
is not limited to, the following:
(a) Each System customer will be advised that service is
provided over facilities licensed to and subject to the ultimate control by
Licensee;
(b) Manager agrees to use its reasonable efforts to comply with
all Industry Canada timetables concerning construction and operation and to take
such steps as may be needed to preserve any Authorizations that may be granted
by Industry Canada, including discontinuing operations if so directed by
Licensee to avoid any violations of Industry Canada
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rules or regulations; Manager will provide Licensee with advance written notice
if it comes into possession of facts indicating that it will be unable to render
a System operational within the timetable specified by the terms of the
applicable authorization;
(c) Neither Manager nor Licensee shall represent themselves as
the legal agents or one another;
(d) Licensee shall, with the cooperation and assistance of
Manager, fully comply with the applicable requirements of the [insert Canadian
statute], as amended (the "Act"), and all regulations necessary to keep the
Authorization in full force and effect, including Industry Canada regulations.
Licensee shall prepare and submit to Industry Canada and any other relevant
federal, state or local agency all reports, applications, renewals, or other
filings or documents that may be required for this purpose, provided that
Manager shall provide any assistance required by Licensee in fulfilling this
obligation; and
(e) In the event that Manager determines that any
modification to any System Authorization are necessary or desirable, Manager
will submit to Licensee a description of such proposed modifications for
Licensee's review and approval, which shall not be unreasonably withheld.
Upon approval, Licensee shall promptly file with Industry Canada any requests
for modifications of the relevant Authorization submitted to such Licensee by
Manager which may be needed to make construction feasible, or any filings or
appeals which are necessary to extend the period for construction under
Industry Canada's rules. Such requests may include, but not be limited to,
applications to Industry Canada for special temporary authority.
(f) Each party has determined in good faith that this Agreement
is consistent with the Act and Industry Canada's rules. In the event that
Industry Canada determines that this Agreement is inconsistent with Licensee's
obligations under the Act or it is otherwise contrary to Industry Canada
policies, rules and regulations, the parties agree to modify this Agreement in
any reasonable way to maintain consistency with the Act and Industry Canada's
rules, preserving to the maximum extent possible the essential business terms
and conditions contained herein.
5. LICENSE FEES. During the term of this Agreement, Manager
shall pay Licensee ten percent (10%) of all Recurring Revenue (as defined
below) relating to the operation of any of the Authorizations(each such
payment made from time to time is referred to as a "Licensee Payment"). As
Manager's compensation for managing the Systems pursuant hereto and as lease
payments for the Equipment pursuant to Section 3(f) hereof, Manager shall
retain all revenue relating to the Authorizations other than the Licensee
Payments. Each Licensee Payment, for each calendar quarter, shall be
distributed to Licensee within sixty days of the end of such quarter.
"Recurring Revenue" shall mean all recurring revenue from customers for the
use of the Authorizations, including revenue received from customers relating
to equipment provided, leased or sold by Manager to customers and used by
customers in connection with Authorizations, but excluding reasonable
installation and other one-time charges.
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6. EXCLUSIVITY; RIGHT OF FIRST REFUSAL.
(a) EXCLUSIVITY. During the term of this Agreement and for a
period of two years after expiration or termination hereof, the parties agree
that neither they nor any or their affiliates will provide or participate in
the provision of microwave services, regardless of the end user appliation,
in Canada outside of the terms of this Agreement and that they will not
negotiate with or enter into any agreement with any other entity for the
provision of such services outside the terms of this Agreement. This
provision shall be inapplicable to Manager in the event that: (i)
substantially all of the Canadian Spectrum Licenses are not granted to
Licensee by October 31, 1997, or if Licensee withdraws the application for
any Canadian Spectrum Licenses, or Licensee becomes ineligible to hold the
Canadian Spectrum Licenses; (ii) Licensee elects not to renew this Agreement
at the end of its initial term or any renewal term. This provision shall be
inapplicable to Licensee in the event that Manager elects not to renew this
Agreement at the end of its initial term or any renewal term.
(b) RIGHT OF FIRST REFUSAL. In addition to the
Authorizations, Manager shall have a right of first refusal with resect to
any and all future 38 or 23 Ghz authorizations granted by Industry Canada to
Licensee (the "Future Licenses") to include such Future Licenses as
Authorizations subject to this Agreement, whether issued in the name of
Licensee or any or its present or future affiliates.
7. NOTICES. All notices and other communications shall be in writing
and shall be deemed given the same day if delivered personally or sent by
telecopy or the next business day if sent by express mail or courier
(overnight delivery), or five (5) business days later if sent by registered
mail or certified mail, return receipt requested, postage prepaid, to the
parties at the following addresses or at such other address for a party as
shall be specified by like notice, provided that notice of change of address
shall be effective only upon receipt thereof:
(a) If to Licensee, to:
Advantage Telecom, Inc.
With a copy to:
(b) If to Manager, to
Advanced Radio Technologies Corporation
000 000xx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
With a copy to:
X. Xxxxxxxx Xxxxxxx, Xx.
Executive Vice President and General Counsel
0000 Xxxxxxxxxx Xx., X.X., Xxxxx 000
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Washington, D.C. 20036
-5-
8. REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee represents and
warrants that:
(a) ENTITY STATUS. Licensee is a corporation duly organized,
validly existing and in good standing in [ ]. Licensee has full power
and authority to carry on its business as and where now conducted, and to own
or lease and to operate its properties and assets where such properties and
assets are now owned, leased or operated by it and where such business is now
conducted by it. Licensee is qualified to do business and is in good standing
in each of the jurisdictions in which the nature of its business or the
property owned or leased by it make such qualification necessary. Licensee
has delivered to Manager complete and correct copies of any organizational,
by-laws or charter documents applicable to it, each as amended and in effect
on the date hereof.
(b) AUTHORITY FOR AGREEMENT: CONFLICTS
(i) Licensee has all necessary power and authority,
corporate or otherwise, to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder and the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement by
Licensee has been duly authorized by all necessary corporate action.
(ii) This Agreement duly and validly executed and
delivered by Licensee, constitutes a legal, valid and binding obligation of
Licensee and is enforceable by and against Licensee in accordance with its
respective terms, except as enforceability thereof may be limited by
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law.
(iii) The execution and delivery of this Agreement by
Licensee and the consummation of the transactions contemplated hereby will not
conflict with or result in any violations of or defaults under: (i) any statute,
regulation, order, judgment or decree of any federal, state or local government
body or regulatory authority applicable to Licensee; (ii) any other statute,
regulation, order, judgment or decree applicable to Licensee in any other
applicable jurisdiction; (iii) any mortgage, indenture, lease, agreement,
instrument or other obligation to which Licensee; or (iv) any permit,
concession, grant, franchise, license, of or applicable to Licensee.
(c) CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or obtained by
Licensee in connection with its execution and delivery of and performance of its
or his obligations under, this Agreement.
(d) INDUSTRY CANADA REGULATORY MATTERS.
[to be modified to reflect Canadian communications law]
(i) Each of the Sellers is in compliance with the [insert
applicable Canadian statute], as amended (the "Communications Act"), and the
rules, regulations and policies of the Industry Canada promulgated thereunder
applicable to either Licensee or the
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Assets, and each of the Sellers is in compliance with all other federal, state
and local laws, rules, regulations and ordinances applicable to either Licensee
or the Assets and is not in default under any order, writ, injunction or decree
of any court or governmental agency or instrumentality applicable to either
Licensee of the Assets.
(ii) SHARING AGREEMENTS. No agreement exists for the
shared use of facilities, trunk lines, airspace, radio frequencies or other
assets used in connection with the Assets or the Pending Applications.
(iii) INDUSTRY CANADA AUTHORIZATIONS. Schedule 1.1 sets
forth a true and complete list of each Authorization that is being transferred
to Manager hereunder, the name of the licensee or permit holder, the call sign,
the Authorization expiration date, and the status of any applications for
assignment, transfer or waiver of Industry Canada rules filed (or to be filed)
with the Industry Canada and a true and complete list of each Pending
Application. Licensee has provided to Manager true and correct copies of the
Authorizations received by it from the Industry Canada. Except for the
Superseded Agreements, none of such Authorizations or Pending Applications are
subject to any purchase, sale, option or right of first refusal agreements, and
Licensee owns all of the right, title and interest in, to and under such
Authorizations and Pending Applications. Licensee is qualified under all laws,
rules and regulations to hold the Authorizations held by it.
(iv) FEES. All franchise, license or other fees and
charges that have become due and payable with respect to the Assets pursuant to
any applications, filings, recordings and registrations with, and all
validations or exemptions, approvals, orders or authorizations, consents,
Authorizations, certificates and permits from, the Industry Canada, any state
public utility commission and any other federal, state or local regulatory or
governmental bodies of authorities, including any subdivision thereof, have been
paid.
(v) AUTHORIZATION COMPLIANCE. The Authorizations are
valid and in full force and effect without materially adverse conditions except
for such conditions as are generally applicable to Industry Canada
Authorizations or holders of Industry Canada Authorizations. No event has
occurred and is continuing that could: (i) result in the revocation,
termination or adverse modification of any Authorization listed on Schedule 1.1;
or (ii) materially and adversely affect any rights of Licensee thereunder prior
to Closing or of Manager after Closing. Licensee has no reason to believe that
the Authorizations will not be renewed by the Industry Canada in the ordinary
course. The current ownership and operation by Licensee, as applicable, of the
Authorizations comply in all material respects with all the regulations and
policies of the Industry Canada.
(vi) REPORTS. Any and all reports and filings required to
be filed with the Industry Canada by Licensee with respect to the Authorizations
have been filed and Licensee has provided true and correct copies of all such
reports and filings to Manager. All such reports and filings were accurate and
complete in all material respects on the date thereof. From the date hereof
through the Closing, all such required reports and filings will be filed by
Licensee on a timely basis.
(vii) DISCLOSURE Licensee knows of no facts pertaining to
its qualifications to be a licensee which would cause the Industry Canada not to
issue its approval
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with respect to, or otherwise prevent, the transfer to Manager pursuant to this
Agreement of the Authorizations.
(e) Licensee represents and warrants that it has filed the
applications for the Authorizations listed in Exhibit A (the "Applications")
and that it is duly qualified under all laws, rules and regulations to hold
the Authorizations. Licensee further represents and warrants that it is the
sole holder of the Applications and is the real party in interest with
respect to the Applications and that no other party has an interest of any
kind. Licensee further represents that it has the requisite authority and/or
capacity, as applicable, to perform its undertakings pursuant to this
Agreement. [Other representations with respect to the Applications, e.g. duly
and validly filed; no impediment to granting.]
9. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager represents and
warrants that:
(a) ENTITY STATUS. Manager is a corporation duly organized, validly
existing and in good standing in the State of Delaware. Manager has full power
and authority to carry on its business as and where now conducted, and to own or
lease and to operate its properties and assets where such properties and assets
are now owned, leased or operated by it and where such business is now conducted
by it. Manager is qualified to do business and is in good standing in each of
the jurisdictions in which the nature of its business or the property owned or
leased by it make such qualification necessary.
(b) AUTHORITY OF AGREEMENT: CONFLICTS.
(i) Manager has all necessary power and authority,
corporate or otherwise, to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder and the transactions contemplated hereby
the thereby. The execution, delivery and performance of this Agreement by
Manager has been duly authorized by all necessary corporate action.
(ii) This Agreement duly and validly executed and
delivered by Manager, constitutes a legal, valid and binding obligation of
Manager and is enforceable by and against Manager in accordance with its
respective terms, except as enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law.
(iii) The execution and delivery of this Agreement by
Manager and the consummation of the transactions contemplated hereby will not
conflict with or result in any violations of or defaults under: (i) any statute,
regulation, order, judgement or decree of any federal, state or local
governmental body or regulatory authority applicable to Manager; (ii) any other
statute, regulation, order, judgment or decree applicable to Manager in any
other applicable jurisdiction; (iii) any mortgage, indenture, lease agreement,
instrument or other obligation to which Manager; or (iv) any permit, concession,
grant, franchise, license, of or applicable to Manager.
(c) CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or
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regulatory authority is required to be made or obtained by Manager in connection
with its execution and delivery of and performance of its or his obligations
under, this Agreement.
10. COVENANTS.
(a) Licensee covenants that it will take all necessary steps, to
obtain and maintain the Authorizations with Industry Canada in good standing.
(b) [Other covenants related to Applications and
Authorizations].
(c) Each of the parties hereto covenants that each shall take
such steps and execute such documents as may be necessary from time to time to
effectuate the terms and conditions of this Agreement.
11. INDEMNIFICATION.
(a) Licensee agrees to indemnify and hold harmless Manager from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorney's
fees and costs), imposed upon or incurred by or asserted against Manager that
arise as a result of the negligence or misconduct of Licensee or Licensee's
employees or agents.
(b) Manager agrees to indemnify and hold harmless Licensee from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorney's
fees and costs), imposed upon or incurred by or asserted against Licensee that
arise as a result of the negligence or misconduct of Manager or Manager's
employees or agents, including but not limited, to conduct in violation of the
Act, the rules and regulations of Industry Canada and the terms and conditions
of the Authorization.
12. ASSIGNABILITY; SUCCESSORS AND ASSIGNS.
(a) Licensee may not assign this Agreement without Manager's
prior written consent, which consent shall not be unreasonably withheld. Any
assignment in violation of this Section 10 shall be null and void.
(b) Manager may assign its right to manage the Systems
hereunder, with Licensee's prior written consent not to be unreasonable
withheld, to another party, provided such assignee of Manager has experience in
the management of 38 GHz systems or other telecommunications facilities or,
alternatively, employs either personnel of Manager or other persons who have
experience in the management of 38 GHz systems or other telecommunications
facilities. Notwithstanding the foregoing, Manager may assign its rights
hereunder to a corporate affiliate. Manager may employ such subcontractors or
agents as it deems necessary in the performance of its duties hereunder.
(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs, representatives,
successor and permissible assigns.
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13. SEVERABILITY. In the event that any provision herein is held to
invalid, void, or illegal by any federal, state or local court, or any
regulatory agency, the remaining provisions of the Agreement shall remain in
full force and effect and this Agreement shall be reasonably construed so as to
preserve the original intent of the parties hereto insofar as practicable. In
the event that any provision herein is deemed to be invalid, void, in violation
of any agency rules, or otherwise unlawful, the parties shall use their
respective best efforts to amend the offending provisions to bring them into
legal compliance with minimum disruption to the expectations of the parties as
set forth in this Agreement.
14. COUNTERPARTS. This agreement may be executed in any number of
counterparts with the same as if the signature of each counterpart were in the
same instrument.
15. NO WAIVER OF RIGHTS; AMENDMENT. The failure of either party to
insist, in any one or more instances, upon the performance of any of the terms,
covenants or conditions herein, or to exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any such
term, covenant or condition, or the future exercise of such right, but the
obligation of the other party with respect to such future performance shall
continue in full force and effect. This Agreement may only be amended, modified
or changed by a writing signed by all parties hereto.
16. WARRANTY. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING,
WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, RESPECTING THIS AGREEMENT OR THE SERVICE PROVIDED HEREUNDER.
17. ENTIRE AGREEMENT. This Agreement supersedes any other agreements
between the parties, whether oral or written, with respect to the
Authorizations, relating to the matter contemplated herein, and constitutes the
entire agreement by and between the parties, there being no other agreemetns or
understandings between the parties as expressly set forth herein.
18. GOVERNING LAW/PROCEDURE. This Agreement will be governed by the laws
of the State of Delaware; provided that any dispute under this Agreement will be
resolved by arbitration under the [to be specified].
19. SURVIVAL. The provisions of Section 6 shall survive any expiration or
termination of this Agreement. Any other provisions of this Agreement which by
their nature are intended to survive expiration or termination of this Agreement
shall so survive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
MANAGER: LICENSEE:
Advanced Radio Technologies Advantage Telecom, Inc.
By: By:
-------------------------------- --------------------------------
Printed Name: Printed Name:
---------------------- ----------------------
Title: Title:
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Dated: Dated:
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