SECURITIES PURCHASE AND OPTION AGREEMENT
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THIS SECURITIES PURCHASE AND OPTION AGREEMENT (this "Agreement"), dated as
of April 2, 1999, is entered into between Sprint Corporation, a Kansas
corporation ("Sprint"), and Wireless Holding LLC, a Delaware limited liability
company ("Securityholder"), with respect to all of the shares of preferred stock
owned by Securityholder of People's Choice TV Corp., a Delaware corporation
("PCTV").
W I T N E S S E T H:
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WHEREAS, Securityholder owns 746,104 shares of the Convertible Cumulative
Pay-in-Kind Preferred Stock, par value $0.01 per share and liquidation
preference of $100 per share, of PCTV (the "Preferred Stock");
WHEREAS, Sprint desires to enter into this Agreement in connection with
Sprint's efforts to consummate an acquisition of PCTV;
WHEREAS, pursuant to the terms and conditions of this Agreement,
Securityholder desires to sell, and Sprint desires to purchase, 497,405 shares
of the Preferred Stock owned by Securityholder;
WHEREAS, the parties desire to enter into certain option arrangements with
respect to the remaining shares of Preferred Stock held by Securityholder, as
well as any additional shares of Preferred Stock acquired as dividends with
respect to such remaining shares;
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Agreement to Purchase.
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1.1 Sale and Purchase. Upon the terms and subject to the conditions
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of this Agreement, on the First Closing Date (as hereinafter defined),
Securityholder shall irrevocably sell, transfer, convey, assign and deliver to
Sprint, and Sprint shall purchase and accept delivery from Securityholder, (a)
497,405 shares of the Preferred Stock (the "Purchased Stock"), and (b) any and
all cash, securities, interest and other property and proceeds which may be
exchanged for, or distributed or collected in respect of, the Purchased Stock
(whether as dividends payable with respect to the Preferred Stock or otherwise).
The assets being sold to Sprint pursuant to this Section 1.1 (subject to
adjustment, exchange or conversion as contemplated by Section 9.1 hereof) are
referred to collectively hereinafter as the "Purchased Assets." Sprint does not
assume any liabilities or obligations (if any) of Securityholder related to or
in connection with the Purchased Assets and arising prior to the First Closing
Date.
1.2 Purchase Price. The aggregate purchase price (the "Purchase
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Price") to be paid by Sprint to Securityholder for the Purchased Assets shall be
an amount equal to fifteen million dollars ($15,000,000.00).
1.3 Payment of Purchase Price. Subject to the terms and conditions
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of this Agreement, on the First Closing Date, Sprint shall make payment of the
Purchase Price to Securityholder by wire transfer of immediately available funds
to an account designated in writing by Securityholder prior to the First Closing
Date.
1.4 Transfer of Purchased Assets. Upon payment of the Purchase Price
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as provided in Section 1.3 hereof, Securityholder shall deliver to Sprint, or an
affiliate of Sprint designated in writing to Securityholder, at the First
Closing (as hereinafter defined), (a) the certificates representing the
Purchased Stock (subject to adjustment, exchange or conversion as contemplated
by Section 9.1 hereof), duly endorsed in blank for transfer, or accompanied by
duly executed stock powers in blank, in each case with signatures guaranteed by
a national bank or trust company or a member firm of the New York Stock
Exchange, Inc., (b) all other cash, securities and other property which
constitute the Purchased Assets, (c) all such other agreements, endorsements,
assignments and other instruments as are necessary or desirable, in Sprint's
sole and absolute discretion, to vest in Sprint or its designee good and
marketable title to the Purchased Assets or to evidence of record the sale and
assignment of the Purchased Assets to Sprint or its designee, and (d) an
irrevocable proxy appointing Sprint or its designee as Securityholder's proxy to
vote the Purchased Stock, which irrevocable proxy shall be substantially
identical to the form attached hereto as Exhibit A.
1.5 First Closing. Subject to the fulfillment or waiver of the
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conditions precedent set forth in Article 6 hereof, the closing of the purchase
and sale of the Purchased Assets (the "First Closing") shall take place at the
offices of King & Xxxxxxxx, 0000 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx
00000 at 2:00 p.m. (local time) on April 5, 1999 (the "First Closing Date").
Except as otherwise provided herein, all actions to be taken and all documents
to be executed at the First Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no action shall be deemed taken nor
documents deemed executed or delivered until all have been taken, delivered and
executed.
2. Grant of Options.
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2.1 Options. Upon the terms and subject to the conditions of this
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Agreement, Securityholder hereby grants to Sprint or Sprint's designee (a) an
irrevocable option (the "First Option") to purchase (i) 123,699 shares of the
Preferred Stock, and (ii) any and all cash, securities, interest and other
property and proceeds which may be exchanged for, or distributed or collected in
respect of, any shares of the Preferred Stock referenced in Section 2.1(a)(i)
hereof, and (b) an irrevocable option (the "Second Option;" the First Option and
the Second Option are referred to collectively hereinafter as the "Options") to
purchase (i) 125,000 shares of the Preferred Stock, and (ii) any and all cash,
securities, interest and other property and proceeds which may be exchanged for,
or distributed or collected in respect of, any shares of the Preferred
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Stock referenced in Section 2.1(b)(i) hereof. The assets subject to the First
Option (subject to adjustment, exchange or conversion as contemplated by Section
9.1) are referred to collectively hereinafter as the "First Option Securities,"
the assets subject to the Second Option (subject to adjustment, exchange or
conversion as contemplated by Section 9.1) are referred to collectively
hereinafter as the "Second Option Securities," and the First Option Securities
and Second Option Securities are referred to collectively hereinafter as the
"Option Securities." Upon exercise of the First or Second Option and purchase of
the related Option Securities, Sprint shall not assume any liabilities or
obligations (if any) of Securityholder related to or in connection with such
Option Securities and arising prior to the relevant Option Closing Date (as
defined hereinafter).
2.2 [INTENTIONALLY OMITTED].
2.3 Option Prices. The purchase price payable by Sprint or its
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designee at (a) the Option Closing (as hereinafter defined) for the First Option
Securities shall be an amount equal to the sum of (the "First Option Price") (i)
four million four hundred eighty thousand one hundred nine dollars
($4,480,109.00), plus (ii) an amount equal to interest accrued on such
$4,480,109.00 amount at the rate of six percent (6%) per annum, compounded
quarterly, calculated from the First Closing Date to the First Option Closing
Date (as hereinafter defined), and (b) the Option Closing for the Second Option
Securities shall be an amount equal to the sum of (the "Second Option Price;"
the First Option Price and the Second Option Price are referred to collectively
hereinafter as the "Option Prices") (i) three million eight hundred fifty-three
thousand four hundred twenty dollars ($3,853,420.00), plus (ii) an amount equal
to interest accrued on such $3,853,420.00 amount at the rate of six percent (6%)
per annum, compounded quarterly, calculated from the First Closing Date to the
Second Option Closing Date (as hereinafter defined).
2.4 Exercise.
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(a) Sprint or its designee shall exercise an Option as to the
related Option Securities by giving written notice to Securityholder.
Such notice shall specify a date (not earlier than one business day
nor later than three business days from the date such notice is
delivered to Securityholder) and place for closing of the exercise of
such Option (the "Option Closing"). Upon delivery of notice
exercising an Option, such Option shall be deemed to have been
exercised by Sprint or its designee irrespective of the actual date of
the Option Closing. The actual date of the Option Closing relating to
the First Option is referred to hereinafter as the "First Option
Closing Date," the actual date of the Option Closing relating to the
Second Option is referred to hereinafter as the "Second Option Closing
Date," and the First Option Closing Date and Second Option Closing
Date are referred to collectively hereinafter as the "Option Closing
Dates." At each Option Closing, Sprint or its designee will deliver
to Securityholder the Option Price with respect to the Option
Securities that are the subject of the Option being exercised, by
wire transfer of immediately available
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funds to an account designated in writing by Securityholder prior to
the applicable Option Closing Date.
(b) Upon payment of the Option Price as provided in Section
2.4(a) hereof, the Securityholder shall deliver to Sprint or its
designee at the Option Closing, (i) the certificates representing the
Option Securities (subject to adjustment, exchange or conversion as
contemplated by Section 9.1 hereof) that are the subject of the Option
being exercised, duly endorsed in blank for transfer, or accompanied
by duly executed stock powers in blank, in each case with signatures
guaranteed by a national bank or trust company or a member firm of the
New York Stock Exchange, Inc., (ii) all other cash, securities and
other property which constitute such Option Securities, and (iii) all
such other agreements, endorsements, assignments and other instruments
as are necessary or desirable, in Sprint's sole and absolute
discretion, to vest in Sprint or its designee good and marketable
title to such Option Securities or to evidence of record the sale and
assignment of such Option Securities to Sprint or its designee.
Notwithstanding any other provision of this Agreement, the parties
acknowledge and agree that Securityholder shall be the sole owner of
the Option Securities until the purchase and sale of the Option
Securities on an Option Closing Date.
2.5 Option Expiration/Put Right. Except as provided below, each
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Option shall terminate and expire on the earlier of: (a) the date that is the
eighteen month anniversary of the date of this Agreement (the "Expiration Date")
if such Option has not been exercised by Sprint or its designee on or before
such date, and (b) the date Securityholder gives notice pursuant to Section
8.1.5 hereof. If either Option has not been exercised on or before the
Expiration Date, Securityholder shall have the right to deliver, at any time
commencing upon the Expiration Date and for a period of 30 days thereafter, a
written notice to Sprint (the "Securityholder Notice") requiring that Sprint or
its designee purchase the Option Securities subject to any unexercised Option at
the applicable Option Price (the "Put Right"); provided, however, that in the
event Sprint or an affiliate has elected or designated, or has the power to
elect or designate pursuant to a power that may be then exercised and that would
have immediate effect, a majority of the board of directors of PCTV, or in the
event Sprint has consummated one or more transactions that have resulted in
Sprint becoming the owner, directly or indirectly, of all of the issued and
outstanding common stock of PCTV, then Securityholder shall have the right to
deliver the Securityholder Notice and exercise the Put Right at any time during
the 30-day period following such election or designation of directors, the
acquisition of such power to elect or designate directors or the consummation of
such transactions. Notwithstanding any other provision of this Section 2.5, if
an Option Closing has not occurred prior to the Expiration Date solely as a
result of the existence of any order or decree that has the effect of
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions at such Option Closing, then the Expiration
Date shall be deemed extended for the time period that the Option Closing has
not occurred as a result of the existence of such order or decree plus an
additional 30 days, subject to a maximum extension of three months (i.e., the
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twenty-one
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month anniversary of the date of this Agreement); provided, however, the Put
Right shall continue for an additional period of two years (i.e., the forty-five
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month anniversary of the date of this Agreement) notwithstanding the termination
and expiration of any unexercised Option on the extended Expiration Date. Upon
the exercise by Securityholder of the Put Right, the parties shall consummate
the purchase and sale of the Option Securities subject to any unexercised Option
in accordance with Section 2.4 hereof.
2.6 Receipt of Distributions. After the execution of this Agreement
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and prior to the Option Closing relating to the Second Option, if Securityholder
receives any cash, securities, interest or other property or proceeds with
respect to the Option Securities (whether as dividends payable with respect to
the Preferred Stock or otherwise), such cash, securities, interest, property and
proceeds shall become a part of the assets included in the Option Securities.
2.7 No Solicitation. Other than as provided in this Article 2, from
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and after the date of this Agreement and through the Expiration Date, neither
Securityholder nor any person acting as an agent of Securityholder or otherwise
on Securityholder's behalf shall, directly or indirectly, solicit, encourage or
initiate negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Sprint or an affiliate
or an associate of Sprint) concerning any sale, transfer, pledge or other
disposition or conversion of the Option Securities or a sale of, merger with, or
similar transaction involving PCTV or of any assets of PCTV. Securityholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Securityholder will notify Sprint immediately if any
party contacts Securityholder following the date hereof (other than Sprint or an
affiliate or associate of Sprint) concerning any sale, transfer, pledge or other
disposition or conversion of the Option Securities or a sale of, or merger with,
PCTV or of any sale of assets of PCTV.
3. Representations and Warranties of Sprint. In order to induce
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Securityholder to enter into this Agreement and to consummate the transactions
contemplated hereby, Sprint hereby represents and warrants to Securityholder, as
of the date hereof, as of the First Closing Date and as of each Option Closing
Date, as follows:
3.1 Authorization. Sprint is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Kansas. Sprint has
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. Sprint has duly authorized,
executed and delivered this Agreement and this Agreement is a legal, valid and
binding agreement of Sprint, enforceable against Sprint in accordance with its
terms.
3.2 Investment. Sprint acknowledges that the Purchased Stock and the
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Option Securities have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under the securities laws of any state or
other jurisdiction. Sprint is acquiring the
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Purchased Stock and the Option Securities solely for its own account and not
with a view to, or for resale in connection with, any distribution prohibited by
the Securities Act or the securities laws of any applicable state or other
jurisdiction. Sprint agrees not to resell or offer to resell the Purchased Stock
or the Option Securities except in compliance with the registration requirements
of the Securities Act and other applicable securities laws, or an applicable
exemption therefrom.
3.3 Sprint Has Adequate Information. Sprint is a sophisticated
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purchaser with respect to the Purchased Assets and Option Securities and has
adequate information concerning the business and financial condition of PCTV to
make an informed decision regarding the purchase of the Purchased Assets and
Option Securities and has independently and without reliance upon Securityholder
and based on such information as Sprint has deemed appropriate, made its own
analysis and decision to enter into this Agreement. Sprint acknowledges that
Securityholder has not made and does not make any representation or warranty,
whether express or implied, of any kind or character except as expressly set
forth in this Agreement. Sprint acknowledges that the purchase of the Purchased
Assets and Option Securities (upon exercise of the Options) by Sprint is
irrevocable, and that Sprint shall have no recourse to Securityholder, except
with respect to breaches of representations, warranties, covenants and
agreements expressly set forth in this Agreement, and pursuant to indemnities
contained herein. Sprint acknowledges that it has reviewed the Stock Purchase
Agreement, dated as of October 27, 1994 (the "Preferred Stock Agreement"), by
and among Blackstone Capital Partners II Merchant Banking Fund, L.P., Blackstone
Offshore Capital Partners II L.P. (collectively, "Blackstone") and PCTV, and the
Certificate of Designations relating to the Preferred Stock and filed by PCTV
with the Delaware Secretary of State on or about November 9, 1994 (the
"Certificate").
3.4 No Violation. Neither the execution and delivery of this
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Agreement nor the consummation of the transactions contemplated hereby will (a)
require Sprint to file or register with, or obtain any material permit,
authorization, consent or approval of, any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity, except for filings required to be made by Sprint pursuant
to federal securities laws and the regulations promulgated thereunder and except
any filings with and notices to governmental or regulatory authorities or any
other person required of Sprint to consummate the transactions contemplated
hereby under Section 7A of the Xxxxxxx Act (Title II of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended) and the rules and regulations
promulgated thereunder (the "HSR Act"), or (b) violate, or cause a breach of or
default under, any contract, agreement or understanding, any statute or law, or
any judgment, decree, order, regulation or rule of any governmental agency,
authority, administrative or regulatory body, court or other tribunal, foreign
or domestic, or any other entity or any arbitration award binding upon Sprint,
except for any such violations, breaches or defaults that would not
(individually or in the aggregate) have a material adverse effect on the
Purchased Assets, the Option Securities, the rights of Securityholder pursuant
to this Agreement or the ability of Sprint to consummate the transactions
contemplated by this Agreement.
3.5 Securityholder's Excluded Information. Sprint acknowledges and
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confirms that (a) Securityholder may possess or hereafter come into possession
of certain non-public information concerning the Purchased Assets, the Option
Securities and PCTV which is not known to Sprint and which may be material to
Sprint's decision to purchase the Purchased Assets and Option Securities
("Securityholder's Excluded Information"), (b) Sprint has requested not to
receive Securityholder's Excluded Information and has determined to purchase the
Purchased Assets and Option Securities notwithstanding its lack of knowledge of
Securityholder's Excluded Information, and (c) Securityholder shall have no
liability or obligation to Sprint, in connection with, and Sprint hereby waives
and releases Securityholder from, and covenants not to xxx Securityholder in
respect of, any claims which Sprint or its successors and assigns may have
against Securityholder (whether pursuant to applicable securities laws or
otherwise) with respect to, the non-disclosure of Securityholder's Excluded
Information; provided, however, nothing contained in this Section 3.5 shall
limit Sprint's right to rely upon the express representations and warranties
made by Securityholder in this Agreement, or Sprint's remedies in respect of
breaches of any such representations and warranties.
4. Representations and Warranties of Securityholder. In order to induce
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Sprint to enter into this Agreement and to consummate the transactions
contemplated hereby, Securityholder represents and warrants to Sprint, as of the
date hereof, as of the First Closing Date and, solely with respect to the
representations and warranties set forth in Section 4.5 below, as of each Option
Closing Date, as follows:
4.1 Existence. Securityholder is a limited liability company duly
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organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Ownership. Securityholder has good and marketable title to the
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Purchased Assets and the Option Securities, free and clear of all liabilities,
claims, liens, options, proxies, charges, participations and encumbrances of any
kind or character whatsoever.
4.3 Authorization. Securityholder has all requisite power and
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authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has sole voting power and sole power of
disposition with respect to all of the Purchased Stock and the Option Securities
with no restrictions on its voting rights or rights of disposition pertaining
thereto. Securityholder has duly authorized, executed and delivered this
Agreement and this Agreement is a legal, valid and binding agreement of
Securityholder, enforceable against Securityholder in accordance with its terms.
Upon the closing of the transactions contemplated hereby on the First Closing
Date, the First Option Closing Date and the Second Option Closing Date,
Securityholder will transfer to Sprint or Sprint's designee, the sole power of
voting and disposition of the Purchased Stock, the First Option Securities and
the Second Option Securities (as applicable).
4.4 No Violation. Neither the execution and delivery of this
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Agreement nor the consummation of the transactions contemplated hereby will (a)
require Securityholder to file or register with, or obtain any material permit,
authorization, consent or approval of, any
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governmental agency, authority, administrative or regulatory body, court or
other tribunal, foreign or domestic, or any other entity, except for (i) filings
required to be made by Securityholder pursuant to federal securities laws and
the regulations promulgated thereunder, (ii) notice to PCTV given pursuant to
Section 4.08(b) of the Preferred Stock Agreement (which notice does not disclose
Sprint's identity), and (iii) consents that have been previously obtained, or
(b) violate, or cause a breach of or default under, any contract, agreement or
understanding, any statute or law, or any judgment, decree, order, regulation or
rule of any governmental agency, authority, administrative or regulatory body,
court or other tribunal, foreign or domestic, or any other entity or any
arbitration award binding upon Securityholder, except for any such violations,
breaches or defaults that would not (individually or in the aggregate) have a
material adverse effect on the Purchased Assets, the Option Securities, the
rights of Sprint pursuant to this Agreement or the ability of Securityholder to
consummate the transactions contemplated by this Agreement. As of the First
Closing Date, no proceedings are pending which, if adversely determined, will
have a material adverse effect on any of the Purchased Assets or the Option
Securities. Securityholder has not previously assigned or sold any of the
Purchased Assets or the Option Securities to any third party.
4.5 Transfer of Purchased Assets. Securityholder is the sole legal
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and beneficial owner of the Purchased Assets and the Option Securities. At the
First Closing and at each Option Closing, Securityholder will transfer and
convey to Sprint or its designee (a) good and marketable title to the Purchased
Assets and the Option Securities (as applicable), free and clear of any liens,
claims, liabilities, options, proxies, charges, participations and encumbrances
of any kind or character whatsoever created by or arising through
Securityholder, any of its affiliates or Blackstone, and (b) all (i) equity
securities of PCTV or its affiliates that were held by Securityholder or its
affiliates as of the date of this Agreement (except, in the case of the First
Closing, the Option Securities and, in the case of the Option Closing relating
to the First Option, the Second Option Securities), (ii) "claims" against PCTV
or any of its affiliates that were held by Securityholder or its affiliates as
of the date of this Agreement and that relate to the Preferred Stock (except, in
the case of the First Closing, any such claims relating to the Option Securities
and, in the case of the Option Closing relating to the First Option, any such
claims relating to the Second Option Securities), and (iii) to Securityholder's
knowledge, other claims against PCTV or any of its affiliates that were held by
Securityholder or its affiliates as of the date of this Agreement. For purposes
of this Agreement, the terms "claim" and "claims" shall have the meaning set
forth in 11 U.S.C. (S) 101(5).
4.6 No Modifications to Documents Governing the Preferred Stock. The
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Preferred Stock Agreement has not been modified, amended or supplemented in any
material respects since the execution and delivery thereof. Securityholder has
not consented to any waiver of any material breach of or material default under
the Preferred Stock Agreement or to any material noncompliance by PCTV with any
of the provisions of the Preferred Stock Agreement. A true, correct and
complete copy of the Preferred Stock Agreement has been provided previously by
Securityholder to Sprint or made available for Sprint's review. Neither
Securityholder nor any of its affiliates has voted to approve, or has consented
to, any material
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modification, amendment or supplement to the Certificate since the filing
thereof with the Delaware Secretary of State. Immediately prior to the First
Closing, Securityholder is a "Designated Transferee" (as such term is defined in
the Certificate) with respect to the Preferred Stock.
4.7 Securityholder Has Adequate Information. Securityholder is a
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sophisticated seller with respect to the Purchased Assets and Option Securities
and has adequate information concerning the business and financial condition of
PCTV to make an informed decision regarding the sale of the Purchased Assets and
Option Securities and has independently and without reliance upon Sprint and
based on such information as Securityholder has deemed appropriate, made its own
analysis and decision to enter into this Agreement. Securityholder acknowledges
that Sprint has not made and does not make any representation or warranty,
whether express or implied, of any kind or character except as expressly set
forth in this Agreement. Securityholder acknowledges that the sale of the
Purchased Assets and Option Securities by Securityholder to Sprint is
irrevocable, and that Securityholder shall have no recourse to the Purchased
Assets, the Option Securities or Sprint, except with respect to breaches of
representations, warranties, covenants and agreements expressly set forth in
this Agreement, and pursuant to indemnities contained herein.
4.8 Sprint's Excluded Information. Securityholder acknowledges and
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confirms that (a) Sprint may possess or hereafter come into possession of
certain non-public information concerning the Purchased Assets, the Option
Securities and PCTV which is not known to Securityholder and which may be
material to Securityholder's decision to sell the Purchased Assets and Option
Securities ("Sprint's Excluded Information"), (b) Securityholder has requested
not to receive Sprint's Excluded Information and has determined to sell the
Purchased Assets and Option Securities notwithstanding its lack of knowledge of
Sprint's Excluded Information, and (c) Sprint shall have no liability or
obligation to Securityholder, in connection with, and Securityholder hereby
waives and releases Sprint from, and covenants not to xxx Sprint in respect of,
any claims which Securityholder or its successors and assigns may have against
Sprint (whether pursuant to applicable securities laws or otherwise) with
respect to, the non-disclosure of Sprint's Excluded Information; provided,
however, nothing contained in this Section 4.8 shall limit Securityholder's
right to rely upon the express representations and warranties made by Sprint in
this Agreement, or Securityholder's remedies in respect of breaches of any such
representations and warranties.
4.9 No Defenses. Neither Securityholder nor any of its affiliates
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has received any payments (other than dividends) under or in respect of the
Purchased Stock or the Option Securities (other than pursuant to this
Agreement). Securityholder has no liability or obligation related to or in
connection with the Purchased Assets or the Option Securities other than the
obligations to Sprint as set forth in this Agreement. As of the First Closing
Date, there are no legal or equitable defenses or counterclaims that have been
or, to Securityholder's knowledge without independent inquiry, are threatened by
or on behalf of PCTV that will affect the validity or enforceability of the
Purchased Stock or the Option Securities. Neither Securityholder nor any
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of its affiliates has caused to be converted any shares of Preferred Stock held
by such party into shares of PCTV common stock.
5. Certain Covenants.
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5.1 Lock-Up. Securityholder hereby covenants and agrees that, from
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and after the date hereof through the Second Option Closing Date, (a) except as
expressly provided in this Agreement or as consented to in writing by Sprint in
its sole and absolute discretion, Securityholder will not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of or limit its right to vote
in any manner any of the Option Securities or Purchased Assets, or agree to do
any of the foregoing, and (b) Securityholder will not take any action which
would have the effect of preventing or disabling Securityholder from performing
any of its obligations under this Agreement.
5.2 Receipt of Distributions. After the First Closing Date (in the
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case of the Purchased Assets), the First Option Closing Date (in the case of the
First Option Securities) and the Second Option Closing Date (in the case of the
Second Option Securities), if Securityholder receives any cash, securities,
interest or other property or proceeds with respect to the Purchased Assets,
the First Option Securities or the Second Option Securities (as applicable),
Securityholder shall hold such cash, securities, interest, property and proceeds
for the sole and exclusive benefit of Sprint or its designee free of any
interest of Securityholder therein, and Securityholder shall promptly pay and/or
deliver any such cash, securities, interest, property and proceeds, in full, to
Sprint or Sprint's designee in the same or equivalent form received (with the
endorsement of Securityholder when necessary or appropriate).
5.3 Public Announcement. Securityholder shall consult with Sprint
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before issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Sprint,
except as may be required by law.
5.4 Designated Transferee. From and after the date of this Agreement
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and through the Second Option Closing Date, Securityholder shall take all
commercially reasonable actions that are necessary or appropriate in order to
ensure that it remains at all times a "Designated Transferee" (as such term is
defined in the Certificate) with respect to the Preferred Stock and
Securityholder shall not take any action that would cause Securityholder to
cease being a Designated Transferee with respect to the Preferred Stock. To the
extent Securityholder is required to take any actions to ensure that it remains
a Designated Transferee, (a) Sprint shall bear all costs and expenses related to
the taking of such actions, and (b) Sprint shall have the right (but not the
obligation) to direct and control the taking of such actions.
5.5 Stop Transfer Instructions. Promptly following the First Closing
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Date, Securityholder and Sprint shall deliver joint written instructions to PCTV
(in its capacity as the transfer agent or registrar for the Preferred Stock)
stating that the Option Securities may not be
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sold, transferred, pledged, assigned, hypothecated or otherwise disposed of in
any manner without the prior written consent of Sprint or except in accordance
with the terms and conditions of this Agreement.
5.6 HSR Filing. Promptly following the First Closing Date, Sprint
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will make all filings with and give all notices to governmental or regulatory
authorities required of Sprint pursuant to the HSR Act in connection with
consummating the transactions contemplated by this Agreement. Sprint will use
all commercially reasonable efforts to obtain early termination of all
applicable waiting periods under the HSR Act.
5.7 Exercise of First Option. Sprint agrees that it will exercise
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the First Option promptly following the satisfaction of the condition precedent
set forth in Section 6.1.5 hereof, but in no event later than 30 days after the
satisfaction of such condition precedent (it being understood that,
notwithstanding Sprint's exercise of the First Option, the consummation of the
transactions at the Option Closing relating to the First Option shall be subject
to the provisions of Section 6.1).
5.8 No Modifications. Securityholder agrees that, from and after the
----------------
date of this Agreement and through the Second Option Closing Date,
Securityholder shall not (without the written consent of Sprint) (a) agree to
any amendment, modification or supplement to the Preferred Stock Agreement, (b)
consent to any waiver of any breach or default under the Preferred Stock
Agreement, or (c) vote to approve, or consent to, any modification, amendment or
supplement to the Certificate.
6. Conditions to Closing.
---------------------
6.1 Conditions to Sprint's Obligations. The obligations of Sprint to
----------------------------------
consummate the transactions contemplated by this Agreement at the First Closing
are subject to the satisfaction at or prior to the First Closing of the
conditions precedent set forth in Sections 6.1.1, 6.1.3 and 6.1.4, and the
obligations of Sprint to consummate the transactions contemplated by this
Agreement at each Option Closing are subject to the satisfaction at or prior to
such Option Closing of each of the conditions precedent set forth in Sections
6.1.2, 6.1.3, 6.1.4 and 6.1.5, any one or more of which may be waived by Sprint:
6.1.1 Each of the representations and warranties of
Securityholder set forth Article 4 hereof shall be true and correct in all
material respects on and as of the date of this Agreement and as of the First
Closing Date with the same force and effect as though made on and as of the
First Closing Date.
6.1.2 Each of the representations and warranties of
Securityholder set forth in Section 4.5 hereof shall be true and correct in all
material respects on and as of the date of this Agreement and as of each Option
Closing Date with the same force and effect as though made on and as of such
Option Closing Date.
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6.1.3 There shall not be any order or decree by any federal,
state or local governmental regulatory agency, commission, bureau, authority,
court or arbitration tribunal of competent jurisdiction (an "Authority")
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions contemplated hereby.
6.1.4 Securityholder shall have complied with the covenants
contained in Section 5.8 hereof.
6.1.5. All waiting periods applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall have terminated or
expired.
6.2 Conditions to Securityholder's Obligations. The obligations of
------------------------------------------
Securityholder to consummate the transactions contemplated by this Agreement at
the First Closing are subject to the satisfaction at or prior to the First
Closing of the conditions precedent set forth in Sections 6.2.1 and 6.2.3, and
the obligations of Securityholder to consummate the transactions contemplated by
this Agreement at each Option Closing are subject to the satisfaction at or
prior to such Option Closing of the conditions precedent set forth in Sections
6.2.2 and 6.2.3, any one or more of which may be waived by Securityholder:
6.2.1 Each of the representations and warranties of Sprint
set forth in Article 3 of this Agreement shall be true and correct in all
material respects on and as of the date of this Agreement and as of the First
Closing Date with the same force and effect as though made on and as of the
First Closing Date.
6.2.2 Each of the representations and warranties of Sprint
set forth in Article 3 of this Agreement shall be true and correct in all
material respects on and as of the date of this Agreement and as of each Option
Closing Date with the same force and effect as though made on and as of such
Option Closing Date.
6.2.3 There shall not be any order or decree by any Authority
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions contemplated hereby.
7. Indemnification and Survival.
----------------------------
7.1 Indemnification by Securityholder.
---------------------------------
7.1.1 Indemnity. Securityholder shall defend and indemnify
---------
Sprint and its agents, affiliates, subsidiaries, controlling persons, officers,
directors, and employees (collectively, the "Sprint Indemnitees"), and hold the
Sprint Indemnitees wholly harmless from and against, any and all losses,
liabilities, damages, costs (including, without limitation, court costs) and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, "Losses") which any Sprint Indemnitee incurs as a result of, or
with respect to, any inaccuracy in
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or breach of any representation, warranty, covenant or agreement by or on behalf
of Securityholder contained in this Agreement or contained in any certificate,
instrument, agreement or document of Securityholder delivered to Sprint in
connection with the consummation of the transactions contemplated hereby.
7.1.2 Claims. In the event that any Sprint Indemnitee shall
------
receive written notice of any claim or proceeding against such Sprint Indemnitee
that, if successful, might result in a claim under this Section 7.1, such Sprint
Indemnitee shall give Securityholder prompt written notice of such claim or
proceeding and shall permit Securityholder to participate in the defense of such
claim or proceeding by counsel of Securityholder's own choosing and at the
expense of Securityholder. In addition, upon written request of such Sprint
Indemnitee, Securityholder shall assume the carriage of the defense of any such
claim or proceeding.
7.2 Indemnification by Sprint.
-------------------------
7.2.1 Indemnity. Sprint shall defend and indemnify
---------
Securityholder and its members, agents, affiliates, subsidiaries, controlling
persons, officers, directors, and employees (collectively, the "Securityholder
Indemnitees"), and hold the Securityholder Indemnitees wholly harmless from and
against, any and all Losses which any Securityholder Indemnitee incurs as a
result of, or with respect to, any inaccuracy in or breach of any
representation, warranty, covenant or agreement by or on behalf of Sprint
contained in this Agreement or contained in any certificate, instrument,
agreement or document of Sprint delivered to Securityholder in connection with
the consummation of the transactions contemplated hereby.
7.2.2 Claims. In the event that any Securityholder
------
Indemnitee shall receive written notice of any claim or proceeding against such
Securityholder Indemnitee that, if successful, might result in a claim under
this Section 7.2, such Securityholder Indemnitee shall give Sprint prompt
written notice of such claim or proceeding and shall permit Sprint to
participate in the defense of such claim or proceeding by counsel of Sprint's
own choosing and at the expense of Sprint. In addition, upon written request of
such Securityholder Indemnitee, Sprint shall assume the carriage of the defense
of any such claim or proceeding.
7.3. Specific Performance. Securityholder acknowledges that Sprint
--------------------
will be irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of Securityholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Sprint upon the breach by
Securityholder of such covenants and agreements, Sprint shall have the right to
obtain injunctive relief to restrain any breach or threatened breach of such
covenants or agreements or otherwise to obtain specific performance of any of
such covenants or agreements.
7.4 Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of Securityholder and Sprint contained herein or
in any
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certificates or other documents delivered at or prior to the First Closing or
any Option Closing shall not be deemed waived or otherwise affected by any
investigation made by the other party hereto, and each representation and
warranty contained herein shall survive the closing of the transactions
contemplated hereby until (a) in the case of the representations and warranties
set forth in Sections 4.2, 4.3, 4.5, 4.7 and 4.8, the expiration of the
applicable statute of limitations, including extensions thereof, and (b) in the
case of all representations and warranties made as of the date hereof and as of
the First Closing Date (except those set forth in Sections 4.2, 4.3, 4.5, 4.7
and 4.8 hereof), the Second Option Closing Date.
7.5 Limitation on Indemnity. Notwithstanding any other provision of
-----------------------
this Article 7, the Sprint Indemnitees shall not be entitled to indemnification
under this Article 7 unless the aggregate amount of all Losses incurred by the
Sprint Indemnitees exceeds an amount equal to $2,000,000; provided, however,
that in the event the Losses incurred by the Sprint Indemnitees exceed the
$2,000,000 amount, then the indemnification obligations of Securityholder shall
apply only to the amount by which such Losses exceed $1,000,000.
8. Termination.
-----------
8.1 Termination. This Agreement may be terminated, and the
-----------
transactions contemplated hereby abandoned, prior to the applicable closing as
follows:
8.1.1 by Sprint and Securityholder by mutual written consent at
any time;
8.1.2 by Sprint by giving written notice to Securityholder at
any time (a) in the event Securityholder has breached any of its
representations, warranties, covenants or agreements contained in this Agreement
in any material respect, Sprint has notified Securityholder of the breach and
the breach has continued without cure for a period of 5 days after the notice of
breach, or (b) if the First Closing shall not have occurred on or before the 5th
day after the execution of this Agreement (unless the failure results primarily
from Sprint breaching any representation, warranty, covenant or agreement of
Sprint contained in this Agreement);
8.1.3 by Securityholder by giving written notice to Sprint at
any time (a) in the event Sprint has breached any representation, warranty,
covenant or agreement of Sprint contained in this Agreement in any material
respect, Securityholder has notified Sprint of the breach, and the breach has
continued without cure for a period of 5 days after the notice of breach, or (b)
if the First Closing shall not have occurred on or before the 5th day after the
execution of this Agreement (unless the failure results primarily from
Securityholder breaching any representation, warranty, covenant or agreement of
Securityholder contained in this Agreement);
8.1.4 by Securityholder or by Sprint at any time prior to the
First Closing Date if the First Closing shall violate any order, decree or
judgment of any court or any Authority
-14-
having competent jurisdiction; or
8.1.5 by Securityholder by giving written notice to Sprint at
any time after the 150th day after the date of this Agreement if all applicable
waiting periods under the HSR Act shall not have terminated or expired.
8.2 Effect of Termination. In the event this Agreement is terminated
---------------------
pursuant to Section 8.1, all rights and obligations of the parties hereunder
shall terminate without liability of any party to any other party (except for
any liability of any party then in breach).
9. Miscellaneous.
-------------
9.1 Reorganization Securities. In the event that PCTV institutes any
-------------------------
change in the Preferred Stock by reason of stock dividends, stock splits,
mergers, recapitalizations, reorganizations, combinations, conversions,
exchanges of shares or the like (whether or not through a plan of reorganization
confirmed by a bankruptcy court) (in any case, a "Reorganization"), the right to
acquire any such Preferred Stock pursuant to this Agreement shall include the
right to purchase any and all cash, debt, securities or other consideration to
be received by Securityholder in exchange for such Preferred Stock on the same
terms and conditions as with respect to the original Preferred Stock,
appropriately adjusted to reflect changes made to the Preferred Stock, and at
the same aggregate Purchase Price or Option Price (as the case may be)
irrespective of such Reorganization.
9.2 Expenses. Each of the parties hereto shall pay its own expenses
--------
incurred in connection with this Agreement. Each of the parties hereto warrants
and covenants to the other that it will bear all claims for brokerage fees
attributable to action taken by it.
9.3 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
9.4 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
9.5 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to all
provisions of this Agreement.
9.6 Assignment. This Agreement may not be transferred or assigned by
----------
Securityholder but may be assigned by Sprint to any of its wholly-owned
subsidiaries or to any successor to its business and will be binding upon and
inure to the benefit of any such subsidiary
-15-
or successor.
9.7 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be an original, but both of which together
shall constitute one and the same Agreement.
9.8 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram, or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) If to Sprint: Sprint Corporation
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xx. Xxxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with copies to: Xxxxxxx X. Xxxxxx, Esq.
Senior Attorney
Sprint Corporation
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
and
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to
Securityholder: Xxxxxx Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
-16-
with a copy to: Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
9.9 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
9.10 Enforceability. The invalidity or unenforceability of any
--------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
9.11 Further Assurances. From time to time at or after the First
------------------
Closing (in the case of the Purchased Assets) or any Option Closing (in the case
of the Option Securities), at Sprint's request and without further
consideration, Securityholder shall execute and deliver to Sprint or its
designee such documents and shall take such action as Sprint or its designee may
reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Sprint or its designee good, valid and
marketable title to the Purchased Assets and the Option Securities, including,
but not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Purchased Assets and the Option
Securities.
-17-
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
SPRINT CORPORATION
By: /s/ Xxxxxx X. Le May
---------------------------
Name: Xxxxxx X. Le May
-------------------------
Title: Chief Operating Officer
------------------------
WIRELESS HOLDING LLC
By: Xxxxxx Capital Management, Inc.,
Managing Member
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
-------------------------
Title: President
------------------------
-18-
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
Wireless Holding LLC, a Delaware limited liability company
("Securityholder"), (a) has revoked or terminated (and hereby revokes and
terminates) any proxies, voting agreements or similar arrangements previously
given or entered into with respect to the shares of Convertible Cumulative Pay-
in-Kind Preferred Stock, par value $0.01 per share and liquidation preference of
$100 per share (the "Preferred Stock"), of People's Choice TV Corp., a Delaware
corporation ("PCTV"), held by Securityholder, and (b) hereby irrevocably
appoints Sprint Corporation, a Kansas corporation ("Sprint"), as proxy for
Securityholder, with full power of substitution and resubstitution, to vote (or
refrain from voting) in any manner as Sprint, in its sole discretion, may see
fit, 497,405 shares of the Preferred Stock (the "Proxy Shares") for
Securityholder and in Securityholder's name, place and stead, at any annual,
special or other meeting or action of the shareholders of PCTV or at any
adjournment thereof or pursuant to any consent of shareholders of PCTV in lieu
of a meeting or otherwise, with respect to any issue brought before the
shareholders of PCTV. Without limiting the generality of the foregoing, this
irrevocable proxy shall be valid and effective during any bankruptcy case
involving PCTV and shall include (without limitation) the right to vote the
Proxy Shares with respect to any plan of reorganization proposed in any such
bankruptcy case. Securityholder acknowledges and agrees that neither Sprint nor
Sprint's successors, assigns, subsidiaries, divisions, employees, officers,
directors, shareholders, agents or affiliates shall owe any duty to
Securityholder, whether in law or otherwise, or incur any liability of any kind
whatsoever, including (without limitation) with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including reasonable
attorney's fees) and compensation of any kind or nature whatsoever, to
Securityholder, in connection with, as a result of or otherwise relating to any
vote (or refrain from voting) by Sprint of the Proxy Shares at any annual,
special or other meeting or action or the execution of any consent of the
shareholders of PCTV.
This Irrevocable Proxy is executed and delivered by Securityholder this
______ day of April, 1999.
WIRELESS HOLDING LLC
By:________________________
Name:______________________
Title:_____________________
IRREVOCABLE PROXY
-----------------
Wireless Holding LLC, a Delaware limited liability company
("Securityholder"), (a) has revoked or terminated (and hereby revokes and
terminates) any proxies, voting agreements or similar arrangements previously
given or entered into with respect to the shares of Convertible Cumulative Pay-
in-Kind Preferred Stock, par value $0.01 per share and liquidation preference of
$100 per share (the "Preferred Stock"), of People's Choice TV Corp., a Delaware
corporation ("PCTV"), held by Securityholder, and (b) hereby irrevocably
appoints Sprint Corporation, a Kansas corporation ("Sprint"), as proxy for
Securityholder, with full power of substitution and resubstitution, to vote (or
refrain from voting) in any manner as Sprint, in its sole discretion, may see
fit, 497,405 shares of the Preferred Stock (the "Proxy Shares") for
Securityholder and in Securityholder's name, place and stead, at any annual,
special or other meeting or action of the shareholders of PCTV or at any
adjournment thereof or pursuant to any consent of shareholders of PCTV in lieu
of a meeting or otherwise, with respect to any issue brought before the
shareholders of PCTV. Without limiting the generality of the foregoing, this
irrevocable proxy shall be valid and effective during any bankruptcy case
involving PCTV and shall include (without limitation) the right to vote the
Proxy Shares with respect to any plan of reorganization proposed in any such
bankruptcy case. Securityholder acknowledges and agrees that neither Sprint nor
Sprint's successors, assigns, subsidiaries, divisions, employees, officers,
directors, shareholders, agents or affiliates shall owe any duty to
Securityholder, whether in law or otherwise, or incur any liability of any kind
whatsoever, including (without limitation) with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including reasonable
attorney's fees) and compensation of any kind or nature whatsoever, to
Securityholder, in connection with, as a result of or otherwise relating to any
vote (or refrain from voting) by Sprint of the Proxy Shares at any annual,
special or other meeting or action or the execution of any consent of the
shareholders of PCTV.
This Irrevocable Proxy is executed and delivered by Securityholder this 5th
day of April, 1999.
WIRELESS HOLDING LLC
By:________________________
Name:______________________
Title:_____________________
