EXHIBIT 10.16
MASTER AGREEMENT
Master Agreement dated as of the 2nd day of December, 1998 (this
"Agreement") by and among Heartland Wireless Communications, Inc., a Delaware
corporation having its principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Heartland"), CAI Wireless Systems,
Inc., a Connecticut corporation having its principal place of business
located at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("CAI") and CS Wireless Systems, Inc., a Delaware corporation having its
principal place of business located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
("CS Wireless").
R E C I T A L S
WHEREAS, the parties hereto are parties to that certain Participation
Agreement (as defined herein), pursuant to which each of Heartland and CAI
contributed wireless cable assets or the stock of entities owning wireless
cable assets to CS Wireless in exchange for CS Common Stock (as defined
herein); and
WHEREAS, in connection with the consummation of the transactions
contemplated by the Participation Agreement, Heartland received 3,578,834
shares of CS Wireless Common Stock, which amount was subsequently increased
to 3,836,035 shares of CS Wireless Common Stock as a result of the issuance
by CS Wireless to Heartland of an additional 257,201 shares of CS Wireless
Common Stock in satisfaction of that certain true-up obligation owed to
Heartland under Section 9.6(a) of the Participation Agreement; and
WHEREAS, in connection with the consummation of the transactions
contemplated by the Participation Agreement, CS Wireless issued to Heartland
the Heartland Long-Term Note (as defined herein) in the principal amount of
$15,000,000, which promissory note matures on February 21, 2006; and
WHEREAS, there is $2,335,276.00 outstanding on the Heartland Long-Term
Note as of November 30, 1998; and
WHEREAS, simultaneously with the consummation of the transactions
contemplated by the Participation Agreement, the parties hereto entered into
that certain Stockholders' Agreement (as defined herein), which agreement
requires, among other things, that Heartland and CAI vote their shares of CS
Wireless Common Stock in favor of a board of directors comprised of four
members designated by CAI and three members designated by Heartland, and that
significant decisions affecting CS Wireless requires the approval of at least
70% of the directors of CS Wireless so that neither CAI nor Heartland can
unilaterally make significant decisions affecting CS Wireless; and
WHEREAS, the parties have disagreed about various matters regarding the
operations, valuation, governance and future of CS Wireless; and
WHEREAS, with due regard to their respective fiduciary duties to various
constituencies including the respective stockholders and creditors of CS
Wireless, CAI and Heartland, the parties wish to terminate Heartland's
ongoing participation in the governance of CS Wireless on a basis that after
prolonged negotiation, investigation and consultation with advisors, the
parties believe to be fair and in the best interests of the parties and their
respective constituents while ensuring that the future operations of
Heartland and CS Wireless and their respective successors can be separated
without unnecessary disruption to either party; and
WHEREAS, CAI desires to purchase from Heartland and Heartland desires to
sell to CAI all of the 3,836,035 shares of CS Wireless Common Stock owned by
Heartland, on and subject to the terms and conditions set forth herein; and
WHEREAS, CS Wireless desires to assign and transfer to Heartland certain
MDS-1 channels, all assets relating to the Radcliffe, Iowa market, WCS
Spectrum in 19 markets and certain other equipment, and Heartland desires to
assign and transfer to CS Wireless any and all ownership and leasehold
interests in MMDS and MDS channels in the Portsmouth, New Hampshire market,
including, but not limited to, the MMDS E Group and MDS H1 - 3 channels,
together with any and all assets used by Heartland in the Portsmouth market;
and
WHEREAS, the parties hereto desire to cooperate with each other with
respect to proposed two-way use of their MMDS, MDS and ITFS spectrum in
contiguous and adjacent markets, including, but not limited to, reaching an
agreement with respect to a comprehensive two-way frequency utilization plan,
cooperation with respect to the implementation of such, timely provision of
requisite interference consent agreements and such other actions as may be
consistent with supporting each other's necessary or desirable filings at the
FCC (as defined herein) in connection with two-way applications; and
WHEREAS, the parties hereto desire to settle certain claims they have
against each other; and
WHEREAS, the parties shall continue to own and lease spectrum rights in
contiguous and adjacent markets, the value of which rights would be
materially adversely affected absent agreement with respect to interference
and related uses arising out of the contemplated two-way applications of such
spectrum.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, each of the parties hereto agree as follows.
Section 1. DEFINED TERMS. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Bankruptcy Code" means the United States Bankruptcy Code, as heretofore
and hereafter amended, and as codified as 11 U.S.C. Sections 101 ET SEQ.
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"BTA" means Basic Trading Area, as such term is used by the FCC to
denote geographic areas in connection with the public auction of available
spectrum in the Multipoint and/or Multichannel Distribution Service.
"BTA Lease and Option Agreement" means that certain BTA Lease and Option
Agreement dated October 31, 1997 by and between CS Wireless and Heartland.
"CPE" means Customer Premises Equipment listed on SCHEDULE 3(a)(i)
attached hereto.
"Communications Act" means the Communications Act of 1934, as amended,
47 U.S.C. Sections 151 ET SEQ.
"CS Leases" means the spectrum leases listed on SCHEDULE 4(a)(i)
attached hereto.
"CS Senior Notes" means $400,000,000 aggregate principal amount of
Series B 11-3/8% Senior Notes due 2006 of CS Wireless Systems, Inc.
"CS Wireless Common Stock" means the common stock, par value $.001 per
share, of CS Wireless.
"CS Wireless FCC Assets" means the FCC licenses owned by CS Wireless and
listed on SCHEDULE 3(a)(ii) attached hereto.
"Encumbrance" shall have the meaning given to such term in Section
8(a)(i).
"FCC Approvals" shall have the meaning given to such term in Section 3(b).
"Governmental Authority" means (a) the government of (i) the United
States of America or any State or other political subdivision thereof, or
(ii) any jurisdiction in which any party hereto or any of such party's
subsidiaries conducts all or any part of its business, or which has
jurisdiction over any properties of any party hereto, as the case may be, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
"Heartland FCC Assets" means the FCC licenses owned by Heartland and
listed on SCHEDULE 3(b) attached hereto.
"Heartland Leases" means the spectrum leases listed on SCHEDULE 4(b)(i)
attached hereto.
"Heartland Long-Term Note" means that certain Subordinated Promissory
Note dated February 23, 1996 and issued by CS Wireless to Heartland in the
principal amount of $15,000,000.
"Hosea" means ▇▇▇▇▇ ▇. ▇▇▇▇▇.
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"Participation Agreement" means the Participation Agreement dated as of
December 12, 1995 by and among CAI, Heartland and CS Wireless, as amended by
Amendment No.1 to the Participation Agreement dated as of February 23, 1996
among the parties thereto.
"Portsmouth Non-FCC Assets" means all assets owned by Heartland and used
in connection with the operation of the channels pursuant to the Heartland FCC
Assets and Heartland Leases, including, without limitation, the assets listed on
SCHEDULE 4(b)(ii) attached hereto.
"Radcliffe Non-FCC Assets" means all assets owned by CS Wireless and used
in connection with the Radcliffe, IA wireless cable system, including, without
limitation, the assets listed on SCHEDULE 4(a)(ii) attached hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Services Agreement" means that certain Administrative Services Agreement
dated as of February 23, 1996 by and between Heartland and CS Wireless.
"Stage I Closing" shall have the meaning given to such term in Section
5(a).
"Stage I Closing Date" shall have the meaning given to such term in Section
5(a).
"Stage I Transactions" shall have the meaning given to such term in Section
5(a).
"Stage II Closing" shall have the meaning given to such term in Section
5(b).
"Stage II Closing Date" shall have the meaning given to such term in
Section 5(b).
"Stage II Transactions" shall have the meaning given to such term in
Section 5(b).
"Stockholders' Agreement" means that certain Stockholders' Agreement dated
as of February 23, 1996 by and among CS Wireless, CAI and Heartland.
Section 2. CS WIRELESS COMMON STOCK.
(a) At the Stage I Closing (as defined below), Heartland shall sell,
assign, transfer, convey and deliver to CAI, and CAI shall purchase, accept and
assume from Heartland, all of Heartland's right, title and interest in and to
3,836,035 shares of CS Wireless Common Stock owned by Heartland, which shares
represent the entire equity interest in CS Wireless owned by Heartland as of the
date hereof.
(b) The parties hereto agree that upon the consummation of the Stage I
Transactions (as defined below), Heartland shall cease to have any equity
interest in CS Wireless and the Stockholders' Agreement shall, without further
action by the parties, permanently and
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irrevocably lapse and terminate with no further force or effect, and each of
the parties thereto shall be relieved of their obligations thereunder, with
the same force and effect and as if the parties had never entered into such
agreement. Upon such Stage I Closing, the resignation of each of the
Heartland Directors and the Heartland Independent Director (as such terms are
defined in the Stockholders' Agreement) from the Board of Directors of CS
Wireless, in the form attached hereto as EXHIBIT A, shall become immediately
effective without further action by the parties; PROVIDED, HOWEVER, that any
indemnification obligations of CS Wireless to each of the Heartland
Directors, the Heartland Independent Directors and Hosea under CS Wireless'
certificate of incorporation, by-laws, contracts, insurance policies (to the
extent applicable) or otherwise existing as of the date hereof shall survive
such resignation, and CS Wireless expressly agrees to assume any such
indemnification obligation in any bankruptcy proceeding filed by or against
CS Wireless.
Section 3. TRANSFERS OF ASSETS AND LEASES OF SPECTRUM RIGHTS AT THE
STAGE I CLOSING.
At the Stage I Closing:
(a) CS Wireless shall, in partial satisfaction of the Heartland Long-Term
Note, which shall cease to accrue interest from and after the Stage I Closing
Date:
(i) sell, assign, transfer, convey and deliver to Heartland, and
Heartland shall purchase, accept and assume from CS Wireless, all of CS
Wireless' right, title and interest in and to the CPE listed on SCHEDULE
3(a)(i);
(ii) lease to Heartland, and Heartland shall lease from CS Wireless
all of CS Wireless' right, title and interest in and to the CS Wireless FCC
Assets. The CS Wireless FCC Assets shall be leased pursuant to the Lease
Agreement set forth as EXHIBIT B attached hereto. Within ten (10) business
days of the signing of this Agreement, CS Wireless and Heartland together
shall file with the FCC the necessary applications for the consent of the
assignment of the CS Wireless FCC Assets; and
(iii) pay Heartland Three Hundred Sixty-six Thousand and 00/100
Dollars ($366,000.00), payable in immediately available funds by wire
transfer in accordance with written wire transfer instructions previously
delivered by Heartland to CS Wireless;
(b) Heartland shall lease to CS Wireless, and CS Wireless shall lease
from Heartland all of Heartland's right, title and interest in and to the
Heartland FCC Assets. The Heartland FCC Assets shall be leased pursuant to the
Lease Agreement set forth as EXHIBIT C attached hereto. Within ten (10)
business days of the signing of this Agreement, CS Wireless and Heartland
together shall file with the FCC the necessary applications for the consent of
the assignment of the Heartland FCC Assets (such consent, together with the
consent of the FCC contemplated by Section 3(a)(ii) above, the "FCC Approvals");
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(c) CAI shall pay Heartland One Million Five Hundred Thirty-four
Thousand and 00/100 Dollars ($1,534,000.00), payable in immediately available
funds by wire transfer in accordance with written wire transfer instructions
previously delivered by Heartland to CAI; and
(d) Heartland and CS Wireless shall execute and deliver an amendment
to the BTA Lease and Option Agreement in the form attached hereto as Exhibit
D, which amendment shall correct certain ground elevation parameters of
Heartland's Sherman, Texas market to reflect a previously proposed or
licensed facility and correct certain operating parameter of CS Wireless'
Fort Worth, Texas market.
The parties acknowledge that it is impracticable for Heartland to inspect,
test and select the CPE before the Stage I Closing. Accordingly, CS Wireless
shall make the CPE available for inspection by Heartland representatives
during normal business hours and Heartland shall inspect, test and select the
CPE on or before the Stage II Closing. CS Wireless shall make available for
inspection at CS Wireless' offices or warehouse facilities the CPE listed on
SCHEDULE 3(A)(I) at the following locations:
(Model 8607 BN55) Scientific Atlanta San Antonio
converter boxes (with remote)
(Model 5508 W or WP) Tocom converter boxes Dallas
(with remote)
(Cal Amp 2040\011 or PacMono 3191i Dallas
or 3192i) Dipoles, PCS filtered and tested
In the event that CS Wireless does not make available for delivery to
Heartland on or before the Stage II Closing the CPE listed on SCHEDULE
3(A)(I), CS Wireless shall immediately pay to Heartland cash in an amount
equal to the difference between $354,000 and the value (as established
pursuant to SCHEDULE 3(A)(I)) of the CPE made available for delivery at the
Stage II Closing.
For a period of One Hundred Eighty (180) days following the earlier of the
(i) Stage II Closing or (ii) the date on which Heartland accepts a unit of
CPE made available by CS Wireless, Heartland shall have the right to return
such unit of CPE which is not in good working order for the purpose for which
it was intended. Upon timely receipt of any returned unit, CS Wireless shall
immediately (i) pay to Heartland cash in an amount equal to the value of such
item as established in SCHEDULE 3(A)(I) or (ii) repair or replace such unit.
If CS Wireless elects to repair or replace such unit, Heartland shall have a
period of Forty-five (45) days to determine whether such repaired or
replacement unit is in good working order for the purpose for which it was
intended. Except as provided herein, CS Wireless hereby disclaims all
warranties, express or implied, including without limitation any warranties
under the UCC or otherwise implied by law. CS Wireless shall use all
reasonable commercial efforts to assist Heartland in enforcing the terms of
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any manufacturer's warranty applicable to any unit of CPE delivered to
Heartland pursuant to the terms hereof.
Section 4. CANCELLATION OF HEARTLAND LONG-TERM NOTE AND RELATED
TRANSACTIONS AT THE STAGE II CLOSING.
At the Stage II Closing:
(a) CS Wireless shall sell, assign, transfer, convey and deliver to
Heartland, and Heartland shall purchase, accept and assume from CS Wireless, all
of CS Wireless' right, title and interest in and to the CS Wireless FCC Assets,
the lessee's interest under the CS Leases and the Radcliffe Non-FCC Assets;
(b) Heartland shall sell, assign, transfer, convey and deliver to CS
Wireless, and CS Wireless shall purchase, accept and assume from Heartland, all
of Heartland's right, title and interest in and to the Heartland FCC Assets, the
lessee's interest under the Heartland Leases and the Portsmouth Non-FCC Assets;
(c) CS Wireless shall pay Heartland One Hundred Thousand and 00/100
Dollars ($100,000.00), payable by wire transfer in immediately available funds
in accordance with written wire instructions previously delivered by Heartland
to CS Wireless; and
(d) Heartland shall cancel the Heartland Long-Term Note and deliver such
cancelled promissory note to CS Wireless.
CS Wireless acknowledges and agrees that Heartland shall not assume any
liabilities, obligations or commitments of CS Wireless or any affiliates thereof
relating to or arising out of the operation of the CS Wireless FCC Assets, the
CS Leases or Radcliffe Non-FCC Assets prior to the Stage II Closing Date
including, without limitation, any liabilities associated with employees arising
prior to the Stage II Closing Date who are hired by Heartland from and after the
Stage II Closing Date.
Heartland acknowledges and agrees that CS Wireless shall not assume any
liabilities, obligations or commitments of Heartland or any affiliate thereof
relating to or arising out of the operation of the Heartland FCC Assets,
Heartland Leases or Portsmouth Non-FCC Assets prior to the Stage II Closing
Date.
Section 5. STAGE I AND STAGE II CLOSING DATES.
(a) The sale and transfer of the CS Wireless Common Stock by Heartland to
CAI, and the sale and transfer of the CPE, the cash payments by each of CS
Wireless and CAI to Heartland contemplated under Section 3, the lease from CS
Wireless to Heartland of the CS Wireless FCC Assets and the lease from Heartland
to CS Wireless of the Heartland FCC Assets (collectively, the "Stage I
Transactions") shall occur at the offices of Heartland, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 11:30 a.m., at a closing (the "Stage I
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Closing") on December 2, 1998, or at such other time as the parties hereto may
agree (the "Stage I Closing Date").
(b) The sale and transfer of the CS Wireless FCC Assets, the CS Leases,
the Radcliffe Non-FCC Assets, the Heartland FCC Assets, the Heartland Leases and
the Portsmouth Non-FCC Assets, the cash payment by CS Wireless to Heartland
contemplated under Section 4 and the cancellation and delivery of the Heartland
Long-Term Note (collectively, the "Stage II Transactions") shall occur at the
offices of Heartland, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at
11:30 a.m., at a closing (the "Stage II Closing") on January 30, 1999 or, if
later, 3 business days after receipt of the final FCC Approvals, or at such
other time as the parties hereto may agree (the "Stage II Closing Date").
Section 6. FCC COOPERATION AND RELATED SPECTRUM MATTERS. As a material
inducement to each of the parties to enter into this Agreement and as additional
consideration for the transactions contemplated by Sections 2, 3 and 4 above,
the parties hereto agree as follows:
(a) The parties hereto will cooperate with each other to the maximum
extent possible in agreeing to enter into interference agreements requested by
the other party that are necessary to facilitate the FCC's grant of applications
filed or sponsored by the other party, as more fully described in Article V of
the BTA Lease and Option Agreement, dated October 31, 1997 by and between
Heartland and CS Wireless and their affiliates (hereinafter the "BTA Lease and
Option Agreement"), which agreement is attached hereto as EXHIBIT D and
incorporated herein by this reference. Heartland and CS Wireless hereby
expressly agree to abide by the BTA Lease and Option Agreement, and that the BTA
Lease and Option Agreement, together with this Agreement, supersedes any other
agreements to the contrary; provided, however, that neither Heartland nor CS
Wireless shall be required to breach any pre-existing agreements with third
parties as a result of this Agreement, or pay monetary or other consideration
not otherwise due.
(b)(i) With respect to markets in which Heartland and CS Wireless
have contiguous or adjacent interests, including, without limitation,
Dallas and Fort Worth, Texas, Heartland and CS Wireless agree to give high
priority to resolving issues surrounding CS Wireless' developmental
application for two-way authority in Dallas/Fort Worth, Texas and to
cooperate in an expeditious manner so as to permit the other party to file
two-way transmission applications in such markets during the first FCC
filing window (with priority given to CS Wireless' Dallas/Fort Worth
market) to (A) agree on a comprehensive two-way frequency utilization plan,
(B) implement such plan and (C) provide the other party with requisite
interference consent agreements in support of such party's two-way
applications, as long as such applications meet each party's mutually
agreed upon technical parameters, consistent with FCC rules.
(ii) Notwithstanding anything to the contrary, CS Wireless and
Heartland agree that the preferred use of the MDS-1 and MDS-2 channels, as
well as the WCS Spectrum, shall be for upstream transmissions, and that
both parties will take all
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reasonable and appropriate steps to accommodate the other party's
applications for and the use of such spectrum so long as such
applications meet the mutually agreed upon technical parameters,
consistent with FCC rules.
(c) Notwithstanding anything in the FCC's rules to the contrary, for
purposes of this Agreement, the interference protection criteria applicable to
the WCS Spectrum shall be governed by the FCC rules in 47 C.F.R. Part 21, as
such rules are amended from time to time, applicable to MMDS spectrum licensed
pursuant to BTA authorizations. For example, the maximum power flux density
application to the WCS Spectrum shall be equal to or less than -73 dbw/m2 at the
BTA or partitioned service area boundary(ies), or as otherwise provided in any
successor rule or regulation of the FCC for MMDS spectrum licensed pursuant to
BTA authorizations.
(d) Heartland hereby acknowledges its obligation to cooperate with CS
Wireless in resolving a dispute with the licensee of the G group channels in
Grand Rapids, Michigan, Call Sign WLS-950, including, but not limited to,
assigning the lease to CS Wireless on an expeditious basis and permitting CS
Wireless to negotiate and execute an excess capacity lease agreement directly
with the licensee. Notwithstanding anything to the contrary, nothing in this
Section 6(d) shall require Heartland to pay any amount of consideration to the
licensor of such channels or to CS Wireless, or to expend any other amounts
related to such channels, including, without limitation, construction, tower
lease, engineering, legal or other fees.
Section 7. CONDITIONS TO ALL OF THE PARTIES' OBLIGATIONS.
(a) The respective obligations of Heartland, CAI and CS Wireless to
consummate the Stage I Transactions, as appropriate, are subject to the
fulfillment prior to or on the Stage I Closing Date of the following conditions
(each of which may be waived in whole or in part by the party being benefitted
thereby in its sole discretion):
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Heartland, CAI and CS Wireless contained in this Agreement
shall be complete and correct in all material respects when made and at the
Stage I Closing Date.
(ii) COMPLIANCE. Each of Heartland, CAI and CS Wireless shall have
performed and complied in all material respects with all agreements and
conditions contained in this Agreement required to be performed or complied
with by each of them prior to or on the Stage I Closing Date.
(iii) COMPLIANCE CERTIFICATES. Each of Heartland, CAI and CS
Wireless shall have delivered to the other an Officer's Certificate dated
the Stage I Closing Date, certifying (A) that the conditions specified in
subsections (i) and (ii) of this Section 7(a), solely as such conditions
relate to the certifying party, have been fulfilled, (B) as to resolutions
adopted by the Board of Directors of Heartland, CAI and CS Wireless, as the
case may be, which certificate shall have attached thereto a copy of such
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resolutions, and (C) as to such other corporate proceedings relating to the
authorization, execution and performance of the transactions contemplated
hereby.
(iv) BOARD AUTHORIZATIONS. The Board of Directors of each of
Heartland, CAI and CS Wireless shall have approved this Agreement and the
transactions contemplated hereby, and shall have authorized, empowered and
directed any or all of their corporate officers to execute and deliver this
Agreement and such agreements, certificates, instruments and other
documents and to take any and all other actions that may be deemed
necessary or desirable by the officer taking such action to give effect to
this Agreement and the transactions contemplated hereby.
(v) TRANSACTIONS PERMITTED UNDER APPLICABLE LAW. On the Stage I
Closing Date, the Stage I Transactions contemplated by this Agreement shall
(A) be permitted by the laws and regulations of each jurisdiction or
Governmental Authority, including, without limitation, the FCC, to which
Heartland, CAI or CS Wireless or any of their respective affiliates, as the
case may be, is subject, and (B) not violate any applicable law or
regulation.
(vi) CERTAIN PROCEEDINGS AND REGULATORY MATTERS. At the Stage I
Closing, none of the parties hereto shall be subject to any judgment, writ,
order, decree or injunction of any court of competent jurisdiction which
restrains, enjoins or otherwise prohibits the consummation of the Stage I
Transactions, nor shall there be pending any suit, action, investigation,
inquiry or other proceeding by any person (including, without limitation,
any Governmental Authority) that (A) seeks injunctive or other relief or
remedies in connection with such transactions or that makes consummation of
the Stage I Transactions subject to significant uncertainty, (B) could
prevent or make illegal the consummation of the Stage I Transactions
contemplated hereby, or (C) imposes or would be reasonably expected to
impose any remedy, condition or restriction on a party hereto which, in
its reasonable judgment, is material and adverse to such party.
(vii) THIRD PARTY AUTHORIZATION, CONSENT, ETC. All required
authorizations, consents, approvals or waivers of any third party,
including, without limitation, consents of Governmental Authorities, if
any, and any lender to any of the parties hereto, in connection with the
transactions contemplated hereby shall have been obtained, including,
without limitation, the consent of the holders of at least a majority of
aggregate principal amount of the CS Senior Notes, which consent shall be
in substantially the form of EXHIBIT F attached hereto.
(viii) BANKRUPTCY PROCEEDINGS. In the event that Heartland or CS
Wireless shall have commenced a case under title 11 of the United States
Code (the "Bankruptcy Code"), the court(s) having jurisdiction over such
case(s) shall have entered an order (or orders, if both Heartland and CS
Wireless are debtors under the Bankruptcy Code) (a) authorizing the
assumption of this Agreement and the BTA Lease Agreement and (b) approving
the transactions contemplated herein, and such order(s) shall become
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final and non-appealable; PROVIDED, HOWEVER, nothing herein shall preclude
the parties from consummating the transactions contemplated herein if the
parties, in their discretion, waive the requirement that such order(s) be
final and non-appealable. No notice of such waiver of this or any other
condition to CAI's obligations to consummate the transactions contemplated
hereby need be given except to Heartland, as explicitly required in this
Agreement, it being the intention of the parties hereto that CAI shall be
entitled to, and is not waiving, the protections of Section 363(m) of the
Bankruptcy Code, the mootness doctrine, and any similar statute or body of
law if either or both of the Stage I and Stage II Closings occurs in the
absence of a final and non-appealable order.
(ix) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the Stage I Transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory to Heartland, CAI and CS Wireless, as the case may
be, and each party hereto shall have received all such counterpart
originals or certified or other copies of such documents as it may
reasonably request.
(b) The obligations of Heartland and CS Wireless to consummate the Stage
II Transactions are subject to the fulfillment prior to or on the Stage II
Closing Date of the following conditions (each of which may be waived in whole
or in part by the party being benefitted thereby in its sole discretion):
(i) CONSUMMATION OF STAGE I TRANSACTIONS. The Stage I Transactions
shall have been consummated.
(ii) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Heartland and CS Wireless contained in this Agreement shall
be complete and correct in all material respects when made and at the Stage
II Closing Date (except to the extent that such representations and
warranties relate specifically to an earlier date).
(iii) COMPLIANCE. Each of Heartland and CS Wireless shall have
performed and complied in all material respects with all agreements and
conditions contained in this Agreement required to be performed or complied
with by each of them prior to or on the Stage II Closing Date.
(iv) COMPLIANCE CERTIFICATES. Each of Heartland and CS Wireless shall
have delivered to the other an Officer's Certificate dated the Stage II
Closing Date, certifying that (A) the conditions specified in subsections
(i) through (iii) of this Section 7(b), solely as such conditions relate to
the certifying party, have been fulfilled, (B)(1) resolutions adopted by
the Board of Directors of Heartland and CS Wireless delivered at the Stage
I Closing, and (2) such other corporate proceedings relating to the
authorization, execution and performance of the transactions contemplated
hereby are still in full force and effect and have not been rescinded,
modified or amended.
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(v) TRANSACTIONS PERMITTED UNDER APPLICABLE LAW. On the Stage II
Closing Date, the Stage II Transactions shall (A) be permitted by the laws
and regulations of each jurisdiction or Governmental Authority, including,
without limitation, the FCC, to which Heartland or CS Wireless or any of
their respective affiliates, as the case may be, is subject, and (B) not
violate any applicable law or regulation.
(vi) CERTAIN PROCEEDINGS AND REGULATORY MATTERS. At the Stage II
Closing, none of the parties hereto shall be subject to any judgment, writ,
order, decree or injunction of any court of competent jurisdiction which
restrains, enjoins or prohibits the consummation of the Stage II
Transactions contemplated by this Agreement, nor shall there be pending any
suit, action, investigation, inquiry or other proceeding by any person
(including, without limitation, any Governmental Authority) that (A) seeks
injunctive or other relief or remedies in connection with such
transactions or that makes consummation of the Stage II Transactions
subject to significant uncertainty, (B) could prevent or make illegal the
consummation of the Stage II Transactions contemplated hereby, of (C)
imposes or would be reasonably expected to impose any remedy, condition or
restriction on a party hereto which, in its reasonable judgment, is
material and adverse to such party.
(vii) THIRD PARTY AUTHORIZATION, CONSENT, ETC. All required
authorizations, consents, approvals or waivers of any third party,
including, without limitation, consents of Governmental Authorities, if
any, and any lender to any of the parties hereto, in connection with the
Stage II Transactions contemplated hereby shall have been obtained.
(viii) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the Stage II Transactions contemplated by
this Agreement and all documents and instruments incident to such
transactions shall be reasonably satisfactory to Heartland, CAI and CS
Wireless, as the case may be, and each party hereto shall have received all
such counterpart originals or certified or other copies of such documents
as it may reasonably request.
(ix) DUE DILIGENCE COMPLETE. Each of Heartland and CS Wireless shall
have completed their business and legal due diligence investigation of the
assets to be transferred under Section 4, the results of which shall be
reasonably acceptable to the party performing such investigation.
(c) The obligations of CAI and CS Wireless to consummate the Stage I
Transactions are subject to the fulfillment prior to or on the Stage I
Closing Date, of the following condition (which may be waived in whole or in
part by the party being benefitted thereby in its sole discretion):
(i) RESIGNATION OF HEARTLAND DIRECTORS. The Heartland Directors
and the Heartland Independent Director shall have resigned from the Board
of Directors of CS Wireless, and all committees thereof effective as of the
Stage I Closing Date.
12
Section 8. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
(a) HEARTLAND REPRESENTATIONS AND WARRANTIES. As a material inducement to
CAI and CS Wireless to enter into this Agreement and effect the transactions
contemplated hereby, Heartland hereby represents and warrants that:
(i) TITLE TO CS WIRELESS COMMON STOCK HELD BY HEARTLAND. Heartland
has and, subject to the terms and conditions of this Agreement, will sell,
assign, transfer, convey and deliver, good and indefeasible title to
3,836,035 shares of CS Wireless Common Stock, which shares comprise
Heartland's entire equity interest in CS Wireless, free and clear of any
security interest, claim, lien, pledge, option, encumbrance, charge,
agreement, voting trust, proxy or other restriction (each, an
"Encumbrance"), other than those Encumbrances created or existing by virtue
of the Stockholders' Agreement.
(ii) TITLE TO HEARTLAND ASSETS TRANSFERRED HEREUNDER. Except as set
forth on SCHEDULE 8(a)(ii) attached hereto, Heartland has and, subject to
the terms and conditions of this Agreement, will sell, assign, transfer,
convey and deliver, good and indefeasible title to (or a valid leasehold
interest in) all of the Heartland FCC Assets, the Heartland Leases and the
Portsmouth Non-FCC Assets transferred hereunder, free and clear of any and
all Encumbrances.
(iii) ORGANIZATION AND QUALIFICATION. Heartland is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in each other jurisdiction in which the
ownership, lease or operation of its property and assets or the conduct of
its business requires such qualification. Heartland has all corporate and
other necessary power and authority, and the legal right, to own or to hold
under lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact. Heartland has
all corporate and other necessary power and authority, and the legal right,
to execute and deliver this Agreement, and each of the other documents
contemplated hereby to which it is or is to be a party, and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
(iv) AUTHORIZATION. The execution, delivery and performance of this
Agreement by Heartland does not and will not (A) conflict with or result in
a breach of the terms, conditions or provisions of, (B) constitute a
default under, (C) result in the creation of any Encumbrance upon any of
the Heartland FCC Assets or Heartland Leases pursuant to, (D) give any
third party the right to modify, terminate or accelerate any obligation
under, (E) result in a violation of, or (F) require any authorization,
consent, approval, exemption or other action by or notice or declaration or
filing with any Governmental Authority or any other Person (other than as
has been duly made or obtained) pursuant to, the charter or bylaws of
Heartland, or any law, statute, rule or
13
regulation to which Heartland or any of its assets is subject, or any
agreement, instrument, order, judgment or decree to which Heartland or
any of its assets is subject.
(v) COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 8(a)(v),
Heartland is in compliance in all material respects with all laws, rules
and regulations applicable to the Portsmouth Non-FCC Assets, the Heartland
FCC Assets and Heartland Leases (including obtaining all authorizations,
consents, approvals, orders, licenses, exemptions from, and making all
filings or registrations or qualifications with, any Governmental
Authority), the noncompliance with which reasonably could have a material
adverse effect on such assets or the use thereof, and Heartland is in
compliance in all material respects with all provisions of applicable FCC
licenses including, without limitation, any build-out requirements and
other obligations, and with all leases, subleases and sublicenses to it of
MMDS or MDS channels comprising the Heartland FCC Assets or the Heartland
Leases, as the case may be. The FCC licenses and channel leases comprising
the Heartland FCC Assets and Heartland Leases conform in all material
respects to all applicable laws, ordinances, codes, licensing requirements,
rules and regulations, and Heartland has not received any notice to the
contrary. Except as set forth on SCHEDULE 8(a)(v), there are no
proceedings or complaints or, to the best of Heartland's knowledge,
investigations pending before or by any Governmental Authority which could
reasonably be expected to have a material adverse effect on any FCC license
or channel lease comprising the Heartland FCC Assets or Heartland Leases.
All applications, reports, fees, filings and other submissions required
under the Communications Act relating to the Heartland FCC Assets and
Heartland Leases have been made or paid in a timely fashion.
(vi) FCC LICENSES. Schedule 3(b) attached hereto correctly sets forth
all of the FCC licenses comprising the Heartland FCC Assets and correctly
sets forth the termination date of each such FCC license, and SCHEDULE
4(b)(i) attached hereto identifies all FCC licenses and the owner thereof
with respect to each of the leased channels comprising the Heartland
Leases. Each FCC license comprising the Heartland FCC Assets or the
Heartland Leases allowing the construction or the operation of radio
station facilities by a lessor of channel capacity who is obligated to
lease the capacity of the radio station (in whole or in part) under a lease
agreement or management/option agreement listed on SCHEDULES 3(b) or
4(b)(i) attached hereto is in full force and effect, and, to the best of
Heartland's knowledge, neither the licensee of such FCC license nor the FCC
license is subject to any complaint, investigation or proceeding by or
before the FCC, or on appeal from the FCC, which looks toward or would
result in the revocation, modification or non-renewal of the FCC license.
Except as set forth on SCHEDULE 8(a)(vi), each of such FCC licenses for an
MMDS or MDS station has a construction completion date which has not
elapsed or, if such date has elapsed, a request to the FCC to extend that
date for at least six (6) months has been properly filed and is pending, or
an application for certification or completion of construction has been
properly filed. Except as set forth on SCHEDULE 8(a)(vi), the FCC has
granted one or more FCC licenses to each lessor of the channel capacity
14
subject to the lease and lease/option agreements comprising the Heartland
FCC Assets or the Heartland Leases allowing that lessor to construct and/or
operate each radio station required for the lessor to provide to lessee
under each such agreement executed by such lessor the channel capacity
subject to that agreement.
(vii) LITIGATION. Except as set forth on SCHEDULE 8(a)(vii),
there is no action, suit, proceeding, arbitration, litigation or government
proceeding (including, without limitation, those related to FCC,
environmental or similar matters), or inquiry or investigation by any
Governmental Authority known to Heartland, in each case domestic or
foreign, pending against, or involving the Heartland FCC Assets, the
Heartland Leases or the Portsmouth Non-FCC Assets or the use thereof which
(A) questions the validity of this Agreement or any action taken or to be
taken by Heartland pursuant to or in connection with this Agreement, (B) is
required to be, and has not been, so disclosed in the filings with the SEC
by Heartland (and such proceedings as are summarized in such SEC filings
are accurately described in all material respects), or (C) could reasonably
be expected to materially adversely affect the FCC licenses or channel
leases comprising the Heartland FCC Assets and the Heartland Leases or the
operation of the channels and transmission facilities relating thereto.
(viii) NO VIOLATION, ETC. Heartland has not violated any law or
any governmental regulation or requirement which violation has had or would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of
Heartland relating to the Heartland FCC Assets, the Heartland Leases or the
Portsmouth Non-FCC Assets, and Heartland has not received notice of any
such violation. Heartland is not subject to, or has reason to believe it
may become subject to, any material liability (contingent or otherwise) or
corrective or remedial obligation arising under any environmental law, rule
or regulation relating to the Heartland FCC Assets, the Heartland Leases or
the Portsmouth Non-FCC Assets.
(ix) COPYRIGHT MATTERS. Heartland has submitted all requisite notices
(if any are required) under the Copyright Act for the carriage of all
Broadcast Stations as currently carried over any of the Heartland FCC
Assets. Heartland has filed in a timely manner with the Copyright Office
all required documents, instruments and statements of account and have
remitted payments of all required royalty fees with respect to compulsory
licenses provided for in Section III of the Copyright Act for the carriage
of broadcast signals in connection with the Heartland FCC Assets.
Heartland is not liable to any Person for copyright infringement under the
Copyright Act as a result of its business operations relating to the
Heartland FCC Assets and the Heartland Leases. There have been no
inquiries received from the Copyright Office or any other party, which
questioned such statements of account or any copyright royalty payments
made by Heartland with respect to the Heartland FCC Assets or Heartland
Leases, and no claim, action or demand for copyright infringement or for
non-payment of royalties is pending or, to the knowledge of Heartland,
threatened against Heartland with respect to the Heartland FCC Assets or
Heartland Leases.
15
(x) CONDITION OF PORTSMOUTH NON-FCC ASSETS. Except as set forth on
SCHEDULE 8(a)(x) and except for ordinary wear and tear, the Portsmouth
Non-FCC Assets are in good working order for the purpose for which they
were intended. All transmitters included in the Portsmouth Non-FCC Assets
used in the Portsmouth market meet all material applicable FCC acceptance
and frequency stability requirements.
(xi) NO INTERFERENCE CAUSED BY PORTSMOUTH MARKET. With respect to its
Portsmouth market, Heartland has not received any written complaint that
it, or any channels used in its Portsmouth market, is causing interference
to any reception, transmission or detection system.
(b) CS WIRELESS REPRESENTATIONS AND WARRANTIES. As a material
inducement to Heartland and CAI to enter into this Agreement and effect the
transactions contemplated hereby, CS Wireless hereby represents and warrants
that:
(i) TITLE TO CPE AND RADCLIFFE NON-FCC ASSETS. CS Wireless has and,
subject to the terms and conditions of this Agreement, will sell, assign,
transfer, convey and deliver, good and indefeasible title to the CPE and
Radcliffe Non-FCC Assets, free and clear of any and all Encumbrances.
(ii) TITLE TO CS WIRELESS FCC ASSETS AND CS LEASES TRANSFERRED
HEREUNDER. Except as set forth on SCHEDULE 8(b)(ii) attached hereto, CS
Wireless has and, subject to the terms and conditions of this Agreement,
will sell, assign, transfer, convey and deliver, good and indefeasible
title to (or a valid leasehold interest in) all of the CS Wireless FCC
Assets and CS Leases transferred hereunder, free and clear of any and all
Encumbrances.
(iii) ORGANIZATION AND QUALIFICATION. CS Wireless is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in each other jurisdiction in which the
ownership, lease or operation of its property and assets or the conduct of
its business requires such qualification. CS Wireless has all corporate
and other necessary power and authority, and the legal right, to own or to
hold under lease the properties it purports to own or hold under lease and
to transact the business it transacts and proposes to transact. CS
Wireless has all corporate and other necessary power and authority, and
the legal right, to execute and deliver this Agreement, and each of the
other documents contemplated hereby to which it is or is to be a party, and
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
(iv) AUTHORIZATION. The execution, delivery and performance of this
Agreement by CS Wireless does not and will not (A) conflict with or result
in a breach of the terms, conditions or provisions of, (B) constitute a
default under, (C) result in
16
the creation of any Encumbrance upon any of the CPE, the Radcliffe Non-FCC
Assets, the CS Leases or the CS Wireless FCC Assets pursuant to, (D) give
any third party the right to modify, terminate or accelerate any
obligation under, (E) result in a violation of, or (F) require any
authorization, consent, approval, exemption or other action by or notice
or declaration or filing with any Governmental Authority or any other
Person (other than as has been duly made or obtained) pursuant to, the
charter or bylaws of CS Wireless, or any law, statute, rule or regulation
to which CS Wireless or any of its assets is subject, or any agreement,
instrument, order, judgment or decree to which CS Wireless or any of its
assets is subject.
(v) COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 8(b)(v), CS
Wireless is in compliance in all material respects with all laws, rules and
regulations applicable to the CPE, the Radcliffe Non-FCC Assets, the CS
Leases and the CS Wireless FCC Assets (including obtaining all
authorizations, consents, approvals, orders, licenses, exemptions from, and
making all filings or registrations or qualifications with, any
Governmental Authority), the noncompliance with which reasonably could have
a material adverse effect on such assets or the use thereof, and CS
Wireless is in compliance in all material respects with all provisions of
applicable FCC licenses including, without limitation, any build-out
requirements and other obligations, and with all leases, subleases and
sublicenses to it of MMDS, MDS, or ITFS channels comprising the CS Wireless
FCC Assets and CS Leases, as the case may be. The FCC licenses and channel
leases comprising the CS Wireless FCC Assets and CS Leases conform in all
material respects to all applicable laws, ordinances, codes, licensing
requirements, rules and regulations, and CS Wireless has not received any
notice to the contrary. Except as set forth on SCHEDULE 8(b)(v), there are
no proceedings or complaints or, to the best of CS Wireless' knowledge,
investigations pending before or by any Governmental Authority which could
reasonably be expected to have a material adverse effect on any FCC license
or channel lease comprising the CS Wireless FCC Assets or CS Leases. All
applications, reports, fees, filings and other submissions required under
the Communications Act relating to the CS Wireless FCC Assets and CS Leases
have been made or paid in a timely fashion.
(vi) FCC LICENSES. SCHEDULE 3(a)(ii) attached hereto correctly sets
forth all of the FCC licenses comprising any portion of the CS Wireless FCC
Assets and correctly sets forth the termination date of each such FCC
license, and SCHEDULE 4(a)(i) identifies all FCC licenses and the owner
thereof with respect to each of the leased channels comprising the CS
Leases. Each FCC license comprising the CS Wireless FCC Assets or CS
Leases allowing the construction or the operation of radio station
facilities by a lessor of channel capacity who is obligated to lease the
capacity of the radio station (in whole or in part) under a lease agreement
or management/option agreement listed on SCHEDULES 3(a)(ii) or 4(a)(i)
attached hereto is in full force and effect, and, to the best of CS
Wireless' knowledge, neither the licensee of such FCC license nor the FCC
license is subject to any complaint, investigation or proceeding by or
before the FCC, or on appeal from the FCC, which looks toward or would
result in the revocation, modification or non-renewal of the FCC license.
Except as set forth on SCHEDULE 8(b)(vi), each of such FCC licenses for an
ITFS, MMDS or MDS station has a construction completion date which has not
elapsed or, if such date has elapsed, a request to the FCC to extend that
date for at least six (6) months has been properly filed and is pending, or
an application for certification of completion of construction has been
properly filed. Except as set forth on
17
SCHEDULE 8(b)(vi), the FCC has granted one or more FCC licenses to each
lessor of the channel capacity subject to the lease and lease/option
agreements comprising the CS Wireless FCC Assets or the CS Leases allowing
that lessor to construct and/or operate each radio station required for
the lessor to provide to lessee under each such agreement executed by such
lessor the channel capacity subject to that agreement.
(vii) LITIGATION. Except as set forth on SCHEDULE 8(b)(vii),
there is no action, suit, proceeding, arbitration, litigation or government
proceeding (including, without limitation, those related to FCC,
environmental or similar matters), or inquiry or investigation by any
Governmental Authority known to CS Wireless, in each case domestic or
foreign, pending against (or circumstances that may give rise to the same),
or involving the CPE, the CS Wireless FCC Assets, the CS Leases or the
Radcliffe Non-FCC Assets or the use thereof which (A) questions the
validity of this Agreement or any action taken or to be taken by CS
Wireless pursuant to or in connection with this Agreement, (B) is required
to be, and has not been, so disclosed in the filings with the SEC by CS
Wireless (and such proceedings as are summarized in such SEC filings are
accurately described in all material respects), or (C) could reasonably be
expected to materially adversely affect the FCC licenses or channel leases
comprising the CS Wireless FCC Assets or CS Leases or the operation of the
channels and transmission facilities relating thereto.
(viii) NO VIOLATION, ETC. CS Wireless has not violated any law or
any governmental regulation or requirement which violation has had or would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of
CS Wireless relating to the CPE, the CS Wireless FCC Assets, the CS Leases
or the Radcliffe Non-FCC Assets, and CS Wireless has not received notice of
any such violation. CS Wireless is not subject to, or has reason to
believe it may become subject to, any material liability (contingent or
otherwise) or corrective or remedial obligation arising under any
environmental law, rule or regulation relating to the CPE, the CS Wireless
FCC Assets, the CS Leases or the Radcliffe Non-FCC Assets.
(ix) COPYRIGHT MATTERS. CS Wireless has submitted all requisite
notices (if any are required) under the Copyright Act for the carriage of
all Broadcast Stations as currently carried over any of the CS Wireless FCC
Assets. CS Wireless has filed in a timely manner with the Copyright Office
all required documents, instruments and statements of account and have
remitted payments of all required royalty fees with respect to compulsory
licenses provided for in Section III of the Copyright Act for the carriage
of broadcast signals in connection with the CS Wireless FCC Assets. CS
Wireless is not liable to any Person for copyright infringement under the
Copyright Act
18
as a result of its business operations relating to the CS Wireless FCC
Assets and CS Leases. There have been no inquiries received from the
Copyright Office or any other party, which questioned such statements of
account or any copyright royalty payments made by CS Wireless with
respect to the CS Wireless FCC Assets or CS Leases, and no claim, action
or demand for copyright infringement or for non-payment of royalties is
pending or, to the knowledge of CS Wireless, threatened against CS
Wireless with respect to the CS Wireless FCC Assets or CS Leases.
(x) CONDITION OF CPE AND RADCLIFFE NON-FCC ASSETS. Except as set
forth on SCHEDULE 8(b)(x) and except for ordinary wear and tear, the CPE
and the Radcliffe Non-FCC Assets are in good working order for the purpose
for which they were intended. All transmitters included in the Radcliffe
Non-FCC Assets used in the Radcliffe market meet all material applicable
FCC acceptance and frequency stability requirements.
(xi) NO INTERFERENCE CAUSED BY RADCLIFFE MARKET, CS WIRELESS FCC
ASSETS OR CS LEASES. With respect to its Radcliffe market, CS Wireless has
not received any written complaint that it, or any channels used in its
Radcliffe market or otherwise comprising CS Wireless FCC Assets and CS
Leases, is causing interference to any reception, transmission or detection
system.
(c) As a material inducement to Heartland and CS Wireless to enter into
this Agreement and effect the transactions contemplated hereby, CAI hereby
represents and warrants that as of the date hereof:
(i) ORGANIZATION AND QUALIFICATION. CAI is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in each other jurisdiction in which the
ownership, lease or operation of its property and assets or the conduct of
its business requires such qualification. CAI has all corporate and other
necessary power and authority, and the legal right, to own or to hold under
lease the properties it purports to own or hold under lease and to transact
the business it transacts and proposes to transact. CAI has all corporate
and other necessary power and authority, and the legal right, to execute
and deliver this Agreement, and each of the other documents contemplated
hereby to which it is or is to be a party, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby.
(ii) AUTHORIZATION. The execution, delivery and performance of this
Agreement by CAI does not and will not (A) conflict with or result in a
breach of the terms, conditions or provisions of, (B) constitute a default
under, (C) give any third party the right to modify, terminate or
accelerate any obligation under, (D) result in a violation of, of (E)
require any authorization, consent, approval, exemption or other action by
or notice or declaration or filing with any Governmental Authority or any
other Person (other than as has been duly made or obtained) pursuant to,
the charter or
19
bylaws of CAI, or any law, statute, rule or regulation to which CAI or any
of its assets in subject, or any agreement, instrument, order, judgment or
decree to which CAI or any of its assets is subject.
(iii) Litigation. Except as set forth on SCHEDULE 8(c)(iii),
there is no action, suit, proceeding, arbitration, litigation or government
proceeding (including, without limitation, those related to FCC,
environmental or similar matters), or inquiry or investigation by any
Governmental Authority known to CAI, in each case domestic or foreign,
pending against or involving CAI which (A) questions the validity of this
Agreement or any action taken or to be taken by CAI pursuant to or in
connection with this Agreement or (B) is required to be, and has not been,
so disclosed in the filings with the SEC by CAI (and such proceedings as
are summarized in such SEC filings are accurately described in all material
respects).
(iv) NO VIOLATION, ETC. CAI has not violated any law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of
CAI, and CAI has not received notice of any such violation. CAI is not
subject to, or has reason to believe it may become subject to, any material
liability (contingent or otherwise) or corrective or remedial obligation
arising under any environmental law, rule or regulation.
(v) INVESTMENT REPRESENTATION. CAI is purchasing the CS Wireless
Common Stock for its own account and not with a view to the public
distribution thereof. CAI acknowledges that the CS Wireless Common Stock
has not been registered under the Securities Act , and that such shares may
be resold only if registered pursuant to the provisions of the Securities
Act, or if an exemption from registration is available.
Section 9. COVENANTS OF ALL OF THE PARTIES.
(a) Unless otherwise indicated:
(i) Each of the parties hereto agrees to use commercially reasonable
efforts to bring about the fulfillment of the conditions precedent to the
Stage I Closing.
(ii) Subject to the terms and conditions provided herein, each of the
parties hereto agrees to (A) use commercially reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable law and regulation to
consummate and make effective the Stage I Transactions in accordance with
the terms of this Agreement, perform each of its obligations hereunder,
including without limitation, the obligations of the parties set forth in
Section 6 hereof, and (B) cooperate following the Stage I Closing in the
taking of any actions necessary or desirable in order to effect the
purposes of this Agreement with respect to the Stage I Transactions.
20
(iii) Each party hereto shall promptly inform each of the other
parties hereto of any circumstance or set of circumstances which could
reasonably be expected to impair such party's ability to perform any of its
obligations under this Agreement.
(b) Unless otherwise indicated:
(i) Each of the parties hereto agrees to use commercially reasonable
efforts to bring about the fulfillment of the conditions precedent to the
Stage II Closing.
(ii) Subject to the terms and conditions provided herein, each of the
parties hereto agrees to (A) use commercially reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable law and regulation to
consummate and make effective the Stage II Transactions in accordance with
the terms of this Agreement and (B) cooperate following the Stage II
Closing in the taking of any actions necessary or desirable in order to
effect the purposes of this Agreement with respect to the Stage II
Transactions.
(iii) Each party hereto shall promptly inform each of the other
parties hereto of any circumstance or set of circumstances which could
reasonably be expected to impair such party's ability to perform any of its
obligations under this Agreement.
Section 10. COVENANTS OF HEARTLAND. In addition to the covenants set
forth in Section 9 above:
(a) Between the date hereof and the Stage I Closing, Heartland shall:
(i) Retain and safeguard the CS Wireless Common Stock held by it, and
maintain such CS Wireless Common Stock free and clear of any and all
Encumbrances and shall not allow, permit or suffer to exist any
Encumbrance, sale, assignment, lease, waiver of rights or granting of a
proxy with respect to, voting agreement or trust affecting other than the
Stockholders' Agreement, or otherwise transfer or dispose of the CS
Wireless Common Stock held by Heartland.
(ii) Within three business days of its commencement of a case under
the Bankruptcy Code, if prior thereto the Stage I Closing has not occurred,
(a) file with the bankruptcy court a motion (together with appropriate
supporting papers) requesting the bankruptcy court to enter, an order in
form and substance reasonably acceptable to CAI and CS Wireless (1)
authorizing Heartland to assume this Agreement, (2) approving the
transactions contemplated herein, and (3) authorizing Heartland to assume
the BTA Lease Agreement, and (b) seek a hearing on such motion to be held
within 20 days of the date of the filing thereof.
(b) Between the date hereof and the Stage II Closing, Heartland shall:
21
(i) Use its reasonable efforts (A) to cause to be maintained in full
force and effect, and (B) to cause the holders to renew when required to
prevent the lapse of, all FCC-issued licenses, conditional licenses and
authorizations comprising any portion of the Heartland FCC Assets or
Heartland Leases.
(ii) Use reasonable efforts to perform each and every obligation of
the lessee under any and all excess channel capacity lease agreements or
MDS transmission capacity lease agreements comprising any portion of the
Heartland FCC Assets or Heartland Leases.
(iii) Use reasonable efforts to cause each of its lessors to
prosecute in good faith and diligently pursue each MDS application and ITFS
application for facilities subject to a lease agreement with Heartland that
comprise any portion of the Heartland FCC Assets or Heartland Leases.
(iv) Operate the Heartland FCC Assets in the ordinary course of
business in accordance with past practices for such operation (except where
such conduct would conflict with any covenant or other obligation of
Heartland under this Agreement).
(v) Promptly notify CAI and CS Wireless in writing of any unusual or
material developments with respect to the business or operations of any of
the Heartland FCC Assets or Heartland Leases and of any material changes in
any of the information contained in Heartland's representation and
warranties contained in this Agreement.
(vi) Subsequent to its commencement of a case under the Bankruptcy
Code, seek bankruptcy court approval of, and use its best efforts to
obtain, an order in form and substance reasonably acceptable to CAI and CS
Wireless (1) authorizing the assumption of this Agreement, (2) approving
the transactions contemplated herein, and (3) authorizing Heartland to
assume the BTA Lease and Option Agreement.
(c) Between the date hereof and the Stage II Closing, Heartland shall not
allow, permit or suffer to exist:
(i) The creation, assumption or permitting to exist of any
Encumbrance, other than the lien for taxes not yet due and payable, on any
of the Heartland FCC Assets or Heartland Leases.
(ii) The sale, assignment, lease, waiver of rights with respect to,
sublease or other transfer or disposal of any and all FCC-issued licenses,
conditional licenses and authorizations, or the lessee's leasehold interest
in any excess channel capacity lease agreements or MDS transmission
capacity lease agreements comprising any portion of the Heartland FCC
Assets or Heartland Leases.
22
(iii) Any material action, or material failure to act under excess
channel capacity lease agreements or MDS transmission capacity lease
agreements comprising any portion of the Heartland FCC Assets or Heartland
Leases, which would constitute a default or a potential default thereunder
(assuming that any requirements of notice or lapse of time have occurred).
Section 11. COVENANTS OF CS WIRELESS. In addition to the covenants set
forth in Section 9 above:
(a) Between the date hereof and the Stage I Closing,
(i) CS Wireless shall retain and safeguard the CS Wireless Non-FCC
Assets and the CS Wireless FCC Assets held by it, and maintain such CS
Wireless Non-FCC Assets free and clear of all Encumbrances and shall not
allow, permit or suffer to exist any Encumbrance, sale, assignment, lease,
waiver of rights with respect to, or otherwise transfer or dispose of the
CS Wireless Non-FCC Assets and the CS Wireless FCC Assets held by CS
Wireless; and
(ii) Within three business days of its commencement of a case under
the Bankruptcy Code, if prior thereto the Stage I Closing has not occurred,
(a) file with the bankruptcy court a motion (together with appropriate
supporting papers) requesting the bankruptcy court to enter, an order in
form and substance reasonably acceptable to Heartland and CAI (1)
authorizing CS Wireless to assume this Agreement, (2) approving the
transactions contemplated herein, and (3) authorizing CS Wireless to assume
the BTA Lease Agreement, and (b) seek a hearing on such motion to be held
within 20 days of the date of the filing thereof.
(b) Between the date hereof and the Stage II Closing, CS Wireless shall:
(i) Use its reasonable efforts (A) to cause to be maintained in full
force and effect, and (B) to cause the holders to renew when required to
prevent the lapse of, all FCC-issued licenses, conditional licenses and
authorizations comprising any portion of the CS Wireless FCC Assets or CS
Leases.
(ii) Use reasonable efforts to perform each and every obligation of
the lessee under any and all excess channel capacity lease agreements or
MDS transmission capacity lease agreements comprising any portion of the CS
Wireless FCC Assets or CS Leases.
(iii) Use reasonable efforts to cause each of its lessors to
prosecute in good faith and diligently pursue each MDS application and ITFS
application for facilities subject to a lease agreement with CS Wireless
that comprise any portion of the CS Wireless FCC Assets or CS Leases.
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(iv) Operate the CS Wireless FCC Assets in the ordinary course of
business in accordance with past practices for such operation (except where
such conduct would conflict with any covenant or other obligation of CS
Wireless under this Agreement).
(v) Promptly notify Heartland and CAI in writing of any unusual or
material developments with respect to the business or operations of any of
the CS Wireless FCC Assets or CS Leases and of any material changes in any
of the information contained in CS Wireless' representation and warranties
contained in this Agreement.
(vi) Subsequent to its commencement of a case under the Bankruptcy
Code, seek bankruptcy court approval of, and use its best efforts to
obtain, an order in form and substance reasonably acceptable to Heartland
(1) authorizing the assumption of this Agreement, (2) approving the
transactions contemplated herein, and (3) authorizing CS Wireless to assume
the BTA Lease and Option Agreement.
(c) Between the date hereof and the Stage II Closing, CS Wireless shall
not allow, permit or suffer to exist:
(i) The creation, assumption or permitting to exist of any
Encumbrance, other than the lien for taxes not yet due and payable, on any
of the CS Wireless FCC Assets or CS Leases.
(ii) The sale, assignment, lease, waiver of rights with respect to,
sublease or other transfer or disposal of any and all FCC-issued licenses,
conditional licenses and authorizations, or the lessee's leasehold interest
in any excess channel capacity lease agreements or MDS transmission
capacity lease agreements comprising any portion of the CS Wireless FCC
Assets or CS Leases.
(iii) Any material action, or material failure to act under excess
channel capacity lease agreements or MDS transmission capacity lease
agreements comprising any portion of the CS Wireless FCC Assets or CS
Leases, which would constitute a default or a potential default of the
lessee thereunder (assuming that any requirements of notice or lapse of
time have occurred).
Section 12. RELEASES AND INDEMNIFICATION. As further consideration for
the transactions contemplated hereby, the parties agree as follows:
(a) At the Stage I Closing, without further action by the parties, CS
Wireless shall release and forever discharge Heartland, its subsidiaries,
affiliates, stockholders, officers, directors, agents, employees, successors and
assigns from any and all actions claims, liabilities, damages, demands,
responsibility and accountability of every nature whatsoever ("Claims"), whether
known or unknown, which CS Wireless ever had, then has or may have for, upon or
by reason of any matter, cause or thing whatsoever against Heartland arising out
of that certain Administrative Services Agreement dated as of February 23, 1996
(the "Services Agreement")
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by and between Heartland and CS Wireless, including, without limitation, CS
WIRELESS SYSTEMS, INC. V. HEARTLAND WIRELESS COMMUNICATIONS, INC.; CAUSE NO.
98-CI-15104; ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, from the beginning of
the world to the Stage I Closing Date, or which CS Wireless may from and
after the Stage I Closing Date have against Heartland by reason of any
matter, act, omission, cause or event arising solely out of the Services
Agreement, which has occurred or which has been done or suffered to be done
before the Stage I Closing Date. CS Wireless hereby agrees to withdraw, with
prejudice, CS WIRELESS SYSTEMS, INC. V. HEARTLAND WIRELESS COMMUNICATIONS,
INC.; CAUSE NO. 98-CI-15104; 225TH DISTRICT COURT, BEXAR COUNTY, TEXAS on or
before the Stage I Closing.
(b) At the Stage I Closing, without further action by the parties,
Heartland shall release and forever discharge CS Wireless, its subsidiaries,
affiliates, stockholders, officers, directors, agents, employees, successors and
assigns from any and all Claims, whether known or unknown, which Heartland ever
had, then has or may have for, upon or by reason of any matter, cause or thing
whatsoever against CS Wireless arising out of the Services Agreement and any
Claim capable of being asserted in connection therewith from the beginning of
the world to the Stage I Closing Date, or which Heartland may hereafter have
against CS Wireless by reason of any matter, act, omission, cause or event
arising solely out of the Services Agreement, which has occurred or which has
been done or suffered to be done before the Stage I Closing Date.
(c) At the Stage I Closing, without further action by the parties, each of
the parties hereto shall release and forever discharges the other parties
hereto, their respective subsidiaries, affiliates, stockholders, officers,
directors, agents, employees, successors and assigns from any and all Claims,
whether known or unknown, which each such party ever had, then has or may have
for, upon or by reason of any matter, cause or thing whatsoever against the
other parties hereto arising solely out of the Participation Agreement or the
Stockholders' Agreement from the beginning of the world to the Stage I Closing
Date, or which each such party may hereafter have against the other parties
hereto by reason of any matter, act, omission, cause or event arising solely out
of the Participation Agreement or the Stockholders' Agreement, which has
occurred or which has been done or suffered to be done before the date hereof.
(d) CS Wireless acknowledges and ratifies the terms and conditions of
that certain Separation Agreement dated as of October 19, 1998 (the
"Separation Agreement") by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and CS
Wireless. CS Wireless acknowledges that (i) Hosea has been employed by
Heartland as Senior Vice President - Video Operations and (ii) Hosea's
employment by Heartland does not violate or breach the Non-Compete
Restrictions as defined and set forth in Section 5 of the Separation
Agreement or any non-disclosure covenants contained in Paragraph 9(a) of the
Employment Agreement dated as of April 2, 1997 or the Non-Disclosure
Agreement dated as of April 2, 1997 between Hosea and CS Wireless.
Notwithstanding anything to the contrary set forth in this Section 12(d), CS
Wireless' acknowledgment set forth herein shall not modify or constitute a
waiver of CS Wireless' rights to enforce Hosea's non-disclosure covenants
relating to any person or entity other than Heartland or its existing
wholly-owned subsidiaries set forth in Section 2 of the Separation Agreement
or Hosea's obligations relating to any person or entity other than Heartland
or its existing wholly-owned subsidiaries under the Employment Agreement and
Non-Disclosure Agreement referred
25
to above CS Wireless expressly agrees to assume the Separation Agreement
described above in any bankruptcy proceeding filed by or against CS Wireless.
(e) Notwithstanding anything to the contrary, CAI shall indemnify and hold
Heartland harmless from any and all Claims arising from or in connection with
CAI's purchase from Heartland of the CS Wireless Common Stock at the Stage I
Closing pursuant to Section 2 of this Agreement, including any such Claims
arising from, in connection with, or related to any subsequent disposition or
transfer of the CS Wireless Common Stock by CAI; PROVIDED, HOWEVER, any
liability of CAI to Heartland arising by operation of this Section 12(e) arising
from, in connection with, or related to a subsequent disposition or transfer of
the CS Wireless Common Stock by CAI to CS Wireless shall be deemed fully
satisfied by CAI with the return to CS Wireless of any and all consideration
received by CAI from CS Wireless for such disposition or transfer, and
thereafter, Heartland shall no longer have any claim for indemnification against
CAI under this Section 12(e).
(f) In the event CS Wireless commences a bankruptcy proceeding, CAI shall
use its best efforts in its capacity as a stockholder of CS Wireless, and shall
cause the CAI Directors and CAI Independent Directors (each as defined in the
Stockholders' Agreement) to use their best efforts, recognizing and taking into
consideration the various fiduciary duties owed by such directors to various CS
Wireless constituencies, to cause (i) CS Wireless to fulfill its obligations to
the Heartland Directors, the Heartland Independent Directors and Hosea, and (ii)
CS Wireless to treat its indemnity obligations to the Heartland Directors, the
Heartland Independent Directors and Hosea no less favorably than CS Wireless
treats its indemnity obligations to any other person who has served, is serving
or may hereafter serve as a member of the board of directors of CS Wireless.
Section 13. TERMINATION.
(a) This Agreement may be terminated at any time prior to the Stage I
Closing by mutual written consent of the parties hereto.
(b) This Agreement shall terminate (without further action or notice (in
writing or otherwise) by any of the parties hereto), unless CAI and Heartland
shall have extended in writing date or the period set forth in this Section 13
(or any of the extended dates or periods), if the Stage I Closing shall not have
occurred by December 4, 1998.
(c) In the event of a termination of this Agreement in accordance with
this Section 13, this Agreement shall forthwith become void and of no further
force and effect, and there shall be no liability hereunder on the part of any
party or its affiliates, directors, officers, shareholders, agents or other
representatives; PROVIDED, HOWEVER, that Sections 2(b), 13, 15 and 16,
inclusive, shall survive any termination of this Agreement, and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement;
PROVIDED FURTHER, HOWEVER, that if the Stage I Closing shall have occurred prior
to the termination of this Agreement, Section 12 shall survive and nothing
contained herein shall limit, abridge or
26
otherwise affect, or relieve any party from, the continuing rights and
obligations arising out of such Stage I Closing.
Section 14. FURTHER ASSURANCES. The parties hereto agree to take all
actions necessary or advisable, in the opinion of the party taking such action,
to effect the terms of the provisions hereof.
Section 15. NO WAIVER. Failure by any party hereto to insist on strict
performance or observance of any provision of this Agreement or to exercise any
right or remedy shall not be construed as a waiver of any right or remedy with
respect to any existing or subsequent breach or default.
Section 16. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
attached hereto and the BTA Lease and Option Agreement, as amended, constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersedes any and all previous agreements, representations and
understandings among the parties hereto with respect to such matters whether
oral or in writing.
(b) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
(c) SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
(d) NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except for the persons not parties to this
Agreement who are being released or indemnified pursuant to Section 12,
nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any person not party to this Agreement, including,
without limitation, (i) any receiver appointed for any party hereto, or (ii)
any trustee, responsible officer or other person or entity appointed to
manage business or property of any party hereto in such party's case under
any chapter of the Bankruptcy Code.
(e) AMENDMENTS. This Agreement may be amended, supplemented or modified,
and any provision hereof may be waived, only pursuant to a written instrument
making specific reference to this Agreement signed by each of the parties
hereto.
(f) EXPENSES. Each of the parties hereto shall be solely responsible for
its fees and expenses incurred in connection with the negotiation, execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
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(g) COUNTERPARTS. This Agreement may be executed by facsimile and in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(h) PUBLIC ANNOUNCEMENTS. The parties hereto will agree upon the timing
and content of an initial press release to be issued describing the transactions
contemplated by this Agreement, and will not make any public announcement
thereof prior to reaching such agreement unless required to do so by applicable
law or regulation.
(i) NAMES, CAPTIONS, ETC. The name assigned this Agreement and the
section captions used herein are for convenience or reference only and shall not
affect the interpretation or construction thereof.
(j) NO STRICT CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
(k) ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce the terms and
provisions hereof in any state or federal court in the State of Delaware, this
being in addition to any other remedy to which they are entitled at law or in
equity.
[The balance of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement through
their duly authorized representatives on the day and year first above written.
HEARTLAND WIRELESS
COMMUNICATIONS, INC.
By:___________________________________
Name:
Title:
CS WIRELESS SYSTEMS, INC.
By:___________________________________
Name:
Title:
CAI WIRELESS SYSTEMS, INC.
By:___________________________________
Name:
Title:
29