EXECUTION COPY
Exhibit 10.13
MASTER SPECTRUM ACQUISITION AGREEMENT
By and Between
FLUX U.S. CORPORATION
And
HISPANIC INFORMATION AND TELECOMMUNICATIONS NETWORK, INC.
Dated as of November 13, 2003
TABLE OF CONTENTS
PAGE
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Article 1. Acquisition of Spectrum Rights................................ 2
Section 1.01 First Closing Spectrum Rights........................... 2
Section 1.02 Extra Spectrum Rights................................... 2
Section 1.03 IUA Lease Rates......................................... 3
Section 1.04 FCC Permitted Extensions................................ 3
Section 1.05 Right of First Refusal on IUAs.......................... 4
Article 2. Consideration................................................. 5
Section 2.01 First Spectrum Consideration............................ 5
Section 2.02 Extra Spectrum Consideration............................ 5
Section 2.03 Contingent Consideration................................ 6
Section 2.04 Adjustment of Share Consideration....................... 6
Section 2.05 CPOP Verification....................................... 7
Article 3. Closings...................................................... 8
Section 3.01 Closings................................................ 8
Section 3.02 First Closing Deliveries................................ 8
Section 3.03 Subsequent Closing Deliveries........................... 9
Section 3.04 Further Assurances...................................... 9
Article 4. Representations and Warranties of HITN........................ 9
Section 4.01 Organization and Good Standing.......................... 9
Section 4.02 Authorization of Agreement.............................. 9
Section 4.03 No Conflict............................................. 10
Section 4.04 FCC Licenses............................................ 10
Section 4.05 Tower Leases............................................ 12
Section 4.06 Interference Coordination Agreements.................... 12
Section 4.07 Litigation.............................................. 12
Section 4.08 Compliance with Laws; Permits........................... 13
Section 4.09 Offering Exemption; Securities Representations.......... 13
Section 4.10 Brokers................................................. 14
Section 4.11 Suitability............................................. 14
Section 4.12 Disclosure.............................................. 14
Section 4.13 Knowledge............................................... 14
Article 5. Representations and Warranties of Flux........................ 15
Section 5.01 Organization and Good Standing.......................... 15
Section 5.02 Authorization of Agreement.............................. 15
Section 5.03 Capitalization.......................................... 15
Section 5.04 Subsidiaries............................................ 16
Section 5.05 No Conflict............................................. 17
Section 5.06 Litigation.............................................. 17
Section 5.07 Brokers................................................. 18
Article 6. Covenants..................................................... 18
Section 6.01 Consents and Approvals.................................. 18
Section 6.02 Notice of Breach........................................ 18
i
Section 6.03 Access to Information................................... 18
Section 6.04 Maintenance of FCC Qualifications....................... 18
Section 6.05 Assignment of FCC Licenses.............................. 19
Section 6.06 Legends................................................. 19
Section 6.07 Future Acquisitions of ITFS Licenses.................... 20
Section 6.08 Maintenance of FCC Qualifications....................... 20
Section 6.09 Existing Rights of First Refusal........................ 21
Article 7. Conditions.................................................... 21
Section 7.01 Conditions to Each party's Obligations.................. 21
Section 7.02 Conditions to the Obligations of Flux................... 22
Section 7.03 Conditions to Obligations of HITN....................... 23
Article 8. Indemnification............................................... 24
Section 8.01 Indemnification......................................... 24
Section 8.02 Limitations on Indemnification for Breaches of
Representations and Warranties.......................... 25
Section 8.03 Indemnification Procedures.............................. 25
Section 8.04 Treatment for Tax Purposes.............................. 26
Article 9. Termination................................................... 26
Section 9.01 Expiration; Termination................................. 26
Article 10. General Provisions........................................... 26
Section 10.01 Payment of Sales, Use or Similar Taxes.................. 26
Section 10.02 Survival of Representations and Warranties.............. 27
Section 10.03 Expenses................................................ 27
Section 10.04 Entire Agreement; Amendments and Waivers................ 27
Section 10.05 Governing Law........................................... 27
Section 10.06 Table of Contents and Headings.......................... 28
Section 10.07 Notices................................................. 28
Section 10.08 Publicity............................................... 29
Section 10.09 Severability............................................ 29
Section 10.10 Binding Effect; Assignment.............................. 29
Section 10.11 Remedies................................................ 29
Section 10.12 Resolution of Certain Disputes.......................... 29
Section 10.13 Counterparts............................................ 32
ii
LIST OF EXHIBITS
A. Definitions and Interpretation
B. Form of IUA
C. Pro Forma IUA Rates
D. Form of Stockholder Agreement
E. Form of Registration Rights Agreement
F. Warrant Agreement
LIST OF ANNEXES
I. First Closing Spectrum Rights
II. Extra Spectrum Rights (Pending Applications)
iii
MASTER SPECTRUM ACQUISITION AGREEMENT
MASTER SPECTRUM ACQUISITION AGREEMENT, dated as of November 13, 2003
(the "First Closing Date"), by and between Flux U.S. Corporation, a Delaware
corporation ("Flux"), and Hispanic Information and Telecommunications Network,
Inc., a New York nonprofit corporation ("HITN").
RECITALS:
WHEREAS, Annex I hereto lists certain licenses ("FCC Licenses") for
Instructional Television Fixed Service ("ITFS") that have been granted by the
Federal Communications Commission (the "FCC") to HITN as of the First Closing
Date (and such annex identifies, with respect to each of the FCC Licenses listed
therein, the ITFS channels licensed thereunder ("Channels"), the exclusive
service area of such FCC License under applicable FCC rules, regulations and
policies ("Market"), the number of total households within such Market
("Households"), and the product of the number of Channels times the Households
("CPOPs"));
WHEREAS, Annex II hereto lists all Pending Applications (as defined
herein) (and such annex identifies, with respect to each of the potential FCC
Licenses listed therein, the Channels, Market, number of Households, and the
number CPOPs);
WHEREAS, subject to the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules, regulations and policies (the "FCC
Rules"), ITFS stations' excess capacity may be used for commercial purposes (the
"Commercial Spectrum Capacity");
WHEREAS, HITN desires to lease to Flux, and Flux desires to lease from
HITN, the Commercial Spectrum Capacity for each of the Channels listed in Annex
I (the "First Closing Spectrum Rights"), consisting of 28,448,074 CPOPs, free
and clear of any Liens;
WHEREAS, subject to obtaining FCC Licenses under the Pending
Applications, HITN desires to lease to Flux, and Flux desires to lease from
HITN, the Commercial Spectrum Capacity for each of the Channels listed in Annex
II (the "Extra Spectrum Rights"), free and clear of any Liens, provided that
HITN leases the Extra Spectrum Rights to Flux within two hundred seventy (270)
days of the First Closing Date (the "Extra Spectrum Period");
WHEREAS, HITN agreed to lease certain Commercial Spectrum Capacity to
Clearwire Communications, Inc., a Delaware corporation ("CCI"), pursuant to that
certain Spectrum Acquisition Agreement, dated as of April 23, 2003 (the
"Clearwire Agreement"), by and between CCI and HITN, and the Clearwire Agreement
grants CCI certain rights ("CCI Rights") to lease other Commercial Spectrum
Capacity from HITN;
WHEREAS, Flux, HITN, CCI, and Clearwire Holdings, Inc. have entered
into that certain Agreement and Undertaking of even date herewith (the
"Undertaking") to modify certain provisions of the Clearwire Agreement;
PAGE 1 - MASTER SPECTRUM ACQUISITION AGREEMENT
WHEREAS, the closing of the transactions contemplated in that certain
Stock Purchase Agreement (as defined in the Undertaking, the "Stock Purchase
Agreement") are occurring simultaneously with the First Closing hereunder;
WHEREAS, Flux Fixed Wireless, LLC ("FFW"), a stockholder of Flux, may
contribute or assign to Flux certain MMDS and ITFS licenses or leases within the
Extra Spectrum Period ("Pending Channels" provided that the term Pending
Channels excludes CPOPs contributed or assigned to Flux or any of its Affiliates
in connection with the transactions contemplated in the Clearwire Agreement,
Undertaking, and/or Stock Purchase Agreement); and
WHEREAS, certain defined terms used in this Agreement, and rules of
interpretation applicable to this Agreement, are contained in Exhibit A hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, and agreements set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, agree as follows:
Article 1.
ACQUISITION OF SPECTRUM RIGHTS
Section 1.01 First Closing Spectrum Rights. Upon the terms and subject
to conditions set forth in this Agreement, at the First Closing, HITN shall
lease to Flux, and Flux shall lease from HITN, all of the First Closing Spectrum
Rights, free and clear of all Liens, pursuant to an individual use agreement in
substantially the form attached as Exhibit B hereto (an "IUA").
Section 1.02 Extra Spectrum Rights. HITN shall have the right under
this Section 1.02, but not the obligation, to lease to Flux additional
Commercial Spectrum Capacity, consisting of all or part of the Channels and
Markets listed on the attached Annex II up to the number of CPOPs equal to the
CPOPs covered by the Pending Channels that have been contributed to or assigned
to Flux by FFW as of such date (the "Extra Spectrum Rights"), free and clear of
all Liens, pursuant to an IUA. Each time that HITN desires to exercise such
right, HITN must deliver to Flux, within the Extra Spectrum Period, a written
notice ("Extra Spectrum Notice") of the Extra Spectrum Rights that HITN desires
to lease to Flux. Each Extra Spectrum Notice must contain a description of the
applicable FCC License, licensee, Channels, Market, Households, and CPOPs. Upon
the terms and subject to conditions set forth in this Agreement, at each
Subsequent Closing, if any, HITN shall lease to Flux, and Flux shall lease from
HITN, the Extra Spectrum Rights designated in the corresponding Extra Spectrum
Notice, free and clear of all Liens, pursuant to an IUA. If HITN does not
deliver an Extra Spectrum Notice as to any of the Extra Spectrum Rights within
the Extra Spectrum Period, this Agreement shall terminate as to such Extra
Spectrum Rights and Flux will have no further obligation or liability with
respect to such Extra Spectrum Rights.
Section 1.03 IUA Lease Rates. Each IUA shall contain the same tiered
lease rates for all Spectrum Rights leased therein. The net present value of the
aggregate lease
PAGE 2 - MASTER SPECTRUM ACQUISITION AGREEMENT
payments under each IUA (over a full term of thirty (30) years, using a discount
rate of ten percent (10%) per annum and a growth rate of three percent (3%) per
annum) shall equal Nine Cents ($0.09) per Verified CPOP leased therein,
substantially in accordance with the pro forma schedule of lease payments
attached as Exhibit C hereto, as reasonably determined by Flux.
Section 1.04 FCC Permitted Extensions.
(a) With respect to each IUA for Commercial Spectrum Capacity, if the
FCC Rules should at any time permit lease terms in excess of fifteen (15) years,
the term (either the initial term or any renewal term) of each IUA then in
effect and any new IUAs entered into after such date shall be automatically
extended to the maximum term then permitted, not to exceed a maximum term of
thirty (30) years for each IUA. No additional compensation (other than
compensation set forth in the IUA) shall be payable to HITN in connection with
such extension of the term. Any party hereto that shall determine that there has
been a change in the FCC Rules permitting such an extension shall promptly
notify the other party in writing of such change and the notifying party's basis
for determining the existence of such change.
(b) Upon the expiration of an IUA, Flux and HITN shall enter into a
Renewal Agreement for an additional term equal to the remainder of the thirty
(30) period from the date of the IUA unless (i) Flux or HITN terminated the IUA
prior to the expiration of the Term (as defined in the IUA) in accordance with
its terms or (ii) HITN enters into an agreement with the original offering party
after the satisfaction of its obligations with respect to the right of first
refusal set forth in Section 1.05. If Flux and HITN enter into a Renewal
Agreement, the only payments due HITN thereunder shall be the monthly lease
payments described therein; HITN shall not receive any other payments in
connection with entering into the Renewal Agreement.
(c) If the FCC changes its policy at any time to permit additional
renewal, first renewal, or other substantially similar rights (an "Extension
Right"), each IUA then in effect shall be deemed amended to include the
Extension Right to the extent, and only to the extent, necessary to permit the
extension of a Term to a total maximum term not to exceed thirty (30) years, and
no additional compensation (other than compensation set forth in the IUA) shall
be payable to HITN in connection with such amendment; provided that in any case,
the right of first refusal in Section 1.05 shall remain in effect upon
expiration of such thirty (30) year term.
Section 1.05 Right of First Refusal on IUAs. With respect to each IUA,
during the Term (as defined in the IUA) and for a period of twenty-four (24)
months thereafter ("ROFR Period"), Flux shall have a right of first refusal to
use the Commercial Spectrum Capacity as set forth in this Section 1.05. Upon the
receipt by HITN of any bona fide offer (an "ROFR Offer") to use any of the
Commercial Spectrum Capacity following the Term, which ROFR Offer HITN desires
to accept, HITN shall transmit a written notice of the ROFR Offer to Flux (the
"ROFR Offer Notice"). The ROFR Offer Notice (i) shall contain the name and
address of the Person making the ROFR Offer, the payment structure therefore and
a summary of all material terms of such ROFR Offer, and (ii) shall offer to Flux
the option to enter into a new agreement upon the terms and subject to the
conditions of the proposed third party use or lease agreement as set forth in
the ROFR Offer Notice. Flux shall then have the right for thirty (30) days to
accept such ROFR Offer. If Flux accepts such ROFR Offer, Flux and HITN shall
enter into a new agreement on such terms and conditions. If after such thirty
(30) day period Flux does not accept such
PAGE 3 - MASTER SPECTRUM ACQUISITION AGREEMENT
ROFR Offer, its rights hereunder as to such ROFR Offer shall terminate and HITN
may for a period of sixty (60) days following the Term enter into an agreement
with the original offering party on the same terms and conditions as were
offered to Flux. If after such sixty (60) day period, HITN does not enter such
an agreement with the original offering party, the Flux right of first refusal
described in this Section 1.05 shall again apply for such timing remaining in
the ROFR Period. If the ROFR Offer Notice provides that any consideration is to
be paid by the third person in whole or in part in a form other than cash, Flux
accepts the ROFR Offer, and Flux is able to provide or procure comparable
non-cash consideration using commercially reasonable efforts, Flux will so
provide or procure. In the event Flux is unable to provide or procure comparable
non-cash consideration, Flux may substitute, in whole or in part, for non-cash
consideration an amount in cash fairly equivalent to the then fair market value
of the non-cash consideration payable by the third person. The ROFR Offer
acceptance must specify the amount of any such substitute cash consideration and
the non-cash consideration for which it is intended to substitute. If HITN
disputes that the substitute cash consideration specified by Flux is in an
amount fairly equivalent to the fair market value of the non-cash consideration
payable by the third person, HITN must within fifteen (15) days after the
receipt of the ROFR Offer acceptance provide Flux with written notice specifying
the amount HITN considers to be fairly equivalent to the fair market value of
the non-cash consideration payable by the third person (the "Counter Offer").
The question of fair market value of the non-cash consideration will be resolved
pursuant to the Baseball Arbitration unless Flux gives HITN written notice
within fifteen (15) days after its receipt of the Counter-Offer that Flux agrees
to enter into an agreement containing the fair market value set forth in the
Counter-Offer.
Article 2.
CONSIDERATION
Section 2.01 First Spectrum Consideration. The total consideration for
the First Closing Spectrum Rights (the "First Spectrum Consideration"), in
addition to the lease payments set forth in the applicable IUA in accordance
with Section 1.03, shall equal the sum of the following:
(a) A sum of money (the "First Closing Cash Consideration") equal to
Eight Million Five Hundred Thirty Four Thousand Four Hundred Twenty Two Dollars
and Twenty Cents ($8,534,422.20).
(b) A stock certificate representing Three Million Six Hundred Ninety
Eight Thousand Two Hundred Fifty (3,698,250) shares of Class A Common Stock (the
"First Closing Equity Consideration").
(c) A portion of the Contingent Consideration described in Section
2.03, at the time, in the manner, and to the extent owing in accordance
therewith, with respect to the CPOPs that HITN delivers to Flux at the First
Closing pursuant to the IUAs duly executed and delivered in accordance with
Section 1.01.
Section 2.02 Extra Spectrum Consideration. The total consideration for
those Extra Spectrum Rights, if any, leased to Flux at a Subsequent Closing (the
"Extra Spectrum
PAGE 4 - MASTER SPECTRUM ACQUISITION AGREEMENT
Consideration"), in addition to the lease payments set forth in the applicable
IUA in accordance with Section 1.03, shall equal the sum of the following:
(a) A sum of money (the "Extra Cash Consideration") equal to the
product of (i) Thirty Cents ($0.30) times (ii) the number of CPOPs that HITN
delivers to Flux at such Subsequent Closing pursuant to the IUAs duly executed
and delivered in accordance with Section 1.02, rounded to the nearest whole
cent.
(b) A stock certificate representing an integral number of shares of
Class A Common Stock (the "Extra Equity Consideration") equal to the result of
(i) Thirteen Cents ($0.13) times (ii) the number of Verified CPOPs that HITN
delivers to Flux at such Subsequent Closing pursuant to the IUAs duly executed
and delivered in accordance with Section 1.02 divided by (iii) One Dollar
($1.00), rounded to the nearest number of whole shares.
Section 2.03 Contingent Consideration.
(a) Within thirty (30) days following delivery of Flux' unaudited
financial statements ("Positive EBITDA Financial Statements") for the first two
consecutive fiscal quarters of Flux (the "Applicable Quarters") in which Flux
has achieved Positive EBITDA, as determined pursuant to such financial
statements prepared in the ordinary course of business, Flux will provide HITN
with written notice ("EBITDA Notice") that Flux has achieved Positive EBITDA.
The EBITDA Notice will include a copy of the Positive EBITDA Financial
Statements, a statement of Flux' Gross Operating Margin and Flux' calculation of
the Positive EBITDA for the Applicable Quarters. Within thirty (30) days of
delivery of the EBITDA Notice, Flux will issue to HITN a number of additional
shares of Class A Common Stock (rounded to the nearest whole share) (the
"Contingent Consideration") equal to a fraction in which:
(i) The numerator is the lesser of (A) one percent (1%) of the
Gross Operating Margin of Flux in the Applicable Quarters, as determined
from the Positive EBITDA Financial Statements or (B) Three Cents ($.03)
multiplied by the total number of CPOPs leased to Flux pursuant to IUAs
under this Agreement at the First Closing (less any CPOPs subject to Loss
of Rights described in Section 6.09); and
(ii) The denominator is the Current Flux Stock Price.
(b) For the purposes of this Section 2.03, "Positive EBITDA" shall
mean the earnings before net interest, income taxes, depreciation expense, and
amortization expense of Flux, but only if the result thereof is a positive
number.
(c) For the purposes of this Section 2.03, "Gross Operating Margin"
shall mean (i) gross revenues of all products and services (less all sales, use
or excise taxes; on- or off-invoice discounts, allowances, rebates, grants,
special purchase allowances, sale prices, or special offers provided by Flux;
and any returns of products) minus (ii) all cost of goods sold and cost of
services, including all payments under the IUAs and all employee expenses, but
excluding any allocation for overhead and general and administrative costs.
PAGE 5 - MASTER SPECTRUM ACQUISITION AGREEMENT
Section 2.04 Adjustment of Share Consideration.
(a) Flux shall issue additional shares of Class A Common Stock to HITN
in accordance with this Section 2.04 if, but only if, both of the following
conditions are satisfied upon the third (3rd) anniversary of the First Closing
Date ("Third Anniversary"): (i) FFW has received, and has not returned to Flux,
a number of shares of Class B Common Stock of Flux solely in exchange for
contributing to Flux rights to purchase base station equipment ("NextNet
Equipment") pursuant to an irrevocable, noncontingent commitment ("NextNet
Agreement") by NextNet Wireless, Inc. ("NextNet") and (ii) any of the NextNet
Equipment is Non-Deployed Equipment or Below-Market Equipment.
(b) "Non-Deployed Equipment" means both (i) the difference between
$40,000,000 worth of NextNet Equipment and the value of the NextNet Equipment
that Flux orders from NextNet on or prior to the Third Anniversary (in each
case, calculated in accordance with Section 1 of the NextNet Agreement, as
reasonably determined by Flux) and (ii) NextNet Equipment that Flux received
from NextNet but that Flux neither (A) installed in the network of Flux, one or
more Affiliates of Flux, and/or one or more joint ventures in which Flux is a
participant nor (B) sold, leased, assigned, or otherwise transferred.
(c) "Below-Market Equipment" means NextNet Equipment that Flux has
sold, leased, assigned, or otherwise transferred in exchange for cash or
non-cash consideration (including the value of any tangible or intangible
benefits) that is less than the value of such NextNet Equipment, calculated in
accordance with Section 1 of the NextNet Agreement, all as reasonably determined
by Flux.
(d) Subject to satisfaction of the conditions set forth in Section
2.04(a), within thirty (30) days following the Third Anniversary, Flux shall
issue to HITN a number of shares of Class A Common Stock (rounded to the nearest
whole share) (the "Adjustment Shares") equal to a fraction in which:
(i) The numerator is (A) the aggregate value of the Non-Deployed
Equipment and the Below-Market Equipment, calculated in accordance with
Section 1 of the NextNet Agreement, as reasonably determined by Flux, minus
(B) the value of all cash or non-cash consideration received by Flux or
owing to Flux in exchange for any sale, lease, assignment, or other
transfer of Below-Market Equipment, as reasonably determined by Flux; and
(ii) The denominator is the Current Flux Stock Price. If the
fraction is less than zero, Flux will not issue any shares to HITN under
this Section 2.04.
Section 2.05 CPOP Verification. After the First Closing, whenever in a
calculation of dollars or shares hereunder one of the variables is a number of
CPOPs, Flux shall have an opportunity to review and verify the CPOPs prior to
the calculation. HITN shall deliver to Flux such information as Flux may
reasonably request, including information delivered in advance of the Subsequent
Closing. If Flux and HITN disagree on a number of CPOPs hereunder, (a) the
parties will proceed with the applicable Closing, at which Flux will deliver the
undisputed amount of the consideration then due HITN, and (b) as to the disputed
amounts,
PAGE 6 - MASTER SPECTRUM ACQUISITION AGREEMENT
either party may submit the dispute to Baseball Arbitration. The number of CPOPs
determined by agreement of the parties or by Baseball Arbitration shall equal
the number of "Verified CPOPs" for purposes of this Agreement.
Article 3.
CLOSINGS
Section 3.01 Closings. Each of the Closings will occur at the offices
of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m. Seattle time on the dates set forth in this Section
3.01.
(a) With respect to the First Closing Spectrum Rights (the "First
Closing"), on the First Closing Date.
(b) With respect to Extra Spectrum Rights, if any (each, a "Subsequent
Closing"), on the day that is as promptly as practical (but in no event earlier
than sixty (60) days following receipt by Flux of the Extra Spectrum Notice)
after satisfaction or waiver of the applicable conditions set forth in Article 7
hereof (each, a "Subsequent Closing Date"). A Subsequent Closing may occur after
the Extra Spectrum Period if HITN duly delivers the Extra Spectrum Notice within
the Extra Spectrum Period.
Section 3.02 First Closing Deliveries. At the First Closing:
(a) HITN shall deliver or cause to be delivered to Flux each of the
following, duly executed by an authorized representative of HITN: (i) an IUA
with respect to each of the First Closing Spectrum Rights, (ii) the Stockholders
Agreement attached as Exhibit D hereto (the "Stockholders Agreement"), and (iii)
the Registration Rights Agreement attached as Exhibit E hereto (the
"Registration Rights Agreement").
(b) Flux shall deliver or cause to be delivered to HITN each of the
following, duly executed by an authorized representative of Flux: (i) an IUA
with respect to each of the First Closing Spectrum Rights, (ii) the Stockholders
Agreement, (iii) the Registration Rights Agreement, (iv) the First Closing Cash
Consideration by wire transfer in immediately available funds to HITN, (v) a
stock certificate representing the First Closing Equity Consideration.
Section 3.03 Subsequent Closing Deliveries. At each Subsequent
Closing, if any, with respect to the Extra Spectrum Rights set forth in the
applicable Extra Spectrum Notice:
(a) HITN shall deliver or cause to be delivered to Flux an IUA with
respect to such Extra Spectrum Rights, duly executed by an authorized
representative of HITN.
(b) Flux shall deliver or caused to be delivered (i) the applicable
Extra Cash Consideration by wire transfer in immediately available funds to
HITN, and (ii) a stock certificate representing the applicable Extra Equity
Consideration.
Section 3.04 Further Assurances. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use its
reasonable best efforts to take, or cause
PAGE 7 - MASTER SPECTRUM ACQUISITION AGREEMENT
to be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
Article 4.
REPRESENTATIONS AND WARRANTIES OF HITN
HITN hereby represents and warrants to Flux that:
Section 4.01 Organization and Good Standing. HITN is a nonprofit
corporation duly organized, validly existing and in good standing under the laws
of the State of New York and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. HITN is duly qualified or authorized
to do business as a foreign corporation and is in good standing under the laws
of each jurisdiction in which it owns or leases real property or FCC Licenses
and each other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization.
Section 4.02 Authorization of Agreement. HITN has all requisite
corporate power and authority (i) to enter into, deliver and carry out the
transactions contemplated by this Agreement and each other agreement, document,
or instrument or certificate contemplated by this Agreement, (ii) to enter into
and deliver all documents required or necessary to be executed by HITN in
connection with the consummation of the Contemplated Transactions (collectively
the "HITN Documents"), and (iii) to consummate the transactions contemplated
hereby and thereby. This Agreement has been and the HITN Documents when
delivered will be duly and validly executed and delivered by HITN and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes and the HITN Documents will constitute when
delivered the legal, valid and binding obligations of HITN, enforceable against
it in accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
Section 4.03 No Conflict. Except as set forth on Section 4.03 of the
disclosure schedule attached hereto by HITN (the "HITN Schedule"):
(a) Neither the execution and delivery by HITN of this Agreement or
the HITN Documents, nor compliance by HITN with any of the provisions hereof or
thereof will (i) conflict with, or result in the breach of, any provision of the
Governing Documents of HITN, (ii) conflict with, violate, result in the breach
of, constitute (with or without due notice, lapse of time or both) a default
under, result in the acceleration of, create in any party the rights to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any note, bond, mortgage, indenture, license, agreement or other
obligation to which HITN is a party or by which HITN or any of its properties or
assets is bound or (iii) violate any statute, rule, regulation, order or decree
of any Government Agency or authority by which HITN is bound.
PAGE 8 - MASTER SPECTRUM ACQUISITION AGREEMENT
(b) No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person or Government
Agency is required on the part of HITN in connection with the execution and
delivery of this Agreement or the HITN Documents or the compliance by HITN with
any of the provisions hereof or thereof.
Section 4.04 FCC Licenses. Throughout the term of this Agreement and
the term of each IUA that HITN and Flux enters into pursuant to this Agreement:
(a) Annex I, Schedules 1 and 3 of the Clearwire Agreement, and
Schedule 5 of the Undertaking collectively set forth true and complete lists of
all FCC Licenses held by HITN as of the First Closing Date. Neither HITN nor any
of its Affiliates has any FCC Licenses or rights to acquire FCC Licenses, except
as set forth thereon. For each FCC License listed in Annex I or II, such Annex
sets forth the name of the licensee, the FCC call sign, the Channels, the
Market, the number of Households, and the number of CPOPs. To the best knowledge
of HITN, all information set forth in such Annexes is complete and accurate in
all respects. Except for Pending Applications filed prior to the First Closing
Date and those modifications that have been granted by the FCC prior to the
First Closing Date, neither HITN nor any of its Affiliates have modified or
sought to have modified any FCC License.
(b) HITN holds all of the FCC Licenses set forth in Annex I, free and
clear of all Liens (except for the rights of first refusal set forth on Section
4.04(b) of the HITN Schedule (each, an "Existing ROFR")). None of the FCC
Licenses set forth in Annex I are subject to CCI Rights or are otherwise subject
to the terms of the Clearwire Agreement.
(c) HITN has Pending Applications for all of the FCC Licenses set
forth in Annex II. Prior to each Subsequent Closing Date, HITN shall be
authorized, by final order, to hold all of the FCC Licenses constituting Extra
Spectrum Rights under the applicable Extra Spectrum Notice and to lease them to
Flux pursuant to an IUA, in each case free and clear of all Liens.
(d) Except as set forth on Section 4.04(d) of the HITN Schedule, to
the best knowledge of HITN, (i) the grant, renewal or assignment of the FCC
Licenses to the existing licensee thereof was approved by the FCC by final order
and the FCC Licenses are validly issued and in full force and effect; (ii)
except with respect construction permit extension requests, there is no
Proceeding pending before the FCC or threatened with respect to any FCC License;
(iii) HITN and its Affiliates have made on a timely basis all payments to any
applicable Government Agency with respect to the FCC Licenses, including all
payments due to the FCC and all required copyright royalty fee payments and all
required Statements of Account to the U.S. Copyright Office relating to
retransmission of television and radio broadcast signals; and (iv) HITN is
otherwise in compliance with the requirements of the compulsory copyright
license described in Section 111 of the Copyright Act and with all applicable
rules and regulations of the Copyright Office.
(e) Except as set forth on Section 4.04(e) of the HITN Schedule, to
the best knowledge of HITN, all Pending Applications have been timely filed, and
the FCC has not notified any of HITN that any of the Pending Applications is
subject to denial due to lack of timely filing or other defect.
PAGE 9 - MASTER SPECTRUM ACQUISITION AGREEMENT
(f) Except as set forth on Section 4.04(f) of the HITN Schedule, to
the best knowledge of HITN, (i) the facilities subject to a FCC License for
which a certification or notification of completion of construction has been
filed with the FCC ("Constructed Facilities") are operating, and have been
operating, in material compliance with the FCC License therefore, the
Communications Act and FCC Rules, (ii) HITN is not transmitting from or
otherwise operating any Constructed Facility that is not the subject of an FCC
License, (iii) none of the Constructed Facilities subject to a FCC License (A)
is authorized pursuant to an authorization which is subject to challenge before
any court of competent jurisdiction or (B) other than as set forth on Section
4.04(f) of the HITN Schedule, is subject to any lease, sub-lease or any
agreement to make it available to a third party; (iv) no FCC License is subject
to a revocation proceeding; and (v) no Constructed Facilities are operating
pursuant to special temporary or developmental authority.
(g) Except as set forth on Section 4.04(g) of the HITN Schedule, to
the best knowledge of HITN, HITN's licensed ITFS facilities are being operated,
and HITN's operations and activities pursuant to any FCC License are being
conducted, in compliance with (i) the Communications Act, (ii) the terms and
conditions of the FCC Licenses applicable to them, and (iii) the FCC Rules.
(h) Except as set forth on Section 4.04(h) of the HITN Schedule, to
the best knowledge of HITN, all FCC Reports and fees required to be filed by
each HITN with the FCC with respect to the FCC Licenses and they have been
timely filed. All FCC Reports filed by any of HITN are complete and correct in
all material respects.
Section 4.05 Tower Leases. Section 4.05 of the HITN Schedule sets
forth a true and complete list of each Tower Lease to which HITN is party in a
Market, the Market, the expiration date of the lease, the name of the lessor,
the address or location of the leased premises or tower site, and the monthly,
quarterly or annual rent, as applicable, payable under such Tower Lease. Each
Tower Lease is valid, binding on HITN and, to the best knowledge of HITN, each
other party thereto and is in full force and effect, enforceable by HITN in
accordance with its terms. Neither HITN nor, to the best knowledge of HITN, any
other party to any of the Tower Leases has failed to comply with or is in
material breach or material default thereunder. Except as set forth on Section
4.05 of the HITN Schedule, to the best knowledge of HITN, no condition exists or
event has occurred and is continuing which, with or without the lapse of time or
the giving of notice, or both, would constitute a material default by any party
under any Tower Lease.
Section 4.06 Interference Coordination Agreements. To the best
knowledge of HITN, Section 4.06 of the HITN Schedule sets forth a true and
complete list of all interference consents that have been granted by HITN with
respect to any FCC Licenses and that would have a material impact on the use of
the Channels (excluding routine consents customary in the industry).
Section 4.07 Litigation. Except as set forth on Section 4.07 of the
HITN Schedule, there is no Proceeding now in progress or pending or, to the best
knowledge of HITN, threatened against HITN or the assets (including the
intellectual property rights) or the business of HITN, nor to the best knowledge
of HITN, does there exist any basis therefore, except for
PAGE 10 - MASTER SPECTRUM ACQUISITION AGREEMENT
immaterial claims brought against HITN in the ordinary course of business. HITN
is not subject to any Government Order.
Section 4.08 Compliance with Laws; Permits. Except as provided on
Section 4.07 of the HITN Schedule, HITN (a) has complied in all respects with
all federal, state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments and
orders applicable to it and its business other than where noncompliance would
not, individually or in the aggregate, reasonably be expected to have a HITN
Material Adverse Effect and (b) has all federal, state, local and foreign
governmental Permits necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which such assets are
currently owned and used other than where the failure to possess such Permits
would not, individually or in the aggregate, reasonably be expected to have a
HITN Material Adverse Effect, such Permits are in full force and effect, and no
violations have been recorded in respect of any such Permit, and no proceeding
is pending or, to the best knowledge of HITN, threatened to revoke or limit any
such Permit. Section 4.07 of the HITN Schedule sets forth a list of all material
licenses, permits and qualifications (other than the FCC Licenses) and the
expiration dates thereof.
Section 4.09 Offering Exemption; Securities Representations.
(a) HITN is an "accredited investor" as this term is defined in Rule
501(a) of Regulation D as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act.
(b) HITN is acquiring the Equity Consideration for its own account,
for investment purposes only and not with a view to the distribution (as such
term is used in Section 2(11) of the Securities Act) thereof. HITN understands
that the Equity Consideration has not been registered under the Securities Act
and cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(c) HITN is knowledgeable and experienced in the telecommunications
industry and is capable of evaluating the risks and merits of the Contemplated
Transactions, including the acquisition of shares of Class A Common Stock, and
making an informed decision with respect thereto. HITN, its officers, and
directors have had sufficient opportunity to ask questions of and receive
answers from Flux concerning the business of Flux, its operations, assets and
liabilities. HITN and its representatives have had an opportunity to review all
documents and records concerning Flux and its business that Flux has requested.
HITN has conducted its own independent assessment, analysis and investigation
with respect to Flux and its business at the time of entering into this
Agreement and has agreed to enter into this Agreement based solely on this
assessment, analysis and investigation, and the representations and warranties
of Flux set forth in Article 5 hereof.
(d) HITN is aware that Flux is a speculative enterprise, that certain
of the information disclosed to HITN contains forward looking statements which
involve risks and uncertainties, and that Flux' actual results may differ
significantly from the results discussed in these forward looking statements.
HITN further acknowledges that the value of Flux' respective assets is
inherently uncertain and is dependent upon market, technological, and regulatory
PAGE 11 - MASTER SPECTRUM ACQUISITION AGREEMENT
developments concerning feasible and allowable uses. HITN represents and
warrants to Flux that it has assessed these factors independently and has agreed
to enter into this Agreement without reliance upon or expectation of any
representations, warranties, or disclosures of any kind from Flux, except as
specifically set forth in Article 5 hereof.
(e) For purposes of application of state securities law, HITN is a
resident of the State of New York.
Section 4.10 Brokers. Neither HITN nor any of its directors, officers,
employees, or representatives has employed any broker or finder in connection
with the Contemplated Transactions.
Section 4.11 Suitability. To the knowledge of HITN, after due inquiry,
none of the following events has occurred during the last five years with
respect to any of its directors or officers: (a) a petition under federal
bankruptcy or insolvency Laws was filed by or against, or a receiver, fiscal
agent or similar officer was appointed for the business or property of such
person; (b) such person was indicted for any crime, or was convicted in a
criminal proceeding or is a named subject of a pending criminal proceeding; (c)
such person is subject to an Order enjoining him from engaging in any kind of
business practice, or any other activity in connection with the purchase or sale
of securities, or to be associated with persons engaging in such activities; (d)
such person has ever been denied any permit affecting HITN or such person's
ability to conduct any activity conducted by HITN; or (e) such person was found
by a court of competent jurisdiction in a civil action or by a government agency
to have violated any securities laws.
Section 4.12 Disclosure. Neither this Agreement (including all
exhibits, annexes, schedules or attachments hereto) nor any certificate
furnished or made to Flux or pursuant to or in connection with this Agreement
(including all exhibits, annexes, schedules or attachments hereto) contains any
untrue statement of a material fact or, to the best knowledge of HITN, omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading.
Section 4.13 Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best knowledge of
HITN is made to its best knowledge after commercially reasonable investigation
and includes all facts which it knew or should have known as a result of such
investigation, including the best knowledge of HITN's executive officers and
legal counsel after commercially reasonable investigation.
Article 5.
REPRESENTATIONS AND WARRANTIES OF FLUX
Flux hereby represents and warrants to HITN that:
Section 5.01 Organization and Good Standing. Flux is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted. Flux
is duly qualified or authorized to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which it owns or leases
PAGE 12 - MASTER SPECTRUM ACQUISITION AGREEMENT
real property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing does
not have and would not reasonably be expected to have a Flux Material Adverse
Effect.
Section 5.02 Authorization of Agreement. Flux has all requisite
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, or instrument or certificate contemplated by this
Agreement or to be executed by Flux in connection with the consummation of the
Contemplated Transactions (the "Flux Documents"), and to consummate the
transactions contemplated hereby and thereby. This Agreement have been and the
Flux Documents will be when delivered duly and validly executed and delivered by
Flux and (assuming the due authorization, execution and delivery by the other
parties hereto and thereto) this Agreement constitutes and the Flux Documents
will constitute when delivered the legal, valid and binding obligations of Flux,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 5.03 Capitalization.
(a) As of the First Closing Date, immediately prior to the occurrence
of the First Closing, and without giving effect to the transactions contemplated
by the Stock Purchase Agreement and Undertaking, (i) the authorized capital
stock of Flux consists of 150,000,000 shares of Class A Common Stock, $0.0001
par value per share (the "Class A Common Stock"), 100,000,000 shares of Class B
Common Stock, $0.0001 par value per share ("Class B Common Stock"), and
5,000,000 shares of Preferred Stock, par value $0.0001 per share ("Preferred
Stock"), (ii) there are no shares of Class A Common Stock, 21,459,840 shares of
Class B Common Stock and no shares of Preferred Stock issued and outstanding and
[iii] no shares of Class A Common Stock, Class B Common Stock or Preferred Stock
are held by Flux as treasury stock. All of the issued and outstanding shares of
Class B Common Stock were duly authorized for issuance and are validly issued,
fully paid and non-assessable.
(b) As of the First Closing Date, immediately prior to the occurrence
of the First Closing, and without giving effect to the transactions contemplated
by the Stock Purchase Agreement and Undertaking, other than (i) the conversion
rights of the Class B Common Stock, (ii) the Warrant Agreement, and (iii) as set
forth on Section 5.03(b) of the disclosure schedule attached hereto by Flux
("Flux Schedule"), there are no existing options, warrants, calls, rights,
commitments or other agreements of any character to which Flux is a party
requiring, and, except for the issued Class B Common Stock, and there are no
securities of Flux outstanding which upon conversion or exchange would require,
the issuance, sale or transfer of any additional shares of Class A Common Stock
or other equity securities of Flux or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
Class A Common Stock or other equity securities of Flux. Except for the
Stockholders Agreement and the Registration Rights Agreement, as of the First
Closing Date Flux is not a party to any voting trust or other voting agreement
with respect to any of the shares of Class A Common Stock.
PAGE 13 - MASTER SPECTRUM ACQUISITION AGREEMENT
(c) Except with respect to the Adjustment Shares, the authorization,
offer, issuance, sale and delivery of the Equity Consideration pursuant to this
Agreement has been duly authorized by all requisite corporate action on the part
of Flux, and the Equity Consideration, when issued, sold and delivered in
accordance with this Agreement, will be validly issued and outstanding, fully
paid and nonassessable, free of any Liens and not subject to preemptive or
similar rights of the other shareholders of Flux or others (other than as set
forth in the Stockholders Agreement or Flux' Certificate of Incorporation, as
amended). The terms, designations, powers, preferences and relative
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of the Class A Common Stock are as stated in the
Flux' Certificate of Incorporation, as amended.
Section 5.04 Subsidiaries. Section 5.04 of the Flux Schedule hereto
sets forth the name of each Subsidiary of Flux as of the First Closing Date,
immediately prior to the occurrence of the First Closing, and without giving
effect to the transactions contemplated by the Stock Purchase Agreement and
Undertaking ("Subsidiaries"), and, with respect to each Subsidiary, the
jurisdiction in which it is incorporated or organized, the jurisdictions, if
any, in which it is qualified to do business, the number of shares of its
authorized capital stock, the number and class of shares thereof duly issued and
outstanding, the names of all stockholders or other equity owners and the number
of shares of stock owned by each stockholder or the amount of equity owned by
each equity owner. The outstanding shares of capital stock or equity interests
of each such Subsidiary are validly issued, fully paid and non-assessable, and
all such shares or other equity interests represented as being owned by Company
are owned by it free and clear of any and all Liens, except as set forth in
Section 5.04 of the Flux Schedule. There is no existing option, warrant, call,
commitment or agreement to which any such Subsidiary is a party requiring, and
there are no convertible securities of any Subsidiary outstanding which upon
conversion would require, the issuance of any additional shares of capital stock
or other equity interests of any Subsidiary or other securities convertible into
shares of capital stock or other equity interests of any Subsidiary or other
equity security of any Subsidiary. Each such Subsidiary is a duly organized and
validly existing corporation or other entity in good standing under the laws of
the jurisdiction of its organization and is duly qualified to do business and is
in good standing under the laws of (i) each jurisdiction in which it owns or
leases real property and (ii) each other jurisdiction in which the conduct of
its business or the ownership of its assets requires such qualification and
where a failure to be so qualified would have a Flux Material Adverse Effect.
Each such Subsidiary has all requisite corporate or limited liability company
power and authority to own its properties and carry on its business as presently
conducted.
Section 5.05 No Conflict.
(a) Except as set forth on Section 5.05 of the Flux Schedule hereto,
neither of the execution and delivery by Flux of this Agreement and of the Flux
Documents, nor the compliance by Flux with any of the provisions hereof or
thereof will (i) conflict with, or result in the breach of, any provision of the
Governing Documents of Flux, (ii) conflict with, violate, result in the breach
of, or constitute a default under any note, bond, mortgage, indenture, license,
agreement or other obligation to which Flux is a party or by which Flux or any
of its properties or assets are bound or (iii) violate any statute, rule,
regulation, order or decree of any Government Agency by which Flux is bound,
except, in the case of clauses (ii) and (iii), for such
PAGE 14 - MASTER SPECTRUM ACQUISITION AGREEMENT
violations, breaches or defaults as would not, individually or in the aggregate,
have a Flux Material Adverse Effect.
(b) No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person or Government
Agency is required on the part of Flux in connection with the execution and
delivery of this Agreement or the Flux Documents or the compliance by Flux with
any of the provisions hereof or thereof.
Section 5.06 Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Flux to close hereunder or as
set forth on Section 5.06 of the Flux Schedule, (a) there is no Proceeding now
in progress or pending or, to the knowledge of Flux, threatened against Flux or
the assets or the business of Flux and (b) Flux is not subject to any order,
writ, injunction or decree of any court or other Government Agency.
Section 5.07 Brokers. Neither Flux nor any of its directors, officers,
employees or representatives has employed any broker or finder in connection
with the Contemplated Transactions.
Article 6.
COVENANTS
Section 6.01 Consents and Approvals. Flux and HITN will use their
respective commercially reasonable efforts to obtain, and each shall cooperate
with and assist the other in obtaining, all consents, waivers, amendments,
modifications, approvals, authorizations, permits and licenses which are
required to be obtained by such party to effectuate this Agreement.
Section 6.02 Notice of Breach. HITN shall promptly give Flux written
notice with particularity upon HITN or its directors, officers, agents or
employers having knowledge of any matter that is reasonably likely to constitute
a breach of any representation, warranty, agreement or covenant by HITN
contained in this Agreement.
Section 6.03 Access to Information. HITN shall afford Flux and its
representatives reasonable access to all of HITN's properties, books, contracts,
commitments and records, all other information concerning its business and
properties (subject to restrictions imposed by applicable law) as Flux may
reasonably request (including copies of FCC Licenses, Pending Applications,
interference coordination agreements and consents, and all documents filed in
any Proceeding pending at the FCC relating thereto).
Section 6.04 Maintenance of FCC Qualifications. Except as such
qualifications may be affected by this Agreement or one or more IUAs entered
into pursuant to this Agreement, HITN hereby covenants and agrees that it shall
maintain all necessary qualifications to hold and to obtain renewal in the
ordinary course of any FCC License, as such qualifications may be amended or
modified from time to time (individually an "FCC Qualification" and collectively
referred to as the "FCC Qualifications"), and further covenants that it shall
not knowingly or negligently take any action, or fail to take any action, which
action or failure to act creates a material risk that HITN shall lose any FCC
Qualification; provided, that in the event that the FCC or any other legal
authority shall at any time specify new or different qualifications or
PAGE 15 - MASTER SPECTRUM ACQUISITION AGREEMENT
conditions for the maintenance of any FCC Qualification or shall issue a
pronouncement offering a new interpretation of an FCC Qualification, HITN shall
only be obligated to maintain such FCC Qualification in accordance with this
sentence so long as to do so would not have a material adverse effect on its
business or operations, taken as a whole; provided, further, that it shall not
be deemed a breach of this sentence if HITN loses an FCC Qualification as a
result, in whole or in part, of an act or omission of Flux or any failure of
Flux to perform its obligations under this Agreement, any IUA or Renewal
Agreement. If, at any time, HITN fails, or it appears to HITN more likely than
not that it will fail, to maintain any one or more of its FCC Qualifications
with respect to any of its FCC Licenses or its operations pursuant thereto, HITN
shall give written notice to Flux within five (5) days after HITN becomes
actually aware that (i) it no longer maintains such FCC Qualifications or (ii)
with the passage of time or upon the occurrence of a future event it will no
longer maintain such FCC Qualifications (referred to as a "Disqualification
Event"). HITN shall cooperate with reasonable requests of Flux made from time to
time for the purpose of verifying, at Flux' expense, that HITN maintains its FCC
Qualifications. Upon the occurrence of a Disqualification Event, HITN shall, at
its expense, promptly undertake all reasonable actions to obtain, to the extent
permitted by applicable law, a waiver from the FCC regarding the circumstances
giving rise to such Disqualification Event or to cure the circumstances giving
rise to such Disqualification Event. If HITN does not obtain a waiver from the
FCC regarding, or otherwise cure the circumstances giving rise to, such
Disqualification Event, HITN agrees to assist Flux, as reasonably requested by
Flux, in identifying one or more entities possessing such FCC Qualifications,
and to take such actions, as are reasonable and appropriate in order to
effectuate the transfer or assignment of any FCC License affected by such
Disqualification Event to one or more entities possessing all necessary FCC
Qualifications.
Section 6.05 Assignment of FCC Licenses. HITN shall not sell,
exchange, deliver ownership of, assign, encumber, or transfer, or permit the
sale, exchange, delivery, assignment, encumbrance, or transfer of, any FCC
License relating to any Market listed on Annex I or II except as permitted in
the IUA applicable to such FCC License.
Section 6.06 Legends. HITN hereby consents to the placement of the
following legends on all certificates representing capital stock of Flux
received by HITN pursuant to this Agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER'S
COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER THE SECURITIES ACT.
PAGE 16 - MASTER SPECTRUM ACQUISITION AGREEMENT
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT
IN CONFORMITY WITH THE TERMS OF A WRITTEN STOCKHOLDERS AGREEMENT AMONG
FLUX U.S. CORPORATION AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR INTEREST TO THE SHARES). SUCH AGREEMENT CONTAINS CERTAIN
RIGHTS AND OBLIGATIONS REGARDING CORPORATE GOVERNANCE AND REGARDING
THE VOTING, SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER
DISPOSITION OF SUCH CORPORATION'S SHARES. THE CORPORATION WILL UPON
WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE.
Section 6.07 Future Acquisitions of ITFS Licenses. Until HITN's equity
ownership in Flux is less than one percent (1%) of the capital holdings of Flux,
if new ITFS channels licensed by the FCC ("Future ITFS Licenses") become
available to Flux for purchase, and Flux wishes to purchase such Future ITFS
Licenses, then to the extent that such Future ITFS Licenses must be acquired
through a non-profit entity, then Flux will provide HITN with the right to
purchase such Future ITFS Licenses on behalf of and for the benefit of Flux and
HITN shall lease the full Commercial Spectrum Capacity of any such Future ITFS
License to Flux, and only to Flux, at no cost to Flux, and HITN shall provide to
Flux an option to purchase such Future ITFS License at any time after the FCC
Rules are modified to permit for-profit entities to hold ITFS licenses, for
$1.00. HITN must exercise such right within the time provided by Flux.
Section 6.08 Maintenance of FCC Qualifications. With respect to any
IUAs that Flux and HITN duly execute and deliver to each other pursuant to this
Agreement, while such IUA remains in full force and effect for the benefit of
Flux:
(a) Flux will use its commercially reasonable efforts to construct any
non-operational or unconstructed Markets covered thereby, or secure definitive
FCC authorization for HITN to remain off-air or unconstructed with respect to
such Markets, in either case within 150 days after the later to occur of (i) the
Closing at which Flux and HITN entered into the IUA or (ii) the date when the
Spectrum Rights covered by the IUA are free and clear of all Liens (including
CCI Rights and Existing ROFRs), including any Proceedings or other disputes
relating to any such Liens.
(b) Flux will provide a plan to operationalize the Markets covered
thereby, including proposals to achieve all necessary regulatory approvals,
within 30 days after the later to occur of (i) the Closing at which Flux and
HITN entered into the IUA or (ii) the date when the Spectrum Rights covered by
the IUA are free and clear of all Liens (including CCI Rights and Existing
ROFRs), including any Proceedings or other disputes relating to any such Liens.
Section 6.09 Existing Rights of First Refusal. If a party holding an
Existing ROFR as to any Spectrum Rights exercises or purports to exercise such
Existing ROFR (whether or not HITN agrees with the exercise of the Existing
ROFR), then at such time as HITN enters into a lease or other use agreement with
such third party for such Spectrum Rights or at such time that Flux is no longer
entitled to full use of such Spectrum Rights pursuant to the IUA
PAGE 17 - MASTER SPECTRUM ACQUISITION AGREEMENT
relating to such Spectrum Rights (either, a "Loss of Rights"), then HITN will,
within fifteen (15) days following the Loss of Rights, (i) surrender to Flux
those shares of Class A Common Stock issued to HITN pursuant to Article 2 with
respect to the applicable Spectrum Rights (including any shares issued pursuant
to Section 2.03 or Section 2.04, if any, with respect to the CPOPs relating to
the applicable Spectrum Rights) and (ii) reimburse Flux, by wire transfer in
immediately available funds to the account designated by Flux, all amounts paid
to HITN pursuant to Article 2 with respect to the applicable Spectrum Rights.
The number of shares described in clause (i) and the amount of cash described in
clause (ii) shall be determined by Flux in accordance with the calculations set
forth Article 2; provided that the calculation with respect to shares received
under Section 2.01(a) shall be as set forth in Section 2.02(a) and the
calculation with respect to cash received under Section 2.01(b) shall be as set
forth in Section 2.02(b). If HITN disputes the exercise of the Existing ROFR,
then HITN shall bear all costs and expenses related to such dispute, unless Flux
requests in writing that HITN dispute the purported exercise of the Existing
ROFR, in which case Flux shall bear the costs and expenses directly related to
such dispute to the extent such costs and expenses are approved by Flux in
writing in advance.
Article 7.
CONDITIONS
Section 7.01 Conditions to Each party's Obligations. The respective
obligations of each party to effect any and all of the Closings hereunder shall
be subject to the satisfaction on or prior to the applicable Closing Date of the
following conditions:
(a) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court or other
Government Agency of competent jurisdiction preventing the consummation of the
Contemplated Transactions shall be pending or in effect; provided, however, that
prior to invoking this condition, each party hereto shall use all commercially
reasonable efforts to have any such injunction or other order vacated.
(b) Statutes. No Law shall have been enacted, promulgated, or
otherwise issued by any Government Agency with authority to enforce such Law,
which would make consummation of the applicable Closing illegal.
Section 7.02 Conditions to the Obligations of Flux. The obligations of
Flux to effect any and all of the Closings hereunder shall be subject to the
satisfaction at or prior to the applicable Closing Date of each of the following
conditions, any of which may be waived, solely in writing, and exclusively by
Flux:
(a) Representations and Warranties. The representations and warranties
of HITN contained in Article 4 hereof (i) shall have been true and correct when
made and (ii) except to the extent that such representations and warranties
relate to a particular date, shall be true and correct as of each of the
applicable Closing Date as though made on that date.
PAGE 18 - MASTER SPECTRUM ACQUISITION AGREEMENT
(b) Covenants. HITN shall have performed and complied in all material
respects with all covenants and obligations under this Agreement required to be
performed and complied with by HITN as of such Closing.
(c) Closing Certificate of HITN. Flux shall have received a
certificate executed on behalf of HITN by a duly authorized officer of HITN and
dated as of the applicable Closing Date to the effect, as of the applicable
Closing, of Section 7.02(a) and Section 7.02(b) (unless otherwise waived in
accordance with the terms thereof).
(d) No HITN Material Adverse Effect. During the period from the First
Closing Date to the applicable Closing Date, there shall not have occurred any
event which has had or is reasonably likely to have an HITN Material Adverse
Effect.
(e) Officer Certificates. Flux shall have received copies, in each
case certified as of the applicable closing date by an authorized officer of
HITN, of (i) the resolutions of the board of directors of HITN authorizing the
execution, delivery and performance of this Agreement and the HITN Documents and
(ii) the signature and incumbency of the officers of HITN authorized to execute
and deliver this Agreement and the HITN Documents.
(f) Waiver of CCI Rights. (i) With respect to the First Closing, the
Undertaking shall have been duly executed and delivered to Flux by the other
parties thereto, including a waiver of all CCI Rights, and (ii) with respect to
every other Closing, the Undertaking shall be in full force and effect.
(g) No Liens on Spectrum Rights. With respect to each Subsequent
Closing, Flux shall have received written documentation satisfactory to Flux in
all respects, reflecting the ownership of such Spectrum Rights by HITN, free and
clear of all Liens; provided that the conditions set forth in this Section
7.02(g) shall be determined on a Market-by-Market basis such that the parties
will proceed with entering into the IUAs that satisfy this condition at the
applicable Subsequent Closing notwithstanding the status of other Markets.
(h) ISA Warrant Agreement. On or prior to the First Closing, (i) ITFS
Spectrum Advisors, LLC, a Delaware limited liability company ("ISA"), shall have
duly executed and delivered to Flux the Warrant Agreement in the form attached
hereto as Exhibit F (the "Warrant Agreement") and (ii) HITN shall have delivered
to Flux, in a form reasonably satisfactory to Flux, written evidence that all
necessary or required approvals and waivers by HITN with respect to the grant of
the Warrant Agreement to ISA have been obtained and that such approvals or
waivers are in full force and effect on the First Closing Date.
Section 7.03 Conditions to Obligations of HITN. The obligations of
HITN to consummate and effect any and all of the Closings hereunder shall be
subject to the satisfaction at or prior to the applicable Closing Date of each
of the following conditions, any of which may be waived, solely in writing, and
exclusively by HITN:
(a) Representation and Warranties. The representations and warranties
contained in Article 5 hereof (i) shall have been true and correct when made and
(ii) except for changes contemplated by this Agreement and except to the extent
that such representations and
PAGE 19 - MASTER SPECTRUM ACQUISITION AGREEMENT
warranties relate to a particular date, shall be true and correct as of the
applicable Closing Date as though made on that date.
(b) Covenants. Flux shall have performed and complied in all material
respects with all covenants and obligations under this Agreement required to be
performed and complied with by Flux as of the applicable closing date.
(c) Closing Certificate of Flux. HITN shall have received a
certificate executed on behalf of Flux by its duly authorized representative and
dated as of the applicable closing date (i) to the effect, as of such closing,
of Section 7.03(a) and Section 7.03(b) (unless otherwise waived in accordance
with the terms thereof).
(d) First Closing Capitalization. At or prior to the First Closing,
FFW shall have contributed to Flux (pursuant to a subscription agreement)
Fifteen Million Dollars ($15,000,000).
Article 8.
INDEMNIFICATION
Section 8.01 Indemnification.
(a) HITN shall indemnify Flux, its Affiliates, and each of their
respective stockholders (other than HITN), directors, officers, employees,
agents, successors and assigns (collectively, the "Flux Indemnified parties")
and hold each of the Flux Indemnified parties harmless from and against any and
all Damages based upon, attributable to or resulting from:
(i) The failure of any representation or warranty of HITN set
forth in Article 4 hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of HITN pursuant to this Agreement, to be
true and correct as of the dates made; and
(ii) The breach of any covenant or other agreement on the part of
HITN under this Agreement.
For purposes of Section 8.01(a)(i), the amount of Damages in respect of any
breach of a representation or warranty shall be determined without regard to any
limitation or qualification as to materiality, HITN Material Adverse Effect,
knowledge or similar language set forth in such representation or warranty.
(b) Flux shall indemnify HITN, its Affiliates, and each of their
respective, agents, successors and assigns (collectively, the "HITN Indemnified
parties") and hold each of the HITN Indemnified parties harmless from and
against any and all Damages based upon, attributable to or resulting from:
(i) The failure of any representation or warranty of Flux set
forth in Article 5 hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of Flux pursuant to this Agreement, to be
true and correct as of the dates made; and
PAGE 20 - MASTER SPECTRUM ACQUISITION AGREEMENT
(ii) The breach of any covenant or other agreement on the part of
Flux under this Agreement.
For purposes of Section 8.01(b)(i), the amount of Damages in respect of any
breach of a representation or warranty shall be determined without regard to any
limitation or qualification as to materiality, Flux Material Adverse Effect,
knowledge or similar language set forth in such representation or warranty.
Section 8.02 Limitations on Indemnification for Breaches of
Representations and Warranties. An indemnifying party shall not have any
liability under Section 8.01(a)(i) or Section 8.01(b)(i) hereof unless the
aggregate amount of Damages to the indemnified parties finally determined to
arise thereunder based upon, attributable to or resulting from the failure of
any representation or warranty to be true and correct, exceeds $10,000 (the
"Deductible") and, in such event, the indemnifying party shall be required to
pay the amount of such Damages including those used to compute the Deductible.
Section 8.03 Indemnification Procedures.
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Section 8.01 hereof (regardless of
the Deductible referred to above) (each, a "Claim"), the indemnified party shall
reasonably and promptly cause written notice of the assertion of any Claim of
which it has knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its sole
option and expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Damages
indemnified against hereunder. If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, it shall within five (5) days (or sooner,
if the nature of the Claim so requires) notify the indemnified party of its
intent to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Damages
indemnified against hereunder, fails to notify the indemnified party of its
election as herein provided or contests its obligation to indemnify the
indemnified party for such Damages under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Claim. If the
indemnified party defends any Claim, then the indemnifying party shall reimburse
the indemnified party for the expenses of defending such Claim upon submission
of periodic bills. If the indemnifying party shall assume the defense of any
Claim, the indemnified party may participate, at his or its own expense, in the
defense of such Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if, so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified party and
the indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required to pay
for more than one such counsel for all indemnified parties in connection with
any Claim. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation, or settlement of any such Claim.
PAGE 21 - MASTER SPECTRUM ACQUISITION AGREEMENT
(b) After any final deductible judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated, or the indemnified party and the
indemnifying party shall have arrived at a mutually binding agreement with
respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying party
pursuant to this Agreement with respect to such matter.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
Section 8.04 Treatment for Tax Purposes. All payments by Flux under
this Article 8 shall be treated as an adjustment to the consideration paid
hereunder for all foreign, federal, state, and local income tax purposes.
Article 9.
TERMINATION
Section 9.01 Expiration; Termination. This Agreement shall expire on
the last day of the last term under the last IUA executed pursuant to this
Agreement. Termination of this Agreement pursuant to this Section 9.01 shall
terminate all rights and obligations of the parties hereunder and this Agreement
shall become void and have no force or effect. Notwithstanding the foregoing,
this Section 9.01 and Section 10.08 shall remain in effect, and no party shall
be relieved from any liability for any breach of any of its covenants or
agreements in this Agreement prior to such termination.
Article 10.
GENERAL PROVISIONS
Section 10.01 Payment of Sales, Use or Similar Taxes. Flux shall be
liable for and shall pay (and shall indemnify and hold harmless the HITN
Indemnified parties against) all sales, use, stamp, documentary, filing,
recording, transfer, real estate transfer, registration, duty or similar fees or
taxes or governmental charges (together with any interest or penalty, addition
to tax or additional amount imposed) as levied by any Taxing Authority in
connection with the Contemplated Transactions.
Section 10.02 Survival of Representations and Warranties. The parties
hereto hereby agree that the representations and warranties contained in this
Agreement or in any certificate, document or instrument delivered in connection
herewith, shall survive each of the Closings hereunder for a period of three (3)
years from the First Closing Date or Subsequent Closing Date, as applicable,
regardless of any investigation made by the parties hereto. All agreements and
covenants contained herein shall survive indefinitely until, by their respective
terms, they are no longer operative.
PAGE 22 - MASTER SPECTRUM ACQUISITION AGREEMENT
Section 10.03 Expenses. Except as otherwise provided in this
Agreement, HITN and Flux shall each bear its own expenses incurred in connection
with the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby.
Section 10.04 Entire Agreement; Amendments and Waivers. This Agreement
(including the annexes, schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant, or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power, or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
Section 10.05 Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of New
York applicable to contracts made and to be performed in that state, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 10.06 Table of Contents and Headings. The table of contents
and section headings of this Agreement are for reference purposes only and are
to be given no effect in the construction or interpretation of this Agreement.
Section 10.07 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the parties
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
If to Flux, to: Flux U.S. Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
PAGE 23 - MASTER SPECTRUM ACQUISITION AGREEMENT
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to HITN, to: Hispanic Information and
Telecommunications Network, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: RJGLaw LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.08 Publicity. No public release, announcement or other form
of publicity concerning this Agreement or the Documents, shall be issued by
either party without the prior consent of the other party, except as such
release or announcement may be required by law, regulation or the rules or
regulations of any securities exchange, in which case the party required to make
the release or announcement shall, to the extent possible, allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance. The parties shall use reasonable efforts to consult in good faith with
each other with a view to agreeing upon any press release or public announcement
relating to the transactions contemplated hereby prior to the consummation
thereof.
Section 10.09 Severability. If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in effect.
Section 10.10 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either HITN
or Flux (by operation of law or otherwise) without the prior written consent of
the other parties hereto (which consent will not be unreasonably withheld) and
any attempted assignment without the required consents shall be void.
PAGE 24 - MASTER SPECTRUM ACQUISITION AGREEMENT
Section 10.11 Remedies. The parties recognize that, in the event that
a party should refuse to perform any provisions of this Agreement, monetary
damages alone will not be adequate. The non-defaulting party shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
Notwithstanding any other provision herein, no remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by a
party shall not constitute a waiver of the right to pursue other available
remedies at any time.
Section 10.12 Resolution of Certain Disputes.
(a) If the parties are unable to resolve any monetary dispute under
this Agreement or any dispute as to the interpretation of a provision of this
Agreement (each, a "Dispute"), the baseball decision rules ("Baseball
Arbitration") set forth in Section 10.12(b) shall apply. If the parties are
unable to resolve any other disputes (each a "Breach Dispute"), including
without limitation disputes regarding a breach or default under this Agreement,
the parties shall arbitrate such dispute pursuant to the rules set forth in
Section 10.12(c).
(b) Any such Dispute shall be resolved by a single Arbitrator. In the
event of a Dispute, either party may request by written notice to the other
party that it wishes to submit the disputed matter for resolution by Baseball
Arbitration. The parties agree to submit to an Arbitrator within 30 days after
the requesting party's notice has been received by the other party. Within
fifteen (15) days (the "Submission Period") after the appointment of the
arbitrator (the "Arbitrator") in accordance with the Commercial Arbitration
Rules (then in effect) of the American Arbitration Association for arbitration
of commercial disputes (the "AAA"), each party shall submit to the Arbitrator
its own proposal for the resolution of the contested issue. Such submissions
shall remain secret until after the Arbitrator has received each party's
proposal, at which time the Arbitrator shall inform each party of the other's
proposal. No such proposal may be amended after it is submitted to the
Arbitrator. The Arbitrator shall compare the proposals. The Arbitrator shall
determine which proposal he or she believes to be the resolution most closely in
accordance with the relevant provisions of this Agreement and shall order the
adoption of such proposal as the relief granted. If any party fails to submit
its proposal by the end of the Submission Period, the Arbitrator shall order the
adoption of the other party's proposal. The Arbitrator may rely upon such
evidence as the Arbitrator may choose in his or her discretion in making such
determination, and may permit discovery in accordance with the provisions of
this Section 10.12(b).
(c) Any such Breach Dispute shall be resolved by a single Arbitrator.
In the event of a Breach Dispute either party may request by written notice to
the other party that it wishes to submit the disputed matter for resolution by
an Arbitrator. The parties agree to submit to an Arbitrator within 30 days after
the requesting party's notice has been received by the other party. During the
Submission Period, the parties shall appoint the Arbitrator in accordance with
the Commercial Arbitration Rules (then in effect) of the AAA. The parties agree
to permit discovery proceedings of the type provided by the Federal Rules of
Civil Procedure both in advance of, and during recesses of, the arbitration
hearings. The parties agree that the Arbitrator
PAGE 25 - MASTER SPECTRUM ACQUISITION AGREEMENT
shall have no jurisdiction to consider evidence with respect to or render an
award or judgment for punitive damages (or any other amount awarded for the
purpose of imposing a penalty).
(d) The arbitration hearing shall be located at a neutral site as
mutually agreed by the parties, or if the parties cannot so agree, then the
location of the arbitration shall be New York, New York. The Federal Rules of
Evidence shall apply to the arbitration hearing. The party bringing a particular
claim or asserting an affirmative defense will have the burden of proof with
respect thereto. Each party shall bear the burden of persuasion with respect to
its proposal for resolution of the matter. The arbitration proceedings and all
testimony, filings, documents and information relating to or presented during
the arbitration proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitrator will have no power
or authority, pursuant to the rules of the AAA or otherwise, to relieve the
parties from their agreement hereunder to arbitrate or otherwise to amend or
disregard any provision of this Agreement, including without limitation the
provisions of this Section.
(e) Should an Arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, the Arbitrator shall be
replaced pursuant to the rules of the AAA. If an arbitrator is replaced after
the arbitration hearing has commenced, then a rehearing shall take place in
accordance with this Section and the rules of the AAA.
(f) Within fifteen (15) days after the closing of the arbitration
hearing, the Arbitrator will prepare and distribute to the parties a writing
setting forth the Arbitrator's or Arbitration Panel's finding of facts and any
relevant conclusions of law relating to the Dispute, including the reasons for
the giving or denial of any award. The findings and conclusions and the award,
if any, shall be deemed to be information subject to the confidentiality
provisions of this Agreement.
(g) The Arbitrator is instructed to schedule promptly all discovery
and other procedural steps and otherwise to assume case management initiative
and control to effect an efficient and expeditious resolution of the Dispute.
The Arbitrator is authorized to issue monetary sanctions against either party
if, upon a showing of good cause, such party is unreasonably delaying the
proceeding.
(h) Any award rendered by the Arbitrator will be final, conclusive,
and binding upon the parties and any judgment thereon may be entered and
enforced in any court of competent jurisdiction.
(i) Each party will bear an equal one-half of all fees, costs and
expenses of the Arbitrators, and notwithstanding any law to the contrary, each
party will bear all the fees, costs and expenses of its own attorneys, experts
and witnesses; provided, however, in connection with any judicial proceeding to
compel arbitration pursuant to this Agreement or to confirm, vacate or enforce
any award rendered by the Arbitrator, the prevailing party in such a proceeding
shall be entitled to recover reasonable attorney's fees and expenses incurred in
connection with such proceedings, in addition to any other relief to which it
may be entitled; the non-prevailing party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of the AAA, and
the expenses, including without limitation, attorneys' fees and costs, and
expert and witness fees and costs, incurred by the other party to the
arbitration.
PAGE 26 - MASTER SPECTRUM ACQUISITION AGREEMENT
(j) Notwithstanding anything to the contrary, neither party shall have
any obligation to arbitrate claims for injunctive relief, specific performance,
or other equitable relief or for the use or unauthorized disclosure of
confidential information, as to which either party shall be entitled to seek and
obtain relief from a court of competent jurisdiction.
Section 10.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
PAGE 27 - MASTER SPECTRUM ACQUISITION AGREEMENT
Each party has caused this Master Spectrum Acquisition Agreement to be
duly executed by its duly authorized officer or representative on the date first
above written.
FLUX U.S. CORPORATION
By: /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
PAGE 28 - MASTER SPECTRUM ACQUISITION AGREEMENT
EXHIBIT A
DEFINITIONS AND INTERPRETATIONS
(a) The following terms have the following meanings throughout this
Master Spectrum Acquisition Agreement:
"AAA" has the meaning set forth in Section 10.12.
"Adjustment Shares" has the meaning set forth in Section 2.04.
"Affiliate" means, with respect to any Person, any other Person that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such first Person. As used in this definition,
"control" (including, with correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
"Agreement" means this Master Spectrum Acquisition Agreement
(including the annexes, schedules, and exhibits hereto, all of which are
incorporated herein by this reference), as it may be amended under Section 10.04
hereof.
"Arbitrator" has the meaning set forth in Section 10.12.
"Baseball Arbitration" has the meaning set forth in Section 10.12.
"CCI" has the meaning set forth in the fourth Recital of this
Agreement.
"CCI Rights" has the meaning set forth in the sixth Recital of this
Agreement.
"Channels" has the meaning set forth in the first Recital of this
Agreement.
"Class A Common Stock" has the meaning set forth in Section 5.03(a).
"Class B Common Stock" has the meaning set forth in Section 5.03(a).
"Claim" has the meaning set forth in Section 8.03.
"Clearwire Agreement" has the meaning set forth in the fourth Recital
of this Agreement.
"Closings" means the First Closing and each Subsequent Closing.
"Closing Dates" means the First Closing Date and each Subsequent
Closing Date.
"Commercial Spectrum Capacity" has the meaning set forth in the second
Recital of this Agreement.
PAGE 1 - EXHIBIT A
"Communications Act" has the meaning set forth in the second Recital
of this Agreement.
"Constructed Facilities" has the meaning set forth in Section 4.04(d).
"Contracts" means all oral and written contracts, agreements,
instruments, commitments, understandings, and binding arrangements, including
leases of real and personal property, licenses, purchase orders, sales orders,
distribution agreements, and partnership or joint venture agreements.
"Counter Offer" has the meaning set forth in Section 1.05.
"CPOPs" has the meaning set forth in the first Recital of this
Agreement.
"Current Flux Stock Price" means the per share price of Class A Common
Stock determined by the Board of Directors of Flux from time to time; provided,
however, that if Flux has engaged in an equity funding round in excess of Two
Million Dollars ($2,000,000) within 120 days of the time when the Current Flux
Stock Price is to apply, then the Current Flux Stock Price at such time shall be
the per share price of capital stock of Flux, determined on an as-converted
basis to Class A Common Stock, paid in the most recent funding round of Flux
that meets such criteria.
"Damages" means any and all losses, claims, demands, liabilities,
obligations, actions, suits, orders, statutory or regulatory compliance
requirements, or proceedings asserted by any Person, and all damages, costs,
expenses, assessments, judgments, recoveries and deficiencies, including
interest, penalties, investigatory expenses, consultants' fees, and reasonable
attorneys' fees and costs, of every kind and description, contingent or
otherwise.
"Deductible" has the meaning set forth in Section 8.02.
"Dispute" has the meaning set forth in Section 10.12.
"Disqualification Event" has the meaning set forth in Section 6.04.
"EBITDA Notice" has the meaning set forth in Section 2.04.
"Environmental Laws" has the meaning set forth in Section 4.08.
"Equity Consideration" means the First Closing Equity Consideration
and/or the Extra Equity Consideration.
"Existing ROFR" has the meaning set forth in Section 4.04.
"Extra Cash Consideration" has the meaning set forth in Section 2.03.
"Extra Equity Consideration" has the meaning set forth in Section
3.03.
"Extra Spectrum Consideration" has the meaning set forth in Section
2.03.
PAGE 2 - EXHIBIT A
"Extra Spectrum Notice" has the meaning set forth in Section 1.03.
"Extra Spectrum Period" has the meaning set forth in the fifth Recital
of this Agreement.
"Extra Spectrum Rights" has the meaning set forth in Section 1.03.
"FAA" has the meaning set forth in Section 4.05.
"FCC" has the meaning set forth in the first Recital of this
Agreement.
"FCC Licenses" has the meaning set forth in the first Recital of this
Agreement.
"FCC Reports" means those reports, filings, notices and regulatory
fees required to be filed annually or periodically with the FCC by licensees,
permittees, conditional licensees and operators, including reports and fees
required by Sections 21.11(a), 21.911, 21.307(d) and 21.920 of the FCC Rules, as
such reports, filings, notices, regulatory fees and similar filing and payment
requirements may be added or amended.
"FCC Qualification" has the meaning set forth in Section 6.04.
"FCC Rules" has the meaning set forth in the third Recital of this
Agreement.
"FFW" has the meaning set forth in the ninth Recital of this
Agreement.
"First Closing" has the meaning set forth in Section 3.01.
"First Closing Cash Consideration" has the meaning set forth in
Section 2.01(a).
"First Closing Date" has the meaning set forth in the introductory
paragraph to this Agreement.
"First Closing Equity Consideration" has the meaning set forth in
Section 2.01(b).
"First Spectrum Consideration" has the meaning set forth in Section
2.01 hereof.
"First Closing Spectrum Rights" has the meaning set forth in the
fourth Recital of this Agreement.
"Flux" has the meaning set forth in the introductory paragraph to this
Agreement.
"Flux Documents" has the meaning set forth in Section 5.02.
"Flux Indemnified parties" has the meaning set forth in Section 8.01.
"Flux Schedule" has the meaning set forth in Section 5.04.
PAGE 3 - EXHIBIT A
"Flux Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Flux, taken as a whole, other than changes affecting
the broadband wireless business generally.
"Future ITFS Licenses" has the meaning set forth in Section 6.08.
"Governing Documents" means articles of incorporation, certificate of
incorporation, bylaws, certificate of formation, limited liability company
agreement, or similar governing documents of an entity.
"Government Agency" means any Federal, state or local government or
any foreign, national, provincial, or local government, or any governmental,
regulatory, legislative, executive, or administrative authority, agency or
commission, or any court, tribunal, or judicial body.
"Government Order" means any order, writ, judgment, injunction,
decree, stipulation, determination, or award entered by or with any Government
Agency.
"Gross Operating Margin" has the meaning set forth in Section 2.04.
"Hazardous Substances" has the meaning set forth in Section 4.08.
"HITN" has the meaning set forth in the introductory paragraph of this
Agreement.
"HITN Documents" has the meaning set forth in Section 4.02.
"HITN Indemnified parties" has the meaning set forth in Section 8.01.
"HITN Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of HITN, taken as a whole, other than changes affecting
the broadband wireless business generally.
"HITN Schedule" has the meaning set forth in Section 4.03.
"Households" has the meaning set forth in the first Recital of this
Agreement.
"ISA" has the meaning set forth in Section 7.02(h).
"ITFS" has the meaning set forth in the first Recital of this
Agreement.
"IUA" has the meaning set forth in Section 1.01.
"Law" means the common law and any federal, provincial, state, local,
or foreign statute, law, ordinance, code, rule, regulation, or other requirement
or rule of law.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction, encumbrance or any other restriction or
limitation whatsoever.
PAGE 4 - EXHIBIT A
"Loss of Rights" has the meaning set forth in Section 6.07.
"Market" has the meaning set forth in the first Recital of this
Agreement.
"NextNet" has the meaning set forth in Section 2.05.
"NextNet Equipment" has the meaning set forth in Section 2.05.
"Pending Applications" means all applications pending with the FCC for
new FCC Licenses for ITFS, assignments or transfers of FCC Licenses for ITFS,
modifications of FCC Licenses for ITFS, extensions of time to construct PSA
stations and renewals of FCC Licenses for ITFS filed by HITN as of the First
Closing Date.
"Pending Channels" has the meaning set forth in the eighth Recital of
this Agreement.
"Person," whether or not such term is capitalized, means any
individual, partnership, firm, corporation, limited liability HITN, association,
trust, unincorporated organization, or other entity.
"Positive EBITDA" has the meaning set forth under Section 2.04.
"Positive EBITDA Financial Statements" has the meaning set forth in
Section 2.04.
"Preferred Stock" has the meaning set forth in Section 5.03.
"Proceeding" means any action, suit, litigation, arbitration
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving any
court or other Government Agency or any arbitrator or arbitration panel..
"Registration Rights Agreement" has the meaning set forth in Section
3.02.
"Renewal Agreement" means a renewal or extension of an IUA on the same
terms as provided in Exhibit B hereto or a new agreement entered into between
Flux and HITN pursuant to the right of first refusal in Section 1.05.
"ROFR Offer" has the meaning set forth in Section 1.05.
"ROFR Offer Notice" has the meaning set forth in Section 1.05.
"ROFR Period" has the meaning set forth in Section 1.05.
"Securities Act" means the Securities Act of 1933, as amended.
"Spectrum Rights" means all Commercial Spectrum Capacity leased by
HITN to Flux in accordance with the terms and conditions of this Agreement,
including the First Closing Spectrum Rights and any Extra Spectrum Rights.
PAGE 5 - EXHIBIT A
"Stock Purchase Agreement" has the meaning set forth in the eighth
Recital to this Agreement.
"Stockholders Agreement" has the meaning set forth in Section 3.02.
"Subsidiaries" has the meaning set forth in Section 5.04.
"Submission Period" has the meaning set forth in Section 10.12.
"Subsequent Closing" has the meaning set forth in Section 3.01(b).
"Subsequent Closing Date" has the meaning set forth in Section
3.01(b).
"Tax" means (a) any Federal, state, local or foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, employment, recapture, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
and (b) any liability for the payment of any amounts of the type described in
clauses (a) as a result of any express or implied obligation to indemnify any
other Person.
"Tax Authority" means any Government Agency having jurisdiction over
the assessment, determination, collection, or other imposition of Tax.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any Tax Authority with respect
to Taxes, including information returns, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
"Third Anniversary" has the meaning set forth in Section 2.05.
"Tower Leases" means Contracts relating to the use by HITN
transmission towers or other transmission equipment (and the embedded software
and intellectual property rights incorporated therein) on the any real property
used or occupied by HITN on which transmission towers used by HITN are located.
"Undertaking" has the meaning set forth in the seventh Recital to this
Agreement.
"Verified CPOPs" has the meaning set forth in Section 2.05.
"Warrant Agreement" has the meaning set forth in Section 7.02(h).
(b) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of the Agreement, the following rules of
interpretation shall apply:
(1) Calculation of Time Period. When calculating the period of
time before which, within which or following which any act is to be done or
step taken
PAGE 6 - EXHIBIT A
pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period
is a non-Business Day, the period in question shall end on the next
succeeding Business Day.
(2) Dollars. Any reference in this Agreement to $ shall mean U.S.
dollars.
(3) Exhibits/Schedules. The Annexes, Exhibits, and Schedules to
this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement. Any capitalized terms used in any Annex,
Exhibit, or Schedule but not otherwise defined therein shall be defined as
set forth in this Agreement.
(4) Gender and Number. Any reference in this Agreement to gender
shall include all genders, and words imparting the singular number only
shall include the plural and vice versa.
(5) Headings. The provision of a Table of Contents, the division
of this Agreement into Articles, Sections and other subdivisions and the
insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement. All
references in this Agreement to any "Section" are to the corresponding
Section of this Agreement unless otherwise specified.
(6) Herein. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires.
(7) Including. The word "including" or any variation thereof
means "including, without limitation" and shall not be construed to limit
any general statement that it follows to the specific or similar items or
matters immediately following it.
(c) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
PAGE 7 - EXHIBIT A