Exhibit 10.1
SPECTRUM LEASE AGREEMENT
------------------------
THIS SPECTRUM LEASE AGREEMENT ("Agreement") is entered into as
of the 6th day of August, 2000 by and between Digital Wireless
Systems, Inc. ("Digital") and Advanced Wireless Systems, Inc.
("Advanced").
WITNESSETH:
WHEREAS, Digital is the holder of those Multipoint
Distribution Service ("MDS") authorizations (the "Licenses") issued
by the Federal Communications Commission ("FCC") and listed on
Exhibit A hereto (collectively, the "Stations");
WHEREAS, pursuant to a certain Asset Purchase Agreement
between Digital and Advanced dated February 15, 2000 (the "Purchase
Agreement"), Advanced has agreed to acquire the Licenses and,
pending FCC consent to the assignment of the Licenses, desires to
transmit programming over the Stations; and
WHEREAS, Digital desires to provide a transmission service to
Advanced.
NOW THEREFORE, in consideration of the premises and other
mutual promises, undertakings, covenants and conditions set forth
herein, Advanced and Digital, intending to be legally bound, do
hereby agree as follows:
I. TERM.
The term of this Agreement shall commence upon the date hereof
(the "Start Date") and shall continue in full force and effect
until one hundred twenty (120) thereafter, unless otherwise
terminated pursuant to the provisions of Section VIII hereof or
pursuant to an assignment of the Licenses to Advanced. The
Agreement shall be automatically renewed for two (2) additional one
hundred twenty (120) month consecutive terms, unless Advanced shall
have submitted to Digital at least sixty (60) days' advance written
notice of its intent to terminate this Agreement upon the
expiration of the initial term or the then-current additional term.
II. USE OF THE CHANNELS.
A. Air Time. Commencing on the Start Date, Digital shall
provide to Advanced during the term of this Agreement all of the
transmission capacity on the Stations 24 hours a day, seven days a
week, every week on the terms and conditions set forth in this
Agreement.
B. Scope of Use. Capacity on the Stations is provided to
Advanced hereunder for the transmission of programming, data and
other information provided by Advanced to reception points selected
by Advanced. The Stations may be used by Advanced for any legal
purpose, without any restriction on the substance, format or type
of information or signal to be transmitted thereover. Advanced
shall utilize the Stations with sufficient frequency that Digital
is not required by FCC rules to submit the Licenses to the FCC for
cancellation.
C. Annual Report. For each calendar year starting with the
year in which the Start Date occurs, Advanced shall prepare and
submit to Digital no later than the following February 1 a report
on Advanced's usage of the channels on the Stations during such
calendar year with such information as shall be required from time
to time to permit Digital to complete an annual report pursuant to
Section 21.911 of the FCC's rules and regulations or any reporting
requirement imposed upon Digital.
III. FACILITIES.
A. Provision of Transmission Facilities. Advanced has
secured the requisite transmission space and such equipment as is
necessary to operate and maintain the Station in accordance with
the terms of the Licenses, the FCC's rules and regulations and this
Agreement. Subject to such supervision and control by Digital as
shall be required under the FCC's rules and regulations, including
but not limited to Section 21.13(g) thereof, as partial
consideration under this Agreement, Advanced shall, as of the Start
Date, assume all expenses for the lease of transmission space and
equipment required to operate and maintain the Stations thereafter.
Advanced shall begin transmitting over the Stations on the Start
Date.
B. Operation and Maintenance. Advanced shall, at its own
cost and expense, operate, repair and maintain the transmission
facilities under the technical direction, supervision and control
of Digital to assure continued operation of the Stations in
accordance with the Licenses and the FCC's rules and regulations.
All persons performing maintenance, repairs or any other duties at
the transmission facilities shall be technically qualified and
properly licensed to perform such duties and shall work under
Advanced's direct and continuing supervision and in accordance with
good engineering practices consistent with industry standards. In
the event transmission service on any of the Stations is
interrupted for any reason, Advanced shall immediately notify
Digital. Advanced shall make available to Digital upon reasonable
request access to all transmission facilities for emergency repairs
and routine inspections and records of all repairs and maintenance
activities.
C. Modification of Transmission Facilities. Digital and
Advanced acknowledge the possibility that the technical
configuration of certain of the Stations may prevent Advanced from
optimizing its business throughout the term of this Agreement.
Digital therefore agrees that if at any time and from time to time
Advanced so requests, Digital shall use its reasonable efforts to
apply to the FCC for authority to modify the transmission
facilities (including, without limiting the generality of the
foregoing, to increase transmitted power, to increase antenna
height, to modify the transmission and antenna systems or to
relocate any of the Stations) to meet the reasonable requirements
of Advanced. Advanced shall bear all costs associated with such
modifications, including legal, engineering and construction, and
all costs associated with obtaining FCC approval thereof. Upon the
completion of such modification, the modified facility shall become
a Station for purposes of this Agreement.
D. Reception Equipment. Digital has no responsibility
hereunder to provide any
reception antennas, down-converters, decoders, descramblers, power
supplies or any other equipment required to display signals
transmitted on the Stations ("Reception Equipment"). Digital may,
in its sole discretion, require Advanced to install or cause to be
installed up to two (2) sets of Reception Equipment as may be
required from time to time to permit Digital to monitor the
programming transmitted over the Stations.
E. Program Origination and Delivery. Subject to Digital's
obligations and duties as an FCC licensee, Advanced shall be solely
responsible for the origination of any and all programming to be
transmitted over the Stations and the delivery of such programming
to the Station, and shall bear all costs and expenses in connection
therewith.
F. Insurance. Digital shall be insured as a third party
insured under any liability insurance obtained by Advanced. The
insurance shall be at full replacement value. Advanced shall
provide Digital with proof of such insurance.
IV. CHARGES.
A. Transmission Fees. In consideration for the lease of
transmission capacity on the Stations during the initial term and
any renewal terms of this Agreement, beginning on the Start Date,
Digital shall receive such consideration as specified in Exhibit B
hereto, to be distributed pursuant to an Escrow Agreement executed
concurrently herewith.
B. Taxes. If federal, state or local taxes for usage (other
than taxes on the income of Digital) are applicable, or become
applicable, it will be the responsibility of Advanced to pay such
tax and to accept the liability of any unpaid taxes which may
subsequently become applicable retroactively; provided, however,
that Advanced shall have no liability for any taxes due for any
period prior to the Start Date.
V. PROSECUTION OF APPLICATIONS AND PETITIONS.
A. FCC Filings. Both parties hereto shall diligently
prepare, file and prosecute before the FCC all necessary or
desirable petitions, waivers, applications, assignments and other
related documents required to secure approval of the matters
addressed herein.
B. Further Efforts. While this Agreement is in effect,
Digital shall use its reasonable efforts to obtain and maintain in
force all licenses, permits and authorizations required in
connection with Advanced's use of the Stations hereunder. Digital
shall also file such reasonable protests or other petitions to deny
against applications of third parties for licenses as may be
requested by Advanced. Digital, if requested by Advanced and to
the extent requested, shall use its reasonable efforts to prevent
any unauthorized individual or entity from receiving the signals
transmitted over the Stations, provided that all costs and expenses
in connection therewith are paid by Advanced. Digital shall
promptly notify Advanced of any event which may affect the
Licenses. Digital shall fully cooperate with all reasonable
requests of Advanced for assistance in the
construction, operation and maintenance of any additional Station
facilities which Advanced may desire in order to optimize its
business, provided Advanced shall reimburse Digital for all
expenses incurred by Digital in providing such assistance as
requested by Advanced pursuant to Sections V.A. and V.B. hereof.
VI. REPRESENTATIONS AND WARRANTIES.
A. Digital Representations and Warranties. Digital
represents and warrants to Advanced that:
1. Organization. It is a corporation duly organized,
validly existing and in good standing under the laws of the state
of its incorporation with full power and authority to carry out all
of the transactions contemplated hereby. All necessary actions on
its part to authorize the execution and delivery of this Agreement
and the performance of its obligations hereunder have been taken.
2. Compliance with Law. To its knowledge the carrying
out of the provisions of this Agreement will not result in any
violation or be in conflict with any judgment, decree, order,
statute, rule or
regulation of any governmental authority with jurisdiction over
him.
3. No Violation. Neither the execution and delivery of
this Agreement nor the performance of the transactions contemplated
hereby, constitutes or will constitute a violation of, be in
conflict with or constitute a default under, or commitment to which
it is bound, or any judgment, decree, order, regulation or rule of
any court or governmental authority, or any statute or law. No
consent of any federal, state or local authority is required in
connection with the execution and delivery of this Agreement or any
other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transactions
contemplated hereby and thereby.
4. Reliance. Digital would not enter into this
Agreement but for its reliance on Advanced's representations and
warranties.
B. Advanced Representations and Warranties. Advanced
represents and warrants to Digital that:
1. Organization and Authorization. It is a corporation
duly organized, validly existing and in good standing under the
laws of the state of its incorporation with full power and
authority to carry out all of the transactions contemplated hereby.
All necessary actions on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations
hereunder have been taken.
2. Compliance with Law. The carrying out of the
provisions of this Agreement will not result in any violation or be
in conflict with any judgment, decree, order, statute, rule or
regulation of any governmental authority with jurisdiction over it.
3. No Violation. Neither the execution and delivery of
this Agreement nor the performance of the transactions contemplated
hereby, constitutes or will constitute a violation of, be in
conflict with, constitute a default under, or be ultra vires as to,
any term or provision of its governing instruments or any agreement
or commitment to which it is bound, or any judgment, decree, order,
regulation or rule of any court or governmental authority, of any
statute or law. Except for approval of the FCC, no consent of any
federal, state or local authority is required in connection with
the execution and delivery of this Agreement or any other
agreements, certificates or instruments executed and delivered
herewith or with the performance of the transactions contemplated
hereby and thereby.
4. Litigation. There is no action, suit, proceeding or
investigation pending or to its best knowledge, directly threatened
against it before any court, administrative agency or other
governmental body relating in any way to the transactions
contemplated by this Agreement, and it does not know of any valid
basis for the commencement of any such action, proceeding or
investigation. It has not been charged with and, to its best
knowledge, has not been under investigation with respect to any
charge concerning, any material violation of any provision of any
federal, state, local law or of any administrative regulation. No
unsatisfied judgment, order, writ, injunction, decree or assessment
of any court or of any federal, state, local or other government
department, commission, board, bureau, agency or instrumentality
relating in any way to this Agreement has been entered against and
served upon it. There is no action, proceeding or investigation
pending or, to its best knowledge, directly threatened against it,
nor are there questions or challenges of the validity of this
Agreement, that otherwise seek to prevent the consummation or
performance of this Agreement.
5. Reliance. Advanced would not enter into this
Agreement but for its reliance on Digital's representations and
warranties.
C. Survival of Representation and Warranties. The
representations and warranties contained in this Agreement shall
not in any respect be limited to or diminished by any past or
future inspection, examination or possession on the part of the
parties or their representatives of any records, documents,
information or properties. Such warranties and representations
shall be deemed to be continuing during the term of this Agreement,
and any renewals thereof, and each party shall have the duty
promptly to notify the other in any event or circumstance, which
might reasonably be deemed to constitute a breach of or lead to a
breach of its continuing warranties or representations.
D. Waiver. The express or implied waiver by either party of
any breach of any representation or warranty or any failure to
fulfill any condition, covenant or other obligation or liability
under this Agreement shall not constitute a waiver of any other
representation or warranty or of any other failure in the future or
in the past by the other party to fulfill such representation,
warranty, condition, covenant, obligation or liability hereunder.
VII. INDEMNIFICATION.
A. Indemnification by Digital. Except as otherwise provided
in this Agreement, Digital will indemnify, defend and hold harmless
Advanced with respect to any and all claims, liability,
obligations, loss, damages or injuries, together with costs and
expenses (including, without limitation, legal costs and expenses):
(1) arising out of or resulting from any inaccuracy,
misrepresentation or breach of any representation or warranty of
Digital contained herein; or (2) arising out of any breach or
default by Digital of any of its covenants, agreements, duties or
obligations hereunder.
B. Indemnification by Advanced. Except as otherwise provided
in this Agreement, Advanced will indemnify, defend and hold
harmless Digital with respect to any and all claims, liability,
obligations, loss, damages or injuries, together with costs and
expenses (including, without limitation, legal costs and expenses):
(1) arising out of or resulting from any inaccuracy,
misrepresentation or breach of any representation or warranty of
Advanced contained herein; or (2) arising out of any breach or
default by Advanced of any of its covenants, agreements, duties or
obligations hereunder.
C. Notice and Defense. Each party agrees to give the other
prompt written notice of any event or assertion of which it has
knowledge concerning any matter as to which it may request
indemnification hereunder. Each party will cooperate with the
other in determining the validity of any such matter and in the
diligent and vigorous defense of any claim which might give rise to
indemnification hereunder.
VIII. TERMINATION AND DEFAULT.
A. Termination by Digital. Digital shall have the right to
terminate this Agreement, without further liability to Advanced,
upon written notice to Advanced, in the event: (1) Digital's
authority to operate the Stations in accordance herewith is
terminated by the FCC through no fault of Digital; (2) Advanced
breaches any of its obligations hereunder, and such breach is not
cured within a thirty (30) day period following written notice
thereof; or (3) Advanced fails to make any payment due and payable
under this Agreement within fifteen (15) days following written
notice that such payment was not timely paid.
B. Termination by Advanced. Advanced shall have the right to
terminate this Agreement, without further liability to Digital,
upon written notice to Digital, in the event: (1) Digital's
authority to operate the Stations in accordance herewith is
terminated by the FCC through no fault of Advanced; or (2) Digital
breaches any of its material obligations hereunder, and such breach
is not cured within a thirty (30) day period following notice.
C. Default by Advanced. It shall be an event of default if
Advanced files or has filed against it a petition for voluntary or
involuntary bankruptcy or is dissolved during the initial term of
this Agreement or any renewal term thereof, so long as the FCC has
not consented to the
assignment of the Licenses.
D. Default By Digital. It shall be an event of default if
Digital either: (1) causes the license for the Station to be
cancelled, forfeited or revoked by the FCC during the term of this
Agreement; or (2) fails to perform its obligations hereunder in
such a manner as to prevent Advanced from using transmission
capacity on the Channels to the extent set forth herein. In any of
such events, this Agreement shall be terminated without further
liability of either party to the other.
IX. MISCELLANEOUS.
A. Assignments.
1. Assignment of Authorization. Digital may not assign
or transfer its FCC authorization for the Station during the term
hereunder.
2. Assignment of Agreement. Neither party may assign or
transfer its rights, benefits, duties or obligations hereunder
without the prior written consent of the other, which consent shall
not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, either party may assign or transfer
its rights, benefits, duties or obligations hereunder to an
affiliate or subsidiary in which the assignor holds a controlling
equity interest, without the prior consent of the other party.
B. Attorneys' Fees. If it shall be necessary for either
party to employ an attorney to enforce its respective rights under
this Agreement because of the other party's default, the defaulting
party shall reimburse the non-defaulting party for its reasonable
and actual attorneys' fees.
C. Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be an
original and all of which together shall constitute one and the
same instrument.
D. Dealings with Third Parties. No party is, nor shall any
party hold itself out to be, vested with any power or right to
contractually bind, or act on behalf of any other as its
contracting broker, agent or otherwise for committing, selling,
conveying or transferring any of the other party's assets or
property, contracting for or in the name of the other party, or
making any contractually binding representations as to the other
party which shall be deemed representations contractually binding
such party.
E. Due Authorization. Each of the signatories personally
represents and warrants that he is duly authorized to execute this
Agreement on behalf of the party on whose behalf it purports to
execute this Agreement.
F. Entire Agreement. This Agreement states the entire
agreement as of this date between the parties with respect to the
subject matter hereof and supersedes all preexisting oral, letter
or other agreements or commitments with respect thereto. This
Agreement may be modified only by an agreement in writing and shall
be binding on and shall inure to the benefit of the parties hereto
and their respective successors and assigns, subject, however, to
the provisions hereof restricting assignment.
G. Force Majeure. If by reason of force majeure either party
is unable in whole or in part to carry out its obligations
hereunder, said party shall not be deemed in violation or default
during the continuance of such inability. The term "Force
Majeure," as used herein, shall mean the following: acts of God;
acts of public enemies; orders of any kind of the government of the
United States of America or of any state or any of their
departments, agencies, political subdivisions, or officials other
than the FCC, or any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; fires,
hurricanes; volcanic activity; storms of extraordinary force;
floods; washouts; droughts; civil disturbances; explosions; or any
similar cause or event not reasonably within the control of the
adversely affected party.
H. Headings. The headings herein are inserted for
convenience only and shall not constitute a part of the Agreement.
I. Notices. All notices and documentation given under this
Agreement shall be in writing and shall be deemed given the first
weekday (excluding federal holidays) after being sent by United
States Express Mail, return receipt requested, or by Federal
Express, signature required, to the other party at the following
address:
If to Digital:
___________________________
___________________________
___________________________
with a copy to:
Stephen E. Coran, Esq.
Rini, Coran & Lancellotta, P.C.
1350 Connecticut Avenue, N.W.
Suite 900
Washington, D.C. 20036
If to Advanced:
____________________________
____________________________
____________________________
with a copy to:
____________________________
____________________________
____________________________
or to such other address as any written notice to the other party
designates.
J. Parties Defined. The parties to this Agreement shall
include the parties identified at the head of this Agreement, or
any corporation or other entity into or with which any of them may
be incorporated, merged or consolidated, or any corporation or
entity which shall succeed to or acquire all or substantially all
of the business and/or assets of any of them, as the case may be,
subject to approval in writing by both parties, such approval not
to be unreasonably withheld, conditioned or delayed.
K. Specific Performance. The parties acknowledge and agree
that the rights reserved to each of them hereunder are of a
special, unique, unusual and extraordinary character, which gives
them a particular value, the loss of which cannot be adequately or
reasonably compensated for in damages in an action at law, and the
breach by either of the parties of any of the provisions hereof
will cause the other parties irreparable injury and damage. In
such event, the non-defaulting party shall be entitled, as a matter
of right, without further notice, to require of the defaulting
party specific performance of all of the acts, services and
undertakings required hereunder including the obtaining of all
requisite authorizations to execute or perform this Agreement and
to obtain injunctive and other equitable relief in any competent
court to prevent the violation of any of the provisions hereof.
Neither this provision nor any exercise by any party or right to
equitable relief or specific performance herein granted shall
constitute a waiver of any other rights which it may have to
damages or otherwise.
L. Station Records. Digital shall maintain a copy of this
Agreement as part of the official records of the Station.
M. Time of Essence. Whenever this Agreement shall set forth
any time for the performance of any act, such time shall be deemed
of the essence.
N. Severability. If any provision of this Agreement is
declared void by any court of competent jurisdiction, the validity
and enforceability of any other provision of this Agreement shall
not be affected thereby, and the parties agree to use their best
efforts to negotiate a replacement provision which is valid and
which maintains the essential benefit of the bargain between the
parties to the maximum extent possible.
O. Confidentiality. Digital and Advanced each agree that it
will not disclose the terms
of this Agreement to any other party, except to each party's
officers, directors, attorneys, accountants and employees involved
in the transactions contemplated hereby, and only then on the
condition that such individuals not disclose the information
disclosed to them. Notwithstanding the foregoing, either party may
disclose the terms of this Agreement to any third party at any time
if: (1) required to do so by law (including without limitation
applicable securities and communications laws and regulations, this
Agreement or other contractual obligation); or (2) both Digital and
Advanced consent in writing to such disclosure.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
DIGITAL WIRELESS SYSTEMS, INC.
By: _______________________________
Its: ______________________________
ADVANCED WIRELESS SYSTEMS, INC.
By: _______________________________
Its: ______________________________
Exhibit B
Monthly Rental: Months 1 through 12: 91,666 Shares of Common Stock
of Advanced Wireless Systems, Inc.