SETTLEMENT AGREEMENT
This Settlement Agreement ("Settlement Agreement") is made as of this
16th day of August, 2002 (the "Execution Date"), by and between Chadmoore
Wireless Group, Inc., successor in interest to Chadmoore Communications, Inc.
("Chadmoore "), and Emergency Radio Service, Inc. ("ERS"). Each of Chadmoore and
ERS may be referred to herein as a "Party" and collectively as the "Parties."
WHEREAS, Chadmoore and ERS entered into that certain Agreement dated as
of June 12, 1997, and amended as of July 23, 1997 and August 5, 1997 (the
"Agreement") between Chadmoore on behalf of itself and as agent for its
affiliates and ERS; and
WHEREAS, Chadmoore and ERS entered into that certain Limited Liability
Company Agreement regarding PTT Communications of Ft. Wayne Limited, effective
June 12, 1997, and amended as of July 23, 1997 and August 5, 1997 (the "LLC
Agreement"); and
WHEREAS, Chadmoore and ERS entered into that certain Dealer Agreement
dated as of April 30, 1997 (the "Dealer Agreement" and together with the
Agreement and the LLC Agreement, the "ERS/Chadmoore Agreements" ); and
WHEREAS, by correspondence dated October 19, 2001, ERS provided notice,
through counsel, to Chadmoore that ERS intended to exercise its rights to
arbitration pursuant to the provisions of the Agreement (the "Arbitration
Notice"); and
WHEREAS, upon receipt of the Arbitration Notice, the American
Arbitration Association ("AAA") assigned the case number 79 133 00112 01 S1R to
the controversy (the "Arbitration Proceeding"); and
WHEREAS, Chadmoore and ERS wish to enter into this Settlement Agreement
to resolve all matters related to the Arbitration Proceeding, all matters
related to the ERS/Chadmoore Agreements, and all other disputes between the
Parties, including but not limited to all matters related to the ERS/Chadmoore
Agreements.
THEREFORE, the Parties, intending to be bound legally, in reliance upon
and in consideration of the mutual covenants, releases, agreements and
conditions contained herein, and subject to the provisions and terms of this
Settlement Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, Chadmoore and
ERS agree as follows:
Article I
Settlement of Disputes
1.01 Settlement of All Rights Under the ERS/Chadmoore Agreements.
Chadmoore and ERS have entered into this Settlement Agreement to
knowingly and voluntarily settle any and all matters related to the
ERS/Chadmoore Agreements, including but not limited to, all recoupment
rights, all rights to allocation/distribution of net income, profits
and losses, and all rights relating to transferability, assignment, and
termination (in each case, past,
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present, and future). Until the earlier of the date that this
Settlement Agreement is terminated or the Settlement Date (as that term
is defined below), Chadmoore and ERS hereby release and waive their
rights to bring any arbitration or court proceeding for any and all
relief of every nature and type, including injunctive and equitable
relief, related to the ERS/Chadmoore Agreements. 1.02 Stay of
Arbitration Proceeding. Within one (1) business day of the Execution
Date, the Parties shall notify the AAA that they have entered into this
Settlement Agreement and shall request that the AAA stay any further
proceedings related to the Arbitration Proceeding.
1.03 No Interference with Settlement Agreement. Both Parties hereby agree
that they shall take no action that, directly or indirectly, may
prejudice any of the other Party's rights under this Settlement
Agreement.
Article II
Settlement Terms
2.01 Assignment of Five Channel System Assets. On or before the Settlement
Date, Chadmoore shall assign, transfer, convey and deliver to ERS all
of Chadmoore's right, title and interest in and to the Assets, as
hereinafter defined, free and clear of all pledges, options, security
interests, charges, liens, liabilities, claims, mortgages, obligations,
restrictions, or other encumbrances of any kind or nature
(collectively, "Liens"):
(a) The licenses issued by the Federal Communications
Commission ("FCC") covering the operation of
specialized mobile radio ("SMR") stations WPEN275 and
WPEQ437 (the "Licenses") and all other governmental
permits and other authorizations necessary or
desirable to operate the system used to provide
wireless communications services in the Fort Wayne,
Indiana area on the frequency assignments (the
"Channels") 853.1625 MHz, 852.0625 MHz, 854.1625 MHz,
854.7125 MHz and 853.7125 MHz (the "Five Channel
System");
(b) the radio transmission and control equipment used to
operate the Five Channel System, including the
receivers and transmitters, as listed on Exhibit A
hereto;
(c) at ERS' election , all rights and benefits of
Chadmoore in the antenna site leases and ground lease
covering the antenna structures and associated
facilities operated by Chadmoore in connection with
the System (collectively, the "Site Leases"), subject
to the approval of the lessor of the Site Leases, if
required, copies of which are attached hereto as
Exhibit B hereto, provided, however, that if ERS
elects not assume the Site Leases, it is the
obligation of ERS to arrange for cancellation of the
Site Leases;
(d) all rights, contracts, commitments, and agreements,
whether written or oral, with persons, firms,
partnerships, trusts, associations, corporations or
other entities for the provision of services to
customers of the Five
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Channel System (the "Assumed Contracts"), copies of
which shall be provided to ERS by Chadmoore within
ten (10) business days of the Execution Date;
(e) all books, files, records, customer lists, customer
records, supplier lists, mailing lists, equipment
repair, maintenance or service records, FCC records
and all other information relating to the operation
of the Five Channel System, copies of all of which
shall be provided to ERS by Chadmoore within ten (10)
business days of the Execution Date;
(f) all accounts receivable and notes receivable related
to the Five Channel System for the period after the
Settlement Date, except as otherwise provided herein;
(g) all prepaid assets of Chadmoore relating to the Five
Channel System, a listing of which shall be provided
to ERS by Chadmoore within ten (10) business days of
the Execution Date; and
(h) the goodwill and any other intangible assets used or
usable in connection with the Five Channel System.
All of the foregoing, together with any other assets, security
deposits, prepaid items, goodwill and rights related to the Five
Channel System of every nature, kind and description, tangible or
intangible, wheresoever located, and used or usable in the operation of
the Five Channel System, or which constitute the operation of the Five
Channel System are referred hereto as the "Assets".
2.02 Excluded Assets. Notwithstanding any other provision of this Settlement
Agreement, the assignment of the Assets of the Five Channel System to
ERS shall not include any other assets of Chadmoore, including any cash
or cash equivalents.
2.03 Assumption of Certain Liabilities. On the terms and subject to the
conditions set forth herein, from and after the Settlement Date, ERS
will assume and satisfy or perform when due only the following debts,
liabilities, obligations and commitments relating to the operation of
the Five Channel System as a going concern:
(a) the Site Leases and the Assumed Contracts, but only
to the extent that the obligations of the Seller
thereunder relate to periods following the Settlement
Date; and
(b) liabilities and obligations of Chadmoore under the
Licenses but only to the extent that such liabilities
and obligations relate to periods following the
Settlement Date.
Except for the foregoing (the "Assumed Liabilities"), ERS shall not
assume, or in any way be responsible for, or liable with respect to,
any debts, liabilities or obligations of
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Chadmoore, whether arising out of or in connection with the Assets,
whether fixed, contingent or otherwise, known or unknown.
2.04 Submission of Applications. Within five (5) business days of the
Execution Date, Chadmoore shall initiate the submission of one or more
applications, using the FCC's Universal Licensing System ("ULS"),
seeking FCC consent to the assignment of the Licenses from Chadmoore to
ERS (the "Assignment Applications") and shall provide ERS with written
notice of such initiation of the Assignment Applications. Within five
(5) business days of its receipt of notification from Chadmoore that
Chadmoore has caused the initiation of the Assignment Applications, ERS
shall complete the assignee portion of the Assignment Applications via
the ULS and shall provide written notice to Chadmoore of its completion
of the assignee portion of the Assignment Applications. Within five (5)
business days of its receipt of notification from ERS of ERS's
completion of the assignee portion of the Assignment Applications,
Chadmoore shall complete the submission of the Assignment Applications
via the ULS and shall provide ERS of written notice of such completion.
Written notice regarding the process of submission of the Assignment
Application may be provided electronically.
2.05 Management Agreement. Simultaneously with the execution of this
Settlement Agreement, Chadmoore and ERS shall enter into a Management
Agreement, in the form attached hereto as Exhibit C, pursuant to which
ERS shall manage the Five Channel System between September 1, 2002 and
the Settlement Date.
2.06 Settlement Payment. Within two (2) business days of the Execution Date,
Chadmoore shall deposit, with Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. (the "Escrow Agent"), the sum of Three Hundred Seventy Five
Thousand Dollars ($375,000) (the "Settlement Payment") to be held in
escrow pursuant to an Escrow Agreement, in the form attached hereto as
Exhibit C (the "Escrow Agreement"). On the Execution Date, ERS,
Chadmoore and the Escrow Agent shall execute the Escrow Agreement. On
the Settlement Date, the Settlement Payment, and all interest thereon,
shall be released by Escrow Agent to ERS. The Parties agree that the
Settlement Payment shall be considered a payment by Chadmoore to ERS
for ERS's sale of its interest in PTT Communications of Ft. Wayne
Limited.
2.07 Exchange of Releases. On the Settlement Date, the Parties shall execute
the Mutual Release and Termination (the "Mutual Release") in the form
attached hereto as Exhibit E.
2.08 Settlement Date. The Settlement (the "Settlement") provided for herein
shall take place, as the Parties may mutually agree, via telephone,
confirmed facsimile, U.S. first class mail, overnight courier, or in
person, at a location mutually agreed upon by the Parties. The
Settlement shall take place within five (5) business days after the
later of: (a) the date upon which the FCC's order effecting the
assignment of all of the Licenses to ERS becomes a Final Order (as
defined below); or (b) the satisfaction of all other conditions
specified in Article V hereof (the "Settlement Date").
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Article III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Chadmoore. Chadmoore hereby
represents and warrants to ERS each of the following:
(a) Authority. Chadmoore is duly organized as a corporation
dissolved in 2002, under the laws of Colorado, validly existing, and has all
requisite power and authority and the legal right, to execute, deliver and
perform this Settlement Agreement. Chadmoore is the lawful, beneficial and
exclusive owner of the Assets and Chadmoore has the unrestricted right to sell
or cause the sale of such Assets and to assign the Assumed Contracts to ERS at
the Settlement Date free and clear of all Liens. This Settlement Agreement
constitutes the legal, valid and binding obligation of Chadmoore enforceable in
accordance with its terms against Chadmoore except as may be limited by laws
affecting the enforcement of creditors' rights or equitable principles
generally.
(b) No Restrictions Against Performance. (i) Neither the
execution, delivery, nor performance of this Settlement Agreement by Chadmoore,
nor the consummation of the Settlement contemplated hereby will violate any
provisions of, create any conflict with, result in a breach of, constitute a
default under, or result in the creation or imposition of any lien or condition
under any agreement, document, contract, judgment, or regulation by any
governmental agency to which Chadmoore is bound. (ii) Other than ERS, no person
or entity holds or has been granted a right of first refusal or option to
purchase the Assets, the Five Channel System or any part thereof. (iii) The
License(s) are free and clear of all Liens, of any nature whatsoever, whether
absolute, legal, equitable, accrued, contingent or otherwise, including without
limitation any rights of first refusal as to the Licenses except as set forth
herein; (iv) There are no outstanding options, warrants, commitments, agreements
or any other rights of any character, entitling any person or entity other than
ERS to acquire any interest in all, or any part of, the Assets.
(c) Equipment. The tangible assets are in good working order
and repair, subject to ordinary wear and tear, and are sufficient to operate the
Five Channel System as currently operated.
(d) Customer Contracts. (i) None of the Assumed Contracts
obligates Chadmoore to the provision of service to any customer under any free,
below-market or commercially unfavorable rates or in barter for any other goods
or services; and (ii) Chadmoore is not in default under any of the Assumed
Contracts.
(e) Third-Party and Governmental Consents. Except as set forth
elsewhere in this Settlement Agreement, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or filing with,
or notice to, any federal, state or local governmental authority or other third
party is required on the part of Chadmoore in connection with the execution of
this Settlement Agreement or the consummation of the transaction contemplated
hereby.
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(f) FCC Matters. (i) the Licenses are valid, in full force and
effect and in good standing with the FCC and the licensee thereof is in
compliance with all applicable federal statutes, rules, regulations and policies
applicable to Chadmoore, the Licenses or the Five Channel System; (ii) the Five
Channel System is fully constructed and operational as required by FCC
regulations; (iii) there is no pending or, to the best of Chadmoore's knowledge,
threatened action by the FCC or any other governmental agency or third party to
suspend, revoke, terminate or challenge any of the Licenses or otherwise
investigate the operation of the Five Channel System.
(g) Orders and Decrees. Neither Chadmoore nor the Licenses are
subject to any judicial or administrative order, ordinance or zoning restriction
which would adversely affect, or impose any condition on, Chadmoore, the
License(s) or the Settlement contemplated hereby.
(h) Litigation. Other than the Arbitration, there is no
judicial or administrative action, suit or proceeding, pending or, to the best
knowledge of Chadmoore, threatened against or relating to Chadmoore, or the
transaction contemplated hereby, before any federal, state or local court,
arbitration tribunal or governmental authority which could, individually or in
the aggregate adversely affect the transaction contemplated hereby.
(i) Broker's Fees. No agent, broker or other person acting
pursuant to the express or implied authority of Chadmoore is entitled to make
any claim against ERS as a result of any action by Chadmoore, for a commission
or finder's fee. Chadmoore agrees to indemnify ERS against any claim for any
such commission or finder's fee made by any agent, broker or other person acting
pursuant to the express or implied authority of Chadmoore.
(j) No Misstatements or Omissions. None of the information or
documents furnished or to be furnished by Chadmoore to ERS and no representation
or warranty made in this Settlement Agreement or in any agreement, document or
instrument contemplated hereby, is or will be knowingly false or misleading as
to any material fact, or omits or will omit to state a material fact required to
make any of the statements made therein not misleading in any material respect.
3.02 Representations and Warranties of ERS. ERS hereby represents and
warrants to Chadmoore each of the following:
(a) Authority. ERS is a corporation duly organized, validly
existing, and in good standing under the laws of Indiana. ERS has all requisite
power, authority and the legal right to execute, deliver and perform this
Settlement Agreement. ERS's execution, delivery, and performance of this
Settlement Agreement has been duly and validly authorized by all necessary
action on the part of the ERS. This Settlement Agreement constitutes the legal,
valid and binding obligations of ERS enforceable in accordance with their terms
against ERS except as may be limited by laws affecting the enforcement of
creditors' rights or equitable principles generally.
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(b) No Restrictions Against Performance. Neither the
execution, delivery, nor performance of this Settlement Agreement by ERS, nor
the consummation of the transaction contemplated hereby will, with or without
the giving of notice or the passage of time, or both, violate any provisions of,
create any conflict with, result in a breach of, constitute a default under, or
result in the creation or imposition of any Lien or condition under (i) any and
all organizational documents of ERS; (ii) any federal, state or local law,
statute, ordinance, regulation or rule, which is or may be applicable to ERS;
(iii) any contract, indenture, instrument, agreement, mortgage, lease, right or
other obligation or restriction to which ERS is a party or by which ERS is or
may be bound; or (iv) any order, judgment, writ, injunction, decree, license,
franchise, permit or other authorization of any federal, state or local court,
arbitration tribunal or governmental agency by which ERS is or may be bound.
(c) FCC and Other Qualifications. ERS is legally qualified
under all relevant laws and regulations to hold the License(s) and to receive
any authorization from any other federal, state or local regulatory or
governmental authority necessary to consummate the transaction contemplated
hereby.
(d) Third-Party and Governmental Consents. Except for the
approval of the FCC, and as set forth elsewhere in this Settlement Agreement, no
approval, consent, waiver, order or authorization of, or registration,
qualification, declaration, or filing with, or notice to, any federal, state or
local governmental authority or other third party is required on the part of ERS
in connection with the execution of this Settlement Agreement or the
consummation of the transaction contemplated hereby.
(e) Litigation. There is no judicial or administrative action,
suit or proceeding, pending or, to the best knowledge of ERS, threatened against
or relating to ERS, or the Settlement contemplated hereby, before any federal,
state or local court, arbitration tribunal or governmental authority which
could, individually or in the aggregate adversely affect ERS or the Settlement
contemplated hereby.
(f) Broker's Fees. No agent, broker or other person acting
pursuant to the express or implied authority of ERS is entitled to make any
claim against Chadmoore as a result of any action by ERS, for a commission or
finder's fee. ERS agrees to indemnify Chadmoore against any claim for any such
commission or finder's fee made by any agent, broker or other person acting
pursuant to the express or implied authority of ERS.
(g) No Misstatements or Omissions. The information and
documents furnished or to be furnished by ERS to Chadmoore and the
representations and warranties made in this Settlement Agreement or in any other
agreement, document or instrument contemplated hereby, taken as a whole, are not
false or misleading as to any material fact, and do not omit to state a material
fact required to make any of the statements made therein not misleading in any
material respect.
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Article IV
COVENANTS
4.01 Chadmoore's Covenants. Chadmoore hereby covenants and agrees that:
(a) Conduct of Business. From the Execution Date until
the Settlement Date, Chadmoore shall:
(i) comply in all material respects with all
statutes, laws, ordinances, rules and
regulations applicable to the Five Channel
System including, but not limited to, the
Communications Act of 1934 and any rules or
regulations promulgated thereunder;
(ii) not enter into or assume any agreement,
contract or commitment, related to the Five
Channel System or the Assets, without the
written approval of ERS;
(iii) not dispose of any Assets, or commit to
dispose of any Assets other than in the
ordinary course of business or as
contemplated by this Settlement Agreement or
the Management Agreement, without the
written approval of ERS;
(iv) not, except in the ordinary course of
business and in accordance with past
practices or as contemplated by this
Settlement Agreement or the Management
Agreement, modify or terminate any of the
Site Leases or Assumed Contracts;
(v) except as contemplated by this Settlement
Agreement or the Management Agreement, take
all actions necessary to ensure the
continued validity of the Licenses; and
(vi) not take any other action which would have a
material adverse effect on any of the Assets
or the Five Channel System, including
without limitation the value thereof.
(b) Access and Information. To the extent ERS reasonably deems
necessary for purposes of this Settlement Agreement, Chadmoore shall afford ERS,
its officers, employees, accountants, counsel and other authorized
representatives reasonable access, throughout the period prior to the Settlement
Date, to its facilities, books and records relating to the Assets and the Five
Channel System. Chadmoore shall cause its representatives to furnish to ERS such
additional financial and operational data and other information as ERS may, from
time to time, reasonably request. Such access shall be afforded during normal
business hours after reasonable notice and shall not unreasonably interfere with
Chadmoore's operations. From and after the Settlement Date, Chadmoore shall
cooperate with ERS in such reasonable ways as ERS may request to allow ERS's
auditors to audit the Five Channel System's operations relating to periods prior
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to the Settlement Date, including, without limitation, signing such management
representation letters as such auditors may require for the audit.
(c) No Shop. Chadmoore agrees that, from the date hereof until
the Settlement Date or termination of this Settlement Agreement pursuant to
Article VIII hereof, neither it nor any of its agents will take any action,
directly or indirectly, to solicit indications of interest in, or offers for,
the sale of the Assets from anyone other than ERS, or provide any information to
or engage in discussions or negotiations with anyone other than ERS relating to
any sale of the Assets. Chadmoore agrees promptly to inform ERS of any offers or
solicitations to purchase the License(s), including the terms thereof, made by
any third party.
(d) Third Party Consents. Chadmoore shall obtain prior to the
Settlement Date, all consents and approvals of third parties or governmental
agencies for the transfer of the Assets to ERS.
(d) Accounting Functions. Chadmoore shall provide to ERS such
assistance in the transfer of the financial and accounting records related to
the operation of the Five Channel System as may be reasonably requested by ERS
to facilitate the transfer of the accounting functions to ERS.
4.02 ERS's Covenants. ERS hereby covenants and agrees that:
(a) Access to Books and Records. From and after the
Settlement Date, ERS shall afford Chadmoore and its representatives access to
the books and records of the Five Channel System operations relating to periods
prior to the Settlement Date as reasonably necessary to enable Chadmoore to
prepare tax returns and other governmental filings, defend or prosecute
litigation or for any other legitimate purpose. Such access shall be afforded
during normal business hours after reasonable notice and shall not unreasonably
interfere with ERS's operations.
(b) Cooperation. ERS shall cooperate with Chadmoore in
obtaining all necessary consents and approvals of third parties or governmental
agencies for the transfer of the Assets to ERS.
4.03 Covenants of Both Parties. The Parties hereto covenant and
agree that:
(a) Disclosure to Parties. If any of the Parties should become
aware, prior to the Settlement Date, that any of its representations, warranties
or covenants is inaccurate or incapable of being performed, such party shall
promptly give written notice of such inaccuracy or incapability to the other
party; provided, however, that nothing contained in this Section 4.03(a) shall
relieve the party bound by such representation, warranty or covenant from
complying with such representation, warranty, or covenant.
(b) Confidentiality. Prior to the Settlement Date, both
parties agree to use their best efforts to keep the existence and terms of this
Settlement Agreement confidential, including but not limited to the nature and
amount of the consideration, and any and all
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information with respect to ERS and Chadmoore; provided, however, that each
party may disclose such information to its lawyers, accountants, and other
representatives or as required by law or regulation or by a court of competent
jurisdiction.
(c) Further Assurances. At and after the Settlement Date, each
of the Parties hereto agrees to execute all documents and instruments and to
take or to cause to be taken all actions, which are necessary or appropriate to
complete the transaction contemplated by this Settlement Agreement, including,
but not limited to taking any actions reasonably required to cause the
cancellation of Short Space Licenses as described in Section 5.01(c) of this
Settlement Agreement.
ARTICLE V
SETTLEMENT CONDITIONS
5.01 Conditions to Obligations of ERS. The obligations of ERS hereunder
to be performed at or before the Settlement Date shall be subject to the
satisfaction by Chadmoore, or waiver in writing by ERS, of the following
conditions at or prior to the Settlement Date:
(a) Representations, Warranties and Obligations. All
representations and warranties of Chadmoore contained in this Settlement
Agreement shall be true and correct as of the date hereof and until and through
the Settlement Date. Chadmoore shall have performed and complied with all of its
covenants and obligations under this Settlement Agreement.
(b) FCC Consent. The FCC shall have granted its consent to the
assignment of the License(s) to ERS, such FCC consent having become a Final
Order. For purposes of this Settlement Agreement, Final Order shall be defined
as an action by the FCC with respect to which no action, request for stay,
petition for rehearing, reconsideration or appeal is pending, and as to which
the forty (40) day period for filing any request, petition or appeal has expired
and with respect to which the time for agency action taken on its own motion has
expired; or in the event of the filing of such request, petition or appeal, an
action which shall have been reaffirmed or upheld and with respect to which the
time for seeking further administrative review shall have expired without the
filing of any such action for further review.
(c) Cancellation of Co-Channel Licensees. There shall be no
licenses issued by the FCC to Chadmoore or to an entity that obtained such
licenses based on Chadmoore's concurrence, that permit operation on the Channels
closer than otherwise allowed by the FCC's rules without concurrence from
co-channel licensees to the base station location(s) designated on the Licenses
("Short Space Licenses"). Any Short Space Licenses that existed prior to the
Settlement Date shall have been cancelled by Final Order.
(d) Assignment of Assumed Contracts and Site Leases. All of
the Assumed Contracts and, if ERS elects, the Site Leases that may be assigned,
shall have been assigned to ERS.
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(e) No Material Adverse Change. There shall not have been any
material adverse change in any of the Assets or the Five Channel System unless
such change results from ERS's management of the Five Channel System pursuant to
the Management Agreement.
(f) Absence of Natural Disasters. The Five Channel System and
the Assets shall not have been, and shall not be seriously threatened to be,
materially adversely affected in any way as a result of fire, explosion,
disaster, earthquake, accident, labor dispute, any action by the United States
of America, the state of Indiana or any other government or governmental
authority, domestic or foreign, flood, riot, act of war, civil disturbance, or
act of God.
(g) Release of Liens. All liens, claims and encumbrances on or
to the Assets shall have been released to the satisfaction of ERS.
(h) Delivery of Possession. Chadmoore shall have delivered
possession of the tangible Assets to ERS as represented in the Bill of Sale to
be delivered by Chadmoore to ERS pursuant to the provisions of Section 6.01(a)
of this Settlement Agreement.
(i) Deliveries. Chadmoore shall have taken the actions
specified in Section 6.01 hereof.
5.02 Conditions to Obligations of Chadmoore. The obligations of
Chadmoore hereunder to be performed at or before the Settlement Date shall be
subject to the satisfaction by ERS, or waiver in writing by Chadmoore, of the
following conditions at or prior to the Settlement Date:
(a) Representations and Warranties. All representations and
warranties of ERS contained in this Settlement Agreement shall, except as
expressly provided herein, be true and correct as of the date hereof, and until
and through the Settlement Date. ERS shall have performed and complied with all
of its covenants and obligations under this Settlement Agreement.
(b) Deliveries. ERS shall have taken the actions specified in
Section 6.02 hereof.
ARTICLE VI
SETTLEMENT DELIVERIES
The following deliveries shall be made by the respective parties at the
Settlement Date:
6.01 Chadmoore's Deliveries. Chadmoore shall deliver to ERS each
of the following items at or prior to the Settlement Date:
(a) Bill of Sale. One or more Bills of Sale from
Chadmoore conveying to ERS the Assets, free and clear of any and all Liens of
any nature;
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(b) Escrow Release Instructions. Instructions to the
Escrow Agent to release the Settlement Payment, with any interest accrued
thereon, to ERS.
(c) Mutual Release and Termination. A copy of the Mutual
Release, signed by an authorized officer of Chadmoore.
(d) Consents and Approvals. Evidence reasonably satisfactory
to ERS that all necessary consents and approvals of third parties and
governmental agencies to the transfer of the Assets to ERS have been obtained on
terms reasonably satisfactory to ERS.
(e) Notification of Termination of Arbitration
Proceeding. A notification to the AAA that the Arbitration Proceeding should be
terminated.
(f) Other Documents. Such other documents, assignments,
bills of sale, instruments of conveyance, and certificates as may be reasonably
required by ERS to consummate this Settlement Agreement and the Settlement
contemplated herein.
6.02 ERS's Delivery. ERS shall deliver to Chadmoore each of the
following items at or prior to the Settlement Date:
(a) Escrow Release Instructions. Instructions to the
Escrow Agent to release the Settlement Payment to ERS.
(b) Mutual Release and Termination. A copy of the Mutual
Release, signed by an authorized officer of ERS.
(c) Notification of Termination of Arbitration
Proceeding. A notification to the AAA that the Arbitration Proceeding should be
terminated.
(d) Other Documents. Such other documents and certificates as
may be reasonably required by Chadmoore to consummate this Settlement Agreement
and the Settlement contemplated hereby including evidence reasonably
satisfactory to Chadmoore that the Site Leases have been terminated by action
of ERS prior to the Settlement Date, in the event that ERS elects not to assume
the Site Leases.
ARTICLE VII
INDEMNIFICATION
7.01 Indemnification by Chadmoore. Chadmoore agrees to defend,
indemnify and hold ERS harmless from and against any and all losses, liability,
damages, costs, or expenses incurred by ERS (including reasonable attorneys'
fees, penalties and interest) resulting from, arising out of, or incurred as a
result of: (a) the inaccuracy of any representation made by Chadmoore herein, or
in accordance herewith, (b) the breach of any warranty or covenant made by
Chadmoore herein or in accordance herewith; (c) Chadmoore's ownership of the
Assets or
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operation of the Five Channel System prior to the Settlement Date, except to the
extent of ERS's operation of the Five Channel System prior to the Settlement
Date pursuant to the Management Agreement; and (d) any debt, liability or
obligation of Chadmoore of any kind or nature. The foregoing agreement by
Chadmoore to indemnify ERS shall continue without expiration, except as provided
by law.
7.02 Indemnification by ERS. ERS agrees to defend, indemnify and hold
Chadmoore harmless from and against any and all losses, liability, damages,
costs, or expenses incurred by Chadmoore (including reasonable attorneys' fees,
penalties and interest) resulting from, arising out of, or incurred as a result
of: (a) the inaccuracy of any representation made by ERS herein or in accordance
herewith, (b) the breach of any warranty or covenant made by ERS herein or in
accordance herewith, or (c) ERS's ownership of the Assets or operation of the
Five Channel System after the Settlement Date. The foregoing agreement by ERS to
indemnify Chadmoore shall continue without expiration, except as provided by
law.
7.03 Notice of Claims. ERS and Chadmoore each agree to give prompt
written notice to the other of any claim against the party giving notice which
might give rise to a claim by it against the other party hereto based upon the
indemnity provisions contained herein, stating the nature and basis of the claim
and the actual or estimated amount thereof. If any third party asserts a claim
against a party hereto which, if true, would give rise to a claim for
indemnification hereunder, the Party against whom the claim is asserted shall be
entitled to be indemnified against the costs and expenses of defending the
claim, whether or not the claimant ultimately prevails.
ARTICLE VIII
TERMINATION
8.01 Termination Upon Mutual Consent. This Settlement Agreement may be
terminated at any time upon mutual consent of the ERS and the Chadmoore. Upon
such termination: (i) neither of the Parties hereto, nor any of their agents or
successors in interest, shall have any liability or further obligation to the
other party or any of its agents or successors in interest pursuant to this
Settlement Agreement; and (ii) the Parties shall instruct the Escrow Agent to
release the Settlement Payment plus interest; and (iii) the Parties shall
cooperate in withdrawing any pending applications or submitting any additional
applications to the FCC, to return the Parties to their respective positions
prior to the execution of this Settlement Agreement.
8.02 Termination by Chadmoore.
(a) Upon Breach by ERS. In the event that ERS fails to comply
with any material term or obligation or breaches any representation or warranty
contained in this Settlement Agreement in any material respect and does not cure
such failure or breach within ten (10) days of receiving written notice from
Chadmoore thereof, then Chadmoore may at its option, by written notice to ERS,
terminate this Settlement Agreement. In the event of termination pursuant to
this section 8.02(a): (i) the Parties shall instruct the Escrow Agent to release
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the Settlement Payment plus interest to Chadmoore; and (ii) the Parties shall
cooperate in withdrawing any pending applications or submitting any additional
applications to the FCC, to return the parties to their respective positions
prior to the execution of this Settlement Agreement.
(b) Upon Failure of Condition. In the event that, within two
hundred seventy (270) days of the Execution Date, any condition to the
obligations of Chadmoore as set forth in Section 5.02 is not fulfilled and such
nonfulfillment does not constitute a breach of a representation, warranty or
covenant of Chadmoore, Chadmoore may terminate this Settlement Agreement by
written notice to ERS. In the event of termination pursuant to this Section
8.02(b): (i) neither of the Parties nor any of their agents or successors in
interest shall have any liability or further obligation to the other Party or
any of its agents or successors in interest pursuant to this Settlement
Agreement; (ii) the parties shall instruct the Escrow Agent to release the
Settlement Payment plus interest to ERS; and (iii) the parties shall cooperate
in withdrawing any pending applications or submitting any additional
applications to the FCC to return the Parties to their respective positions
prior to this execution of this Settlement Agreement.
8.03 Termination by ERS.
(a) Upon Breach by Chadmoore. In the event that Chadmoore
fails to comply with any material term or obligation or breaches any
representation or warranty contained in this Settlement Agreement in any
material respect and does not cure such failure or breach within ten (10) days
of receiving written notice thereof, then ERS may at its option by written
notice to Chadmoore terminate this Settlement Agreement. In the event of
termination pursuant to this section 8.03(a): (i) the Parties shall instruct the
Escrow Agent to release the Settlement Payment plus interest to ERS; and (ii)
the Parties shall cooperate in withdrawing any pending applications or
submitting any additional applications to the FCC, to return the Parties to
their respective positions prior to the execution of this Settlement Agreement.
(b) Upon Failure of Condition. In the event that, within two
hundred seventy (270) days of the Effective Date, any condition to the
obligations of ERS as set forth in Section 5.01 is not fulfilled and such
nonfulfillment does not constitute a breach of a representation, warranty or
covenant of ERS, ERS may terminate this Settlement Agreement by written notice
to Chadmoore. In the event of termination pursuant to this Section 8.03(b): (i)
neither of the Parties nor any of their agents or successors in interest shall
have any liability or further obligation to the other Party or any of its agents
or successors in interest pursuant to this Settlement Agreement; (ii) the
parties shall instruct the Escrow Agent to release the Settlement Payment plus
interest to Chadmoore; and (iii) the parties shall cooperate in withdrawing any
pending applications or submitting any additional application to the FCC to
return the Parties to their respective positions prior to this execution of this
Settlement Agreement.
8.04 Remedies. In the event that this Settlement Agreement is
terminated pursuant to Sections 8.02(a) or 8.03(a) of this Settlement Agreement,
nothing in this Settlement Agreement shall be construed as limiting remedies
available to the parties by principles of law or equity for any breach occurring
prior to termination. ERS shall not be limited to the Settlement Payment in any
action it may bring against Chadmoore for breach of this Settlement Agreement.
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8.05 Specific Performance. The parties agree and acknowledge that, due
to the unique nature of the subject matter of this Settlement Agreement, ERS
would be irreparably damaged in the event of a breach of this Settlement
Agreement by Chadmoore, which damage could not be adequately compensated except
by specific performance of this Settlement Agreement. In the event that
Chadmoore refuses to perform, or otherwise breaches, this Settlement Agreement,
it is agreed that ERS shall have, in addition to any other rights available to
it pursuant to this Article VIII, the right to obtain temporary or permanent
injunctive relief, including but not limited to, specific performance of any and
all obligations of Chadmoore without any showing of actual damage or inadequacy
of legal remedy.
ARTICLE IX
GENERAL PROVISIONS
9.01 Expenses. Except as otherwise expressly provided herein, each
Party to this Settlement Agreement shall pay its own expenses (including without
limitation the fees and expenses of its agents, representatives, counsel, and
accountants) incidental to the negotiation, drafting, and performance of this
Settlement Agreement.
9.02 Successors and Assigns. This Settlement Agreement shall be binding
upon and inure to the benefit of Chadmoore, ERS and their respective successors
and permitted assigns, but shall not be assignable or delegable in whole or in
part by either party without the prior written consent of the non-assigning
party, such consent not to be unreasonably withheld.
9.03 Waiver. No provision of this Settlement Agreement shall be deemed
waived by course of conduct, including the act of Settlement, unless such waiver
is made in a writing signed by both parties stating that it is intended
specifically to modify this Settlement Agreement, nor shall any course of
conduct operate or be construed as a waiver of any subsequent breach of this
Settlement Agreement, whether of a similar or dissimilar nature.
9.04 Entire Agreement. Except as specifically indicated herein, this
Settlement Agreement constitutes the entire agreement by and among the parties
regarding the transactions contemplated hereunder and there are no agreements or
commitments except as expressly set forth herein. The representations and
warranties of the Parties in this Settlement Agreement shall survive the
Settlement Date.
9.05 Denial of Liability. This Settlement Agreement does not constitute
an admission of wrongdoing by any Party and the Parties expressly deny any
liability in connection with the ERS/Chadmoore Agreements.
9.06 Risk of Loss. Each of the parties hereto hereby acknowledges and
agrees that the risk of loss, damage or destruction of the Assets shall be upon
the Chadmoore until the Settlement Date and after the Settlement Date shall pass
to ERS.
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9.07 Notices. All notices, demands, requests, and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
shall be effective upon receipt if delivered by hand, or sent by certified or
registered United States mail, postage prepaid and return receipt requested, or
by prepaid overnight express service. Notices shall be sent to the parties at
the following addresses (or such other address as any Party may specify in a
notice to the other Party):
(a) if to Chadmoore , to:
2875 E. Patrick Lane
Suite G
Las Vegas, NV 89120
Attn: Rick Rhodes
Phone: 702-740-5633
Fax: 702-740-5643
With a copy, which shall not constitute notice, to:
Lionel Sawyer & Collins
1700 Bank of America Plaza
300 South Fourth Street
Las Vegas, NV 89101
Attention: Elizabeth Brennan, Esq.
Phone: 702-383-8888
Fax: 702-383-8845
(b) if to ERS, to:
P.O. Box 110
9144 N 900 W
Ligonier, IN 46767
Attn.: Brian Hull
Phone: 219-984-4145
Fax: 219-894-7581
With a copy, which shall not constitute
notice, to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
701 Pennsylvania Ave., N.W.
Washington, D.C. 20004
Attention: Russell H. Fox, Esq.
Telephone: 202-434-7300
Facsimile: 202-434-7400
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9.08 Amendments, Supplements, Etc. This Settlement Agreement may be
amended or modified only by a written instrument executed by both parties, which
states specifically that it is intended to amend or modify this Settlement
Agreement.
9.09 Arbitration. Except as otherwise provided herein, any controversy
or claim arising out of or relating to this Settlement Agreement or the breach
thereof shall be settled pursuant to the procedures applicable to the existing
Arbitration Proceeding, employing the Hon. Lester Berkson.
9.10 Applicable Law. This Settlement Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the substantive laws of Nevada without giving effect to the principles of
conflict of laws thereof.
9.11 Titles and Headings. Titles and headings to sections hereof are
inserted for convenience of reference only, and are not intended to be a part
of, or to affect the meaning or interpretation of, this Settlement Agreement.
9.12 Exhibits and Schedules. Exhibits, Schedules and other documents
referred to in this Settlement Agreement are an integral part of this Settlement
Agreement.
9.13 Severability. The provisions of this Settlement Agreement are
severable and in the event that any one or more of the provisions are deemed
illegal or unenforceable, the remaining provisions shall remain in full force
and effect.
9.14 Execution in Counterparts. This Settlement Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement as of the date last written below.
CHADMOORE WIRELESS GROUP, INC. EMERGENCY RADIO SERVICE, INC.
By: ______________________________ By: _____________________________
Name: Name: Brian Hull
Title: Title: President
Date: August 16, 2002 Date: August 16, 2002