<PAGE> 1
EXHIBIT 2.1
================================================================================
SHARE PURCHASE AGREEMENT,
DATED AS OF JUNE 2, 2000
AMONG
ENDESA, S.A.
LEAP WIRELESS INTERNATIONAL, INC.
AND
INVERSIONES LEAP WIRELESS CHILE, S.A.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
(Not a part of the Agreement)
<TABLE>
<S> <C>
SHARE PURCHASE AGREEMENT......................................................................1
RECITALS:.....................................................................................1
I. PURCHASE AND SALE OF SHARES..............................................................1
1.1. Purchase and Sale of Shares...........................................................1
1.2. Consideration.........................................................................1
1.3. Purchase Price Adjustment.............................................................3
II. REPRESENTATIONS AND WARRANTIES...........................................................4
2.1. Representations and Warranties of Leap and Seller.....................................4
2.1.1. Corporate Matters................................................................4
2.1.2. Shares...........................................................................5
2.1.3. No Subsidiaries, Etc.............................................................5
2.1.4. Officers and Directors...........................................................5
2.1.5. Authorization and Effect of Agreement............................................5
2.1.6. No Restrictions or Consents......................................................6
2.1.7. Financial Statements.............................................................7
2.1.8. Conduct of the Business Since the Balance Sheet Date.............................7
2.1.9. Compliance with Laws.............................................................7
2.1.10. Tangible Personal Property.......................................................7
2.1.11. Real Property....................................................................8
2.1.12. Insurance........................................................................8
2.1.13. Intellectual Property............................................................8
2.1.14. Licenses.........................................................................9
2.1.15. Network.........................................................................11
2.1.16. Litigation; Decrees.............................................................14
2.1.17. Contract Rights.................................................................14
2.1.18. Employee Plans..................................................................16
2.1.19. Taxes...........................................................................16
2.1.20. Environmental Matters...........................................................17
2.1.21. No Undisclosed Liabilities......................................................18
2.1.22. Assets..........................................................................18
2.1.23. Affiliate Interests.............................................................18
2.1.24. Subscribers.....................................................................19
2.1.25. Suppliers.......................................................................19
2.1.26. Brokers.........................................................................19
2.2. Representations and Warranties of Buyer..............................................19
2.2.1. Corporate Organization..........................................................19
2.2.2. Authorization and Effect of Agreement...........................................19
2.2.3. No Restrictions.................................................................20
2.2.4. Financing.......................................................................20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
2.2.5. Brokers.........................................................................20
2.2.6. Litigation......................................................................20
2.3. Certain Limitations on Representations and Warranties...............................20
III. COVENANTS..............................................................................20
3.2. Press Releases......................................................................21
3.3. Regulatory Filings..................................................................21
3.4. [Intentionally Omitted].............................................................22
3.5. Compensation for Removal of Equipment...............................................22
3.6. No Solicitation.....................................................................22
3.7. Indemnification Related to Interest, Penalties and Fines Related to Taxes...........22
3.8. [Intentionally Omitted].............................................................23
3.9. Resignations........................................................................23
3.10. Wireless Local Loop................................................................23
3.11. Company Employees..................................................................23
3.12. Indemnification Related to Non-Compliance..........................................23
3.13. Indemnification Related to Ericsson................................................24
3.14. No Double Recovery.................................................................24
IV. THE CLOSING............................................................................24
4.1. The Closing.........................................................................24
4.2. Conditions Precedent to Obligations of Buyer and Leap...............................25
4.3. Additional Conditions Precedent to Obligations of Buyer.............................25
4.3.1. Transfer Documents, Etc.........................................................25
4.3.2. No Material Misrepresentation or Breach.........................................25
4.3.3. Legal Opinions..................................................................25
4.3.4. Qualcomm Consent................................................................25
4.4. Additional Conditions Precedent to Obligations of Leap..............................25
4.4.1. Estimated Purchase Price........................................................26
4.4.2. No Material Misrepresentation or Breach.........................................26
4.4.3. Legal Opinions..................................................................26
4.4.4. Qualcomm Release................................................................26
4.5. Termination.........................................................................26
V. SURVIVAL AND INDEMNIFICATION...........................................................27
5.1. Definitions.........................................................................27
5.1.1. Limitations on Liability Definitions............................................27
5.2. Limits..............................................................................27
5.3. Exclusivity.........................................................................28
5.4. Survival of Representations and Warranties and Covenants............................28
5.5. Indemnification.....................................................................28
5.5.1. Leap's Duty.....................................................................28
5.5.2. Buyer's Duty....................................................................29
5.6. Defense of Claims...................................................................29
5.6.1. Third Party Claims..............................................................29
5.6.2. Assumption of Defense...........................................................29
5.6.3. Settlements.....................................................................29
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
5.6.4. Direct Claims...................................................................30
5.6.5. Failure to Notify...............................................................30
5.6.6. Other Recoveries................................................................30
5.6.7. Subrogation.....................................................................30
VI. OTHER POST-CLOSING COVENANTS...........................................................31
6.1. Post-Closing Purchases..............................................................31
6.2. General Post-Closing Matters........................................................31
6.2.1. Post-Closing Notifications......................................................31
6.2.2. Access..........................................................................31
VII. MISCELLANEOUS PROVISIONS............................................................32
7.1. Notices.............................................................................32
7.2. Expenses............................................................................33
7.3. Successors and Assigns..............................................................33
7.4. Waiver..............................................................................33
7.5. Entire Agreement....................................................................33
7.6. Amendments, Supplements, Etc........................................................34
7.7. Rights of the Parties...............................................................34
7.8. Further Assurances..................................................................34
7.9. Applicable Law; Jurisdiction........................................................34
7.10. Titles and Headings................................................................34
7.11. Certain Interpretive Matters and Definitions.......................................34
7.11.1.References......................................................................34
7.11.2.Drafting........................................................................34
</TABLE>
ANNEXES
Annex A Form of Agreement with Company Nominee and Seller
Annex B Allocations of Closing Consideration
Annex C-1 Form of Non-Negotiable Note
Annex C-2 Form of Non-Negotiable Note
Annex C-3 Form of Negotiable Note
Annex D Company's Year 2000 Budget
SCHEDULES
Schedule 2.1.2(a) Liens/Company Shares
Schedule 2.1.2(c) Other Company Securities
Schedule 2.1.4 Officers and Directors
Schedule 2.1.6(a) Conflicts/Breaches/Violations/Defaults
Schedule 2.1.6(b) Consents
Schedule 2.1.7 Financial Statements
Schedule 2.1.8(a) Conduct of Business
Schedule 2.1.8(b) Changes/Events
iii
<PAGE> 5
SCHEDULES (continued)
Schedule 2.1.9 Compliance with Laws
Schedule 2.1.10(a) Liens on Tangible Assets
Schedule 2.1.10(b) Condition of Tangible Assets
Schedule 2.1.11 Real Property
Schedule 2.1.12 Insurance
Schedule 2.1.13 Intellectual Property
Schedule 2.1.14(b) Licenses
Schedule 2.1.14(c) License and Other Compliance
Schedule 2.1.15(b) Equipment
Schedule 2.1.15(c) Network Compliance
Schedule 2.1.15(d) Network Performance
Schedule 2.1.15(e) Handsets
Schedule 2.1.16 Litigation
Schedule 2.1.17 Contracts
Schedule 2.1.18 Employee Plans
Schedule 2.1.19(d) Tax Returns
Schedule 2.1.19(e) Tax Rulings/Closing Agreements
Schedule 2.1.19(f) Tax Claims
Schedule 2.1.20(b) Environmental Liabilities
Schedule 2.1.21 Other Liabilities
Schedule 2.1.22 Assets Not Owned by Company
Schedule 2.1.23 Affiliate Interests
Schedule 2.1.24 Subscribers
Schedule 2.1.25 Suppliers
Schedule 2.2.3 Conflicts/Breaches/Violations/Defaults
Schedule 2.2.6 Consents
Schedule 3.11 Employees
iv
<PAGE> 6
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement") is made and entered
into as of June 2, 2000, among Endesa, S.A., a sociedad anonima organized under
the laws of Spain ("Buyer"), Leap Wireless International, Inc., a Delaware
corporation ("Leap"), and Inversiones Leap Wireless Chile S.A., a sociedad
anonima organized under the laws of Chile ("Seller").
RECITALS:
A. Smartcom, S.A., a sociedad anonima organized under the laws of Chile
(the "Company"), is presently engaged in the business (the "Business") of
providing public digital mobile 1900 MHz telecommunications services
("Services") utilizing the Code Division Multiple Access format ("CDMA") and
performing various related activities;
B. The Company has issued and outstanding 8,400,000 shares of Series A
preferred stock and 8,400,000 shares of Series B common stock (collectively, the
"Company Shares"), of which 8,399,999 shares of Series A preferred stock and
8,400,000 shares of Series B common stock (the "Seller Company Shares") are
owned by Seller and 1 share of Series A preferred stock (the "Nominee Company
Share") is owned by Michael Grasty Cousino ("Company Nominee"); and
C. Leap desires to cause Seller and Company Nominee to sell, assign and
deliver ("Transfer") to Buyer, and Buyer desires to purchase and accept from
Seller and Company Nominee, all of the Company Shares on the terms and subject
to the conditions set forth in this Agreement and the agreement with Company
Nominee in the form of Annex A hereto which is being executed and delivered on
the date hereof.
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale of Shares. On the terms and subject to the
conditions hereof, at Closing (as defined in Section 4.1), (a) Seller will
Transfer to Buyer, and Buyer will purchase from Seller, the Seller Company
Shares, and (b) Leap and Seller will cause Company Nominee to Transfer to
Buyer's nominee, and such nominee will purchase from Company Nominee, the
Nominee Company Share, in the case of both (a) and (b), free and clear of all
Liens. "Liens" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer (or, in the case of capital
stock, restrictions on the transfer or voting of such securities), conditional
sale or other title retention device or arrangement, transfer for the purpose of
subjection to the payment of any indebtedness, or restriction on the creation of
any of the foregoing, whether relating to any property or right or the income or
profits therefrom.
1.2. Consideration. (a) Price. The purchase price for the Company Shares
will be $300,000,000 (the "Initial Purchase Price"). In addition, at the Closing
(as hereinafter defined),
<PAGE> 7
Buyer will purchase, or acquire the rights in accordance with Section 4.1.1,
from Leap, Seller and from ABN AMRO BANK (Chile) ("ABN") (or will establish a
cash collateral arrangement as contemplated by Section 4.1.1 with ABN), the
Intercompany Debt (as defined below) in an amount not to exceed $81,979,100. The
Initial Purchase Price and the amount of Intercompany Debt to be purchased are
collectively called the "Closing Consideration."
(b) Payment. The Closing Consideration will be paid in United States
Dollars under the terms of Chilean Law DL600, subject to adjustment as provided
below (as so adjusted, the "Adjusted Purchase Price"), by and on behalf of Buyer
to the parties and in the amounts listed on Annex B hereto, on behalf of both
Seller and Company Nominee, at the Closing by the wire transfer in cash of a
portion thereof determined as set forth below (the "Cash Consideration") and the
delivery of three promissory notes of Buyer to Seller or Leap (the "Notes") in
the form of Annexes C-1, C-2 and C-3 hereto and in an aggregate principal amount
equal to the difference between the Closing Consideration and the Cash
Consideration. The Cash Consideration is equal to $238,321,581.68. As used in
this Agreement, "Company Indebtedness" means all liabilities of the Company
other than Intercompany Debt. "Intercompany Debt" means any of the Company's
obligations to the following creditors to repay borrowed money and interest
thereon in the following aggregate amounts:
<TABLE>
<CAPTION>
Creditor Amount
-------- ------
<S> <C>
Leap ................. $17,480,455.06
Seller ............... $35,836,152.73
ABN AMRO ............. $28,177,501.11
Total .... U.S. $81,494,108.90
</TABLE>
(c) Estimated Balance Sheet. The Company has prepared in good faith an
unaudited balance sheet of the Company as of May 31, 2000 ("Estimated Balance
Sheet"). The Estimated Balance Sheet is based upon the review by the Company of
monthly financial information then available.
(d) Repayment. Leap will repay, or cause to be repaid, at Closing,
without in any manner triggering acceleration of any other debt of the Company,
any indebtedness of the Company to Seller, Leap, ABN AMRO or any of their
respective Affiliates (as defined in Section 7.11.1) in excess of the
Intercompany Debt unless the existence, amount and other terms and conditions
have previously been approved by Buyer.
(e) Leap Responsibility. Leap shall indemnify, defend and hold harmless
Buyer and its Affiliates and their respective directors, officers, partners,
shareholders, employees, agents and representatives (including without
limitation, any predecessor or successor to any of the foregoing) from and
against any and all Indemnifiable Losses (as defined in Section 5.1.1) relating
to, resulting from or arising out of any claim by the Company Nominee related to
the non-payment of consideration for the Nominee Company Share as contemplated
by this Agreement or the Transaction Documents (as defined in Section 2.1.5) or
the transactions contemplated thereby.
2
<PAGE> 8
1.3. Purchase Price Adjustment. (a) Nature of Adjustment. In order to
determine the Adjusted Purchase Price, the Initial Purchase Price will be
decreased by the amount, if any, by which the amount of the Company's Audited
Net Worth is more negative than the Company's Target Net Worth (the "Closing
Adjustment"). The Company's Target Net Worth is negative $31,287,503.00.
"Audited Net Worth" means net worth calculated as of June 1, 2000 based upon a
balance sheet of the Company prepared in accordance with Section 1.3 as of the
close of business on June 1, 2000 (the "Closing Balance Sheet") in accordance
with United States generally accepted accounting principles ("U.S. GAAP"), and
using the same accounting principles, policies, practices and procedures used in
preparing the December 31, 1999 Balance Sheet to the extent they are consistent
with U.S. GAAP; provided, however, that (i) the Closing Balance Sheet will be
based upon the currency exchange rate in effect on March 31, 2000 (which the
parties agree to be 502.22 Chilean Pesos, (the "Exchange Rate"), (ii) in the
Closing Balance Sheet, the gross value and net value of all intangible assets
will be $57,538,000 and $53,836,000, respectively, and (iii) any Company prepaid
expenses and revenues for the month of June will be prorated to reflect the
portion of the expense or revenue applicable to June 1, 2000.
(b) Preparation of Balance Sheet. Within 60 calendar days after the
Closing Date, Buyer will cause Deloitte & Touche ("D&T") in consultation with
the Buyer to prepare and deliver to Leap and Buyer an audited Closing Balance
Sheet setting forth the Audited Net Worth. Leap and its respective authorized
representatives will be entitled to review, during normal business hours, the
books, records and work papers of the Company in order to review the Closing
Balance Sheet and the Audited Net Worth. Buyer will use reasonable efforts to
cause D&T to provide Leap access to any of such firm's workpapers, trial
balances and similar materials prepared in connection with such firm's audits or
reviews of the Closing Balance Sheet and the Audited Net Worth (the
"Workpapers").
(c) Resolution of Objections. If, within 60 calendar days after the date
of D&T's delivery of the Closing Balance Sheet including the Audited Net Worth
to Leap, Leap disagrees in good faith with the Closing Balance Sheet or the
Audited Net Worth, Leap may give written notice of such objection to Buyer
within such 60 calendar day period, specifying in reasonable detail Leap's basis
for the objection ("Objection"). The failure by Leap so to express any objection
and provide such specification within such 60 calendar day period will
constitute Leap's acceptance of the Closing Balance Sheet and the Audited Net
Worth prepared by D&T. If Buyer and Leap are unable to resolve any such
objection between them within ten business days after the giving of notice of
the Objection, the items in dispute will be referred for determination to the
Santiago, Chile, offices of Ernst &Young LLP or any successor thereto (the
"Accountants") as promptly as practicable. The Accountants will make an
independent determination as to each of the items in dispute, which
determination will be (i) in writing, (ii) furnished to each of the parties
hereto as promptly as practicable after the items in dispute have been referred
to the Accountants, (iii) made in accordance with this Agreement, and (iv)
conclusive and binding upon each of the parties hereto. In connection with their
determination of the disputed items, the Accountants will be entitled to full
access to the Company's books and records. Buyer and Leap will use reasonable
efforts to cause the Accountants to render their decision as soon as
practicable, including without limitation by promptly complying with all
reasonable requests by the Accountants for information, books, records and
similar items.
3
<PAGE> 9
(d) Cost of Resolution. The fees and expenses of the Accountants will be
shared equally by Buyer and Leap, except as provided below. If the determination
of the Accountants represents an outcome more favorable to either Buyer or Leap
than the midpoint of such parties' last written settlement offers related to all
items in dispute, in the aggregate, submitted to the other party at least two
calendar days before the referral of the matter to the Accountants (each a "Last
Offer", and if no offer has been submitted by Buyer, then the amount of the
Closing Adjustment based upon D&T's Audited Net Worth shall be the Last Offer of
Buyer and if no offer has been submitted by Leap, the Closing Adjustment
proposed in the Objection shall be the Last Offer of Leap), then the party
obtaining such favorable result will be deemed the "Prevailing Party" and the
other party will be deemed the "Non-Prevailing Party". All of the fees and
expenses of the Accountants will be borne by the Non-Prevailing Party. No party
will disclose to the Accountants, and the Accountants will not consider for any
purpose, any settlement offer.
(e) Settlement. To the extent that a Closing Adjustment is determined to
be applicable, as provided in Section 1.3, the principal amount of the
$50,000,000 Note in the form of Annex C-2 hereto shall, upon final determination
of all objections in accordance with this Section 1.3, be decreased by the
amount of the Closing Adjustment and Leap will, within ten calendar days after
such determination, surrender to Buyer the Note delivered at Closing in the form
of Annex C-2 hereto in exchange for a new Note in the adjusted principal amount,
which Note will be in the form of Annex C-3 hereto. No interest shall be payable
with respect to the amount of any such Closing Adjustment.
(f) Limitation on Adjustment. Notwithstanding the foregoing, the Closing
Adjustment shall not exceed Fifty Million United States Dollars ($50,000,000).
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Leap and Seller. Except as set
forth on the Company's Schedules of Exceptions attached hereto (subject to the
terms of Section 2.3), Leap and Seller, jointly and severally, represent and
warrant to Buyer as follows as of the date hereof (it being understood that if
information is given "as of" an earlier date in such Schedules, the portion of
the representation and warranty to which such information relates will be deemed
given only as of such earlier date:
2.1.1. Corporate Matters.
(a) Leap and Seller Organization. Leap is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Seller is a
sociedad anonima duly organized, validly existing and in good standing under the
laws of Chile and has the requisite corporate power to own and hold its Company
Shares.
(b) Company Organization. Each of the Company and Seller is a sociedad
anonima duly organized, validly existing and in good standing under the laws of
Chile and has the requisite corporate power and authority to own, lease or
otherwise hold the assets owned, leased or otherwise held by it and to carry on
its business as presently conducted in Chile. The
4
<PAGE> 10
Company conducts no business outside of Chile. Copies of the Estatutos Sociales
of the Company have heretofore been delivered to Buyer and such copies are
accurate and complete as of the date hereof.
2.1.2. Shares.
(a) Company Shares. Except as set forth on Schedule 2.1.2(a), Seller and
the Company Nominee each owns, free and clear of any Liens, the Company Shares
set forth by its name on Schedule 2.1.2, which shares in the aggregate represent
all of the outstanding shares of the Company. The Company Shares are duly
authorized, validly issued and outstanding, fully paid and non-assessable. None
of the Company Shares have been issued in violation of, or are subject to, any
preemptive rights other than those granted by Chilean Law. There are no voting
trust or other Contracts restricting the voting, dividend rights or disposition
of any of the Company Shares.
(b) Authorized Company Capitalization. The authorized capital stock of
the Company consists of 8,400,000 shares of Series A preferred stock and
8,400,000 shares of Series B common stock, of which
(i) 8,400,000 shares of Series A preferred stock and 8,400,000
shares of Series B common stock are issued and outstanding, and
(ii) no shares are held in the treasury of the Company.
(c) No Other Securities. Except as set forth above in Sections 2.1.2(a)
or (b) and except as listed on Schedule 2.1.2(c), there are no other shares of
capital stock or other securities of Company outstanding and no other
outstanding options, warrants, rights to subscribe to (including any preemptive
rights other than those granted by Chilean Law), calls or commitments of any
character whatsoever to which the Company is a party or may be bound requiring
the issuance, transfer or sale of any shares of capital stock or other
securities of the Company or any securities or rights convertible into or
exchangeable or exercisable for any such shares or securities, and there are no
existing contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of its capital stock
or options, warrants or rights to purchase or acquire any additional shares of
its capital stock or securities convertible into or exchangeable or exercisable
for any such shares.
2.1.3. No Subsidiaries, Etc. Except as described in Schedule
2.1.3, the Company does not, directly or indirectly, own or have the right to
acquire, beneficially or of record, any equity or other ownership interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any other corporation, partnership, joint venture or
other business association or entity.
2.1.4. Officers and Directors. Schedule 2.1.4 lists all officers
and members of the board of directors of the Company.
2.1.5. Authorization and Effect of Agreement. Each of Leap and
Seller has the requisite corporate power and authority to execute and deliver
this Agreement and the other agreements or instruments required to be executed
by a party and delivered to the other party
5
<PAGE> 11
pursuant to this Agreement (collectively, the "Transaction Documents") and to
perform its respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby to be performed by it. All necessary
corporate action required to be taken by Leap or by Seller for the due
authorization of the execution, delivery and performance by Leap and Seller of
this Agreement and the Transaction Documents and the transactions contemplated
thereby to be performed by each of Leap and Seller has been duly taken by each
of them. This Agreement and the Transaction Documents have been, or will be, as
the case may be, duly executed and delivered by Leap and Seller, and, assuming
the due authorization, execution and delivery of this Agreement and the
Transaction Documents by Buyer, constitute, or will constitute, as the case may
be, valid and binding obligations of Leap and Seller, enforceable in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by equitable
principles, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for equitable
defenses.
2.1.6. No Restrictions or Consents. (a) Restrictions. The execution and
delivery of this Agreement and the Transaction Documents by Leap and Seller do
not, and the performance by Leap and Seller of the transactions contemplated
thereby to be performed by each of them will not, conflict with, or result in
any breach or violation of, or constitute a default (with or without notice or
lapse of time or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a benefit, or
result in the creation of any Lien upon any property or assets of Leap or Seller
or the Company (other than a Lien created by Buyer), under any provision of (i)
the Certificate of Incorporation or Bylaws of Leap or the Estatutos Sociales of
Seller or the Company, (ii) any note, bond, mortgage, indenture, deed of trust,
license, lease, or other agreement, instrument or obligation to which Leap,
Seller, the Company Nominee or the Company is a party (including without
limitation any Contract (as defined below)) or to which any of them or any of
their respective properties or assets may be subject or (iii) any Chilean or
United States statute, law, ordinance, rule, regulation, judgment, order,
injunction, decree or ruling or common law obligation ("Law") of any Chilean or
United States court, government, governmental agency, authority, entity,
instrumentality or arbitration panel or body in the United States or Chile
("Governmental Entity") or any permit or approval ("Permit") issued thereunder,
other than any such conflicts, breaches, violations or defaults as are listed or
described on Schedule 2.1.6(a) or which, individually or in the aggregate, would
not have a Material Adverse Effect or materially and adversely affect the
ability of Leap, Seller or the Company Nominee to perform their respective
obligations under this Agreement and the Transaction Documents. For purposes of
this Agreement, the term "Material Adverse Effect" means an event, circumstance
or occurrence that has a material adverse effect on the Business or the assets,
financial condition, results of operations or prospects of the Company.
(b) Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained or made by or with respect to Leap, Seller, the Company Nominee or
the Company in connection with the execution and delivery of this Agreement and
the Transaction Documents by any of them or the performance by any of them of
the transactions contemplated thereby to be performed by any of them, except for
such of the foregoing as are described on Schedule 2.1.6(b).
6
<PAGE> 12
2.1.7. Financial Statements. Schedule 2.1.7 lists the audited financial
statements of the Company ("Audited Financial Statements") and the unaudited
financial statements of the Company ("Unaudited Financial Statements") which
Leap has delivered to Buyer (collectively, with the related notes, the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial condition of the Company as of the dates
thereof, and the results of its operations and cash flows for the periods
specified, in conformity with U.S. GAAP or Chilean generally accepted accounting
principles ("Chilean GAAP"), as applicable, with respect to (i) the Audited
Financial Statements, and (ii) the Unaudited Financial Statements, consistently
applied in all cases, except, in the case of the Unaudited Financial Statements,
for (i) normal recurring year-end audit adjustments which are not, individually
or in the aggregate, material to the Company and (ii) the absence of complete
notes.
2.1.8. Conduct of the Business Since the Balance Sheet Date. Except as
listed or described on Schedules 2.1.8(a) or 2.1.8(b), since December 31, 1999
(the "Balance Sheet Date"), (a) the Company has conducted the Business in the
ordinary and usual course, materially consistent with past practice, and (b)
there has not been any event, change or effect which has resulted in or could
reasonably be expected to have a Material Adverse Effect.
2.1.9. Compliance with Laws. Except as listed or described on Schedule
2.1.9, the Company has not violated, and is not in violation of, any Law (other
than violations which will not result in a Material Adverse Effect) and neither
Leap, Seller nor the Company has received notice of any alleged material
violation of Law by the Company. The Company has all Permits (other than such
Permits for which the failure to obtain would not result in a Material Adverse
Effect) necessary to conduct the Business as presently conducted in all material
respects and each such Permit is in full force and effect in all material
respects. The Company is in compliance in all respects with all the terms and
conditions of each Permit, to the knowledge of Leap, Seller and the Company, and
no action has occurred or failed to occur which (whether or not with the lapse
of time or giving of notice or both) would permit any such Permit to be revoked.
2.1.10. Tangible Personal Property. (a) Title. Except with respect to
the Owned Real Property and the Leased Real Property which are the subject of
Section 2.1.11, the tangible assets owned by the Company are owned free and
clear of all Liens except for (i) Liens that are listed or described on Schedule
2.1.10(a), (ii) Liens arising or incurred in the ordinary course of business of
the Business relating to liabilities of the Company that are not overdue, (iii)
Liens for taxes, assessments and other similar governmental charges which are
not due and payable or which may thereafter be paid without penalty, and (iv)
other imperfections of title or encumbrances, if any, which could not be
reasonably expected, individually or in the aggregate, materially to impair the
continued use of the property subject thereto in the Business as presently
conducted or result in a Material Adverse Effect. (The items referred to in
clauses (i) through (iv) of the immediately preceding sentence are hereafter
referred to as "Permitted Liens".)
(b) Conditions. Except as listed on Schedule 2.1.10(b), all material
tangible assets owned (other than assets in the hands of customers), leased or
used by the Company (including without limitation the Equipment (as defined in
Section 2.1.15)) are in good repair, working order and condition and serve the
purposes for which they are being used, subject to wear and tear in the ordinary
course of business.
7
<PAGE> 13
2.1.11. Real Property. Schedule 2.1.11 lists all real property owned in
fee by the Company (the "Owned Real Property") or leased by the Company (the
"Leased Real Property"). The Company has good and marketable fee simple title to
the Owned Real Property and valid and subsisting leasehold interests in the
Leased Real Property (subject to the terms of the applicable leases, subleases
and related instruments governing the Company's interests therein, as listed on
Schedule 2.1.11), free and clear of all Liens other than (a) Liens listed or
described on Schedule 2.1.11, (b) Permitted Liens, (c) Liens imposed by the
owner of the Leased Real Property to which the leased interest is subject, and
which do not affect the use of the Leased Real Property (except where use is
affected in the case where the holder of the Lien forecloses on the Leased Real
Property), and (e) easements, covenants, rights-of-way and other encumbrances or
restrictions, whether recorded or referred to in an applicable lease which could
not reasonably be expected to materially impair the marketability or continued
occupancy or use of the property subject thereto in the Business as presently
conducted. The use by the Company of all Owned Real Property and Leased Real
Property is in conformity with all material zoning and other applicable Laws,
and no Governmental Entity or other person has asserted otherwise, or, to the
knowledge of Seller, Leap or the Company, has threatened otherwise.
2.1.12. Insurance. Schedule 2.1.12 lists (i) all material policies of
fire, liability and other forms of insurance maintained by the Company, and (ii)
all material claims made by the Company under any such insurance policy since
January 1, 1999, and the disposition or status thereof. All premiums due under
such policies have been paid, and the Company is not in default in any material
respect under any provision of any such policy nor has it failed to give notice
or present any material claim thereunder in a timely manner so as to bar
recovery of any valid claim. The Company has not received any written notice of
the cancellation or non-renewal of any such insurance policy or of any material
increase in any insurance premiums with respect thereto. Such insurance is
reasonable in amount and scope of coverage in comparison to that maintained by
other companies owning and operating businesses similar to the Business.
2.1.13. Intellectual Property. Intellectual Property shall mean all
patents, trademarks, tradenames, service marks and registered copyrights, and
registrations and applications therefor, material to the conduct of or otherwise
material to the Business as of the date hereof. The Company owns or (subject to
the qualification(s) set forth in this Section) has rights to use all trademarks
and all trade names, service marks, and registrations and applications therefor,
material to the conduct of or otherwise material to the Business as of the date
hereof . The Company owns no patents and registered copyrights and applications
therefor material to the Business. Schedule 2.1.13 lists or describes all
Intellectual Property owned by the Company and material agreements between the
Company and each of Qualcomm, Alcatel, Ericsson, Kyocera, Samsung, LG, Sema,
Intervoice, Peoplesoft, Metrica, Planet, Compaq, Converse, Hewlett-Packard, MSI,
Nera, Nokia, North Supply, New Net, and Sun under which the Company is
indemnified for infringement of intellectual property rights of third parties.
With respect to the Intellectual Property contained in the Equipment and
Software, Leap, Seller or the Company has no knowledge that such Intellectual
Property infringes the rights of any other person. To the knowledge of Leap,
Seller or the Company, none of the previous or current use, marketing or
distribution of products or services of or by the Company materially infringes
or has infringed upon the intellectual property rights of any other person. To
the knowledge of Leap, Seller or the Company, no other person is materially
infringing the rights of the Company in any such Intellectual Property. The
Company has not received any written notice (that has not been
8
<PAGE> 14
subsequently satisfied or withdrawn) of any material conflict with, or assertion
that the Company is or may be materially infringing, the asserted right of any
other person in connection with the use by the Company of any of the
Intellectual Property or other intellectual property rights in the conduct of
the Business.
2.1.14. Licenses.
(a) Definitions.
"License" means the PCS License and (i) any concession, license,
permit or franchise for the provision of, or acquisition, construction,
ownership, operation or other use of facilities relating to, (A) public
mobile telecommunications services ("PMTS") or (B) the interconnection
of PMTS facilities with other telecommunications facilities by microwave
frequencies, fiber optic cable or other means and (ii) any material
consent, certificate of compliance, approval or authorization with
respect to any such concession, license, permit or franchise that, in
the case of either clause (i) or (ii) above, has been granted or issued
by Subtel (as defined below) or any other Governmental Entity.
"PCS License" means the concession for 30 MHz of spectrum in the
1900 MHz band for the construction, operation and provision of digital
personal communications services and other mobile telecommunications
services issued to the Company by the Ministry of Transportation and
Telecommunications in Chile.
"Subtel" means the Chilean Subsecretaria de Telecomunicaciones
and any other or successor Chilean telecommunications regulatory
authority.
(b) PCS License Information. Other than the security interest in the PCS
License granted to Qualcomm Incorporated, the PCS License is not subject to any
Liens or other rights of first refusal, options and other rights or obligations
with respect to the acquisition or disposition of the PCS License (or interests
therein) other than the consent of Subtel with respect to acquisitions or
dispositions. Schedule 2.1.14(b) sets forth the following information with
respect to the PCS License issued to the Company, the name of the licensee, the
service area, the type of service permitted, the frequency or frequencies
authorized or reserved, and the license termination/renewal date.
(c) License and Other Compliance.
(i) Fees. Except as set forth in Schedule 2.1.14(c)(i), the
Company (A) has paid all fees and charges imposed by any Governmental
Entity which have become due and payable with respect to the PCS License
and (B) has made appropriate provision in the Financial Statements as is
required by Chilean GAAP and U.S. GAAP, as the case may be, for any such
fees and charges which were accrued and unpaid on the respective dates
of such Financial Statements.
(ii) Filings. Except as set forth in Schedule 2.1.14(c)(ii), the
Company has filed or otherwise submitted in due and proper form all
registrations, applications or other filings, reports and other
documents required by Subtel, Ministry of Transportation and
Telecommunications and any other Governmental Entity regulating the
operation of
9
<PAGE> 15
telecommunication services, including without limitation, information
with respect to amendments to the technical project.
(iii) Effectiveness; Defaults. Except as set forth in Schedule
2.1.14(c)(iii), (A) The PCS License and each other material License
issued to the Company are valid and in full force and effect, (B) no
event has occurred and is continuing which could result in the
revocation, termination or adverse modification of the PCS License
and/or each other material License, (C) the Company is not in default
under or in breach of any of the terms and conditions of the PCS License
and/or each other material License (and no event has occurred which with
the passage of time or giving of notice or both would constitute such a
breach or default), including without limitation any obligation to
exploit the PCS License, and (D) Leap has no reason to believe that any
such breach or default (or any event which could result in such breach
or default) has occurred.
(iv) Telecommunications Law. Except as set forth in Schedule
2.1.14(c)(iv), the Company has complied in all respects with all
obligations specifically imposed under the Chilean Telecommunications
Law, including without limitation (A) submitting to Subtel information
regarding the form of service agreements to be executed with
subscribers, (B) drafting and complying with codes of commercial
practices, (C) entering into interconnection agreements with third-party
licensees of telecommunication services, (D) complying with
quality-of-service obligations, (E) complying with bookkeeping
requirements and (F) posting any required bonds or other security to
guarantee its performance of its obligations thereunder.
(v) Absence of Events. Except as set forth in Schedule
2.1.14(c)(v), the Company has not (A) been subject to any cancellation
of frequencies with respect to the PCS License, (B) had any
participation of any kind by any non-Chilean Governmental Entity, (C)
granted any powers of attorney to transfer any rights or obligations
under the PCS License, (D) engaged in any monopolistic practices, (E)
engaged in any discriminatory practices in the rendering of Services
under Chilean Law, (F) received any customer complaints requiring Subtel
notification pursuant to the Chilean Law, (G) incurred any interruption
of the Services requiring any amounts to be credited to customers'
accounts other than in the ordinary course of business, (H) established
any tie-in provisions in agreements with subscribers, (I) been required
to provide exclusivity to any supplier as a condition for any purchase
of materials, equipment or services, (J) executed any agreement with any
foreign Governmental Entity for interconnection with any non-Chilean
network, (K) been ordered by Subtel to carry out any modifications or
improvements to the Network, or (L) been engaged in any judicial
proceedings or litigation against Subtel.
(vi) Written Communications. Leap has provided Buyer access to
copies of all applications as listed in Schedule 2.1.14(c)(vi) with
respect to the construction and operation of the Network, that have been
filed by the Company with the Ministry of Transportation and
Telecommunications, SubTel and any other Governmental Entity regulating
the operation of telecommunication services, and Leap has provided
access to Buyer of copies of all material supplemental or related
materials
10
<PAGE> 16
filed in connection therewith by or on behalf of the Company, and all
other material written communications with respect to the PCS License
between the Ministry of Transportation and Telecommunications, SubTel or
any other Governmental Entity regulating the operation of
telecommunication services, including without limitation those with any
third party that have come into the Company's possession.
(vii) Other Actions. Except as set forth in Schedule
2.1.14(c)(vii), no material (a) License from, (b) consent of, (c) filing
with, (d) authorization or (e) other action of, Subtel or any other
Governmental Entity is required to be received, made or filed by, or
taken on behalf of, the Company with respect to the Network (as defined
below) or the operation of the Business or the Company's provision of
the Services other than those that have already been received, made or
filed by, or taken on behalf of, the Company with respect to the Network
or the operation of the Business or the Company's provision of the
Services.
2.1.15. Network.
(a) Definitions.
(i) "Equipment" means all of the operating fixtures and
equipment of the Company, including, without limitation, any hardware or
software component, base stations, base station controllers, mobile
switching centers, radio and fiber optic transmission equipment,
antennas, prepaid system, voicemail and short message service, and
support equipment for: activation and network management and network
activation, monitoring, security, performance management and billing
equipment.
(ii) "Handsets" means the terminals sold or otherwise provided
by the Company to subscribers for using the Services.
(iii) "Sites" means the places where the Equipment is located,
and related structures owned, leased or used by the Company at that
location including, civil infrastructure, towers, masts, shelters,
electrical power, heating and air conditioning.
(iv) "Network" means the Company Owned Real Property, Sites,
Leased Real Property, Equipment and Software (as each is defined
herein), together with all interconnections between such components or
any such components and any other telecommunications system (whether by
microwave frequencies, fiber optic cable or other means) and any other
interconnection with other public telecom networks, to the extent such
interconnections have been configured, installed and operated by the
Company.
(v) "Software" means the computer programs and applications
utilized by the Company for the provision of Services including, without
limitation, in connection with the operation of the Network.
(b) Description. The Network is a digital mobile network using CDMA
technology. The Network is capable of providing service coverage to areas where
approximately 80% of the population of Chile lives, with a dedicated interface
signaling, voice and data backbone network
11
<PAGE> 17
to support hand-off capabilities. The Network generally complies with Chilean
signaling network standards (CCITT#7 and/ or ANSI SS#7), to the extent necessary
to provide the Services. The Network provides the following services to
subscribers in covered areas with telephone interconnect, including basic voice
services, mobile terminated short messaging service, voice mail, call
forwarding, call waiting, call forward unconditional, call forward busy, call
forward no answer, call number identity presentation, call number identity
restricted, hot line, do not disturb, three party calling, direct dial
long-distance/international calling, automatic call delivery, automatic short
message delivery with SMPP Interface, and voice-mail deposit and retrieval. The
respective manufacturers of the Equipment have represented and warranted to the
Company that Equipment has the capability to provide packet data, IS-707 digital
Fax G3 and asynchronous data, although the Company is not currently offering
such services. The Network includes each item of Equipment listed on Schedule
2.1.15(b) hereto, which is located in the places described on such Schedule
2.1.15(b). Each material item of Equipment of the following types is listed on
such Schedule 2.1.15(b): switches, cell sites, microwave sites, generators and
measurement equipment.
(c) Compliance. Except as set forth in Schedule 2.1.15(c), the Network
is in compliance with all standards or rules imposed by Chilean Law or any
Governmental Entity, and has passed Acceptance Tests under the standards
specified in the documents evidencing final acceptance except where such final
acceptance documents indicate otherwise.
(d) Performance.
(i) Overview. The Network has been operated and maintained in
accordance with the instructions of the manufacturers/providers of the
Equipment and the Software and meets the functionalities and the
specifications described in the Final Acceptance Documents. Each piece
of Equipment and Software in the Network is materially compatible with
each other piece of Equipment and Software in the Network.
(ii) Quality and Coverage. The Network is designed, deployed,
operated, managed and maintained to provide and is capable of providing
outdoor services in the coverage areas described in the attached maps
that permit a subscriber to maintain communication 90% of the time in
90% of those locations in Chile where coverage is indicated in the maps
(other than those described as "marginal coverage").
(A) Coverage of the Network. In a drive test conducted by
the Company on May 26, 2000, 90% of the measurements
as reported in the test data showed a signal power of
at least -90 dbm and a FFER (Forward Frame Error Rate)
of less than 5% . A copy of the test data has been
provided to Buyer.
(B) Access failure rate of the Network: Based upon data
compiled from the switch (and processed by management
of the Company), for the last week of April 2000, the
overall access failure rate of the Network averaged
11% , measured by one week's average of call attempts.
(C) Interconnection blocking rate (interconnections from
base stations to
12
<PAGE> 18
public networks): Based upon data compiled from the
switch (and processed by the management of the
Company), for the last week of April 2000, the overall
interconnection blocking rate averaged 1%, measured by
the one week's average of call attempts.
(D) Drop calls rate: Based upon data compiled from the
switch (and processed by the management of the
Company), for the last week of April 2000, the overall
drop calls rate averaged 6%, measured by the week's
average of connected calls.
(iii) Loading. The Network, as a whole, is designed to operate
properly under the current loading of traffic, without material service
interruption.
(iv) Interconnections. The Network is interconnected, directly
or indirectly, with the public switched fixed and mobile networks set
forth on Schedule 2.1.15(d)(iv).
(v) Management Reports. Schedule 2.1.15(d)(v) lists all of the
"Network Management Reports" produced by the Company since January 1,
2000. These reports are used by management in its evaluation of the
Network and set forth the Network's main operating parameters reported
by the operation and management software and other report generating
tools used by the Company in the ordinary course of business.
(vi) Information System. The Company has the information systems
necessary to support the provision of Services to customers, including
without limitation the initial delivery of Services, tarification
(correctly collecting, computing and transcribing operating data in
accordance with applicable tariffs, including, without limitation,
correctly applying the tarification standards established in Chile for
the interconnection agreements with the other public networks in Chile),
billing, and other customer services. All the material information
systems of the Company are described in Schedule 2.1.15(d)(vi).
(vii) Functionality. The Network supervisory and management
systems achieve the basic level of functionality required for
monitoring, fault management, configuration, accounting, efficiency and
security with respect to the operation of the Network.
(viii) Building Infrastructure. The Owned Real Property and
Leased Real Property contain the power, heating and cooling capabilities
and similar improvements necessary for the proper operation and
maintenance of the Network at each such location. They are in compliance
with the rules and standards generally accepted in the wireless industry
in Chile.
(e) Handsets. Except as listed in Schedule 2.1.15(e), the Handsets
purchased by the Company and used in the Business are compatible with the
Equipment installed and the Network features. The handset stocks are in good
working order and to be distributed and sold under commercial or promotional
plans of the Company.
13
<PAGE> 19
2.1.16. Litigation; Decrees. Except (a) as listed or described
on Schedule 2.1.16, there are no actions, suits, administrative or other
adjudicative proceedings or investigations ("Legal Proceedings") pending or, to
the knowledge of Leap, Seller or the Company, threatened in writing against (i)
the Company, including without limitation in respect of Intellectual Property,
except for Legal Proceedings which, if determined adversely, could not
reasonably be expected to have a Material Adverse Effect; and (ii) Leap or the
Seller or its Affiliates, which seek to enjoin or otherwise to prevent the
consummation of the transactions contemplated in this Agreement. The Company is
not in default under or in violation of the terms of any material judgment,
order or decree of any Governmental Entity (collectively, "Orders").
2.1.17. Contract Rights. (a) Identification. Except as listed or
described on Schedule 2.1.17, as of the date hereof, the Company is not a party
to or bound by any agreement, lease or other contract or legally binding
contractual right or obligation (collectively, "Contracts") that is of a type
described below:
(i) Any employment, severance or consulting Contract with an
employee or former employee, that receives salaries and other benefits
that aggregate more than $50,000 per year, that is not terminable at
will by the Company (other than, as to any employee or former employee
of the Company, any Contract for the employment of any such employee or
former employee implied in Law);
(ii) Any collective bargaining Contract with its employees,
workers or any labor union;
(iii) Any Contract for capital expenditures or the acquisition
or construction of fixed assets which requires aggregate future payments
in excess of $250,000;
(iv) Any Contract relating to cleanup, abatement or other
actions (other than monitoring or reporting in the ordinary course of
business) in connection with environmental liabilities;
(v) Any Contract with respect to Intellectual Property which
pursuant to the terms thereof requires future payments by the Company in
each case which involves amounts in excess of $50,000;
(vi) Any Contract (including, without limitation, "cuenta
corriente mercantil") under which the Company has (i) borrowed any money
or issued any note, bond, indenture or other evidence of indebtedness
for borrowed money, (ii) guaranteed indebtedness for money borrowed by
others, (iii) any liability for any letter of credit issued by any other
person, or (iv) any obligation for the deferred purchase price for goods
or services, excluding trade terms in the ordinary course of conduct of
the Business;
(vii) Any Contract under which the Company is (A) a lessee of
real property (including without limitation the Leased Real Property),
and not described in Schedule 2.1.11, (B) a lessee of, or holds or uses,
any machinery, equipment, vehicle or other tangible personal property
owned by a third person or entity (including without
14
<PAGE> 20
limitation the Equipment), (C) a lessee of software (including the
Software), (D) a lessor of real property, or (E) a lessor of any
tangible personal property owned by the Company, provided that
disclosure is required, in the case of any of the above only if the
Contract is one which requires annual payments in excess of $100,000;
(viii) Any Contract which involves aggregate future annual
payments by or to the Company in excess of $100,000 other than
agreements entered into in the ordinary course of the conduct of the
Business;
(ix) Any Contract which prohibits or restricts the Company from
engaging in the Business as it is now being conducted or may be
conducted in the future, including, without limitation, any Contract
that imposes any exclusivity requirements on the Company, that is
material to the conduct of the Business;
(x) Any Contract pursuant to which the Company may enforce
warranty or similar obligations against manufacturers or other providers
of Equipment or Software which Equipment or Software has a value in
excess of $100,000;
(xi) Forms of subscriber contracts;
(xii) Qualcomm, Ericsson, Alcatel and other similar contracts
that involve amounts in excess of $1,000,000, where (i) the obligations
of the Company have not been performed or (ii) the performance of or
other obligations of which, are not reflected in the Financial
Statements of the Company;
(xiii) Human resources software and billing software contracts;
(xiv) Distribution contracts;
(xv) Handset supplier contracts (Qualcomm (now Kyocera), LG,
Samsung) and other related contracts that involve amounts in excess of
$1,000,000;
(xvi) Chilesat contracts where (i) the obligations of the
Company have not been performed or (ii) the performance or other
obligations of which is not reflected in the Financial Statements of the
Company;
(xvii) Advertising contracts which involve annual payments which
aggregate more than $20,000;
(xviii) Any Contract which guarantees the performance of
obligations of third-parties;
(xix) Interconnection contracts;
(xx) Any Contract with any Governmental Entity regarding
frequency clearances or involving amounts greater than $50,000;
15
<PAGE> 21
(xxi) Any Contract which has been assigned as part of a security
interest or pledge agreement other than pursuant to the agreements
entered into with Qualcomm Incorporated;
(xxii) Any engineering contracts related to the build-out of
systems which involve annual payments which aggregate more than $20,000;
and
(xxiii) Any Contract that requires the Company to offer good or
services with a "most favored nation" provision.
(b) Validity; Default. Except as set forth on Schedule 2.1.17, each
Contract listed or described on Schedule 2.1.17 is a valid and binding
obligation of the Company and, to the knowledge of Leap, Seller or the Company,
is a valid and binding obligation of the other party thereto. Except as set
forth on Schedule 2.1.17, the Company has (i) performed in all respects the
obligations required to be performed by it through the date hereof under each of
such Contracts and the Company is not (with or without the lapse of time or the
giving of notice, or both) in breach or default thereunder, (ii) taken all
actions necessary on the part of the Company to maintain its ability to enforce
the service commitments, warranties, indemnifications and other obligations of
the other party to each such Contract. To the knowledge of Leap, Seller or the
Company, no party to any Contract is (with or without the lapse of time or
giving of notice or both) in breach or default thereunder, and the execution and
delivery of this Agreement and the Transaction Documents by Leap, Seller and
Company Nominee does not, and the performance by Leap, Seller and Company
Nominee of the transactions contemplated thereby to be performed by them will
not conflict with, or result in any breach or violation of, or constitute a
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation or the
loss of a benefit or result in the creation of any Lien (other than a Lien
created by Buyer) upon any property or assets of the Company under any Contract,
other than any such conflicts, breaches, violations or defaults as (i) are
listed or described on Schedule 2.1.6(a) or (ii) which, individually or in the
aggregate, would not have a Material Adverse Effect.
2.1.18. Employee Plans. Except as set forth on Schedule 2.1.18,
the Company is not a party to an agreement and does not have a plan or other
arrangements that give rights or benefits to its employees or workers in
addition to those included in the written employment agreements that it has
executed with each employee or worker.
2.1.19.Taxes.
(a) Definition. "Taxes" means all municipal, local, foreign and other
taxes (including without limitation income, profits, premium, estimated, excise,
sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital
levy, production, transfer, withholding, social security, employment,
unemployment compensation, payroll-related and property taxes, alternative
minimum, estimated stamp, value-added, windfall profits, import duties and other
governmental charges and assessments), whether or not measured in whole or in
part by net income, and including deficiencies, interest, additions to tax or
additional amounts, interest and penalties with respect thereto; provided that
such term shall also include any Taxes as to which the Company is liable as a
successor or transferee or pursuant to a contractual obligation.
16
<PAGE> 22
(b) Returns. The Company has timely filed (or has had filed on its
behalf) or caused to be timely filed with the appropriate Governmental Entities
or other tax authorities all returns, reports or information returns or
statements relating to material Taxes (including amendments thereto)
(collectively, "Tax Returns") required to be filed by it with respect to the
Company (other than those for which the failure to file will not result in a
Material Adverse Effect) on or prior to the Closing Date (taking into account
all extensions of due dates). All such Tax Returns were correct and complete in
all respects.
(c) Payments. The Company has paid when due all material Taxes (as
defined above) owed with respect to the Company. No material penalties or other
charges are due with respect to the late filing of any Tax Return of the Company
required to be filed on or before the Closing Date (taking into account all
extensions of due dates). The Company has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor or other third party. The
unpaid Taxes of the Company will not exceed the reserves for Taxes (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) that are reflected in the Estimated Balance Sheet. There
are no liens on any of the assets of the Company that arose in connection with
any failure (or alleged failure) to pay any tax.
(d) Filings. The Company files Tax Returns solely in Chile. The Tax
Returns of the Company have not been audited and are not currently the subject
of an audit. Except as set forth on Schedule 2.1.19(d), there are no waivers or
extensions of any applicable statute of limitations, or agreements to any
extension of time for the assessment or collection of such Taxes with respect to
any such Tax Returns, which waivers, extensions or agreements currently are in
effect. Except as set forth on Schedule 2.1.19(d), no claim has been made in
writing or to the knowledge of Leap, Seller or Company, threatened by an
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction and no such claim exists
as of the date hereof.
(e) Rulings, Etc. Except as set forth on Schedule 2.1.19(e), the Company
has not requested or received a Tax Ruling (as defined below) or entered into a
Tax Closing Agreement (as defined below) with any taxing authority that would
have a continuing effect after the Closing Date. For purposes of the preceding
sentence, the term "Tax Ruling" means a written ruling of a taxing authority
relating to Taxes, and the term "Tax Closing Agreement" means a written Contract
with a taxing authority relating to Taxes. Except as set forth on Schedule
2.1.19(e), the Company is not a party to any Tax allocation or sharing Contract.
(f) Claims. Except as set forth on Schedule 2.1.19(f), no action, suit,
proceeding, investigation, audit, claim or assessment is presently pending or,
to the knowledge of Leap, Seller or the Company, has been proposed to the
Company or Leap with regard to any material Taxes that relates to the Company
for which the Company would be liable.
2.1.20. Environmental Matters.
(a) Definitions.
17
<PAGE> 23
(i) "Environment" means soil, surface waters, groundwaters,
land, surface or subsurface strata, ambient air or any other
environmental medium.
(ii) "Environmental Condition" means a condition with respect to
the Environment which has resulted, or is reasonably likely to result,
in a material loss, liability, cost or expense to the Company.
(iii) "Environmental Law" means any Chilean law, statute, rule
or regulation relating to the Environment, including without limitation,
any statute, regulation pertaining to (i) storage, disposal, or
transportation of hazardous substances or solid or hazardous waste; (ii)
air and noise pollution; (iii) soil contamination; (iv) the release or
threatened release into the Environment of hazardous substances, or
solid or hazardous waste; (v) health and safety of employees; and (vi)
use, distribution, storage, disposal, transportation or handling of
hazardous substances or oil or petroleum products or solid or hazardous
waste.
(b) No Liabilities or Violation. Except as listed or described on
Schedule 2.1.20(b), (i) the Company does not have any liability under any
Environmental Law (including without limitation any obligation to remediate any
Environmental Condition applicable to the Owned Real Property or the Leased Real
Property, (ii) the Company has not violated, and is not in violation of, any
Environmental Law, (iii) there is no pending or, to the knowledge of Leap,
Seller or the Company, threatened in writing civil or criminal litigation,
written notice of violation, formal administrative proceeding or investigation,
inquiry or information request by any Governmental Entity, relating to any
Environmental Law involving the Company, and (iv) there exists no Environmental
Condition with respect to the Owned Real Property or the Leased Real Property,
which liability, violation or Environmental Condition specified in (i), (ii),
(iii) or (iv) could reasonably be expected to have a Material Adverse Effect on
the Company.
2.1.21. No Undisclosed Liabilities. The Company does not have
any material liabilities, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, except (i) as and to
the extent set forth in the Balance Sheet or specifically disclosed in the notes
thereto, (ii) liabilities incurred in the ordinary course of business consistent
with past practice and not prohibited by this Agreement, (iii) as set forth in
Schedule 2.1.21, (iv) current liabilities reflected in the most recent balance
sheet included in the Financial Statements, and (v) liabilities specified in
Contracts which are not required to be disclosed under U.S. GAAP set forth in
the Financial Statements.
2.1.22. Assets. Except as described on Schedule 2.1.22, the
Company owns or has the right to use all of the material assets currently used
to conduct the Business or required for the operation of the Business.
2.1.23. Affiliate Interests. Except as disclosed in Schedule
2.1.23, neither Leap nor any of its direct or indirect subsidiaries (other than
the Company) or, to the knowledge of Leap, Seller or the Company, any officer or
director of the Company, or any member of their immediate family, (i) has a
controlling interest or other material financial interest (other than a
noncontrolling investment in a public company) in any business entity which
competes with the Business in Chile, (ii) has any material personal financial
interest, direct or indirect, in any
18
<PAGE> 24
property, real or personal, tangible or intangible, including Intellectual
Property, owned or used by the Company in the Business, or (iii) provides or
causes to be provided to, or receives from, the Company any assets, loans,
advances, services or facilities, (other than pursuant to an employment contract
with the Company). Except for this Agreement and the Transaction Documents,
there are no Contracts between the Company and any Affiliate of Leap that will
remain in effect after Closing.
2.1.24. Subscribers. Schedule 2.1.24 hereto sets forth, differentiated
between prepaid and post-paid customers, (a) the total number of digital
subscriber units ("Units") to which the Company provided service as of December
31, 1999, January 31, 2000, March 31, 2000 and April 30, 2000, (b) the average
revenue per Unit ("ARPU") for each of the months ended as of such dates; (c) the
average Network minutes of use per customer and the total Network minutes of use
for each such month, (d) the rate of subscriber turnover for each such month,
(e) the percentage of subscribers whose payments are more than 30 days past due
at the end of each such month and the aggregate amount of such past due payments
at the end of each such month.
2.1.25. Suppliers. Schedule 2.1.25 sets forth the name of each entity
currently supplying Equipment and Handsets to the Company ("Supplier"). The
Company is not currently involved in any material dispute with a Supplier and,
to Leap's, Seller's or the Company's knowledge, no such Supplier has threatened
to terminate or otherwise materially and adversely alter its relationship with
the Company. The Company is not obligated to any Supplier (whether to continue
Equipment or Handset purchases or otherwise), except to the extent described
either in a Contract listed in Schedules 2.1.17 or 2.1.25.
2.1.26. Brokers. No broker, investment banker, financial advisor or
other person (other than ABN AMRO, the fees and expenses of which will be paid
by Leap) is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission from Leap or any of its Affiliates (including without
limitation the Company) in connection with the transactions contemplated by this
Agreement.
2.2. Representations and Warranties of Buyer. Subject to Section 2.2.6,
Buyer represents and warrants to Seller and Leap as follows:
2.2.1. Corporate Organization. Buyer is a sociedad anonima duly
organized, validly existing and in good standing under the Laws of Spain.
2.2.2. Authorization and Effect of Agreement. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and the Transaction Documents and to perform the obligations hereunder and
thereunder and to consummate the transactions contemplated to be performed by
it. All necessary corporate action required to be taken by Buyer for the due
authorization of the execution, delivery and performance of the Agreement and
the Transaction Agreements by Buyer has been duly taken by Buyer. This Agreement
and the Transaction Documents have been duly executed and delivered by Buyer
and, assuming the due authorization, execution and delivery of this Agreement
and the Transaction Documents by Seller and Leap, constitute valid and binding
obligations of Buyer, enforceable in accordance
19
<PAGE> 25
with their terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by equitable
principles, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for equitable
defenses.
2.2.3. No Restrictions. Except as set forth in Schedule 2.2.3,
the execution and delivery of this Agreement and the Transaction Documents does
not, and the performance by Buyer of the transactions contemplated thereby to be
performed by it will not conflict with, or result in any breach or violation of,
or constitute a default (with or without notice or lapse of time or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or the loss of a benefit or result in the creation of any Lien upon
any property or assets of Buyer under (i) any provision of the Estatutos
Sociales of Buyer, (ii) any note, bond, mortgage, indenture, deed of trust,
license, lease, distribution agreement, joint venture agreement or any other
agreement or instrument or obligation to which Buyer is a party or to which
Buyer or Buyer's properties or assets may be subject or (iii) any Law of any
Governmental Entity or any Permit issued thereunder, other than any such
conflicts, breaches, violations or defaults which, individually or in the
aggregate, would not have a Material Adverse Effect on Buyer or materially and
adversely affect the ability of Buyer to perform its obligations under this
Agreement and the Transaction Documents.
2.2.4. Financing. Buyer has sufficient funds to perform its
obligations under Article I, either from existing cash or cash items or through
undrawn amounts available under existing loan agreements or lines of credit.
2.2.5. Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission from Buyer or any of its Affiliates in
connection with the transactions contemplated by this Agreement.
2.2.6. Litigation. Except as set forth in Schedule 2.2.6, there
are no Legal Proceedings pending or, to the knowledge of Buyer, threatened in
writing against the Buyer or its Affiliates, which seek to enjoin or otherwise
to prevent the consummation of the transactions contemplated in this Agreement.
2.3. Certain Limitations on Representations and Warranties. Any
representation and warranty made in this Agreement by Leap and Seller will be
deemed for all purposes to be qualified by the disclosures made at the date
hereof in any Schedule specifically referred to in such representation or
warranty and by the information disclosed in any other Schedule if the relevance
of such information to such representation and warranty is reasonably apparent
on its face.
III. COVENANTS
3.1. Confidentiality. Leap will not, and will cause its Affiliates and
their respective officers, attorneys, accountants or authorized representatives
not to, disclose to any third party
20
<PAGE> 26
any confidential information about the Company (including without limitation
information relating to supply and sales agreements and relationships with third
persons or entities), except as required by Law or rules of any national stock
exchange or any Governmental Authority applicable to it or its Affiliates. Leap
and Seller and each of their Affiliates and their respective officers,
attorneys, accountants or authorized representatives will return to the Company
all originals and copies of all non-public documents and materials of the type
provided for in this Section 3.1 which are in the possession of Leap and Seller
and Leap and Seller and their respective officers, attorneys, accountants or
authorized representatives will destroy all notes, analyses, compilations,
studies or other documents which contain or otherwise reflect such information.
3.2. Press Releases. No party will issue or cause the publication of any
press release or other public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of Buyer (in the case
of Leap) or Leap (in the case of Buyer), which consent will not be unreasonably
withheld; provided, however, that nothing herein will prohibit any party from
issuing or causing publication of any such press release or public announcement
to the extent that such party determines such action to be required by Law or
the rules of any national stock exchange applicable to it or its Affiliates, in
which event the party making such determination will, if practicable in the
circumstances, use reasonable efforts to allow the other parties reasonable time
to comment on such release or announcement in advance of its issuance.
3.3. Regulatory Filings. (a) Filings. Within fifteen business days after
the date hereof, each of Buyer and Leap will make such filings, if any, as may
be required by Law with respect to the consummation of the transactions
contemplated by this Agreement. Thereafter, Buyer and Leap will file or cause to
be filed as promptly as practicable with the Chilean authorities supplemental
information, if any, which may be required or requested by the Chilean
authorities. To the extent required by Law, Leap will make, or cause any of its
Affiliates to make, such filings and use its reasonable efforts to obtain the
governmental approvals and the other consents (if any) referred to in Section
2.1.6, and Buyer will make such filings and use its reasonable efforts to obtain
the governmental approvals and the other consents (if any) referred to in
Section 2.2.3. All filings referred to in Section 3.3(a) will comply in all
material respects with the requirements of the respective Laws pursuant to which
they are made.
(b) Reasonable Effort. Without limiting the generality or effect of
Section 3.3(a), each of the parties will (i) use its respective reasonable
efforts to comply as expeditiously as possible with all lawful requests of
Governmental Entities for additional information and documents pursuant to
Chilean law, if applicable, (ii) not extend any waiting period under Law or
enter into any agreement with any Governmental Entity not to consummate the
transactions contemplated by this Agreement and the Transaction Documents,
except with the prior consent of each of the other parties hereto, and (iii)
cooperate with each other and use reasonable efforts to cause (A) the lifting,
removal, dissolution, stay or dismissal of any temporary restraining order,
preliminary injunction or other judicial or administrative order which prevents
the consummation of the transactions contemplated hereby or requires as a
condition thereto that all or any part of the Business be held separate and,
prior to or after Closing, pursue the underlying litigation or administrative
proceeding diligently and in good faith and (B) the execution, delivery and
performance by the appropriate entity of such divestiture agreements or other
21
<PAGE> 27
actions as may be necessary to secure the expiration or termination of the
applicable waiting periods under Law.
3.4. [Intentionally Omitted].
3.5. Compensation for Removal of Equipment. If (a) within one year from
the Closing Date, the Company is required to remove Equipment and/or Software
from service because such Equipment and/or Software does not provide the
capabilities and service conditions required to meet the needs of the Company as
would be reasonably expected to cope with forecasted growth of subscribers and
traffic to provide service to customers consistent with current functionality as
forecasted in the Company Year 2000 Budget attached hereto as Annex D (the
"Company Year 2000 Budget") for that year or the following year and (b) such
Equipment and/or Software cannot otherwise be reasonably redeployed elsewhere in
the Network (as agreed to, in the case of both clauses (a) and (b), by the
engineering firm of Mobile Systems International (currently based in London,
England)), then Leap shall indemnify Buyer, as an Indemnifiable Loss, in
accordance with the provisions of Article V by paying the Company an amount
equal to 50% of the unamortized or undepreciated value of such Equipment and/or
Software as of the date hereof provided that all such amounts paid by Leap shall
not in the aggregate, together with the amount of all indemnification payments
made by Leap pursuant to Section 3.12, exceed Two Million Dollars ($2,000,000).
All amounts paid or otherwise indemnified pursuant to this Section 3.5 shall
represent Indemnifiable Losses for purposes of Section 5.2(b) and the cap set
forth thereunder.
3.6. No Solicitation. From the date hereof until the termination of this
Agreement in accordance with its terms or until Closing, Leap shall not, nor
shall it authorize or permit any of its Affiliates or representatives to,
directly or indirectly, (i) solicit or initiate any Third Party (as defined
below) with respect to the submission of any Acquisition Proposal (as defined
below) or (ii) participate in any discussions or negotiations regarding, or
furnish to any Third Party any non-public information with respect to, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. "Acquisition Proposal" means any proposal with respect to
a merger, consolidation, share exchange, or similar transaction involving the
Company, or any purchase or other acquisition of any significant amount of the
assets of the Company or of the equity interest in the Company, other than the
transactions contemplated hereby. "Third Party" means any corporation,
partnership, person or other entity or "group" (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended) other than Buyer.
3.7. Indemnification Related to Interest, Penalties and Fines Related to
Taxes. Leap and Seller, jointly and severally, will pay, reimburse payment of,
indemnify, defend and hold harmless Buyer and the Company in connection with any
administrative or legal actions, fines, penalties and payment obligations,
costs, expenses, charges, assessments, and other Indemnifiable Losses arising
from actions or events that cause or create obligations of the Company to pay
Taxes related to matters prior to the date hereof (including without limitation
stamp tax, withholding tax, income taxes and value added tax) that should have
been paid or withheld by the Company prior to the date hereof and related to the
future payment or capitalization of any part of the Indebtedness of the Company
existing at this date; provided that (a) Buyer shall not recover amounts
pursuant to this Section to the extent such amounts are recovered by Buyer
through the Closing Adjustment, (b) such obligations shall survive for a
22
<PAGE> 28
period of six years and (c) Buyer shall not be able to recover the actual tax
liability incurred, but only the fines, penalties and interest related to such
tax liability, and (d) the amount recovered pursuant to this Section shall
represent Indemnifiable Losses for purposes of Section 5.2(b) and the cap set
forth thereunder.
3.8. [Intentionally Omitted].
3.9. Resignations. Upon the Closing, upon Buyer's specific request, Leap
will cause to resign or to be removed from office (i) all directors of the
Company, and (ii) such officers of the Company whose full-time employment is not
in the Business.
3.10. Wireless Local Loop. If, prior to the first anniversary of the
Closing Date, the Company is prohibited from offering wireless local loop
service (which shall be defined as a kind of local, limited mobility, zone-based
tariff service as contemplated by the Company) under the terms and conditions
of, and pursuant to the authority under, the PCS License as the result of an
order, resolution, ruling, decree, edict or other similar document issued by
Subtel, the Ministry of Transportation and Telecommunications or any
Governmental Entity regulating telecommunications services (a
"Telecommunications Order") and (i) such action is not caused by or based upon a
change in the Law and (ii) the Company since the date hereof has not taken any
action that could reasonably be construed as a request of, or inquiry to,
Subtel, the Ministry of Transportation and Telecommunications or any
Governmental Entity regulating telecommunications services concerning or
relating to the offering of wireless local loop service, then Leap shall
indemnify Buyer, in accordance with the provisions of Article V, for its
Indemnifiable Losses resulting from any such Telecommunications Order up to an
aggregate Two Million and Five Hundred Thousand Dollars ($2,500,000) (it being
understood that such amounts when paid shall represent Indemnifiable Losses for
the purposes of Section 5.2(b) and the cap set forth thereunder); provided that
immediately upon any subsequent reversal or vacation of such Telecommunications
Order, Buyer shall pay to Leap the amount recovered under this Section less the
Indemnifiable Losses incurred during the period while such Telecommunications
Order is in effect (including without limitation the reasonable legal fees and
other costs incurred in appealing the Telecommunications Order) and provided
further that Buyer shall in good faith continue to appeal such
Telecommunications Order if in Buyer's good faith judgment there is a reasonable
basis for such appeal.
3.11. Company Employees. After Closing, Buyer will seek to retain the
key management employees identified for this purpose in Schedule 3.11 and under
terms and conditions no less favorable than those described on such Schedule.
3.12. Indemnification Related to Non-Compliance. Leap and Seller,
jointly and severally, will pay, reimburse payment of, indemnify, defend and
hold harmless Buyer and the Company in connection with any administrative or
legal actions, fines, penalties and payment obligations related to any action by
any Governmental Entity based upon the failure of the Company prior to the
Closing (a) to provide service to customers, (b) to obtain Permits for changes
in the Network (including without limitation frequency changes) or (c) to
provide notification of changes in the form of customer contracts or of changes
in tariffs, provided, however, that (v) such obligations of Leap and Seller
under this Section shall exist only with respect to claims made by any such
Indemnitee prior to the first anniversary of the Closing; (w)
23
<PAGE> 29
any such claim may be based upon any inquiry or allegation (written or oral) by
any Governmental Entity relating to any such failure; (x) after making any such
claim described in clause (a), Buyer shall cause the Company promptly to use
commercially reasonable efforts to recover such claim in good faith against each
manufacturer which might reasonably be expected to be liable for such claim,
provided, however, that (i) the Company shall not be required to initiate
litigation, arbitration or any other adversarial legal proceeding against any
such manufacturer, (ii) the costs and expenses (including without limitation
attorney's fees) incurred in pursuing such claims against manufacturers shall be
reimbursed by Leap and Seller as Indemnifiable Losses and (iii) Leap and Seller
will be required to indemnify Buyer and/or the Company pursuant to clause (a) to
the extent that the Company's efforts pursuant to this clause (x) have not
resulted in payment from manufacturers within 30 days after the claims were made
against them; (y) Leap and Seller shall only be responsible for 50% of any claim
described in clauses (b) or (c) above; and (z) any amounts recovered pursuant to
this Section 3.12 shall not exceed, in the aggregate, and together with all
amounts recovered pursuant to Section 3.5, Two Million Dollars ($2,000,000) and
shall represent Indemnifiable Losses for purposes of Section 5.2(b) and the cap
set forth thereunder.
3.13. Indemnification Related to Ericsson. Leap and Seller, jointly and
severally, will indemnify, defend and hold harmless Buyer and the Company from
and against all Indemnifiable Losses with respect to Ericsson's claim for
$2,532,915 described in Schedule 2.1.16, provided, however, that (x) such
obligations shall exist regardless of the time required to resolve such dispute,
(y) Leap shall assume the defense of such claim (including the right to defend
or settle such claim in Leap's discretion so long as such settlement imposes no
obligation on the Company, Buyer or any of its Affiliates), and (z) any amounts
expended by Leap or Seller after the date hereof in satisfaction of its
obligations under this Section 3.13 shall represent Indemnifiable Losses for
purposes of Section 5.2(b) and the cap set forth thereunder.
3.14. No Double Recovery. Sections 3.5, 3.7, 3.10, 3.12, and 3.13 shall
not otherwise affect the rights of Buyer to seek indemnification for
representations and warranties under this Agreement, except to the extent that
such indemnification would constitute a double recovery.
IV. THE CLOSING
4.1. The Closing. The consummation of the purchase and sale of the
Company Shares contemplated hereby (the "Closing") will take place on the date
hereof (the "Closing Date"). The Closing will take place at the offices of
Cariola Diez Perez-Cotapos & Cia. Ltda., in Santiago, Chile.
4.1.1 At Closing the following shall take place:
(a) Leap shall assign all of its right, title and interest in and to the
Current Commercial Contract, dated October 12, 1999, that evidences a portion of
the Intercompany Debt with Company in favor of Buyer.
(b) Seller shall assign all of its right, title and interest in and to
the Current Commercial Contract, dated April 12, 1999 (that evidences a portion
of the Intercompany Debt) with Company in favor of Buyer.
24
<PAGE> 30
(c) Buyer shall invest $28,600,000 in time deposits with ABN that will
be pledged in favor of ABN to guarantee payment of ABN's portion of the
Intercompany Debt in substitution for the standby letter(s) of credit that
support such Intercompany Debt ("Standby L/C"), and ABN shall release the cash
collateral pledged by Leap as security for the Standby L/C.
4.2. Conditions Precedent to Obligations of Buyer and Leap. The
obligations of each of Buyer and Leap under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to Closing, of the conditions that there shall not have been entered a
preliminary or permanent injunction, temporary restraining order or other
judicial or administrative order or decree in any jurisdiction, the effect of
which prohibits the Closing, or imposes any conditions or restrictions on the
consummation of the transactions contemplated hereby or the Business of the
Company or other businesses of the Buyer in Chile. The foregoing condition may
be waived (i) insofar as it is a condition to the obligations of Buyer, by Buyer
at its option and (ii) insofar as it is a condition to the obligations of Leap
and/or Seller, by Leap at its option.
4.3. Additional Conditions Precedent to Obligations of Buyer. The
obligations of Buyer under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to Closing,
of all of the following conditions, any one or more of which may be waived at
the option of Buyer.
4.3.1. Transfer Documents, Etc. Leap shall have delivered or
caused to be delivered to Buyer the certificates representing the Seller Company
Shares and the Nominee Company Share, which certificates shall be accompanied by
duly executed share transfer agreements in the form of Annex A hereto, according
to Chilean Law.
4.3.2. No Material Misrepresentation or Breach. There shall have
been no material breach by Leap in the performance of any of the covenants
herein to be performed by it in whole or in part prior to Closing, and the
representations and warranties of Leap contained in this Agreement shall be true
and correct in all material respects as of the Closing Date, except for
representations or warranties made as of a specified date, which shall be true
and correct in all material respects as of the specified date, and Leap shall
have delivered to Buyer a certificate certifying each of the foregoing, dated
the Closing Date and signed by one of its executive officers to the foregoing
effect (it being understood that where any such representation or warranty
already includes a Material Adverse Effect or other materiality exception, no
further materiality exception is to be permitted by this Section).
4.3.3. Legal Opinions. Leap shall have delivered to Buyer (a) a
legal opinion in form and substance satisfactory to Buyer; and (b) a legal
opinion of Grasty, Quintana, Majlis & Cia. in form and substance satisfactory to
Buyer.
4.3.4. Qualcomm Consent. Qualcomm shall have agreed to such
changes in the terms and conditions of the Company's indebtedness to Qualcomm as
are satisfactory to Buyer, in Buyer's sole discretion.
4.4. Additional Conditions Precedent to Obligations of Leap. The
obligations of Leap under this Agreement to consummate the transactions
contemplated hereby will be subject to the
25
<PAGE> 31
satisfaction, at or prior to Closing, of all the following conditions, any one
or more of which may be waived at the option of Leap.
4.4.1. Estimated Purchase Price. Buyer shall have delivered to
Leap in the manner specified in Section 1.2 the Cash Consideration and the
Note(s).
4.4.2. No Material Misrepresentation or Breach. There shall have
been no material breach by Buyer in the performance of any of the covenants
herein to be performed by Buyer in whole or in part prior to Closing, and the
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the Closing Date, except for
representations or warranties made as of a specified date, which shall be true
and correct in all material respects as of the specified date, and Buyer shall
have delivered to Leap a certificate certifying each of the foregoing, dated the
Closing Date and signed by one of its executive officers to the foregoing effect
(it being understood that where any such representation or warranty already
includes a Material Adverse Effect or other materiality exception, no further
materiality exception is to be permitted by this Section).
4.4.3. Legal Opinions. Buyer shall have delivered to Leap legal
opinions of Spanish, Chilean and United States counsel, in form and substance
satisfactory to Leap.
4.4.4. Qualcomm Release. Qualcomm shall have provided Seller
with such documentation as Seller, in Seller's sole discretion, deems necessary
to enable Leap and Seller to consummate the transactions contemplated by this
Share Purchase Agreement and the other Transaction Documents.
4.5. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to Closing:
(a) By the mutual written consent of Buyer and Leap;
(b) By either Buyer or Leap if the Closing shall not have occurred on or
before the later of the following dates (the "Drop Dead Date"): (i) September 1,
2000 and (ii) such later date as Buyer and Leap may mutually agree in writing;
provided that the failure to consummate the transactions contemplated hereby on
or before such date did not result from the failure by the party seeking
termination of this Agreement to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled before the Closing; or
(c) By either Buyer or Leap if any Law shall have been adopted or
promulgated, or if there shall have been entered a final, nonappealable order or
injunction of any Governmental Entity, specifically restraining or prohibiting
the consummation of the transactions contemplated hereby or any material part
thereof; or
(d) By either Buyer or Leap, if the other shall have breached or failed
to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set forth
in Sections 4.3.2 or 4.4.2, as the case may be, and (ii) cannot be or has not
been cured within 30 days after the giving of notice by terminating party to the
defaulting party of such breach or failure (provided that the terminating party
is not then in material breach
26
<PAGE> 32
of any of its representations, warranties, covenants or other agreements
contained in this Agreement); or
(e) By Buyer, if Leap breaches the covenants set forth in Section 3.6.
In the event of the termination of this Agreement under Section 4.5, each party
hereto will pay all of its own fees and expenses. There will be no further
liability hereunder on the part of any party hereto if this Agreement is so
terminated, except for fraud or willful malfeasance, or for any breach of this
Agreement prior to termination.
V. SURVIVAL AND INDEMNIFICATION
5.1. Definitions.
5.1.1. Limitations on Liability Definitions.
(a) "Indemnifiable Losses" means (i) any and all claims, demands,
actions, suits or proceedings (by any person or entity, including without
limitation any Governmental Entity), judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and expenses in connection
therewith or in enforcing the Indemnifying Party's obligations hereunder
(including without limitation any Taxes incurred in connection with or as a
result of any recovery from or payment by any Indemnifying Party of
Indemnifiable Losses), and (ii) any other losses, liabilities, costs and
expenses (including without limitation any losses of revenues or any payments or
similar charges to subscribers). For purposes of this Article V, the foregoing
amounts shall be reduced by (i) the amount of warranty or insurance proceeds
actually received from any person or entity that is not an Affiliate of the
Indemnitee, and (ii) the amount of Closing Adjustment received by Buyer pursuant
to this Agreement to the extent the claim and/or Indemnifiable Loss is caused by
a breach of a representation or warranty for which a Closing Adjustment was
claimed.
(b) "Indemnifying Party" means any person or entity required to provide
indemnification under this Agreement.
(c) "Indemnitee" means any person or entity entitled to indemnification
under this Agreement.
(d) "Indemnity Payment" means any amount of Indemnifiable Losses
required to be paid pursuant to this Agreement.
(e) "Third Party Claim" means any claim, demand, action, suit or
proceeding made or brought by any person or entity who or which is not a party
to this Agreement or an Affiliate of a party to this Agreement.
5.2. Limits. Notwithstanding any other provision in this Agreement or of
any applicable Law:
27
<PAGE> 33
(a) Minimum Claim. No Indemnitee will be entitled to indemnification by
an Indemnifying Party under Section 5.4 or otherwise in respect of any breach or
alleged breach of any representation or warranty contained in Article II unless
(i) the aggregate amount of Indemnifiable Losses incurred by the Indemnitee in
respect of any individual event, or occurrence or series of events or
occurrences arising out of a common nucleus of operative facts, giving rise to
such Indemnifiable Losses exceeds $25,000, in which event the Indemnitee will be
entitled to pursue such claim to the full amount of its Indemnifiable Losses
relating thereto and (ii) the aggregate amount of all Indemnifiable Losses
claimed or previously claimed by the Indemnitee exceeds $250,000, in which event
the Indemnitee will be entitled to pursue all claims to the full amount of its
Indemnifiable Losses in excess of $250,000.
(b) Cap. Notwithstanding any other provision of this Agreement, the
indemnification obligations of Leap and Seller under Section 5.4 (except for a
claim for breach of Sections 2.1.1(a), 2.1.2, 2.1.5 or 2.1.6 (but only to the
extent that the representation and warranty relates to Leap or Seller) will not
exceed $35,000,000.
5.3. Exclusivity. As between any Leap and any Leap Affiliate, on the one
hand, and Buyer or any Affiliate thereof, on the other hand, the rights and
obligations set forth in this Article V will be the sole and exclusive remedies
for breach of this Agreement, except in the event of fraud.
5.4. Survival of Representations and Warranties and Covenants. Each of
the representations and warranties contained in Article II will survive the
Closing and remain in full force and effect until the first anniversary of the
Closing Date, except that the representations and warranties set forth in
Sections 2.1.1(a), 2.1.2, 2.1.5, 2.1.6 (but only to the extent that such
representation and warranty relates to Leap and/or Seller), 2.2.1, 2.2.2, and
2.2.3 will survive the Closing and remain in full force and effect until the
expiration of the relevant statute of limitations, if any. Any claim for
indemnification with respect to any matter which is not asserted by a notice
given as herein provided specifically identifying the breach underlying such
claim (whether or not the Indemnifiable Loss has been actually incurred as of
the date of such notice) and a reasonable summary of the facts and Indemnifiable
Loss relating thereto (to the extent reasonably determinable as of the date of
such notice), within such specified periods of survival may not be pursued and
is hereby irrevocably waived.
5.5. Indemnification.
5.5.1. Leap's Duty. Subject to Sections 5.1, 5.2, 5.3, 5.4 and
5.6, Leap and Seller, jointly and severally, will indemnify, defend and hold
harmless Buyer and its Affiliates and their respective directors, officers,
partners, shareholders, employees, agents and representatives (including,
without limitation, any predecessor or successor to any of the foregoing) from
and against any and all Indemnifiable Losses relating to, resulting from or
arising out of (a) the matters disclosed in the second (stamp tax, withholding
tax related to Leap commercial contract), fifth (remuneration of key employees),
sixth (VAT related to fiber backbone) and seventh (expensing of handsets)
paragraphs of Schedule 2.1.19(a) and (b)any breach by Leap or Seller of any of
the representations or warranties of Leap or Seller contained in this Agreement,
without giving effect to any Material Adverse Effect or other materiality
limitations therein or exception thereto (other than those included in Sections
2.1.8, 2.1.13 (first
28
<PAGE> 34
three sentences only), 2.1.15(d)(i), 2.1.23 and 2.1.25). For avoidance of doubt,
it is understood by the parties that certain representations and warranties,
other than those in Sections 2.1.8, 2.1.13, 2.1.15(d)(i), 2.1.23, and 2.1.25,
contain Material Adverse Effect or other materiality exceptions, restriction and
other limitations, but such limitations shall be only effective for disclosure
purposes but not for determining if there has been a breach of the
representation and warranty for indemnification purposes .
5.5.2. Buyer's Duty. Subject to Sections 5.1, 5.4 and 5.6, Buyer
will, and, if the Closing occurs, will cause the Company to, indemnify, defend
and hold harmless, Leap, Seller and their Affiliates and their respective
directors, officers, partners, shareholders, employees, agents and
representatives (including, without limitation, any predecessor or successor to
any of the foregoing) from and against any and all Indemnifiable Losses relating
to, resulting from or arising out of any breach by Buyer of any of the
representations or warranties of Buyer contained in this Agreement, without
giving effect to any Material Adverse Effect or other materiality limitation
therein or exception thereto.
5.6. Defense of Claims.
5.6.1. Third Party Claims. If any Indemnitee receives notice of
the assertion or commencement of any Third Party Claim against such Indemnitee
with respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such Indemnifying
Party reasonably prompt written notice thereof, but in any event not later than
30 calendar days after receipt of such written notice of such Third Party Claim.
Such notice by the Indemnitee will describe the Third Party Claim in reasonable
detail, will include copies of all material written evidence thereof and will
indicate the estimated amount of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee.
5.6.2. Assumption of Defense. The Indemnifying Party will have
the right to participate in, or, by giving written notice to the Indemnitee, to
assume, the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense. If, within ten calendar days following receipt by the Indemnifying
Party of notice of a Third Party Claim, an Indemnitee receives written notice
from the Indemnifying Party that the Indemnifying Party has elected to assume
the defense of such Third Party Claim as provided in the preceding sentence, the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable steps necessary
to defend diligently such Third Party Claim or if the Indemnifying Party does
not undertake to indemnify fully the Indemnitee in respect of all Indemnifiable
Losses relating to the matter, the Indemnitee may assume its own defense, and
the Indemnifying Party will be liable for all reasonable costs or expenses paid
or incurred in connection therewith, and provided, further, that if there is a
conflict between the interests of the Indemnifying Party and the Indemnitee, the
Indemnifying Party shall reimburse the Indemnitee for the reasonable legal
expenses of a single separate counsel in connection with the defense of such
Third Party Claim.
5.6.3. Settlements. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of any
Third Party Claim which would lead
29
<PAGE> 35
to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder, or which provides for injunctive or other non-monetary relief
applicable to the Indemnitee or does not include an unconditional release of the
Indemnitee. If a firm offer is made to settle a Third Party Claim without
leading to liability or the creation of a financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party will give written notice to the Indemnitee
to that effect. If the Indemnitee fails to consent to such firm offer within ten
calendar days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will not exceed
the amount of such settlement offer.
5.6.4. Direct Claims. Any claim by an Indemnitee on account of
an Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim") will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 calendar days after
the Indemnitee becomes aware of such Direct Claim. Such notice by the Indemnitee
will describe the Direct Claim in reasonable detail, will include copies of all
material written evidence thereof and will indicate the estimated amount of the
Indemnifiable Loss that has been or may be sustained by the Indemnitee (to the
extent reasonably determinable as of the date of such notice). The Indemnifying
Party will have a period of 30 calendar days within which to respond in writing
to such Direct Claim. If the Indemnifying Party does not so respond within such
30 calendar day period, the Indemnifying Party will be deemed to have rejected
such claim, in which event the Indemnitee will be free to pursue such remedies
as may be available to the Indemnitee on the terms and subject to the provisions
of this Agreement.
5.6.5. Failure to Notify. A failure to give timely notice or to
include any specified information in any notice as provided in Sections 5.6.1,
5.6.2, 5.6.3, or 5.6.4 will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such failure, any
party which was entitled to receive such notice was deprived of its right to
recover any payment under its applicable insurance coverage or was otherwise
materially prejudiced as a result of such failure.
5.6.6. Other Recoveries. If the amount of any Indemnifiable
Loss, at any time subsequent to the making of an Indemnity Payment to the
Indemnitee, is reduced by recovery, settlement or otherwise under or pursuant to
any warranty or insurance coverage, or pursuant to any claim, recovery,
settlement, rebate or other payment by or against any other person or entity,
the amount of such reduction, less any costs, expenses, premiums or taxes
incurred in connection therewith, will promptly be repaid by the Indemnitee to
the Indemnifying Party.
5.6.7. Subrogation. Upon making any Indemnity Payment the
Indemnifying Party will, to the extent of such Indemnity Payment, be subrogated
to all rights of the Indemnitee against any third person or entity that is not
an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the
Indemnity Payment relates; provided, however, that (i) the Indemnifying Party
shall then be in compliance with its obligations under this Agreement in respect
of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment
of its Indemnifiable Loss, any and all claims of the Indemnifying Party against
any such third person
30
<PAGE> 36
or entity on account of said Indemnity Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
person or entity. Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying Party will duly execute
upon request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
VI. OTHER POST-CLOSING COVENANTS
6.1. Post-Closing Purchases. Buyer, Leap and the Company shall for two
(2) years after the date hereof use reasonable efforts, to the extent permitted
by Law, and consistent with their respective contract obligations to, cooperate
in the purchase of handsets, switches and other equipment so that Leap, its
Affiliates and the Company can obtain lower prices and other benefits by
purchasing such items in bulk.
6.2. General Post-Closing Matters.
6.2.1. Post-Closing Notifications. Buyer and Leap will, and each
will cause its respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable to such party,
of any antitrust, trade competition, investment, control or other Law of any
Governmental Entity having jurisdiction over the Business.
6.2.2. Access. (a) Deliveries. On the Closing Date, or as soon
thereafter as practicable, and in no event later than 30 calendar days after the
Closing Date, Leap will deliver or cause to be delivered to Buyer all original
agreements, documents, books, records, and files primarily relating to the
Business or the Company (collectively, "Records") in the possession of Leap or
any Affiliate to the extent not in the possession of the Company or Buyer.
(b) Retention. After the Closing, each party will, and will cause its
Affiliates to, retain all Records (except those Records referred to in Section
6.2.2(a)) required to be retained pursuant to obligations imposed by any
applicable Law. Except as provided in the immediately preceding sentence, each
party will, and will cause its Affiliates to, retain all Records for a period of
seven years after the Closing Date. After the end of such seven-year period,
before disposing, or permitting its Affiliates to dispose, of any such Records,
each party will, and will cause its Affiliates to, give notice to such effect to
the other party and give the other party at its cost and expense an opportunity
to remove and retain all or any part of such Records as the other party may
elect.
(c) Post-Closing Access. After the Closing, upon reasonable notice, each
party hereto will give, or cause to be given, to the representatives, employees,
counsel and accountants of the other parties hereto access, during normal
business hours, to Records relating to periods prior to or including the Closing
Date, and will permit such persons to examine and copy such Records to the
extent reasonably requested by the other party in connection with tax and
financial reporting matters (including, without limitation, any Tax Return
relating to state or local real property transfer or gains taxes), audits, legal
proceedings, governmental investigations and other business purposes and to make
inquiries relating thereto of the relevant personnel; provided, however, that
nothing herein will obligate any party to take actions that would unreasonably
disrupt the normal course of its business, violate the terms of any contract to
which
31
<PAGE> 37
it is a party or to which it or any of its assets is subject or grant access to
any of its proprietary, confidential or classified information (except to the
extent required for purposes of defending or prosecuting any third party Legal
Proceedings).
VII. MISCELLANEOUS PROVISIONS
7.1. Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or by a
nationally recognized overnight courier service or when dispatched during normal
business hours by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) to the appropriate party at the address specified
below:
(a) If to Buyer, to:
Endesa, S.A.
Principe de Vergara 187
28002 Madrid, Spain
Attention: Jose Luis Marin
Fax: (011) (34) (91) 566-8962
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York, 10022
Attention: Jere R. Thomson, Esq.
Fax: (212) 755-7306
(b) If to Leap or Seller, to:
Leap Wireless International, Ltd.
10307 Pacific Center Court
San Diego, California 92121
Attention: President and General Counsel
Fax: (858) 882-6040
with a copy to:
Grasty, Quintana, Majlis & Cia.
Tenderini 153
Santiago, Chile
Attention: Octavio Bofill Genzsch, Esq.
Fax: (011) (562) 633-1886
or to such other address or fax number as any such party may from time to time
designate as to itself by like notice.
32
<PAGE> 38
7.2. Expenses. Except as otherwise expressly provided herein, (a) Leap
will pay or cause to be paid all expenses incurred by Leap and its Affiliates
(including, without limitation, the Company) incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein
and (b) Buyer will pay any expenses incurred by Buyer and its Affiliates
incident to this Agreement and in preparing to consummate and consummating the
transactions provided for herein, including without limitation the fees and
expenses of any broker, finder, financial advisor or similar person engaged by
such party. Notwithstanding the foregoing, Buyer and Leap shall share equally
the amount of any stamp tax payable to the Government of the Republic of Chile
with respect to the issuance of the Notes pursuant to Section 1.2(b).
7.3. Successors and Assigns. Subject to the next sentence, this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but will not be
assignable or delegatable by any party without the prior written consent of the
other parties hereto. Notwithstanding the foregoing sentence, Buyer may assign
this Agreement to any subsidiary of Buyer, provided however, that no such
assignment hereunder shall in any way affect Buyer's obligations or liabilities
under this Agreement, and provided, further that Buyer will guarantee the Notes
if they are the obligation of a subsidiary of Buyer.
7.4. Waiver. Either Buyer or Leap by written notice to the other may (a)
extend the time for performance of any of the obligations or other actions of
the other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement, or (d) waive or modify performance of any of the obligations
of the other under this Agreement; provided, however, that neither Buyer nor
Leap may, without the prior written consent of the other, make or grant such
extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its (or any of its Affiliates')
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties or covenants contained in this Agreement and will
not operate or be construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.
7.5. Entire Agreement. This Agreement (including the Annexes and
Schedules hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by any party or any of their respective
Affiliates (or by any director, officer or representative thereof) prior to the
date hereof relating to the matters contemplated hereby, other than the
confidentiality agreement (the "Confidentiality Agreement"), between Leap or one
of its Affiliates and Buyer or one of its Affiliates, and the escrow agreement
between Citibank, N.A., the Buyer and Leap which will survive the execution,
delivery or termination of this Agreement and to which Buyer agrees to be bound
as if it was an original party thereto. This Agreement (together with the
Schedules hereto) constitutes the entire agreement by and among the parties
hereto and there are no agreements or commitments by or among such parties or
their Affiliates except as expressly set forth herein.
33
<PAGE> 39
7.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Buyer and Leap to be necessary, desirable or expedient to further
the purposes of this Agreement, or to clarify the intention of the parties
hereto.
7.7. Rights of the Parties. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto and their respective Affiliates any rights
or remedies under or by reason of this Agreement or any transaction contemplated
hereby.
7.8. Further Assurances. From time to time, whether at or after the
Closing and when requested by either Buyer or Leap, the other will execute and
deliver, or cause to be executed and delivered, all such documents and
instruments as may be reasonably necessary or otherwise reasonably requested by
Buyer or Leap to consummate the transactions contemplated by this Agreement or
otherwise to carry out the intent and purpose of this Agreement.
7.9. Applicable Law; Jurisdiction. This Agreement and the legal
relations among the parties hereto will be governed by and construed in
accordance with the substantive Laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
7.10. Titles and Headings. Titles and headings to Sections herein 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 Agreement.
7.11. Certain Interpretive Matters and Definitions.
7.11.1. References. Unless the context otherwise requires, (a)
all references to Articles, Sections, Schedules or Annexes are to Articles,
Sections, Schedules or Annexes of or to this Agreement, (b) each term defined in
this Agreement has the meaning assigned to it, (c) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with U.S. GAAP or Chilean GAAP, as applicable within the context in which such
accounting term is used, (d) "or" is disjunctive but not necessarily exclusive,
(e) words in the singular include the plural and vice versa, (f) the terms
"Subsidiary" and "Affiliate" have the meanings given to those terms in Rule
12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as amended,
(provided that Qualcomm Incorporated shall not be deemed an Affiliate of the
Company, Leap or Seller for any purpose) and (g) all references to "$" or dollar
amounts will be to lawful currency of the United States of America.
7.11.2. Drafting. No provision of this Agreement will be
interpreted in favor of, or against, any of the parties hereto by reason of the
extent to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof.
34
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ENDESA, S.A.
By: /S/ JOSE LUIS MARIN
---------------------------------
Name: Jose Luis Marin
Title:
LEAP WIRELESS INTERNATIONAL, INC.
By: /S/ THOMAS D. WILLARDSON
---------------------------------
Name: Thomas D. Willardson
Title:
INVERSIONES LEAP WIRELESS CHILE, S.A.
By: /S/ OCTAVIO BOFILL
---------------------------------
Name: Octavio Bofill
Title:
