Agreement For Exchange Of Assets

EXHIBIT 10.3


AGREEMENT
FOR
EXCHANGE OF ASSETS


THIS AGREEMENT FOR EXCHANGE OF ASSETS (this "Agreement") is made and entered into this _ day of July, 1996, by and between HEARTLAND WIRELESS COMMUNICATIONS, INC., a Delaware corporation ("Heartland Parent"), HEARTLAND WIRELESS SOUTH DAKOTA PROPERTIES, INC., a South Dakota corporation ("Heartland SD"), HEARTLAND WIRELESS FLORIDA PROPERTIES, INC., a Florida corporation ("Heartland FL"; Heartland SD and Heartland FL are individually and collectively referred to herein as "Heartland" and each reference herein to "Heartland" shall be deemed to be a reference to Heartland SD and Heartland FL individually and collectively), and AMERICAN TELECASTING, INC., a Delaware corporation ("ATI").


WHEREAS, Heartland has acquired rights in and to certain Federal Communications Commission ("FCC") authorizations for wireless cable television channels or applications for such authorizations in the Elk Point, South Dakota, Montrose, South Dakota, and Naples, Florida markets (collectively, the "Heartland Markets");


WHEREAS, ATI has acquired rights in and to certain FCC authorizations for wireless cable television channels or applications for such authorizations in the Peoria, Illinois, Grand Rapids, Michigan, and Danville, Illinois markets (collectively, the "ATI Markets");


WHEREAS, ATI desires to acquire from Heartland and Heartland desires to assign to ATI all the rights, title and interest in, to or arising from the such authorizations and applications in the Heartland Markets and such other assets as are specifically set forth herein by means of a like-kind exchange and its intended that the exchange of asset's contemplated hereunder qualify as a like-kind exchange within the meaning of Section 1031 of the Internal Revenue Code, as amended; and


WHEREAS, Heartland desires to acquire from ATI and ATI desires to assign to Heartland all the rights, title and interest in, to or arising from the such authorizations and applications in the ATI Markets and such other assets as are specifically set forth herein on the terms and conditions set forth herein by means of a like-kind exchange and its intended that the exchange of asset's contemplated hereunder qualify as a like-kind exchange within the meaning of Section 1031 of the Internal Revenue Code, as amended;


NOW, THEREFORE, in consideration of the premises and promises herein contained the parties agree as follows as set 2 forth below.


ARTICLE I


EXCHANGE OF ASSETS


1.1. The Transaction. At the Closing (as defined in Section 3.1), (a) Heartland shall sell, transfer, assign and deliver to ATI, and ATI shall purchase, accept, assume and receive, all right, title and interest in, to or arising from the Heartland Assets (as defined in Section 1.2), and (b) ATI shall sell, transfer, assign and deliver to Heartland, and Heartland shall purchase, accept, assume and receive, all right, title and interest in, to or arising from the ATI Assets (as defined in Section 1.3).


1.2. Heartland Assets. The "Heartland Assets" are the assets, rights and claims set forth below:


(a) all of Heartland's rights in, to and under the
channel lease agreements listed on Schedule 1.2(a) attached hereto
(the "Heartland FCC Schedule"; all such channel rights, and contracts
and leases are referred to herein as the "Heartland Channel Rights");


(b) the Agreement of Option to Lease and Lease
between Heartland SD and Paul & Connie Smith, William & Connie Smith,
and Heartland SD, as assignee of Rural Vision Central, Inc., dated
November 7, 1991, as extended from time to time, for the Elk Point,
South Dakota market (the "Heartland Tower Lease Agreement"); and


(c) all documents and records relating to the
foregoing Heartland Assets.


1.3. ATI Assets. The "ATI Assets" are the assets, rights and claims set forth below:


(a) all of ATI's rights in, to and under the
wireless channel authorizations and applications therefore, and the
channel lease agreements listed on Schedule 1.3(a) attached hereto
(the "ATI FCC Schedule"; all such channel rights, and contracts and
leases are referred to herein as the "ATI Channel Rights"); and


(b) all documents and records relating to the
foregoing ATI Assets.


1.4. Assumed Obligations.


(a) At the Closing, ATI shall assume and discharge only those obligations of Heartland under the Heartland Channel Rights and the Heartland Tower Lease Agreement incurred after the


-2- 3 Closing Date (the "Obligations Assumed by ATI"). ATI shall forever defend, indemnify and hold harmless Heartland from and against any and all liabilities, obligations, claims, damages (including incidental and consequential damages), costs and expenses (including court costs and reasonable attorneys' fees) related to or arising from its failure to fully perform and discharge the responsibilities of Heartland (to the extent assumed as provided herein) with respect to the foregoing.


(b) At the Closing, Heartland shall assume and discharge only those obligations of ATI under the ATI Channel Rights and the ATI Tower Lease Agreement incurred after the Closing Date (the "Obligations Assumed by Heartland"). Heartland shall forever defend, indemnify and hold harmless ATI from and against any and all liabilities, obligations, claims, damages (including incidental and consequential damages), costs and expenses (including court costs and reasonable attorneys' fees) related to or arising from its failure to fully perform and discharge the responsibilities of ATI (to the extent assumed as provided herein) with respect to the foregoing.


1.5. Excluded Liabilities and Obligations.


(a) Except as expressly set forth in Section 1.4(a) above, ATI shall not assume and shall not be liable or responsible for any debt, obligation or liability of Heartland, or any subsidiary or any affiliate thereof, or any claim against any of the foregoing, of any kind, whether known or unknown, contingent, absolute, or otherwise.


(b) Except as expressly set forth in Section 1.4(b) above, Heartland shall not assume and shall not be liable or responsible for any debt, obligation or liability of ATI, or any subsidiary or any affiliate thereof, or any claim against any of the foregoing, of any kind, whether known or unknown, contingent, absolute, or otherwise.


ARTICLE II


CONSIDERATION FOR TRANSFER


2.1. Consideration for the Heartland Assets. The aggregate consideration for the Heartland Assets shall be the transfer of the ATI Assets to Heartland.


2.2. Consideration for the ATI Assets. The aggregate consideration for the ATI Assets shall be the transfer of the Heartland Assets to ATI.


2.3. Prorations. In the event that at the Closing, Heartland has prepaid expenses under the Heartland Channel Rights and the Heartland Tower Lease Agreement attributable to the time


-3- 4 period after the Closing Date, Heartland shall deliver to ATI evidence of such prepayments, and ATI shall reimburse Heartland for such prepaid expenses for the time period commencing after the Closing Date. In the event that at the Closing, ATI has prepaid expenses under the ATI Channel Rights and the ATI Tower Lease Agreement attributable to the time period after the Closing Date, ATI shall deliver to Heartland evidence of such prepayments, and Heartland shall reimburse ATI for such prepaid expenses for the time period commencing after the Closing Date. All payments to be made pursuant to this Section 2.3 shall be offset against each other.


2.4. No Adjustments for Pending Applications. In the event that a pending application with the FCC for a license included within either the Heartland Channel Rights or the ATI Channel Rights is dismissed and the other party to acquire the rights in such pending application does not terminate this Agreement pursuant to Section 3.5, there shall not be any adjustment to the consideration deliverable under this Article II.


ARTICLE III


THE CLOSING AND TRANSFER OF ASSETS


3.1. Closing. On such date as mutually agreed to by the parties hereto, but in no event later than sixty days after the date of this Agreement (the "Closing Date"), the closing (the "Closing") shall be held at the offices of McDermott, Will & Emery, located at 1850 K Street, N.W., Washington, DC 20006, at 10:00 a.m., at which time the parties shall perform the actions specified in Sections 3.2 and 3.3 hereof.


3.2. Deliveries by ATI at Closing. At the Closing, ATI shall deliver the following to Heartland:


(a) a certificate signed by a duly authorized
officer of ATI attesting to the accuracy of ATI's representations and
warranties and such ATI's compliance with its covenants and
obligations under this Agreement as of the Closing Date;


(b) a bill of sale duly executed by ATI, in
substantially the form of Schedule 3.2(b) attached hereto;


(c) consent, assignment and certification agreements
for all leasehold interests included in the ATI Assets, including any
leasehold interests included within the ATI Channel Rights and the ATI
Tower Lease Agreement, in substantially the form of Schedule 3.2(c)
hereto;


(d) an opinion of ATI's general corporate counsel,
in substantially the form of Schedule 3.2(d) attached


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hereto;


(e) MMDS Sublease and Option Agreement for each of
the E and F channel groups in Peoria, Illinois, in substantially the
form of Schedule 3.2(e) attached hereto (the "Sublease Agreements");


(f) an opinion of ATI's Federal Communications
counsel, in a form reasonably acceptable to Heartland; and


(g) such other instruments or documents as may be
reasonably necessary to carry out the transactions contemplated
hereby.


3.3. Deliveries by Heartland at Closing. At the Closing, Heartland shall deliver the following to ATI:


(a) certificates signed by a duly authorized officer of
each of Heartland SD and Heartland FL attesting to the accuracy of
such company's representations and warranties and compliance with its
covenants and obligations under this Agreement as of the Closing Date;


(b) bills of sale duly executed by each of Heartland
SD and Heartland FL, in substantially the form of Schedule 3.3(b)
attached hereto;


(c) consent, assignment and certification agreements
for all leasehold interests included in the Heartland Assets,
including any leasehold interests included within the Heartland
Channel Rights and the Heartland Tower Lease Agreement, in
substantially the form of Schedule 3.2(c) hereto;


(d) an opinion of Heartland's general corporate
counsel, in substantially the form of Schedule 3.3(d) attached hereto;


(e) an opinion of Heartland's Federal Communications
counsel, in a form reasonably acceptable to ATI;


(f) Sublease Agreements duly executed by Heartland
SD and/or Heartland FL; and


(g) such other instruments or documents as may be
reasonably necessary to carry out the transactions contemplated
hereby.


3.4. Nonassignable Contracts and Licenses.


(a) To the extent that (i) the assignment by
Heartland or ATI of any of Heartland Channel Rights or the


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ATI Channel Rights, as the case may be, (ii) any government approvals
related to the operation of wireless cable systems in the Heartland
Markets or the ATI Markets, or (iii) any sales order, purchase order,
lease, license or other contract included in the Heartland Assets or
the ATI Assets (collectively, the "Contracts and Licenses") is not
permitted without (A) the consent of the issuing party or governmental
agency or any other party thereto, (B) the approval of ATI or
Heartland, as the case may be, as a source of the services called for
by such Contracts and Licenses, or (C) the approval of ATI or
Heartland, as the case may be, as a lessee or licensee under such
Contracts and Licenses, this Agreement shall not be deemed to
constitute an assignment or an attempted assignment of the same, if
such assignment or attempted assignment would constitute a breach
thereof. However, unless otherwise agreed as to any particular
Contracts and Licenses, Heartland and ATI shall use their best efforts
to obtain any and all such consents, approvals and novations. All
such consents, approvals and novations shall be in forms acceptable to
parties hereto.


(b) If any such consent, approval or novation is
requested but not obtained, the parties hereto shall cooperate with
each other party hereto in any reasonable arrangement designed to
provide the party to whom assets are being transferred hereunder with
all of the benefits under such Contracts and Licenses as if such
consent, approval or novation had been obtained.


(c) If such a consent, approval or novation is
requested but not obtained prior to the Closing Date and as a result
ATI or Heartland, as the case may be, will not receive the benefit of
the underlying Contracts and Licenses despite the mutual best efforts
of the parties to develop a suitable arrangement pursuant to
subsection (b) above, ATI or Heartland, as the case may be, shall have
the right to terminate this Agreement.


3.5. Termination.


(a) This Agreement may be terminated under the circumstances described below, in addition to any other grounds for termination provided for herein or by law:


(i) by ATI in the event that there has been a material
adverse change with respect to the Heartland Assets;


(ii) by ATI in the event that any one or more of the
conditions set forth in Article VIII has not been fulfilled
in any material respect prior to the Closing Date;


-6- 7
(iii) by ATI if Heartland SD or Heartland FL has breached
in any material respect any representation, warranty,
covenant or agreement made by Heartland SD or Heartland FL
in this Agreement, which breach cannot be or is not cured
by the Closing Date;


(iv) by Heartland in the event that there has been a
material adverse change with respect to the ATI Assets;


(v) by Heartland in the event that any one or more of the
conditions set forth in Article IX has not been fulfilled
in any material respect as of the Closing Date; or


(vi) by Heartland, if ATI has breached in any material
respect any representation, warranty, covenant or agreement
made by ATI in this Agreement, which breach cannot be or is
not cured by the Closing Date.


(b) If this Agreement is terminated it shall become null and void and have no further force or effect, except as otherwise provided herein.


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF HEARTLAND


Heartland SD and Heartland FL each represent and warrant to ATI as of the date hereof, and as of the Closing, as set forth below.


4.1. Authority. Heartland has full legal right, power and authority, without the consent of any other person, to execute and deliver this Agreement and to carry out the transactions contemplated hereby, except for consents to be delivered at Closing in connection with the Heartland Channel Rights and the Heartland Tower Lease Agreement (the "Heartland Consents"). All corporate and other acts or proceedings required to be taken by Heartland to authorize the execution, delivery and performance of this Agreement and all transactions contemplated hereby have been duly and properly taken.


4.2. Validity. This Agreement has been, and the documents to be delivered at Closing will be, duly executed and delivered and constitute lawful, valid and legally binding obligations of Heartland, enforceable in accordance with their respective terms. Except for the Heartland Consents, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not result in the creation of any lien, charge or encumbrance of any kind or the acceleration of any


-7- 8 indebtedness or other obligation of Heartland as it may relate to the Heartland Assets and are not prohibited by, do not violate or conflict with any provision of, and do not constitute a default under or a breach of (a) the charter or By-laws of Heartland, (b) any contract, agreement or other instrument to which Heartland is a party or by which Heartland or any of its assets are bound, (c) any order, writ, injunction, decree or judgment of any court or governmental agency, or (d) any law, rule or regulation applicable to Heartland and will not restrict the ability of ATI to carry on any operations relating to the Heartland Assets. Except for the Heartland Consents, no approval, authorization, consent or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by Heartland of this Agreement or such other agreements and instruments or the consummation by Heartland of the transactions contemplated hereby or thereby.


4.3. Due Organization. Heartland is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and has full power and authority and all requisite licenses, permits and franchises to own, lease and operate its assets and to carry on the business in which it is engaged. Heartland is duly licensed and qualified to do business as a foreign corporation and is in good standing in all jurisdictions where failure to be so licensed or qualified would have a material adverse effect upon its business or assets or where failure to qualify would affect the ability of ATI to enforce any material rights included in the Heartland Assets.


4.4. Title to Heartland Assets. Heartland is the sole and exclusive legal and equitable owners of all right, title and interest in and it has good and marketable title to all of the Heartland Assets. None of the Heartland Assets which Heartland purports to own are subject to (a) any contract of lease, license or sale, (b) any security interest, mortgage, pledge, lien, charge or encumbrance of any kind or character, direct or indirect, whether accrued, absolute, contingent or otherwise, except minor liens and encumbrances which do not materially detract from the value or interfere with the present use of such property and assets, (c) subject to any royalty or commission arrangements, or (d) subject to any claims, covenants or restrictions.


4.5. Leases. Heartland has delivered to ATI an accurate, correct and complete copy of each lease agreement included within the Heartland Assets, including, without limitation, the all channel lease agreements listed on the Heartland FCC Schedule and the Heartland Tower Lease Agreement (collectively, the "Heartland Property Leases"). With respect to the Heartland Property Leases:


(a) the Heartland Property Leases are in full force
and effect and are valid, binding and enforceable in


-8- 9
accordance with their respective terms;


(b) no amounts payable under any Heartland Property
Lease are past due and all liabilities and obligations of Heartland to
be paid or performed on or before the Closing Date under the Heartland
Property Leases have been, or will have been on such date, fully paid
or performed;


(c) Heartland has, and to the best of its knowledge,
each other party to each Heartland Property Lease, has complied with
all material commitments and obligations on its part to be performed
or observed under each such Heartland Property Lease;


(d) Heartland has not received any notice of a
default, offset or counterclaim under any Heartland Property Lease, or
any other communication calling upon Heartland to comply with any
provision of any Heartland Property Lease or ascertaining
noncompliance, and (i) to the best of Heartland's knowledge, no event
or condition has happened or presently exists which constitutes a
default or, after notice or lapse of time or both, would constitute a
default by any party (other than Heartland) under any Heartland
Property Lease, and (ii) no event or condition has happened or
presently exists which constitutes a default or, after notice or lapse
of time or both, would constitute a default by Heartland under any
Heartland Property Lease;


(e) except for the Heartland Consents, Heartland has
filed all necessary applications and has obtained all requisite
consents and approvals for the transfer or assignment of all of the
Heartland Property Leases to which Heartland is a party to ATI, and
the assignment of each Heartland Property Lease to ATI will not
constitute a breach of or a default under any provision of any
Heartland Property Lease and upon such assignment ATI will have and
may enjoy and enforce all rights and benefits of the lessee under the
Heartland Property Leases;


(f) Heartland has not received notice that any party
to any Heartland Property Lease intends to cancel or terminate such
Heartland Property Lease or to exercise or not exercise options or
rights under such Heartland Property Lease; and


(g) Heartland has marketable title to each Heartland
Property Lease and there does not now and there will not at Closing
exist any security interest, lien, encumbrance or claim of others
created or suffered to exist on the leasehold interest created under
any Heartland Property Lease.


4.6. Litigation. Heartland is not engaged in or a party


-9- 10 to or threatened with any suit, action, proceeding, investigation or legal, administrative, arbitration or other method of settling disputes or disagreements or governmental investigation, and Heartland does not know, anticipate or have notice of any basis for any such action. Heartland has not received notice of any investigation threatened or contemplated by any foreign, Federal, state or local governmental or regulatory authority, which remains unresolved. Heartland nor any of the Heartland Assets are subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any arbitrator.


4.7. Licenses and Permits. Schedule 1.2(a) contains an accurate, correct and complete list and status of each license, certificate, approval, registration, accreditation, authorization and permit which pertain to or in any way affect the Heartland Assets, including the Heartland Channel Rights (collectively, the "Heartland Licenses and Permits") held by Heartland, the foreign, Federal, state or local jurisdiction issuing such Licenses and Permits, and the type and number of such Heartland License or Permit. The Heartland Licenses and Permits are valid and in full force and effect and there are not pending, or, to the knowledge of Heartland, threatened, any proceedings which could result in the termination, revocation, limitation or impairment of any such Heartland License or Permit. Heartland has all certificates, licenses, permits, approvals, franchises, registrations, accreditation and other authorizations as are necessary in order to enable it to own and exercise any and all rights and interests in and to the Heartland Assets. All Heartland Licenses and Permits are freely assignable to ATI. No violations have been recorded in respect of any Heartland Licenses and Permits and no proceeding is pending or, to the knowledge of Heartland, threatened or contemplated with respect to the revocation or limitation of the same.


4.8. Compliance with Law. The Heartland Assets conform to all applicable laws, ordinances, codes, licensing requirements, rules and regulations, except for such minor violations as do not impair or interfere with the use for which such Heartland Assets are employed, and Heartland has not received any notice to the contrary. Except for minor violations not affecting the value of the Heartland Assets or the validity of the Heartland Channel Rights, Heartland has complied with all laws, ordinances, regulations, licensing requirements, rules, decrees, awards or orders, and there is not and will not be any liability arising from or relating to any violations thereof. To Heartland's knowledge, there is no proposed or pending change in any such law or regulation which would adversely affect the Heartland Assets, other than proposed Federal laws regulations applicable to the wireless cable industry in general. No notice from any governmental body or other person of any violation of any law, ordinance, code, rule or regulation or requiring or calling


-10- 11 attention to the necessity of any work, repairs, new construction, installation or alteration has been served.


4.9. Brokers. Heartland has not retained any broker or finder or incurred any liability or obligation for any brokerage fees, commissions or finders fees with respect to this Agreement or the transactions contemplated hereby.


4.10. Material Facts. No representation or warranty made by Heartland in this Agreement contains any untrue statement of a materia ...