SECURITIES PURCHASE AGREEMENT
dated as of September 30, 1997
by and among
TELIGENT, L.L.C.
(the "Company"),
MICROWAVE SERVICES, INC.
("MSI"),
DIGITAL SERVICES CORPORATION
("DSC"),
and
NIPPON TELEGRAPH AND TELEPHONE CORPORATION
(the "INVESTOR")
TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS..........................................................................................1
ARTICLE II PURCHASE AND SALE TERMS...............................................................................6
Section 2.1. Purchase and Sale..............................................................................6
Section 2.2. Payment........................................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY, MSI AND DSC...........................................6
Section 3.1. Existence......................................................................................6
Section 3.2. Power and Authority............................................................................6
Section 3.3. Subsidiaries...................................................................................7
Section 3.4. No Material Adverse Change.....................................................................7
Section 3.5. Litigation.....................................................................................7
Section 3.6. Intellectual Property Rights and Government Approvals..........................................8
Section 3.7. Compliance with Law; Government and Other Approvals............................................8
Section 3.8. Ownership of Member Interests..................................................................9
Section 3.9. Brokers, etc...................................................................................9
Section 3.10. Private Sale..................................................................................9
Section 3.11. Employment Contracts, etc.; Certain Material Transactions....................................10
Section 3.12. Contracts and Commitments, etc...............................................................10
Section 3.13. Employee Benefit Plans.......................................................................11
Section 3.14. Liabilities..................................................................................12
Section 3.15. Affiliate Transactions.......................................................................12
Section 3.16. Taxes........................................................................................12
Section 3.17. Full Disclosure..............................................................................13
Section 3.18. Financial Matters............................................................................13
Section 3.19. No Other Ventures............................................................................13
Section 3.20. Investment Company Act; Public Utilities Holding Company Act, Etc............................13
Section 3.21. Insurance....................................................................................13
Section 3.22. Labor Matters................................................................................14
Section 3.23. Force Majeure................................................................................14
Section 3.24. Environmental Protection.....................................................................14
Section 3.25. Properties...................................................................................15
Section 3.26. FCC Compliance...............................................................................16
Section 3.27. No Conflict of Interest......................................................................17
Section 3.28. No Improper or Other Payments................................................................17
Section 3.29. Equity Plans.................................................................................17
Section 3.30. Use of Proceeds..............................................................................18
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ARTICLE IV COVENANTS OF THE COMPANY AND THE INVESTOR............................................................18
Section 4.1. Accounts and Reports..........................................................................18
Section 4.2. Insurance.....................................................................................19
Section 4.3. Taxes and Assessments.........................................................................19
Section 4.4. Maintenance of Existence......................................................................19
Section 4.5. Further Assurances............................................................................20
Section 4.6. Conduct of Business...........................................................................20
Section 4.7. Filings and Consents..........................................................................21
Section 4.8. Supplements to Disclosure Schedule; Notice and Cure...........................................21
Section 4.9. Covenant to Satisfy Conditions................................................................22
Section 4.10. Stock Option Pool............................................................................22
Section 4.11. Sale of Member Interests.....................................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTOR........................................................23
Section 5.1. Existence.....................................................................................23
Section 5.2. Power and Authority...........................................................................23
Section 5.3. Purchase for Investment; No Authorization or Consent..........................................23
Section 5.4. Financial Matters.............................................................................23
ARTICLE VI THE CLOSING AND CLOSING CONDITIONS...................................................................24
Section 6.1. First Closing.................................................................................24
Section 6.2. Second Closing................................................................................30
ARTICLE VII MISCELLANEOUS.......................................................................................34
Section 7.1. Remedies Cumulative...........................................................................34
Section 7.2. Brokerage.....................................................................................34
Section 7.3. Severability..................................................................................34
Section 7.4. Parties in Interest...........................................................................35
Section 7.5. Notices.......................................................................................35
Section 7.6. No Waiver.....................................................................................35
Section 7.7. Amendments and Waivers........................................................................35
Section 7.8. Rights of The Investor........................................................................35
Section 7.9. Survival......................................................................................35
Section 7.10. Construction; Disputes.......................................................................35
Section 7.11. Entire Understanding.........................................................................37
Section 7.12. Expenses.....................................................................................37
Section 7.13. Counterparts.................................................................................37
Section 7.14. Assignment; No Third-Party Beneficiaries.....................................................37
Section 7.15. Press Releases and Announcements.............................................................37
ARTICLE VIII TERMINATION........................................................................................38
Section 8.1. Termination...................................................................................38
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Section 8.2. Effect of Termination.........................................................................39
ARTICLE IX INVESTOR ASSIGNMENT..................................................................................39
Section 9.1. Assignment....................................................................................39
Section 9.2. Guaranty......................................................................................39
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EXHIBITS AND SCHEDULES
Exhibit 1.1 Form of Amended Operating Agreement
Exhibit 3.1 Formation
Exhibit 3.3 Subsidiaries
Exhibit 3.4 Material Adverse Change
Exhibit 3.5 Litigation
Exhibit 3.6 Intellectual Property
Exhibit 3.7 Regulatory Consents
Exhibit 3.8 Equity Owners
Exhibit 3.11 Employment Contracts
Exhibit 3.12 Contracts and Commitments
Exhibit 3.13 ERISA
Exhibit 3.14 Liabilities
Exhibit 3.15 Affiliate Transactions
Exhibit 3.22 Labor Matters
Exhibit 3.24 Environmental Protection
Exhibit 3.25 Real Property
Exhibit 3.26(a) FCC Compliance
Exhibit 3.26(c) FCC Order
Exhibit 3.27 No Conflict of Interest
Exhibit 3.29 Equity Plans
Exhibit 4.6 Conduct of Business
Exhibit 4.7(a) Required Consents
Exhibit 5.3 Investor Consents
Exhibit 6.1(b)(iv) Form of Registration Rights Agreement
Exhibit 6.1(b)(xii) Opinions of ▇▇▇▇▇▇▇ ▇▇▇▇, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
Exhibit 6.1(b)(xiv) Form of Technical Services Agreement
Exhibit 6.1(b)(xv) Form of Bank Confirmation
Exhibit 7.5 Notices
Schedule A DEMS Licenses
iv
AGREEMENT dated as of September 30, 1997, between Teligent, L.L.C., a
Delaware limited liability company (the "Company"), Microwave Services, Inc., a
Delaware corporation ("MSI"), Digital Services Corporation, a Delaware
corporation ("DSC"), and Nippon Telegraph and Telephone Company, a Japanese
corporation ("NTT" and together with any assignee thereof pursuant to Article IX
hereof, the "Investor").
PREAMBLE
The Company wishes to obtain equity financing. The Investor is willing,
on the terms contained in this Agreement, to purchase member interests of the
Company having the characteristics set forth in the Amended and Restated Limited
Liability Company Agreement of the Company, attached as Exhibit 1.1 (the
"Amended Operating Agreement"). The Company and NTT America Inc., a New York
corporation and a wholly-owned subsidiary of NTT ("NTTA") are entering into a
technical services agreement (the "Technical Services Agreement") under which
NTTA shall provide assistance to the Company on certain technical matters.
Certain capitalized terms are defined in the first Article. Exhibits are
incorporated by reference into this Agreement as though such exhibits were set
forth at the point of such reference. The neuter gender shall include the
masculine and feminine genders as appropriate.
ARTICLE I
DEFINED TERMS
The following terms, when used in this Agreement, have the following
meanings, unless the context otherwise indicates:
"Acceptable Currency" shall mean immediately available funds in United
States dollars which will be credited to the account of the Company at the bank
previously designated to the Investor in time to earn interest for the day of
the Closing.
"'33 Act" means the Securities Act of 1933, as amended, or any similar
federal law then in force.
"'34 Act" means the Securities Exchange Act of 1934, as amended, or any
similar federal law then in force.
"Affiliate" means, with respect to any specified Person, any other
Person who, directly or indirectly, through one or more intermediaries controls,
is controlled by, or is under common control with, the specified Person.
"Best Knowledge" or "Company's Best Knowledge" or "Best Knowledge of
the Company" shall mean (a) the actual knowledge of the Company's Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer
(collectively, the "Senior Officers") and (b) any knowledge which any of the
Senior Officers could reasonably be expected to have obtained through the
exercise of due diligence (either conducted by such Senior Officer directly or
by
1
agents of the Company acting at the direction of such Senior Officer) which
such Senior Officer would reasonably be expected to perform in his capacity as
such Senior Officer.
"Certificate of Formation" means the certificate of formation of the
Company, as originally filed with the Delaware Secretary of State together with
all amendments thereto.
"Closings" and "Closing Dates" mean the consummation of the Company's
sale and the Investor's purchase of Member Interests pursuant to this Agreement,
and the date or dates on which the same occurs or occurred, respectively. "First
Closing" and "First Closing Date" shall be determined in accordance with Section
6.1 hereof, and "Second Closing" and "Second Closing Date" shall be determined
in accordance with Section 6.2 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, or any
similar federal law then in force.
"Commission" means the United States Securities and Exchange Commission
or any successor agency.
"Common Stock" shall mean Common Stock of the Company if and when the
Company is converted into a corporation.
"Company Parties" means, collectively, the Company, MSI and DSC.
"Contaminant" means any substance regulated or forming the basis of
liability under any Environmental Law, including, without limitation, any waste,
pollutant, hazardous substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum-derived substance or waste, or any constituent of any
such substance or waste, or asbestos or polychlorinated biphenyls ("PCBs").
"Conversion Date" shall mean the date on which Common Stock is first
sold to the public pursuant to a Public Offering.
"Employee Benefit Plan" means any plan regulated under ERISA.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, Release, or threatened
Release of any Contaminants at any location whether or not owned or operated by
the Company, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any judicial or
administrative order, consent decree or judgment relating to pollution or
protection of human health or the environment, including without limitation,
laws relating to Releases or
2
threatened Releases of Contaminants or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal, transport
or handling of Contaminants and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Contaminants.
"Equity Equivalents" has the meaning set forth in Section 4.1.
"Equity Participations" means any security or right entitling the
holder, absolutely or contingently, to participate in the revenues or equity
appreciation of the Company, including, but not limited to, options, warrants,
company appreciation rights, interests in "phantom" stock plans, restricted or
contingent stock or profits interests, stock appreciation rights or equivalents,
stock loan purchase plans, convertible debentures or stock bonus plans.
"Equity Rights" has the meaning set forth in the Amended Operating
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"FCC License" means each of the DEMS licenses listed on Schedule A
hereto.
"First ▇▇▇▇ Agreement" means the Agreement dated as of March 10, 1997
between the Company, First ▇▇▇▇ Communications, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including, without limitation, the Federal Communication
Commission (or any successor thereto) (the "FCC") and each applicable public
utilities commission).
"Holder" means the Investor (or its successors or assigns) who
continues to hold a Member Interest or any successor security thereto.
"IPO Price" means the per share offering price for Common Stock stated
on the face of the final prospectus relating to the Public Offering.
"▇▇▇▇▇ Employment Agreement" means the Employment Agreement made as of
August 19, 1996 between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇, as amended from time to
time.
"Material Adverse Change" has the meaning specified in Section 3.4
hereof.
"Material Adverse Effect" has the meaning specified in Section 3.7
hereof.
3
"Member Interest" means the Interest of a Member (as such terms are
defined in the Amended Operating Agreement), of the percentage designated.
"Membership Percentage" has the meaning specified in the Amended
Operating Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, and to which the Company or any ERISA Affiliate is making,
is obligated to make, has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"NTT's Per Share Price" means the quotient obtained (at the time of the
Second Closing) by dividing $60,000,000 by the number of Equity Equivalents
which represents 7.5% of the Equity Equivalents, calculated on a Pro Forma
Equity Basis.
"NTT's Price Per Percent" means the quotient obtained, from time to
time, by dividing the Investor's total investment in the Company pursuant to
this Agreement by the Investor's then-current Membership Percentage; as of the
First Closing, the Investor's Price Per Percent shall be $8,000,000 (obtained by
dividing $40,000,000 by 5).
"NTTA" means NTT America, Inc.
"Operating Agreement" means the Limited Liability Company Agreement of
the Company dated as of March 5, 1996, as amended prior to the First Closing.
"Pension Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which the
Company or, if a Title IV Plan, any ERISA Affiliate maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Permit" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law including, without limitation, each FCC License.
"Plan" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which the Company maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by the Company.
"Person" means any individual, corporation, partnership, limited
liability company or partnership, joint venture, association, governmental
entity, or any other entity.
"Pro Forma Equity Basis" means a determination of equity amounts made
on a pro forma basis, calculated as the sum of (i) Member Interests (or their
Equity Equivalents) which are actually outstanding on the date of this
Agreement, plus (ii) if the closing under the First ▇▇▇▇ Agreement has not been
consummated on or before the date of this Agreement, the Member Interest (or its
Equity Equivalent) issued to ▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant to the First ▇▇▇▇ Agreement
4
plus (iii) the Member Interests (or their Equity Equivalents) to be issued to
MSI and DSC in respect of the $60,000,000 additional capital contribution
contemplated by Section 6.1(b)(xvii) hereof plus (iv) Member Interests (or their
Equity Equivalents) issued upon the exercise of Equity Rights.
"Public Offering" means an underwritten distribution of Member
Interests (or their Equity Equivalents) pursuant to a registration statement
filed by the Company under the '33 Act in which the Company receives proceeds
(before any application thereof) of $75,000,000 or more.
"Qualified Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the Code, and which the Company or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Registration Rights Agreement" means that certain Registration Rights
Agreement to be dated as of the date of the First Closing between the Company
and the Investor, in substantially the form of Exhibit 6.1(b)(iv) hereto.
"Release" means, as to any person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case of any Contaminant, into the indoor or outdoor
environment or into or out of any property owned by such Person, including,
without limitation, the movement of Contaminants through or in the air, soil,
surface water, groundwater or property.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and bylaws or other organizational or governing documents of such
Person, and all federal, state, local and foreign laws, rules and regulations,
including, without limitation, federal, state, local or foreign securities,
antitrust, communications, licensing, health, safety, labor and trade laws,
rules and regulations, the disclosure requirements of Environmental Laws and
ERISA and all orders, judgments, decrees or other determinations of any
Governmental Authority (including, without limitation, the FCC) or arbitrator,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Subsidiary" or "Subsidiaries" of any Person means any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person.
"Title IV Plan" means a Pension Plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA.
"Welfare Benefit Plan" means an employee welfare benefit plan, as
defined in Section 3(1) of ERISA, to which the Company maintains, contributes
to, contributed to within the six year period prior to the First Closing Date,
or has an obligation to contribute to, on behalf of its former or active
employees (or their beneficiaries).
Additional defined terms are found in the body of the following text.
5
The masculine form of words includes the feminine and the neuter and
vice versa, and, unless the context otherwise requires, the singular form of
words includes the plural and vice versa. The words "herein," "hereof,"
"hereunder," and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular section or subsection.
ARTICLE II
PURCHASE AND SALE TERMS
2.1 Purchase and Sale. (a) Subject to the terms of this Agreement, at
the First Closing, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company, a 5% Member Interest (calculated on a
Pro Forma Equity Basis) for the aggregate purchase price of $40,000,000.
(b) Subject to the terms of this Agreement, at the Second
Closing, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, an additional 7.5% Member Interest (or its
Equity Equivalent) (subject to adjustment as provided in Section 6.3(a))
calculated on a Pro Forma Equity Basis (together with the Member Interest
purchased by the Investor at the First Closing, the "Purchased Interest") for
the aggregate purchase price of $60,000,000.
2.2 Payment. The Investor shall pay the purchase price for the Member
Interest to be purchased by it at the First Closing and the Second Closing in
Acceptable Currency.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, MSI AND DSC
The Company (and, to the extent expressly provided herein, MSI and DSC,
in which case such representations and warranties shall be several and not joint
and shall be deemed made solely with respect to such party) represents and
warrants to the Investor, as of the date hereof and as of the date of the First
Closing (and, to the extent expressly provided for herein, the Second Closing)
that:
3.1 Existence. The Company is a limited liability company duly formed,
validly existing and in good standing under Delaware law and has the requisite
limited liability company power and authority to conduct its business and own or
lease its properties as now conducted and owned or leased. Exhibit 3.1 is a true
copy of the Certificate of Formation, with all amendments. The Company is duly
qualified to do business in all jurisdictions in which the nature of its
properties and business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect.
3.2 Power and Authority. (a) (i) The Company has the requisite limited
liability company power and authority, and has taken all required action
necessary (including any
6
approvals required under the Operating Agreement) to authorize, the execution
and delivery by the Company of this Agreement and the issuance and sale by the
Company of the Member Interests as herein provided and otherwise for the Company
to carry out the terms of this Agreement and all other documents, instruments,
or transactions required by this Agreement, and (ii) none of such actions will
(A) violate any provision of the Operating Agreement or (B) except as set forth
in Exhibit 4.7(a), (1) constitute or result in a breach or default by the
Company, or give rise to a right of termination on the part of any other party,
or result in the creation or imposition of any lien, claim or encumbrance on any
Company assets, under, any agreement or instrument to which the Company is a
party or by which it is bound or (2) constitute or result in a violation by the
Company of any Requirement of Law, except, in the case of clause (ii)(B)(1), for
any such breach, default or termination or any such lien, claim or encumbrance
which would not have a Material Adverse Effect.
(b) This Agreement has been duly executed and delivered by
each of MSI, DSC and the Company and (assuming the due authorization, execution
and delivery hereof by the Investor) constitutes the valid and binding
obligation of the Company enforceable against each of MSI, DSC and the Company
in accordance with its terms.
(c) The Company has all necessary licenses, permits, consents
or approvals from or by, has made all necessary filings with, and has given all
necessary notices to, each Governmental Authority having jurisdiction, to the
extent required for the conduct of the Company's business as currently
conducted, except for licenses, permits, consents or approvals or filings or
notices which can be obtained, made or given by the taking of ministerial action
with respect to which no third party action or approval is required or the
failure of which to be obtained, made or given in the aggregate does not have a
Material Adverse Effect.
3.3 Subsidiaries. Except as set forth in Exhibit 3.3, as of the date
hereof, the Company has no subsidiaries and owns no capital stock or other
securities, or rights or obligations to acquire the same, of any other entity.
3.4 No Material Adverse Change. Except as set forth in Exhibit 3.4,
since December 31, 1996, there has been no material adverse change in the
financial or other condition, properties or business operations of the Company
(a "Material Adverse Change").
3.5 Litigation. As of the date hereof, except as disclosed in Exhibit
3.5, there are no suits, proceedings or investigations pending or, to the Best
Knowledge of the Company, threatened, against or affecting the Company or, to
the Best Knowledge of the Company, an officer or member of the Company, which in
any such case is reasonably likely to have a Material Adverse Effect or
materially and adversely affect the ability of any officer or member to
participate in the affairs of the Company, or which concern in any material way
the transactions contemplated by this Agreement. The foregoing includes, without
limiting its generality, actions pending or threatened (or any basis therefor
known to the Company) involving the prior employment of such officer or such
currently contemplated prospective officer of the Company or their use, in
connection with the business of the Company, of any information or techniques
which might be alleged to be proprietary to their former employer(s).
7
3.6 Intellectual Property Rights and Government Approvals. The
patents, trademarks, service marks, trade names, copyrights and rights or
licenses to use the same, and any and all applications therefor, as well as the
trade secrets and similar proprietary information, owned or held by the Company
(the "Intellectual Property Rights") are all that are required to enable the
Company to conduct its business as now conducted, except for such failures to
own or hold as, in the aggregate, would not have a Material Adverse Effect. As
of the date hereof, there is no individual Intellectual Property Right for which
the Company has paid or currently pays in excess of $5,000 per annum for the
right to use. As of the date hereof, the Company has not received any formal or
informal notice of infringement or other complaint that the Company's operations
traverse or infringe rights under patents, trademarks, service marks, trade
names, trade secrets, copyrights or licenses or any other proprietary rights of
others. As of the date hereof, the Company has no reason to believe that there
has been any such infringement. No person affiliated with the Company has
wrongfully employed, in connection with their affiliation with the Company, any
trade secrets or any confidential information or documentation proprietary to
any former employer, and, to the Company's Best Knowledge, no person affiliated
with the Company has violated any confidential relationship which such person
may have had with any third party except for any such wrongful employment or
violations as, in the aggregate would not have a Material Adverse Effect. The
Company has the right and authority to utilize the processes, systems and
techniques presently employed by it in the design, development and manufacture
of its present products and all rights to any material processes, systems and
techniques developed by any employee or consultant of the Company have been and
will be duly and validly assigned to the Company, except to the extent the
failure to have such right or authority or to obtain such assignment, in the
aggregate, would not have a Material Adverse Effect. Except as set forth in
Exhibit 3.6, as of the date hereof no royalties, honoraria or fees are or will
be payable by the Company to other persons by reason of the ownership or use by
the Company of Intellectual Property Rights. The Company has all governmental
approvals, authorizations, consents, licenses and permits necessary or required
to conduct its business except for such approvals, authorizations, consents,
licenses or permits, the failure of which to obtain, in the aggregate, would not
have a Material Adverse Effect.
3.7 Compliance with Law; Government and Other Approvals. The Company
Parties represent and warrant that each of them is in compliance with all
applicable Requirements of Law except for such non-compliance as in the
aggregate would not have a material adverse effect on the financial or other
condition, properties or business operations of the Company (a "Material Adverse
Effect"). Except as set forth in Exhibit 3.7 or as may be required by any state
"blue sky" laws, no authorization, consent, approval, license, qualification or
formal exemption from, or any filing, declaration or registration with, or
termination or expiration of any waiting periods imposed by, any court,
governmental agency, regulatory authority or political subdivision thereof, any
securities exchange or any other Person (collectively, "Consents") is required
to be made or obtained by the Company in connection with the execution, delivery
or performance by the Company of this Agreement or the consummation by the
Company of the transactions contemplated in this Agreement, except for any
Consent to be made or obtained by the Company from a Person who or which is not
a Governmental Authority and which if not so obtained or made would not, in the
aggregate, have a Material Adverse Effect; and all such material authorizations,
consents, approvals, licenses, qualifications, exemptions, filings, declarations
and
8
registrations that have been obtained or made, as the case may be, are in
full force and effect and are not the subject of any pending or, to the Best
Knowledge of the Company Parties, threatened attack by appeal or direct
proceeding or otherwise.
3.8 Ownership of Member Interests. Exhibit 3.8 sets forth the owners
of the outstanding Member Interests of Company as of the date hereof; all of
such outstanding Member Interests are, and upon issuance and payment therefor in
accordance with the terms of this Agreement, the Member Interests issued to the
Investor pursuant to this Agreement will be, validly issued in compliance with
applicable law. Each of MSI and DSC hereby represent and warrant to the full
extent of the immediately preceding sentence with respect to the Member Interest
owned by it. Except as set forth in Exhibit 3.8 or as expressly provided in the
Amended Operating Agreement or this Agreement, as of the date hereof, (i) the
Company has no outstanding Equity Participation or other commitment to issue or
to acquire any Member Interest, or any securities or obligations convertible
into or exchangeable for a Member Interest, nor, except as contemplated hereby,
has it given any person any right to acquire from the Company or sell to the
Company any Member Interest; (ii) there is no agreement, restriction or
encumbrance with respect to the sale or voting of any Member Interest of the
Company (whether outstanding or issuable upon conversion or exercise of
outstanding securities) except for the offering and sale pursuant to this
Agreement and the Amended Operating Agreement; (iii) the Company has no
obligation to register under the '33 Act any of its presently outstanding
securities or any of its securities which may thereafter be issued other than as
provided in the Registration Rights Agreement, the ▇▇▇▇▇ Employment Agreement
and the First ▇▇▇▇ Agreement; and (iv) there are no voting trusts, voting
agreements, proxies, first refusal rights, first offer rights, co-sale rights,
options, transfer restrictions or other agreements (whether written or oral)
with respect to the voting, transfer or disposition of the Member Interests to
which the Company is a party or by which it is bound, or, to the Best Knowledge
of the Company Parties, between or among any Persons other than the Company.
3.9 Brokers, etc. Other than for Bear ▇▇▇▇▇▇▇ Inc., the Company has
not dealt with any broker, finder, or other similar person in connection with
the offer or sale of the Member Interests pursuant to the transactions
contemplated by this Agreement, and the Company is not under any obligation to
pay any broker's fee, finder's fee or commission in connection with such
transactions other than to Bear ▇▇▇▇▇▇▇ Inc.
3.10 Private Sale. The Company has not, either directly or through any
agent, offered any securities to or solicited any offers to acquire any
securities from, or otherwise approached, negotiated, or communicated in respect
of any securities with, any person, and neither the Company nor anyone acting on
its behalf will take any action prior to any Closing, such that the offering,
issuance or sale of the Member Interests pursuant to this Agreement would be
subject to the registration provisions of the '33 Act. Assuming the continued
accuracy of the Investor's representations and warranties set forth in Section
5.3 hereof, the issuance of Member Interests sold hereby will be exempt from
registration under the '33 Act. The Company has complied with all federal and
state securities and blue sky laws in all issuances of its Member Interests
prior to the date hereof and has not violated any applicable law in making such
issuances of its Member Interests prior to the date hereof. Any notices required
to be filed by the Company under federal
9
and state securities and blue sky laws prior to or subsequent to each Closing
shall be filed by the Company on a timely basis prior to or as so required.
3.11 Employment Contracts, etc.; Certain Material Transactions. Except
as set forth in Exhibit 3.11 hereto, as of the date hereof (i) the Company is
not a party to any employment or deferred compensation agreements providing for
compensation in excess of $40,000 per annum, (ii) the Company does not have any
bonus, incentive or profit-sharing plans, and (iii) the Company does not have
any pension, retirement or similar plans or obligations, whether funded or
unfunded, of a legally binding nature or in the nature of informal
understandings. As of the date hereof, the Company is not a party to any
collective bargaining agreement and, to the best of its knowledge, no
organizational efforts are currently being made with respect to any of their
respective employees.
3.12 Contracts and Commitments, etc. Exhibit 3.12 lists the following
contracts and other agreements to which the Company is a party as of the date
hereof:
(a) any agreement which imposes a security interest on any of
its assets, tangible or intangible;
(b) any agreement concerning confidentiality or
noncompetition (and, with respect to employees which have executed a
non-disclosure or non-competition agreement with the Company which is in
substantially the Company's standard form of such agreement previously delivered
to the Investor, a list of such employees);
(c) any agreement to which any of the members of the Company
or their Affiliates (other than the Company) are parties;
(d) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of the Company's current or former directors,
officers, or employees;
(e) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $40,000 or for periods greater than one year or providing material
severance benefits;
(f) any agreement under which the Company has advanced or
loaned (or agreed to advance or loan) an amount to any of its directors,
officers, or employees in excess of $50,000;
(g) any agreement under which the consequences of a default
or termination could have a Material Adverse Effect; or
(h) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.
The Company has delivered to the Investor a correct and complete copy of each
written agreement listed in Exhibit 3.12 (as amended to date) and each oral
agreement referred to in
10
Exhibit 3.12. With respect to each such written agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect in all material
respects against the Company (assuming, for such purposes, that the agreement is
legal, valid, binding, enforceable and in full force and effect in all material
respects against each other party thereto); (B) the Company has not declared any
party in material breach or default, the Company is not in material breach or
default, and, to the Best Knowledge of the Company, no event has occurred which
with notice or lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under such agreement; and (C)
the Company has not advised any party to such agreement of the repudiation
thereof, and has not received from any other party thereto notice that such
other party has repudiated or intends to repudiate, any material provision of
such agreement, except in the case of (A), (B) or (C), to the extent any
illegality, invalidity, non-binding nature or unenforceability of, or any such
other actions with respect to such agreement, in the aggregate, would not have a
Material Adverse Effect.
3.13 Employee Benefit Plans. (a) Exhibit 3.13 separately identifies
all Plans. Neither the Company nor any ERISA Affiliates maintains or contributes
to, or has ever maintained or contributed to, any Title IV Plan, Multiemployer
Plan, Pension Plan (other than a Qualified Plan) or Welfare Benefit Plan that
provides retiree benefits (other than continuation coverage provided pursuant to
Section 4980B of the Code).
(b) Except as set forth on Exhibit 3.13, each Qualified Plan
has been determined by the IRS to qualify under Section 401 of the Code, and the
trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and, as of the date hereof, to the Best
Knowledge of the Company, nothing has occurred which would cause the loss of
such qualification or tax-exempt status.
(c) Each Plan is in compliance with applicable provisions of
ERISA and the Code, except for any noncompliance which would not have a Material
Adverse Effect.
(d) Neither the Company nor any ERISA Affiliate, with respect
to any Qualified Plan, has failed to make any contributions or pay any amount
due as required by Section 412 of the Code or Section 302 of ERISA or the terms
of any such Qualified Plan, except for any such failures which in the aggregate
would not have a Material Adverse Effect nor, as of the date hereof, is any such
failure reasonably expected to occur. There has been no, nor is there reasonably
expected to occur any, failure to make a required contribution to a Qualified
Plan.
(e) As of the date hereof, there are no pending or threatened
claims, actions or lawsuits (other than claims for benefits in the normal
course), asserted or instituted against (i) any Plan or its assets, (ii) any
fiduciary with respect to any Plan or (iii) the Company or any ERISA Affiliate
with respect to any Plan.
(f) The Company and each ERISA Affiliate has complied with
the notice and continuation coverage requirements of Section 4980B of the Code
and the regulations thereunder, except for non-compliance which in the aggregate
would have no Material Adverse Effect.
11
(g) The Company has not engaged in a prohibited transaction,
as defined in Section 4975 of the Code or Section 406 of ERISA, in connection
with any Plan, except for transactions which in the aggregate would not have a
Material Adverse Effect.
(h) Neither the Company nor any ERISA Affiliate has any
liability under any terminated "employee benefit plan", as defined in Section
3(3) of ERISA, of any related or unrelated entity, except for such liabilities
which, in the aggregate, would not have a Material Adverse Effect.
(i) As of the date hereof, there is no unfunded liability
under any Plan.
3.14 Liabilities. As of the date hereof, except as set forth on
Exhibit 3.14, the Company has no indebtedness for borrowed money that the
Company has directly or indirectly created, incurred, assumed or guaranteed, or
with respect to which the Company has otherwise become directly or indirectly
liable.
3.15 Affiliate Transactions. As of the date hereof, except as set
forth in Exhibit 3.15, (i) other than the payment of compensation to employees
of the Company, the Company is not a party to any transaction, contract or other
agreement with any Affiliate or associate (as defined in Rule 12b-2 promulgated
under the `34 Act) of the Company and (ii) the Company is not the direct or
indirect owner of an interest in any Person which is a present or potential
competitor, supplier or customer of the Company.
3.16 Taxes. (a) All material federal, state, local and foreign tax
returns, reports and statements (collectively, the "Tax Returns") required to be
filed by the Company have been filed with the appropriate governmental agencies
in all jurisdictions in which such Tax Returns, are required to be filed, all
such Tax Returns are true and correct in all material respects, and all taxes,
charges and other impositions shown to be due and payable on such Tax Returns
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for non-payment thereof, except where
contested in good faith and by appropriate proceedings if (i) adequate reserves
therefor have been established on the books of the Company in conformity with
GAAP and (ii) all such non-payments in the aggregate have no Material Adverse
Effect.
(b) Amounts have been withheld by the Company from their
respective employees for all periods in compliance in all material respects with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been or will be
timely paid to the respective Governmental Authorities.
(c) As of the date hereof, the Company has (i) not executed
or filed with the Internal Revenue Service or any other Governmental Authority
any agreement or other document extending, or having the effect of extending,
the period for assessment or collection of any charges; (ii) not agreed or been
requested to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise; or (iii) no obligation under any
written tax sharing agreement.
12
3.17 Full Disclosure. The Company represents and warrants that, to the
Company's Best Knowledge, the written information concerning the Company
provided by the Company to the Investor in connection with the Investor's
examination of the Company prior to entering into this Agreement (other than any
materials, including without limitation the Company's business plans previously
provided to the Investor, which relate to future periods, which this
representation and warranty does not address) is not, taken as a whole, untrue
or misleading in any respect which constitutes or would have a Material Adverse
Effect.
3.18 Financial Matters. (a) The consolidated balance sheet of the
Company and subsidiary as of December 31, 1996, and the related consolidated
statements of operations, members' equity and cash flows for the period March 5,
1996 (date of inception) to December 31, 1996 (the "Period") (together with the
notes thereto), certified by Ernst & Young, LLP, copies of which have been
furnished to the Investor, present fairly in all material respects the financial
position of the Company and subsidiary at December 31, 1996 and the results of
the operations of the Company and subsidiary for the Period, all in conformity
with GAAP.
(b) The Company had as of December 31, 1996 no material
obligation, contingent liability or liability for taxes, long-term leases or
unusual forward or long-term commitment which is required by GAAP to be
reflected in the balance sheet at such date referred to in subsection (a) above
or in the notes thereto and which is not so reflected.
3.19 No Other Ventures. As of the date hereof, the Company is not
engaged in any joint venture or partnership with any other person.
3.20 Investment Company Act; Public Utilities Holding Company Act,
Etc. (a) Neither the Company nor any of its controlled Affiliates is an
"Investment Company" subject to registration and regulation as an investment
company under the Investment Company Act of 1940, as amended.
(b) The Company is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, and state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness
3.21 Insurance. All policies of insurance owned by or issued to the
Company, including, without limitation, policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity,
workers' compensation and employee health and welfare insurance, are in full
force and effect (except where the failure to be in full force and effect would
not have a Material Adverse Effect) and, in the good faith judgment of the
Company's Board of Directors, as of the date hereof, are of a nature and provide
such coverage as is sufficient and as is customarily carried by companies of the
size and character of the Company. As of the date hereof, the Company has not
been refused insurance for which it applied or had any policy of insurance
terminated (other than at its request).
13
3.22 Labor Matters. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving the Company,
other than those which in the aggregate have no Material Adverse Effect.
(b) There are no arbitrations or grievances pending against
or involving the Company, nor are there any arbitrations or grievances
threatened involving the Company, other than those which, in the aggregate, if
resolved adversely to the Company, would have no Material Adverse Effect.
(c) As of the date hereof, the Company is not a party to, and
has no obligations under, any collective bargaining agreement.
(d) There is no organizing activity involving the Company
pending or threatened by any labor union or group of employees, other than those
which in the aggregate have no Material Adverse Effect. There are no
representation proceedings pending or threatened with the National Labor
Relations Board, and no labor organization or group of employees of the Company
have made a pending demand for recognition, other than those which in the
aggregate have no Material Adverse Effect.
(e) There are no unfair labor practices charges, grievances
or complaints pending or in process or threatened by or on behalf of any
employee or group of employees of the Company, other than those which, in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
(f) There are no complaints or charges against the Company
pending or threatened to be filed with any federal, state or local court,
governmental agency or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment by the Company of any individual, other
than those which in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
(g) Except as set forth on Exhibit 3.22, as of the date
hereof, the Company is not a contractor or subcontractor with obligations under
any federal, state or local government contracts, nor does the Company otherwise
have a legal obligation to engage in affirmative action.
3.23 Force Majeure. Neither the business nor the properties of the
Company are currently suffering from the effects of any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), other than those which in the aggregate
have no Material Adverse Effect.
3.24 Environmental Protection. (a) Except as set forth in Exhibit
3.24, the Company is in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by the Company of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof), other
than such non-compliance the consequences of which in the aggregate would not
have a Material Adverse Effect. As of the date hereof, the Company has not
received any
14
communication (written or oral), whether from a Governmental Authority,
citizens group, employee or otherwise, alleging that the Company is not in
such compliance.
(b) Except as set forth in Exhibit 3.24, there are no past or
present conditions, events or incidents, including, without limitation, the
Release or presence of any Contaminant, which could form the basis of any
Environmental Claim against the Company, or against any person or entity whose
liability for any Environmental Claim the Company has or may have retained or
assumed either contractually or by operation of law, which in any such case
would in the aggregate have a Material Adverse Effect. Furthermore, there is not
now on or in the property leased or operated by the Company (i) any underground
storage tanks or surface impoundments or (ii) any asbestos-containing material,
which in any such case would in the aggregate have a Material Adverse Effect.
3.25 Properties.
(a) As of the date hereof, the Company does not own any real
property.
(b) The Company owns valid leasehold interests in all other
properties and assets purported to be leased by the Company, free and clear of
all liens, except for any liens which do not have a Material Adverse Effect and
provided that such leaseholds may be subordinate to the fee interest or superior
leasehold interest or other encumbrances to which such fee interest is subject.
Each item of real property leased at the date hereof by the Company involving
annual lease payments in excess of $20,000 is listed on Exhibit 3.25, setting
forth information regarding the commencement date, termination date, renewal
options (if any) and annual base rents. Assuming each of such leases is valid
and enforceable against the other parties thereto, each of such leases is valid
and enforceable against the Company in accordance with its terms and is in full
force and effect, except for any invalidity, unenforceability or failure to be
in full force and effect which in the aggregate would not have a Material
Adverse Effect. The Company has delivered to the Investor true and complete
copies of each of such real property leases and all documents to which it is a
party or which are in its possession affecting the rights or obligations of the
Company under such leases, including, without limitation, any such
non-disturbance and recognition agreements, subordination agreements, attornment
agreements and agreements regarding the term or rental of any of such leases.
Neither the Company nor, to the knowledge of the Company, any other party to any
such lease is in default of its obligations under or has delivered or received
any written notice of default under any such lease, nor has any event occurred
with respect to the Company or, to the knowledge of the Company, any other
party, which, with the giving of notice, the passage of time or both, would
constitute a default under any such lease, except for defaults which in the
aggregate have no Material Adverse Effect.
(c) Except as set forth in Exhibit 3.25, as of the date
hereof the Company does not own or hold, and is not obligated under or a party
to, any option, right of first refusal or other contractual right to purchase,
acquire, sell, assign or dispose of any real property.
(d) To the Best Knowledge of the Company, as of the date
hereof, the improvements included within the real property leased by the Company
(collectively, "Improvements"), including, without limitation, the roofs and
structural elements thereof and the
15
heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer,
waste water, storm water, paving and parking equipment, systems and facilities
included therein, are in good working order and repair, except for such defects
which, in the aggregate, would not have a Material Adverse Effect. To the Best
Knowledge of the Company, as of the date hereof, the water, gas, electrical,
steam, compressed air, telecommunication, sanitary and storm sewage lines and
systems and other similar systems serving the real property leased by the
Company are installed and operating and are sufficient to enable the real
property leased by the Company to continue to be used and operated in the manner
currently being used and operated, except for such insufficiencies which, is the
aggregate, would not have a Material Adverse Effect, and, as of the date hereof,
the Company has no knowledge of any factor or condition that could result in the
termination or material impairment of the furnishing thereof.
(e) All Permits required to have been obtained by the Company
to enable all real property leased by the Company to be lawfully occupied and
used for the purposes for which they are currently occupied and used have been
issued and are in full force and effect, other than those which in the aggregate
if not so obtained would have no Material Adverse Effect.
(f) As of the date hereof, the Company has not received any
written notice, or has any knowledge, of any pending, threatened or contemplated
condemnation proceeding affecting any real property leased by the Company or any
part thereof, or of any sale or other disposition of any real property leased by
the Company or any part thereof in lieu of the condemnation except for those
which, in the aggregate, would not have a Material Adverse Effect.
(g) As of the date hereof, no portion of any real property
leased by the Company has suffered any arterial damage by fire or other casualty
loss which has not heretofore been completely repaired and restored to its
original condition, except for such losses which, in the aggregate, would not
have a Material Adverse Effect.
3.26 FCC Compliance. (a) Except as disclosed on Exhibit 3.26(a), at
the First Closing, the Company and a wholly-owned subsidiary of the Company (the
"License Subsidiary" and, together with the Company, to the extent applicable,
the "License Companies") together will have in effect all the licenses required
to be obtained from the FCC and any applicable state public utility commission
exercising jurisdiction over the License Companies ("Applicable PUC") or their
provision of digital electronic message services ("DEMS") to the extent required
by the License Companies's operations at the Closing Date. All FCC Licenses and
any Applicable PUC licenses which were or are held by the Company Parties were
duly and validly issued and in full force and effect; all FCC Licenses and any
Applicable PUC licenses which will be held by the License Companies as of the
First Closing Date will have been duly and validly issued and in full force and
effect; and the License Companies are not, and the Company Parties were not, in
violation of any of the terms and conditions of any of the FCC Licenses and any
Applicable PUC licenses, and have fulfilled and performed all of their
respective material obligations with respect to its FCC Licenses and any
Applicable PUC licenses, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or result in any
other material impairment of the License Companies's rights under any of their
respective FCC Licenses
16
and any Applicable PUC licenses; except with respect to any of the foregoing
as would not have a Material Adverse Effect.
(b) The Company Parties were not, and the License Companies
are not, in violation of the Communications Act of 1934, as amended, or any rule
or regulation of the FCC or any Applicable PUC, or any judgment, injunction,
order or decree of the FCC or any Applicable PUC, except for violations which
individually or in the aggregate would not have a Material Adverse Effect.
(c) The Company Parties and the License Companies represent
and warrant that, except as disclosed in Exhibit 3.26(c), there is no
outstanding adverse judgment, injunction, decree or order that has been issued
by the FCC or any Applicable PUC against any of the Company Parties or License
Companies, or any action, proceeding or investigation pending or, to the
knowledge of the Company Parties and the License Companies, threatened by the
FCC or any Applicable PUC against any of the Company Parties or License
Companies, specifically including (but not limited to) any pending or threatened
proceeding that would have the effect of revoking or restricting any of the FCC
Licenses or any Applicable PUC Licenses, except for any such judgment,
injunction, decree or order or any such action, proceeding or investigation
which individually or in the aggregate would not have a Material Adverse Effect.
(d) Except as set forth in Exhibit 3.26(a), the execution,
delivery and performance by the Company of this Agreement, compliance by the
Company with all the provisions hereof and the consummation by the Company of
the transactions contemplated hereby will not require that the Company Parties
or the License Companies obtain any consent, approval, authorization or other
order of the FCC or any Applicable PUC, violate or conflict with the
Communications Act of 1934, as amended, or the rules or regulations of the FCC
or any Applicable PUC, and will not cause any cancellation, termination,
revocation, forfeiture or material impairment of any of the FCC Licenses or any
Applicable PUC Licenses.
3.27 No Conflict of Interest. Except as disclosed on Exhibit 3.27,
none of the Company Parties or any of their respective Affiliates has or claims
to have any direct or indirect interest in any tangible or intangible property
used in the business of the Company.
3.28 No Improper or Other Payments. The Company has not made any
improper foreign payment (as defined in the Foreign Corrupt Practices Act).
3.29 Equity Plans. On the date hereof, the only agreements which have
been entered into by the Company which by its or their terms provides any
director, officer, employee, or agent of the Company, or any Affiliate of any of
the foregoing, with an Equity Participation are, together with their material
terms, set forth in Exhibit 3.29 (except to the extent a copy of such agreement,
or the form thereof in the case of award agreements under the Company's Long
Term Incentive Compensation Plan, has previously been delivered to the Investor,
in which case the only information required shall be who the recipient of the
award was, the equity interest involved and the exercise price).
17
3.30 Use of Proceeds. No portion of the funds received by the Company
pursuant to the purchase of the Member Interests contemplated hereby will be
utilized to fund any distributions to the Company's Members.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE INVESTOR
4.1 Accounts and Reports. (a) So long as the Investor holds the greater of (x) a
Member Interest representing not less than 3% of all the then-outstanding Member
Interests (or other equity equivalent in the event the Company is no longer
limited liability company ("Equity Equivalents")) (provided, that in connection
with any such determination, any Member Interests or their Equity Equivalents
issuable under any Equity Rights shall not be counted) or (y) 50% of the
aggregate Member Interests (or Equity Equivalents) purchased by it at the time
of such determination pursuant to this Agreement (the greater of (x) or (y)
being referred to as the "Investor Threshold Membership Percentage"), the
Company shall furnish to the Investor copies of the following certificates,
filings and reports:
(i) Annual Budgets. So long as the Investor is
entitled to nominate a member to the Company's Board of Directors, as
soon as available, and in any event no later than 60 days prior to the
end of each fiscal year, the annual budget of the Company for the
succeeding fiscal year.
(ii) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the end of each
quarter, copies of the Company's comparative statements of income and
cash flow and unaudited consolidated balance sheet as of the end of
such quarter, which shall be prepared in accordance with GAAP.
(iii) Other Information. So long as the Investor is
entitled to nominate a member to the Company's Board of Directors, upon
the reasonable request of the Investor, the Company will deliver to the
Investor other information and data, pertaining to its business,
financial and corporate affairs to the extent that such delivery will
not violate any then applicable laws and any contracts of the Company
with third persons. The Company will permit any person designated by
the Investor in writing, upon prior notice, to visit and inspect any of
the properties of the Company, including its books of account, and to
discuss its affairs, finances, and accounts with the Company's
officers, all at such reasonable times and as often as the Investor may
reasonably request.
(b) The Company's obligations under Section 4.1(a) shall
terminate with respect to the Investor upon the effectiveness of the Company's
registration statement for the Member Interests (or Equity Equivalents) under
the '34 Act.
(c) All information furnished under Section 4.1(a) is deemed
to be confidential. Each recipient of any information furnished under Section
4.1(a) shall (i) maintain the confidential nature of such information and not
disclose the same to any third party, except as required by law
18
or approved in advance by the Company, and (ii) take all reasonable measures to
prevent any officer or agent of such recipient from disclosing any such
information including, without limitation, advising such party of the obligation
to keep such information confidential. In connection therewith, each recipient
of such information shall agree as a precondition to such receipt not to make
copies of any such information which the Company believes to be proprietary and
to return to the Company all copies of such information furnished by the Company
after they have completed their review of the same. The parties hereto
acknowledge and agree that the violation by any recipient of the foregoing
provisions would not be adequately compensated through money damages and hereby
agree to the Company's seeking of equitable relief, including a temporary
restraining order or permanent injunction, in the event the Company believes any
such recipient is violating the foregoing provisions. This Section 4.1(c) shall
not apply to information that (i) is generally available to the public other
than as a result of a disclosure of the Investor or an employee or agent
thereof, (ii) is in the possession of the Investor prior to its delivery by the
Company, provided that such information was not known by the Investor, after due
inquiry, to be provided in breach of any confidentiality provision, (iii) is
obtained, after the date hereof, by the Investor on a non-confidential basis
from any party not known by the Investor, after due inquiry, to be in violation
of any confidentiality agreement or (iv) is provided in accordance with Section
8.8 of the Amended Operating Agreement.
4.2 Insurance. The Company will maintain full force and effect its
insurance policies in effect as of the date hereof, except for such policies for
which the failure to keep in full force and effect would not have a Material
Adverse Effect, and a policy on the life of ▇▇▇▇ ▇▇▇▇▇ for which the Company is
the sole beneficiary in an amount of not less than $10,000,000. This Section 4.2
shall expire and be of no further force and effect upon the First Closing.
4.3 Taxes and Assessments. The Company will pay any taxes, assessments
and governmental charges, and any liabilities thereon imposed on the Company and
outstanding and due, except for those which the Company is contesting in good
faith and by appropriate proceedings if (i) adequate reserves have been
established on the books of the Company in conformity with GAAP and (ii) all
such non-payments, in the aggregate, have no Material Adverse Effect. The
Company will pay and discharge in a timely manner all taxes, assessments and
governmental charges upon or against the Company, or any of its properties, and
all other material liabilities at any time existing, except to the extent and so
long as (a) the same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any Material Adverse Effect and (b)
the Company shall have set aside on its books adequate reserves with respect
thereto. This Section 4.3 shall expire and be of no further force and effect
upon the First Closing.
4.4 Maintenance of Existence. The Company will preserve, renew and
keep in full force and effect, its limited liability company existence,
qualification in requisite jurisdictions and rights and privileges necessary or
desirable in the normal conduct of its business; provided, that the Company
shall be permitted to convert to a corporate form pursuant to the express
provisions of the Amended Operating Agreement (the "Incorporation Merger"). This
Section 4.4 shall expire and be of no further force and effect upon the First
Closing.
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4.5 Further Assurances. Subject to the terms and conditions provided
herein, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done as promptly as
practicable, all things necessary, proper or advisable under applicable laws and
regulations or otherwise to consummate and make effective the transactions
contemplated by this Agreement. The Company will cure promptly any defects in
the creation and issuance of the Member Interests (or Equity Equivalents) to be
purchased by the Investor at any Closing hereunder, and the Company and the
Investor will cure promptly any defects in the execution and delivery of this
Agreement. The Company, at its expense, will promptly execute and deliver to the
Investor, and the Investor will, at its expense, promptly execute and deliver to
the Company, upon the other's request, all such other and further documents,
agreements and instruments in compliance with or pursuant to its covenants and
agreements herein, and will make any recordings, file any notices, and obtain
any consents as may be necessary or appropriate in connection therewith.
4.6 Conduct of Business. Except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Exhibit 4.6 or (iii) as consented to by
Purchaser in writing, from and after the date of this Agreement and until the
First Closing Date, the Company:
(a) shall use reasonable efforts consistent with good
business judgment to: (i) preserve intact the present business organization of
the Company, (ii) keep available the services of those employees of the Company
having management responsibilities, (iii) maintain in full force and effect
without any amendment, termination, waiver, disposal or lapse all Permits of the
Company Parties and the License Companies, including any FCC Licenses, other
than such Permits, the failure of which to keep in full force and effect without
any termination, waiver, disposal or lapse would not have a Material Adverse
Effect, (iv) preserve the present relationships of the Company with entities or
persons having business dealings with them and (v) enter into agreements with
each of the Company's managers, officers and key employees to the effect that
all proprietary information and inventions developed by such persons are the
property solely of the Company, and assigning all right, title and interest any
of them may have to the Company;
(b) shall operate in the ordinary course of business;
(c) shall not
(i) directly or indirectly purchase, redeem or
otherwise acquire or dispose of any Member Interests or other
securities of the Company (i) for cash (other than with respect to
redemptions under the CARS Plan with respect to Persons who are
employees of the Company who are not of the level of Vice President or
above), and (ii) other than pursuant to the CARS Plan and the ▇▇▇▇▇
Employment Agreement;
(ii) except as specifically required (as opposed to
permitted) under the Operating Agreement, declare, set aside or pay, or
commit to pay, any distribution on the Member Interests; or
(iii) agree to do any of the foregoing;
20
(d) shall not add to or modify in any material respect any of
the Plans other than for (i) contributions in accordance with the normal
practices of the Company, (ii) the extension of coverage to any other employees
who become eligible in accordance with the terms thereof or (iii) amendments or
modifications reasonably necessary in order to comply with applicable law; and
(e) shall not undertake acts which would constitute a
prohibited transaction under ERISA, or fail to fund employee benefits to the
extent required by law or contract.
4.7 Filings and Consents. (a) As soon as practicable after execution
and delivery of this Agreement, the Investor and the Company shall make all
filings required under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), relating to the transactions contemplated hereby. In
addition, the Investor and the Company will each furnish all information as may
be required by the Japan Ministry of Finance or by the Federal Trade Commission
and the Department of Justice under the HSR Act in order for the requisite
approvals for the purchase and sale of the Member Interests, and the
transactions contemplated hereby, to be obtained or any applicable waiting
periods to expire. Each of the parties hereto will cooperate with each other
with respect to obtaining, as promptly as practicable, all necessary consents,
approvals, authorizations and agreements of, and the giving of all notices and
making of all other filings with, any third parties, including (i) Governmental
Authorities, necessary to authorize, approve or permit the consummation of the
transactions contemplated hereby and (ii) those set forth in Exhibit 4.7(a)
hereto.
(b) The Investor and the Company will provide such
information and communications to the Persons requiring such approvals,
authorizations and consents as reasonably required by such Person.
(c) The Company and its Members will use all reasonable
efforts to consummate the DTS Systems Transfers (as such term is defined in and
pursuant to the terms of the Operating Agreement).
4.8 Supplements to Disclosure Schedule; Notice and Cure. (a) From time
to time prior to the First Closing, the Company and the Investor will promptly
supplement or amend the Exhibits relating to their respective representations
and warranties in this Agreement with respect to any matter, condition or
occurrence hereafter arising which, if existing or occurring as the date of this
Agreement, would have been required to be set forth or described in their
respective Exhibits or would otherwise have given rise to a breach of any
representations or warranties herein. No supplement or amendment by either party
shall be deemed to cure (or affect the rights of any party with respect to) any
breach of any representation or warranty made in this Agreement or have any
effect for the purpose of determining satisfaction of the conditions set forth
in Article VI hereof or the compliance by the Company or the Investor with the
covenants set forth in this Article IV.
(b) From the date hereof until the Second Closing, each of
the Investor and the Company shall inform the other in writing of, and
contemporaneously with such notice will provide to the other reasonable details
(and other information reasonably requested) concerning,
21
any event, transaction or circumstance occurring after the date hereof that
causes any of its covenants or agreements under this Agreement to be breached.
4.9 Covenant to Satisfy Conditions. Each party agrees to use all
reasonable efforts to insure that the conditions to the other party's
obligations hereunder set forth in Article VI, insofar as such matters are
within the control of such party, are satisfied.
4.10 Stock Option Pool. The Company will not from and after the date
hereof until the First Closing Date (i) authorize a pool of Equity
Participations to be granted or awarded to the Company's employees or directors
in excess of the pool provided for as of the date of this Agreement under the
CARS Plan (as hereinafter defined), and (ii) authorize the creation of any other
plan to provide incentive awards or other grants to employees or directors of
any form of equity or other securities of the Company. Until the occurrence of a
public distribution of the class of Member Interests (or Equity Equivalents)
issuable pursuant to the cancellation of Appreciation Units (as such term is
defined in the CARS Plan), so long as the Investor holds the Threshold
Membership Percentage, the Company will, as contemplated by Section 6 of the
form of award agreement under the CARS Plan previously delivered to the
Investor, require each person to whom such Membership Interests (or Equity
Equivalents) are to be issued pursuant to the cancellation of any such
Appreciation Units, as a pre-condition to such issuance, to execute an agreement
providing that such Member Interests (or Equity Equivalents) shall not be
transferable prior to the occurrence of such a public distribution.
4.11 Sale of Member Interests. From and after the date hereof until
the Second Closing, except as provided in the ▇▇▇▇▇ Employment Agreement and
except for issuances pursuant to the Company's Long Term Incentive Compensation
Plan dated November 26, 1996 (the "CARS Plan") and, in the event that the
closing under the First ▇▇▇▇ Agreement has not occurred on or prior to the date
of this Agreement, as provided in the First ▇▇▇▇ Agreement, the Company shall
not issue or sell, or commit to issue or sell, any Member Interests (or their
Equity Equivalents) or other securities of the Company, any options, warrants or
commitments or rights of any kind with respect thereto or any convertible or
exchangeable securities (provided, that the Company may issue or sell Member
Interests in connection with a private sale not requiring registration under the
`33 Act, so long as the price for a 1% Member Interest or its Equity Equivalent
in such sale, as relevant, is greater than or equal to NTT's Price Per Percent
or its Equity Equivalent, as relevant, subject to the Investor's rights under
Section 5.1(c) of the Amended Operating Agreement). This Section 4.11 shall not
apply to or restrict in any way any issuance or sale, or commitment to issue or
sell, any Member Interests (or their Equity Equivalent) pursuant to a public
offering registered under the Securities Act which results in the Member
Interests (or their Equity Equivalents) becoming registered under the Securities
Act of 1934, as amended.
22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company, as of the date
hereof and as of the date of the First Closing (and, to the extent expressly
provided for herein, the Second Closing) that:
5.1 Existence. The Investor is a company duly organized, validly
existing and current in payment of all taxes properly payable pursuant to the
laws of the jurisdiction of its organization. The Investor has the requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as presently conducted.
5.2 Power and Authority. The Investor has the requisite corporate
power and authority and has taken all required action necessary to authorize the
execution and delivery by it of this Agreement and all other documents or
instruments required by this Agreement, and to carry out the terms of this
Agreement and of all such other documents or instruments. This Agreement has
been duly executed and delivered by the Investor and (assuming the due
authorization, execution and delivery hereof by the Company and the other
parties thereto other than the Investor) constitutes the valid and binding
obligation of the Investor, enforceable against the Investor in accordance with
its terms.
5.3 Purchase for Investment; No Authorization or Consent. The Investor
is purchasing its Member Interests for investment, for its own account and not
for the account of any Employee Benefit Plan (or if are being acquired for the
account of any such Plan, such acquisition does not involve a nonexempt
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code) and not with a view to distribution thereof, except for
transfers permitted hereunder. The Investor understands that its Member
Interests must be held indefinitely unless they are registered under the '33 Act
or an exemption from such registration becomes available, and that its Member
Interests may only be transferred as provided in this Agreement and the Amended
Operating Agreement. Except as set forth in Exhibit 5.3, no Consent is required
to be made or obtained by the Investor in connection with the execution,
delivery or performance by the Investor of this Agreement or the consummation by
the Investor of the transactions contemplated in this Agreement, except for any
Consent to be made or obtained by the Investor from a Person which is not a
Governmental Authority and which is not so obtained or made would not, in the
aggregate, prevent, in any material way, the ability of the Investor to perform
its material obligations under this Agreement.
5.4 Financial Matters. The Investor, either alone or with its
financial advisor, has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
to be made by it hereunder. The Investor represents that it is an "accredited
investor" as that term is defined in Regulation D promulgated under the '33 Act.
23
ARTICLE VI
THE CLOSING AND CLOSING CONDITIONS
6.1 First Closing. (a) The purchase and sale of the Member Interests to take
place at each Closing shall be held at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
New York, New York. The First Closing shall occur on the second business day
following the satisfaction of each of the conditions set forth in Sections
6.1(b)(ix) and (x) and 6.1(c)(ix) and (x), or, such other date as the Company
and the Investor may designate (the "First Closing Date").
(b) The obligation of the Investor to purchase the Member
Interests to be purchased by it hereunder at the First Closing shall be subject
to the satisfaction of, or waiver by the Investor of, the following conditions
at and as of the First Closing:
(i) Issuance of Member Interests. Concurrently with
such purchase, the Company shall have duly issued and have amended its
books and records to reflect the purchase by the Investor of a 5%
Member Interest determined on a Pro Forma Equity Basis, all as provided
in Section 2.1.
(ii) Certificate of Officer of the Company. The
Company shall have delivered to the Investor a certificate of its chief
financial officer, or an alternative therefor reasonably satisfactory
to counsel for the Investor, dated the date of the First Closing, to
the effect that each of the conditions in this Section 6.1(b) has been
satisfied.
(iii) Amended Operating Agreement. Each of the
Company's members immediately prior to the First Closing shall have
duly authorized, executed and delivered the Amended Operating
Agreement.
(iv) Registration Rights Agreement. The Company
shall have duly authorized, executed and delivered the Registration
Rights Agreement.
(v) Representations and Warranties to be True and
Correct. The representations and warranties contained in Article III
shall be true and correct on and as of the First Closing Date with the
same effect as though such representations and warranties had been made
on and as of such date (except to the extent that any representations
and warranties of the Company specifically apply to conditions existing
at a particular date, in which case such representation and warranty
shall have been true and correct on and as of such date), except to the
extent that the aggregate of all such untrue or incorrect
representations and warranties do not have a Material Adverse Effect,
and the Company shall have certified to such effect to the Investor in
writing; provided, that solely for purposes of this Section 6.1(b)(v),
the determination of whether a representation or warranty is true and
correct shall be made without the benefit of, and as if it had not
contained, any limitation or qualification as to materiality, Material
Adverse Effect or material adverse change set forth in such
representation and warranty.
24
(vi) Performance. The Company shall have performed
and complied in all respects with all agreements and covenants
contained herein required to be performed or complied with by it prior
to or at the First Closing Date, except to the extent that the
aggregate effect of such non-performances does not have a Material
Adverse Effect, and the Company shall have certified to such effect to
the Investor in writing; provided, that solely for purposes of this
Section 6.1(b)(vi), the determination of whether any agreement or
covenant has been performed and complied with shall be made without the
benefit of, and as if it had not contained, any limitation or
qualification as to materiality, Material Adverse Effect or material
adverse change set forth in such covenant.
(vii) All Proceedings to Be Satisfactory. All
limited liability company and other proceedings (including third party
consents, if any) to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Investor
and its counsel, and the Investor and said counsel shall have received
all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(viii) No Injunction or Other Action. (A) There
shall be no injunction, writ, preliminary restraining order or other
order in effect of any nature issued by a court or governmental agency
of competent jurisdiction directing that the transactions provided for
in this Agreement not be consummated in the manner provided for in this
Agreement.
(B) No action or proceeding shall have been
instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain,
prohibit or otherwise challenge the transactions contemplated
by this Agreement (or seeking substantial damages from the
Investor or the Company as a result thereof), other than any
such action or proceeding which was instituted prior to the
date of this Agreement of which the Investor was aware at
least 15 days prior to such date or was instituted prior to,
on or after such date but which is not reasonably likely to
have a Material Adverse Effect or impair the ability of the
Company or the Investor to perform their respective
obligations hereunder.
(C) No governmental or regulatory agency or
body of competent jurisdiction shall have notified any party
to this Agreement in writing that the consummation of the
transactions contemplated hereby would constitute a violation
of the laws of the United States or the laws of the
jurisdiction to which such governmental or regulatory agency
or body is subject and that it intends to commence proceedings
to restrain consummation of such transactions, to force
divestiture if the same are consummated or to materially
modify the terms or results of such transactions, unless such
governmental or regulatory agency or body shall have withdrawn
such notice.
(ix) HSR Act. The applicable waiting period, if any,
including any extension thereof, under the HSR Act, if applicable to
the transactions contemplated by the First Closing, shall have been
terminated or shall have expired.
25
(x) Japanese Governmental Consents. The Investor
shall have filed notification of its proposed purchase of the Member
Interests with the Japan Ministry of Finance ("MOF") and the waiting
period with respect thereto shall have expired without the MOF having
objected to such purchase or any such objection shall have been
withdrawn by the MOF.
(xi) Consents. Each of the Consents identified in
Exhibit 4.7(a) shall, if required, have been obtained and, if the
Consent referred to in item 4 of such Exhibit is required, such Consent
shall have been obtained and shall not be subject to any conditions
adverse to the Investor that are not: (a) generally imposed by the FCC
in connection with all or virtually all such consents, (b) previously
imposed on the Licenses currently held by the Company Parties or the
License Companies prior to any requirement for such Consent, or (c) for
conditions not covered by clauses (a) or (b), reasonably acceptable to
the Investor.
(xii) Opinion. The Investor shall have received the
opinions of (A) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ in substantially
the forms attached hereto as Exhibit 6.1(b)(xii) and (B) counsel to the
Company regarding the Applicable PUC licenses in the states in which
the License Companies are operating at the time of the First Closing,
which the Company shall use its reasonable best efforts to obtain and
which shall be reasonably satisfactory to the Investor, except that the
failure of the Company to obtain such opinion in any state or states in
which, either individually or in the aggregate, the Company does not
conduct a material portion of its operations at the time of the First
Closing, shall not be deemed to constitute a failure to satisfy this
condition.
(xiii) Material Adverse Change. There shall not have
occurred a Material Adverse Change with respect to the Company since
the date of this Agreement.
(xiv) Technical Services Agreement. The Company
shall have duly executed and delivered the Technical Services
Agreement, in substantially the form attached hereto as Exhibit
6.1(b)(xiv) prior to October 15, 1997, and, assuming the valid
execution and delivery thereof by NCCA, the same shall be in full force
and effect on the date of the First Closing.
(xv) Bank Confirmation. The Toronto-Dominion Bank
("TD") shall have provided the Company with a letter in substantially
the form of Exhibit 6.1(b)(xv).
(xvi) Transfer of FCC Licenses. The DTS Systems
Transfer (as such term is defined in the Amended Operating Agreement)
shall have occurred in all material respects as provided in the Amended
Operating Agreement and the Investor shall have received evidence
thereof reasonably satisfactory to the Investor and its counsel.
(xvii) MSI and DSC Additional Contribution. MSI and
DSC shall have made additional capital contributions to the Company
under the terms of the Operating Agreement in the aggregate amount of
$60,000,000, provided, however, that such capital
26
contributions may be reduced by up to $3,000,000 if ▇▇▇▇ ▇▇▇▇▇▇▇▇ has
made capital contributions in the same amount.
(xviii) First ▇▇▇▇. The Company shall have closed
the transaction contemplated by the First ▇▇▇▇ Agreement and shall have
issued the Member Interest to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ contemplated thereby.
(xix) [intentionally omitted]
(xx) Supporting Documents. On or prior to the First
Closing Date, the Investor and its counsel shall have received copies
of the following supporting documents:
(A) copies of the Certificate of Formation,
certified as of a recent date by the Secretary of State of the
State of Delaware (the "Delaware Secretary");
(B) a certificate of the Delaware
Secretary, dated as of a recent date, as to the due formation
and good standing of the Company and listing all documents of
the Company on file with the Delaware Secretary;
(C) a confirmation from the Delaware
Secretary as of the close of business on the next business day
preceding the First Closing Date as to the continued good
standing of the Company; and
(D) a certificate of the Secretary or an
Assistant Secretary of the Company, dated the First Closing
Date and certifying: (1) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery and
performance of this Agreement, the Amended Operating Agreement
and the Registration Rights Agreement, the issuance, sale and
delivery of the Member Interests to be purchased by the
Investor, and that all such resolutions are still in full
force and effect and are all the resolutions adopted in
connection with the transactions contemplated by this
Agreement; (2) that the Certificate of Formation has not been
amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (B) above; and
(3) the incumbency and specimen signature of each officer of
the Company executing this Agreement and the Registration
Rights Agreement and any certificate or instrument furnished
pursuant hereto, and a certification by another officer of the
Company as to the incumbency and signature of the officer
signing the certificate referred to in this clause (xvii);
All such documents shall be reasonably satisfactory in form
and substance to the Investor and its counsel.
(c) The obligation of the Company to sell the Member
Interests to be sold by it to the Investor at the First Closing shall be subject
to satisfaction, or waiver by the Company, of the following conditions at and as
of the First Closing:
27
(i) Payment. Concurrently with such sale, the
Investor shall have made the payment to be made by it at the First
Closing pursuant to Section 2.1 hereof.
(ii) Certificate of Officer of the Investor. The
Investor shall have delivered to the Company a certificate of its chief
financial officer, or an alternative therefor reasonably satisfactory
to counsel for the Company, dated the date of the First Closing, to the
effect that each of the conditions in this Section 6.1(c) has been
satisfied.
(iii) Amended Operating Agreement. The Investor
shall have duly authorized, executed and delivered the Amended
Operating Agreement.
(iv) Registration Rights Agreement. The Investor
shall have duly authorized, executed and delivered the Registration
Rights Agreement.
(v) Representations and Warranties to be True and
Correct. The representations and warranties contained in Article V
shall be true and correct in all material respects on and as of the
First Closing Date with the same effect as though such representations
and warranties had been made on and as of such date (except to the
extent that any representations and warranties of the Investor
specifically apply to conditions existing at a particular date, in
which case such representation and warranty shall have been true and
correct in all material respects on and as of such date).
(vi) Performance. The Investor shall have performed
and complied in all material respects with all agreements and covenants
contained herein required to be performed or complied with by it prior
to or at the First Closing Date.
(vii) All Proceedings to Be Satisfactory. All
corporate and other proceedings (including third party consents, if
any) to be taken by the Investor in connection with the transactions
contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Company and its
counsel, and the Company and said counsel shall have received all such
counterpart originals or certified or other copies of such documents as
they may reasonably request.
(viii) No Injunction or Other Action. (A) There
shall be no injunction, writ, preliminary restraining order or other
order in effect of any nature issued by a court or governmental agency
of competent jurisdiction directing that the transactions provided for
in this Agreement not be consummated in the manner provided for in this
Agreement.
(B) No action or proceeding shall have been
instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain,
prohibit or otherwise challenge the transactions contemplated
by this Agreement (or seeking substantial damages from the
Investor or the Company as a result thereof) other than any
such action or proceeding which was instituted prior to the
date of this Agreement of which the Investor was aware at
least 15 days prior to such date or was instituted prior to,
on or after such date but which is not
28
reasonably likely to have a Material Adverse Effect or impair
the ability of the Company or the Investor to perform their
respective obligations hereunder.
(C) No governmental or regulatory agency or
body of competent jurisdiction shall have notified any party
to this Agreement in writing that the consummation of the
transactions contemplated hereby would constitute a violation
of the laws of the United States or the laws of the
jurisdiction to which such governmental or regulatory agency
or body is subject and that it intends to commence proceedings
to restrain consummation of such transactions, to force
divestiture if the same are consummated or to materially
modify the terms or results of such transactions, unless such
governmental or regulatory agency or body shall have withdrawn
such notice.
(ix) HSR Act. The waiting period, if any, including
any extension thereof, under the HSR Act, if applicable to the
transactions contemplated by the First Closing, shall have been
terminated or shall have expired.
(x) Japanese Governmental Consents. The Investor
shall have filed notification of its proposed purchase of Member
Interests with the MOF and the waiting period with respect thereto
shall have expired without the MOF having objected to such purchase or
any such objection shall have been withdrawn by the MOF.
(xi) Consents. Each of the Consents identified in
Exhibit 4.7(a) shall have been obtained.
(xii) Opinion. The Company shall have received the
opinion of counsel to the Investor in a form reasonably satisfactory to
the Company.
(xiii) Supporting Documents. On or prior to the
First Closing Date, the Company and its counsel shall have received
copies of the following supporting documents in the event that the
Investor is not NTT:
(A) copies of the Certificate of
Incorporation of the Investor, and all amendments thereto,
certified as of a recent date by the Secretary of State of the
Investor's state of organization (the "State Secretary");
(B) a certificate of the State Secretary
dated as of a recent date as to the due formation and good
standing of and listing of all documents of the Investor on
file with the State Secretary;
(C) a confirmation from the State Secretary
as of the close of business on the next business day preceding
the First Closing Date as to the continued good standing of
the Investor; and
(xiv) a certificate of the Secretary or an Assistant
Secretary of the Investor, dated the First Closing Date and certifying:
(1) that attached thereto is a true and complete copy of the
Certificate of Incorporation and By Laws (or equivalent
29
organizational documents) of the Investor as in effect on the date of
such certification; (2) that attached thereto is a true and complete
copy of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement,
the Amended Operating Agreement and the Registration Rights Agreement,
and that all such resolutions are still in full force and effect and
are all the resolutions adopted in connection with the transactions
contemplated by this Agreement; (3) that the Certificate of
Incorporation and By Laws (or equivalent organizational documents) of
the Investor have not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (B) above;
and (4) the incumbency and specimen signature of each officer of the
Investor executing this Agreement, the Amended Operating Agreement and
the Registration Rights Agreement and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Investor as to the incumbency and signature of the officer signing
the certificate referred to in this paragraph (xiii).
6.2 Second Closing. The Second Closing shall be held at the offices of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, New York, New York. The Second Closing shall occur on
the later to occur of the date of the First Closing and the date of the
consummation of the transactions contemplated by the underwriting agreement
relating to the Public Offering.
(a) The obligation of the Investor to purchase the Common
Stock (or Member Interests if the Company remains a limited liability company at
the time of the Second Closing) to be purchased by it from the Company at the
Second Closing shall be subject to satisfaction, or waiver by the Investor, of
the following conditions:
(i) Issuance of Common Stock. Concurrently with such
purchase, in the event the Company has converted to a corporation, the
Company shall have duly issued to the Investor such number of shares of
Common Stock which would represent the Equity Equivalent of the
remaining 7.5% Member Interest determined on a Pro Forma Equity Basis,
as provided in Section 2.1; provided, however, that, notwithstanding
the foregoing, in the event that the IPO Price is less than NTT's Per
Share Price, then and in such event, the Investor shall receive such
additional number of shares of Common Stock in consideration for such
$60,000,000 such that NTT's Per Share Price equals the IPO Price. In
the event that the Company remains a limited liability company at the
time of the Second Closing, then concurrently with the Second Closing,
the Company shall issue to the Investor (and duly amend its Amended
Operating Agreement to reflect the purchase by the Investor of) a 7.5%
Member Interest determined on a Pro Forma Equity Basis, subject to the
same adjustment as provided in the immediately preceding sentence in
connection with the issuance of Common Stock.
(ii) [intentionally omitted]
(iii) No Injunction or Other Action. (A) There shall
be no injunction, writ, preliminary restraining order or other order in
effect of any nature issued by a court or governmental agency of
competent jurisdiction directing that the transactions provided
30
for in this Agreement to be consummated at the Second Closing not be
consummated in the manner provided for in this Agreement.
(B) No action or proceeding shall have been
instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain,
prohibit or otherwise challenge the transactions contemplated
by this Agreement to be consummated at the Second Closing (or
seeking substantial damages from the Investor or the Company
as a result thereof) other than any such action or proceeding
which was instituted prior to the date of this Agreement of
which the Investor was aware at least 15 days prior to such
date or was instituted prior to, on or after such date but
which is not reasonably likely to have a Material Adverse
Effect or impair the ability of the Company or the Investor to
perform their respective obligations hereunder.
(C) No governmental or regulatory agency or
body of competent jurisdiction shall have notified any party
to this Agreement in writing that the consummation of the
transactions contemplated hereby to be consummated at the
Second Closing would constitute a violation of the laws of the
United States or the laws of the jurisdiction to which such
governmental or regulatory agency or body is subject and that
it intends to commence proceedings to restrain consummation of
such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of
such transactions, unless such governmental or regulatory
agency or body shall have withdrawn such notice.
(iv) Consents. Each of the Consents identified in
Exhibit 4.7(a) (to the extent applicable to the Second Closing) shall,
if required, have been obtained and, if the Consent referred to in item
4 of such Exhibit is required, such Consent shall have been obtained
and shall not be subject to any conditions adverse to the Investor that
are not: (a) generally imposed by the FCC in connection with all or
virtually all such consents, (b) previously imposed on the Licenses
currently held by the Company Parties or the License Companies prior to
any requirement for such Consent, or (c) for conditions not covered by
clauses (a) or (b), reasonably acceptable to the Investor.
(v) Opinion. The Investor shall have received the
opinion of (A) the Company's counsel in substantially the form provided
to the underwriter of the Public Offering to the extent such opinion
relates to the organization and good standing of the Company or the due
authorization and valid issuance of the Membership Interest to be
issued to the Investor at the Second Closing and (B) counsel to the
Company regarding the Applicable PUC licenses in the states in which
the License Companies are operating at the time of the Second Closing,
which the Company shall use its reasonable best efforts to obtain and
which shall be reasonably satisfactory to the Investor, except that the
failure of the Company to obtain such opinion in any state or states in
which, either individually or in the aggregate, the Company does not
conduct a material portion of its operations at the time of the Second
Closing, shall not be deemed to constitute a failure to satisfy this
condition.
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(vi) HSR Act. The applicable waiting period,
including any extension thereof, under the HSR Act shall have been
terminated or shall have expired with respect to the investment to be
made by the Investor at the Second Closing.
(vii) Supporting Documents. On or prior to the
Second Closing Date, the Investor and its counsel shall have received
copies of the following supporting documents:
(A) copies of the Certificate of Formation
of the Company (or Certificate of Incorporation if the Company
has become a corporation), and all amendments thereto,
certified as of a recent date by the Delaware Secretary;
(B) a certificate of the Delaware Secretary
dated as of a recent date as to the due formation and good
standing of the Company and listing all documents of the
Company on file with said Secretary;
(C) a confirmation from the Delaware
Secretary as of the close of business on the next business day
preceding the Second Closing Date as to the continued good
standing of the Company; and
(D) a certificate of the Secretary or an
Assistant Secretary of the Company, dated the Second Closing
Date and certifying: (1) that attached thereto is a true and
complete copy of the Amended Operating Agreement (or
Certificate of Incorporation and Bylaws if the Company has
become a corporation) of the Company as in effect on the date
of such certification; (2) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery and
performance of this Agreement, the Amended Operating Agreement
and the Registration Rights Agreement, the issuance, sale and
delivery of the Member Interests to be purchased by the
Investor, and that all such resolutions are still in full
force and effect and are all the resolutions adopted in
connection with the transactions contemplated by this
Agreement; (3) that the Certificate of Formation of the
Company has not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (B) above; and (4) the incumbency and specimen
signature of each officer of the Company executing this
Agreement, the Amended Operating Agreement and the
Registration Rights Agreement and any certificate or
instrument furnished pursuant hereto, and a certification by
another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to
in this paragraph (vi).
All such documents shall be reasonably satisfactory in form and substance to the
Investor and its counsel.
(b) The obligation of the Company to sell the Member
Interests to be sold by it to the Investor at the Second Closing shall be
subject to satisfaction, or waiver by the Company, of the following conditions
at and as of the Second Closing:
32
(i) Payment. Concurrently with such sale, the
Investor shall have made the payment to be made by it at the Second
Closing pursuant to Section 2.1 hereof.
(ii) No Injunction or Other Action. (A) There shall
be no injunction, writ, preliminary restraining order or other order in
effect of any nature issued by a court or governmental agency of
competent jurisdiction directing that the transactions provided for in
this Agreement to be consummated at the Second Closing not be
consummated in the manner provided for in this Agreement.
(B) No action or proceeding shall have been
instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain,
prohibit or otherwise challenge the transactions contemplated
by this Agreement to be consummated at the Second Closing (or
seeking substantial damages from the Investor or the Company
as a result thereof) other than any such action or proceeding
which was instituted prior to the date of this Agreement of
which the Investor was aware at least 15 days prior to such
date or was instituted prior to, on or after such date but
which is not reasonably likely to have a Material Adverse
Effect or impair the ability of the Company or the Investor to
perform their respective obligations hereunder.
(C) No governmental or regulatory agency or
body of competent jurisdiction shall have notified any party
to this Agreement in writing that the consummation of the
transactions contemplated hereby to be consummated at the
Second Closing would constitute a violation of the laws of the
United States or the laws of the jurisdiction to which such
governmental or regulatory agency or body is subject and that
it intends to commence proceedings to restrain consummation of
such transactions, to force divestiture if the same are
consummated or to materially modify the terms or results of
such transactions, unless such governmental or regulatory
agency or body shall have withdrawn such notice.
(iii) Supporting Documents. On or prior to the
Second Closing Date, the Company and its counsel shall have received
copies of the following supporting documents in the event that the
Investor is not NTT:
(A) copies of the Certificate of
Incorporation of the Investor, and all amendments thereto,
certified as of a recent date by the Secretary of State of the
Investor's state of organization (the "State Secretary");
(B) a certificate of the State Secretary
dated as of a recent date as to the due formation and good
standing of and listing of all documents of the Investor on
file with the State Secretary;
(C) a confirmation from the State Secretary
as of the close of business on the next business day preceding
the Second Closing Date as to the continued good standing of
the Investor; and
33
(iv) a certificate of the Secretary or an Assistant
Secretary of the Investor, dated the Second Closing Date and
certifying: (1) that attached thereto is a true and complete copy of
the Certificate of Incorporation and By Laws (or equivalent
organizational documents) of the Investor as in effect on the date of
such certification; (2) that attached thereto is a true and complete
copy of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement,
the Amended Operating Agreement and the Registration Rights Agreement,
and that all such resolutions are still in full force and effect and
are all the resolutions adopted in connection with the transactions
contemplated by this Agreement; (3) that the Certificate of
Incorporation and By Laws (or equivalent organizational documents) of
the Investor have not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (2) above;
and (4) the incumbency and specimen signature of each officer of the
Investor executing this Agreement, the Amended Operating Agreement and
the Registration Rights Agreement and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Investor as to the incumbency and signature of the officer signing
the certificate referred to in this paragraph (iv).
(v) Consents. Each of the Consents identified in
Exhibit 4.7(a) (to the extent applicable to the Second Closing) shall
have been obtained.
(vi) Opinion. The Company shall have received the
opinion of counsel to the Investor in a form reasonably satisfactory to
the Company.
(vii) HSR Act. The applicable waiting period,
including any extension thereof, under the HSR Act shall have been
terminated or shall have expired with respect to the investment to be
made by the Investor at the Second Closing.
ARTICLE VII
MISCELLANEOUS
7.1 Remedies Cumulative. Except as herein provided, the remedies provided herein
shall be cumulative and shall not preclude assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto.
7.2 Brokerage. Each party hereto will indemnify and hold harmless the
other against and in respect of any claim for brokerage or other commission
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
7.3 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be
34
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
7.4 Parties in Interest. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective legal representatives, successors and permitted
assigns of the parties hereto whether so expressed or not.
7.5 Notices. Notices required under this Agreement shall be deemed to
have been adequately given if delivered in person or sent to the recipient at
its address (or telefacsimile number, as the case may be) set forth in Exhibit
7.5 (with copies to the persons specified in Exhibit 7.5 at the respective
addresses for such persons specified in such Exhibit 7.5) or such other address
as such party may from time to time designate in writing by certified mail
(return receipt requested), telefacsimile or overnight courier.
7.6 No Waiver. No failure to exercise and no delay in exercising any
right, power or privilege granted under this Agreement shall operate as a waiver
of such right, power or privilege. No single or partial exercise of any right,
power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies provided by law.
7.7 Amendments and Waivers. This Agreement may be modified or amended
only by a writing signed by the Company and by the Investor.
7.8 Rights of the Investor. Subject to the terms and conditions of
this Agreement, the Investor shall have the absolute right to exercise or
refrain from exercising any right or rights that such holder may have by reason
of this Agreement or its Member Interest, including without limitation the right
to consent to the waiver of any obligation of the Company under this Agreement
and to enter into an agreement with the Company for the purpose of modifying
this Agreement or any agreement effecting any such modification, and such holder
shall not incur any liability to any other holder or holders of its Member
Interest with respect to exercising or refraining from exercising any such right
or rights.
7.9 Survival. All covenants and agreements contained in this Agreement
shall survive the execution and delivery of this Agreement and, except as
provided in such covenant or agreement, the First and Second Closing. Except for
the representations and warranties contained in the first sentence of Section
3.1, subsections (a)(i), (a)(ii)(A) and (b) of Section 3.2, Section 5.1, Section
5.2, and the first two sentences of Section 5.3 and Section 5.4, all of which
shall survive forever, the respective representations and warranties of the
parties contained in this Agreement shall survive for a period of one year from
the First Closing Date. The representations and warranties contained herein
shall be unaffected by any investigation at any time made by or on behalf of a
party.
7.10 Construction; Disputes. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, other than
such laws as would result in the
35
application of any jurisdiction's law other than that of the State of New York.
Each party hereto expressly acknowledges each of the other parties' rights, in
the event of such party's breach of its obligations hereunder, to require the
specific performance of such party's obligations hereunder, and hereby waives
any defenses or objections to any claim or action seeking specific performance
by such party of its obligations hereunder based on the ground that there exists
an adequate remedy at law.
(b) Disputes Generally. In the event of a dispute between any
of the parties arising under this Agreement or the breach, termination or
validity thereof (a "Dispute"), the parties concerned shall attempt to settle
such Dispute amicably.
(c) Arbitration. Notwithstanding the provisions of Section
7.10(b) above, when any Dispute between the parties has not been settled
amicably within sixty (60) days of written notification by any party to the
other parties concerned of the existence of such a Dispute, the Dispute shall be
finally and conclusively settled by arbitration in accordance with the Rules of
Arbitration (the "Rules") of the International Chamber of Commerce ("ICC") in
force when such arbitration is commenced. The arbitration shall be conducted and
the award shall be rendered in both English and Japanese, and shall be held in
London unless all of the parties to the arbitration agree upon another place.
(d) Procedures. For the purpose of any arbitration
proceeding, unless MSI and DSC and the opposing parties in a Dispute, the
Company, MSI and DSC shall be treated as one Arbitration Party and the Investor
shall be treated as the other Arbitration Party. Each Arbitration Party shall
nominate an arbitrator in accordance with the Rules. The third arbitrator, who
shall be the chairman of the arbitral tribunal, shall be nominated by agreement
of the two party appointed arbitrators within thirty days of the appointment of
the second arbitrator in accordance with the Rules
(e) Binding Decision. The arbitrators' award shall be final
and binding upon the parties to the arbitration. The parties expressly agree
that the leave to appeal under Section 45 or 69 of the English Arbitration ▇▇▇
▇▇▇▇ may not be sought with respect to any question of law arising in the course
of the arbitration or with respect to any award made. Judgment upon the award
may be entered by any court having jurisdiction thereof or having jurisdiction
over the parties or their assets. The parties shall furthermore carry out the
award without delay, provided that the parties reserve their right to seek
recourse against the award as provided in the United Nations Convention on the
Enforcement of Foreign Arbitral Awards 1958.
(f) Expenses of Arbitration. During the arbitration, the
parties shall each bear their own costs and expenses in connection with the
arbitration, subject, however, to the power of the arbitrators to decide in
their award which of the parties shall bear such costs, in addition to the
arbitrators' fees and expenses and other costs of the arbitration, or in what
proportions such costs shall be borne by the parties.
(g) Preliminary Injunctions. Notwithstanding the provisions
of Sections 7.10(b) through (g) of this Agreement, in the event any party hereto
is seeking a pre-arbitral injunction, preliminary injunction or an order in aid
of arbitration, each of the parties hereto
36
agrees that jurisdiction and venue will be proper in the federal and state
courts located in New York, New York and the Tokyo District Court located in
Tokyo, Japan, and waives any objection based upon lack of personal jurisdiction
or forum non conveniens, and agrees to submit to jurisdiction in each of such
venues. The choice of forum set forth in this Section 7.10(g) shall not be
deemed to preclude the seeking of a pre-arbitral injunction, preliminary
injunction or order in aid of arbitration in any other appropriate jurisdiction.
7.11 Entire Understanding. This Agreement and the agreements to be
executed in connection therewith on the First Closing Date express the entire
understanding of the parties and supersede all prior and contemporaneous
agreements and undertakings of the parties with respect to the subject matter
hereof and thereof.
7.12 Expenses. Each party will pay all of its own expenses, including
attorney's fees incurred in connection with the negotiation of this Agreement,
the performance of its obligations hereunder and the consummation of
transactions contemplated by this Agreement.
7.13 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but which taken together shall
constitute one agreement.
7.14 Assignment; No Third-Party Beneficiaries. (a) This Agreement and
the rights hereunder shall not be assignable or transferable by the Company
(other than pursuant to the Incorporation Merger) without the prior written
consent of the other. The Investor may assign or transfer this Agreement in
accordance with the provisions of Article IX hereof without the consent of the
Company. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
(b) This Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such successors and permitted assigns, any legal or
equitable rights hereunder.
7.15 Press Releases and Announcements. All press releases and
announcements concerning the investment contemplated by this Agreement shall be
mutually agreed to by the Company and the Investor, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Investor and, in the case of such disclosure by either NTT or the
Investor, shall, to the extent practicable under the circumstances, be first
discussed with the Company. Without limiting the generality of the foregoing,
the Company and the Investor agree to issue jointly a press release in the
United States and Japan announcing the execution of this Agreement on the date
hereof. The foregoing provisions of this Section 7.15 shall not prohibit or
restrict in any way disclosure by a party with respect to this Agreement, the
Amended Operating Agreement and the Registration Rights Agreement in connection
with any financing, strategic transaction, acquisition or disposition involving
such party or any of its Affiliates, provided that such disclosure shall be
first approved by the other party, which approval shall not be unreasonably
withheld or delayed.
37
ARTICLE VIII
TERMINATION
8.1 Termination. (a) This Agreement may be terminated at any time prior to the
First Closing:
(i) by mutual consent of the Investor and the
Company;
(ii) by either the Company or the Investor if the
First Closing shall not have occurred by December 31, 1997, provided
that the failure to consummate the First Closing by such Date is not a
result of either the failure by the party so electing to terminate this
Agreement to perform any of its obligations hereunder or the breach by
the party so electing of its representations and warranties; provided,
however, that such date may be extended by either party to March 31,
1998 in the event such failure to consummate is due to a governmental
intervention or failure to obtain a necessary Consent from a
Governmental Authority other than as a result of the party seeking such
extension failing to perform any of its obligations hereunder;
provided, however, that notwithstanding the foregoing proviso, in the
event of such extension to March 31, 1998, the Investor shall have the
right to conduct due diligence with respect to the Company and, in the
event it determines there shall have been a Material Adverse Change
with respect to the Company since the date of this Agreement, the
Investor shall have the right to terminate this Agreement
notwithstanding and despite of such extension; or
(iii) by either the Company or the Investor in the
event any court or governmental agency of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restricting, enjoining or otherwise prohibiting the transaction
contemplated hereby and such order, decree, ruling or other action
shall have become final and unappealable, and the parties hereto hereby
agree to use all reasonable efforts to prevent any such order, decree,
ruling or other action from becoming final and unappealable.
(b) This Agreement may be terminated at any time after the
First Closing and prior to the Second Closing:
(i) by the Investor by notice delivered to the
Company within 30 days after the second year anniversary of the First
Closing;
(ii) by either the Investor or the Company by notice
delivered to the other party within 30 days after the third year
anniversary of the First Closing;
(iii) by mutual consent of the Investor and the
Company; or
(iv) by either the Company or the Investor in the
event any court or governmental agency of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restricting, enjoining or otherwise prohibiting the consummation of the
Second Closing, and such order, decree, ruling or other action shall
have become
38
final and unappealable, and the parties hereto hereby agree to use all
reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
8.2 Effect of Termination. Except for the obligations of Section
4.1(c) hereof and this Section 8.2, if this Agreement shall be terminated
pursuant to Section 8.1, all obligations, representations and warranties of the
parties hereto under this Agreement shall terminate and there shall be no
liability of any party to another party except for a party's breach of any of
its obligations, representations or warranties under this Agreement prior to
such termination; provided, however, the aggregate maximum liability any party
shall have to all other parties hereunder arising from a termination of this
Agreement as a result of such party's breach of any of its representations or
warranties under this Agreement shall be $500,000.
ARTICLE IX
INVESTOR ASSIGNMENT
9.1 Assignment. From and after the date of this Agreement, the Investor shall
have the right, with or without the consent of the Company, to assign all of its
rights and obligations under this Agreement, effecting a novation (except that
such assignment shall not relieve NTT from liability (subject to Section 8.2)
for breach of any of its representations or warranties contained herein), to a
direct or indirect wholly-owned subsidiary of the Investor (the "Assignee").
Such assignment shall become effective immediately upon notification by the
Investor to the Company of such assignment. In the event of a statutory
reorganization of the Investor by way of enactment of specific legislation in
Japan (which reorganization may involve the dissolution of the Investor and/or
the transfer of assets and liabilities of the Investor to one or more successor
entities), the Investor undertakes to ensure that all the rights and obligations
of the Investor under this Agreement and the ownership of all the Investor's
Member Interests are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject to
the aforesaid, the other parties to this Agreement: (a) agree that such a
reorganization shall not constitute a default by the Investor or any successor
entity of the Investor under this Agreement and shall not constitute grounds for
termination of this Agreement by any of such parties; (b) consent to the
transfer of the rights and obligations of the Investor under this Agreement to a
successor entity as part of such reorganization; and (c) consent to the transfer
of the Investor's ownership of its Member Interests to a successor entity as
part of such reorganization.
9.2 Guaranty. In connection with any assignment provided by Section
9.1 above, the Investor shall, and effective automatically upon any such
assignment, hereby agrees to unconditionally guarantee the full and timely
performance by the Assignee of each covenant, provision and agreement to be
performed and observed by the Assignee and its successors under each of this
Agreement, the Amended Operating Agreement and the Registration Rights Agreement
(the "Guaranteed Obligations") until January 1, 1999 (the "Guarantee Period").
If the Assignee, during the Guarantee Period, shall fail to perform or observe
any of the Guaranteed Obligations, the Investor shall fully and promptly perform
such Guaranteed Obligation, but only
39
during the Guaranty Period. The foregoing guaranty shall be continuing and
unconditional and enforceable directly against the Investor, but only during the
Guarantee Period, without the necessity of (i) any suit or proceeding against
the Assignee, (ii) any notice of nonperformance, nonobservance, or breach, (iii)
any notice of acceptance of such guaranty or (iv) any other notice or demand,
all of which the Investor hereby waives. The Investor's obligations under such
guaranty during the Guarantee Period will not be affected in any way by reason
of any amendment, renewal, supplement or modification of this Agreement, the
Amended Operating Agreement or the Registration Rights Agreement, and such
obligations will not be affected by any party's failure to exercise or waiver of
any of such party's rights under any of such agreements. Such guaranty will be a
primary and independent obligation of the Investor during the Guarantee Period.
In the event that any Guaranteed Obligations remain at the termination of the
Guarantee Period, the Investor will arrange for a guarantee equivalent to the
one provided in this Section 9.2 to be issued by a substitute guarantor having a
reasonable creditworthiness in light of the guarantee obligations hereunder.
40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELIGENT, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
NIPPON TELEGRAPH AND TELEPHONE
CORPORATION
By: /s/ Junichiro Miyazu
-----------------------------------
SOLELY WITH RESPECT TO SECTIONS 3.2(b),
3.7, 3.8, 3.26, and 3.27, SOLELY TO THE
EXTENT OF THE REPRESENTATIONS MADE BY
THEM IN SUCH SECTIONS:
MICROWAVE SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
DIGITAL SERVICES CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
41
Exhibit 7.5
Teligent, L.L.C. (T) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (F) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with copies to
Microwave Service, Inc. (T) (▇▇▇) ▇▇▇-▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ (F) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Digital Services Corporation (T) (▇▇▇) ▇▇▇-▇▇▇▇
c/o Telcom Ventures, LLC (F) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇, Esq. (T) (▇▇▇) ▇▇▇-▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (F) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Nippon Telegraph and Telephone Corporation (T) ▇▇-▇-▇▇▇▇-▇▇▇▇
Tokyo Opera City Tower (F) ▇▇-▇-▇▇▇▇-▇▇▇▇
▇▇-▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇
▇▇▇▇▇
Attn.: Mr. ▇▇▇▇▇ ▇▇▇▇▇
with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. (T) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP (F) (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
1