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STOCK CONTRIBUTION AGREEMENT
DATED AS OF MARCH 10, 1997
BY AND BETWEEN
ASSOCIATED COMMUNICATIONS, L.L.C.,
FIRSTMARK COMMUNICATIONS, INC.
AND
▇▇▇▇ ▇▇▇▇▇▇▇▇
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TABLE OF CONTENTS
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Section 1. Definitional Provisions.......................................................................1
(a) Defined Terms......................................................................1
(b) Other Definitional Provisions......................................................6
Section 2. Actions of Associated and Contributor Upon Signing the Agreement..............................7
Section 3. Contribution of FirstMark Stock...............................................................7
(a) The Closing........................................................................7
(b) Contribution of the Stock..........................................................8
(c) Consideration......................................................................8
(d) Conversion of Associated...........................................................9
(e) Trust Channels and Related DEMS Systems............................................9
(f) Certain Operating Expenses........................................................11
Section 4. Conditions to Consummating the Contribution..................................................11
Section 5. Termination; Extension Payments..............................................................12
Section 6. Withdrawal of FirstMark DEMS Applications....................................................14
(a) Withdrawal........................................................................14
(b) Conveyance to Trust...............................................................14
Section 7. Additional Covenants and Agreements of Contributor and FirstMark.............................14
(a) Cooperation.......................................................................14
(b) Conduct of Business...............................................................15
(c) Access............................................................................15
(d) Capital Stock.....................................................................15
(e) Dividends and Distributions.......................................................15
(f) Debt; Liabilities.................................................................15
(g) Certain Agreements................................................................15
(h) Covenants Regarding DEMS Systems and FirstMark DEMS Applications..................16
(i) Noncompetition....................................................................17
(j) Confidentiality...................................................................18
(k) Intercompany Indebtedness.........................................................18
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Section 8. Additional Covenants and Agreements of Associated............................................18
(a) Cooperation by Associated.........................................................18
(b) Conduct of Business...............................................................18
(c) Books and Records; Personnel......................................................18
(d) Interim Control of DEMS Systems...................................................19
(e) Opposition to DEMS Licenses.......................................................19
(f) Teledesic Settlement..............................................................20
(g) Contributor Registration Rights...................................................21
(h) Tag-Along and Drag-Along Rights...................................................22
(i) Right of First Refusal............................................................23
(j) Confidentiality...................................................................25
(k) Non-disclosure of Financial Terms.................................................26
(l) Anti-Dilution Rights..............................................................26
Section 9. Tax Matters..................................................................................27
(a) Tax Indemnification by Contributor................................................27
(b) Apportionment of Taxes............................................................27
(c) Refunds...........................................................................28
(d) Cooperation.......................................................................28
(e) Certain Other Definitions.........................................................28
(f) Certain Taxes.....................................................................28
(g) Tax Treatment of Indemnity Payments...............................................28
(h) Certain Representations...........................................................28
Section 10. Representations and Warranties..............................................................29
(a) Representations and Warranties of Contributor and FirstMark.......................29
(b) Representations and Warranties of Associated......................................32
Section 11. Miscellaneous...............................................................................34
(a) Further Assurances................................................................34
(b) Binding Effect....................................................................34
(c) Indemnification; Joint and Several Liability of FirstMark and Contributor
Prior to Closing...............................................................34
(d) Survival..........................................................................35
(e) Entire Agreement..................................................................35
(f) Costs and Expenses................................................................35
(g) Amendment.........................................................................35
(h) Waiver; Cumulative Rights.........................................................35
(i) Notices...........................................................................35
(j) Governing Law.....................................................................37
(k) Counterparts......................................................................37
(l) Headings..........................................................................37
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Schedule I - DEMS Licenses
Schedule II - FirstMark DEMS Applications
Schedule 7(g) Extraordinary Contracts of FirstMark
Schedule 9(h)(i) Tax Matters
Schedule 10(a)(vi) Regulatory Matters
Schedule 10(a)(vii) Subscription Contracts
Schedule 10(a)(x) Assets and Liabilities of FirstMark
Schedule 10(b)(i) Capitalization of Associated
Exhibit A - Signing Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Exhibit B - Closing Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
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STOCK CONTRIBUTION AGREEMENT
AGREEMENT dated as of March 10, 1997, by and between
ASSOCIATED COMMUNICATIONS, L.L.C., a Delaware limited liability company
(together with its successors, "Associated"), FIRSTMARK COMMUNICATIONS, INC., a
Delaware corporation (together with its successors, "FirstMark"), and ▇▇▇▇
▇▇▇▇▇▇▇▇ ("Contributor"), and, for purposes of Sections 8(h) and (i) only,
Microwave Services, Inc., a Delaware corporation (together with its successors,
"MSI") and Digital Services Corporation, a Virginia corporation (together with
its successors, "DSC," and, collectively with MSI, the "Original Shareholders").
WHEREAS, Contributor owns all of the issued and outstanding
capital stock of FirstMark (the "Stock") and all of the issued and outstanding
capital stock of Netwave Inc., a Delaware corporation (together with its
successors, "Netwave"); and
WHEREAS, FirstMark has been granted licenses by the FCC to
provide, and to construct and operate facilities for the provision of, common
carrier digital electronic message services ("DEMS") in the Los Angeles SMSA and
the San Francisco SMSA and has pending before the FCC applications to provide,
and to construct and operate facilities for the provision of, DEMS in the New
York SMSA and the Boston SMSA; and
WHEREAS, Contributor desires to contribute, and Associated
desires to accept the contribution of, the Stock (the "Contribution"), and
Associated desires that Contributor cause, and Contributor has agreed to cause,
FirstMark to withdraw the FirstMark DEMS Applications, all upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in connection with the Contribution, Associated
desires to acquire, and Contributor has agreed to cause Netwave to issue to
Associated, shares of common stock of Netwave, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and agreements contained herein, the parties hereto
agree as follows:
Section 1. Definitional Provisions.
(a) Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Accepting Original Shareholder" shall have the meaning set
forth in Section 8(i) hereof.
"Affiliate" shall mean, as to any Person, any other Person (i)
that is a subsidiary of such Person or (ii) that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, such Person. For the purposes of this definition, "control" when
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing.
"Agreement" shall mean this Agreement, as amended, modified,
supplemented or restated from time to time.
"Associated" shall have the meaning set forth in the first
paragraph hereof.
"Books and Records" shall have the meaning set forth in
Section 8(c) hereof.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York, New York are authorized or obligated to close by law or executive order.
"Change in Control Application" shall mean the application
required under FCC regulations to be filed with the FCC for approval of the
Contribution.
"Closing" shall have the meaning set forth in Section 3(a)
hereof.
"Closing Date" shall have the meaning set forth in Section
3(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall have the meaning set forth in
Section 8(j) hereof.
"Contribution" shall have the meaning set forth in the third
"WHEREAS" clause hereof.
"Contributor" shall have the meaning set forth in the first
paragraph hereof.
"Contributor Registrable Securities" shall have the meaning
set forth in Section 8(g) hereof.
"DEMS" shall have the meaning set forth in the second
"WHEREAS" clause hereof.
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"DEMS Facilities" shall mean facilities and equipment for the
provision of DEMS in the geographic area or areas covered by any or all of the
DEMS Licenses.
"DEMS Licenses" shall mean the licenses listed on Schedule I
hereto granted by the FCC to FirstMark (and any FCC waivers relating thereto)
any amendments, modifications or renewals thereof, and any other licenses
granted by the FCC to FirstMark after the date hereof (and any FCC waivers
relating thereto) to construct DEMS Facilities or provide DEMS in any of the
geographic areas covered by any of the licenses listed on Schedule I hereto, or
by any amendments, modifications or renewals thereof, and any licenses,
authorizations or approvals granted to FirstMark by any PUC, together with any
amendments, modifications or renewals thereof, with respect to any DEMS
Facilities or DEMS in any of the geographic areas covered by any of the licenses
listed on Schedule I hereto or by any amendments, modifications or renewals
thereof, in each case whether in the 18 GHz frequency band or any other
frequency band to which DEMS are relocated by the FCC. Except as otherwise
expressly provided herein, as used herein "DEMS License" refers to such license
with respect to any or all of the channels covered thereby.
"DEMS Systems" shall mean all assets, property and equipment
comprising or relating to the DEMS Facilities, including without limitation any
DEMS License(s) relating thereto.
"DSC" shall have the meaning set forth in the first paragraph
hereof.
"Equity Interest" shall have the meaning set forth in Section
8(h) hereof.
"Equityholders Agreement" shall mean any shareholder,
operating or similar agreement which establishes certain rights and obligations
of equityholders of Associated. As of the date hereof, "Equityholders Agreement"
means the Limited Liability Company Agreement.
"Extension Payment" shall mean, with respect to each one year
extension of this Agreement as provided in Section 5(b) hereof, an amount in
cash equal to $1,000,000.
"FCC" shall mean the United States Federal Communications
Commission and any successor agency.
"FirstMark" shall have the meaning set forth in the first
paragraph hereof.
"FirstMark DEMS Application License" shall have the meaning
set forth in Section 6(b) hereof.
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"FirstMark DEMS Applications" shall mean the applications of
FirstMark pending on the date hereof before the FCC for licenses to provide, and
to construct and operate facilities for the provision of, DEMS, together with
any amendments, modifications or renewals thereof, in each case whether in the
18 GHz frequency band or any other frequency band to which DEMS are relocated by
the FCC, which applications as currently pending are listed on Schedule II
hereto.
"First Refusal Interest" shall have the meaning set forth in
Section 8(i) hereof.
"First Refusal Notice" shall have the meaning set forth in
Section 8(i) hereof.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any entity or official
properly exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Interest" shall have the meaning set forth in the Limited
Liability Company Agreement; provided that, if the Interests in Associated have
been changed into or exchanged for any other equity securities, the term
"Interest" shall refer to the number and class of equity securities into or for
which such Interests have been changed or exchanged.
"IPO" shall have the meaning set forth in Section 8(g) hereof.
"IRS" shall have the meaning set forth in Section 9(e) hereof.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement and any capital lease).
"Limited Liability Company Agreement" shall mean the Limited
Liability Company Agreement of the Company dated as of March 5, 1996, as amended
as of August 16, 1996, and as further amended from time to time.
"▇▇▇▇▇ " shall mean ▇▇▇▇ ▇. ▇▇▇▇▇, currently the Chief
Executive Officer of Associated.
"▇▇▇▇▇ Employment Agreement" shall mean the Employment
Agreement dated as of August 19, 1996 between Associated and ▇▇▇▇▇, as in effect
on the date hereof.
"Member" shall have the meaning set forth in the Limited
Liability Company Agreement.
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"Membership Percentage" shall have the meaning set forth in
the Limited Liability Company Agreement. References in this Agreement to the
Membership Percentage represented by any Interest issued to Contributor
hereunder are to such Membership Percentage calculated as of the date of this
Agreement, after giving effect to the issuance to Contributor of such Interest
and any Interest previously issued to Contributor as if all such Interests had
been issued as of the date of this Agreement (that is, the Interest receivable
by Contributor will be subject to dilution from and after the date of this
Agreement (subject to Section 8(k) hereof), such that the Interest issued to
Contributor at the Closing or upon the release from the Trust of any Trust
Channel or upon the grant by the FCC or the release from the Trust of any
Applicable License may represent a percentage Interest in Associated when so
issued that is less than the Membership Percentage referred to in Sections 3(c)
or 3(e), as applicable).
"MSI" shall have the meaning set forth in the first paragraph
hereof.
"Netwave" shall have the meaning set forth in the first
"WHEREAS" clause hereof.
"Offer" shall have the meaning set forth in Section 8(i)
hereof.
"Offering Price" shall have the meaning set forth in Section
8(i) hereof.
"Operating Expenses" shall have the meaning set forth in
Section 3(f) hereof.
"Original Shareholders" shall have the meaning set forth in
the first paragraph hereof.
"Person" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, joint-stock company,
estate, limited liability company, unincorporated organization or other legal
entity or organization.
"Pre-Closing Tax Period" shall have the meaning set forth in
Section 9(a) hereof.
"Pro Rata Share" shall have the meaning set forth in Section
8(i) hereof.
"PUC" shall mean any state public utility commission of
competent jurisdiction, the approval of which is required to consummate any DEMS
Systems Transfer.
"Related DEMS System" shall have the meaning set forth in
Section 3(e) hereof.
"Representative" shall have the meaning set forth in Section
8(j) hereof.
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"Requirement of Law" shall mean, as to any Person, any
statute, law, rule, regulation, ordinance, code, license, permit, order,
judgment, decree or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its properties or to which such Person or any of its property is
subject.
"Requisite Approvals" shall have the meaning set forth in
Section 4(a) hereof.
"Requisite Regulatory Approvals" shall mean decisions of the
FCC and of any applicable PUC approving the Contribution, and any other
consents, approvals or authorizations of any other Governmental Authority
required in connection with the Contribution.
"Return" shall have the meaning set forth in Section 9(e)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"SMSA" shall mean Standard Metropolitan Statistical Area.
"Stock" shall mean all of the issued and outstanding stock of
FirstMark.
"Straddle Period" shall have the meaning set forth in Section
9(b) hereof.
"Tax" shall have the meaning set forth in Section 9(e) hereof.
"Taxing Authority" shall have the meaning set forth in Section
9(e) hereof.
"Teledesic" shall mean Teledesic Corp., a Delaware
corporation.
"Teledesic Settlement" shall have the meaning set forth in
Section 8(f) hereof.
"Transfer" shall have the meaning set forth in Section 8(i)
hereof.
"Trust" shall have the meaning set forth in Section 3(e)
hereof.
"Trust Agreement" shall have the meaning set forth in Section
3(e) hereof.
"Trust Channel" shall have the meaning set forth in Section
3(e) hereof.
(b) Other Definitional Provisions.
(i) Any term defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
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(ii) As used herein, the neuter gender shall also
denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
(iii) The words "hereof", "herein" and "hereunder",
and words of a similar import, when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of
this Agreement. References to Sections shall refer to Sections of this
Agreement, unless otherwise expressly provided.
Section 2. Actions of Associated and Contributor Upon Signing the Agreement.
(a) As an inducement to Contributor to enter into this
Agreement and in partial consideration for the Contribution, concurrently with
the execution and delivery hereof, Associated is paying or causing to be paid to
Contributor a non-refundable cash payment of $5,570,000, by wire transfer of
immediately available funds to an account previously designated by Contributor
to Associated. Concurrently with and as a condition to such payment, Contributor
is delivering or causing to be delivered to Associated an opinion of ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Chartered, special FCC counsel to Contributor, in the
form of Exhibit A hereto.
(b) As a further inducement to Contributor to enter into this
Agreement and in consideration of the mutual covenants and agreements of the
parties contained herein with respect to the Contribution, as promptly as
practicable after the execution and delivery hereof, pursuant to a Subscription
Agreement in form and substance reasonably satisfactory to Netwave and
Associated, Netwave shall issue to Associated shares of common stock of Netwave
constituting ten percent (10%) of the outstanding shares of capital stock of
Netwave on a fully diluted basis immediately after giving effect to such
issuance, and Associated shall deliver to Netwave $200,000 by wire transfer of
immediately available funds to an account of Netwave previously designated by
Contributor to Associated.
(c) Concurrently with the execution and delivery hereof,
FirstMark is delivering to Associated FirstMark's original technology plan,
marketing study and business plan relating to development of DEMS in the 18 GHz
frequency band.
Section 3. Contribution of FirstMark Stock.
(a) The Closing. The closing of the Contribution (the
"Closing") shall occur at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, not later than five (5) Business Days
after satisfaction or waiver of the conditions to Closing specified in Sections
4(a) and (b) hereof, or at such other time and/or place and/or on such other
date as the parties may mutually agree (the "Closing Date").
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(b) Contribution of the Stock.
(i) At the Closing, Contributor shall contribute to
Associated, and Associated shall accept the contribution from
Contributor of, the Stock.
(ii) At the Closing, Contributor shall deliver to
Associated certificates representing the Stock, free and clear of all
Liens, duly endorsed in blank for transfer or accompanied by duly
executed stock powers assigning the Stock in blank.
(c) Consideration. The aggregate consideration for the
Contribution (in addition to the amount previously paid pursuant to Section 2(a)
hereof) shall consist of the following:
(i) $4,950,000 payable in cash to
Contributor by wire transfer of immediately available funds to
an account designated by Contributor to Associated not less
than two (2) Business Days prior to the Closing; and
(ii) an Interest of the same class or
classes as that then held by the Original Shareholders which
represents a 5.00% Membership Percentage. Commencing as of the
Closing, Contributor shall share in the profits and losses of
Associated as provided in the Limited Liability Company
Agreement and a capital account shall be established for
Contributor in an amount equal to that percentage of the
aggregate capital accounts of the Members equal to
Contributor's percentage Interest. The Interest issued to
Contributor shall be evidenced by the Limited Liability
Company Agreement, which Contributor shall sign at the Closing
and thereby become a party to, with Schedule A thereto
appropriately amended to reflect Contributor's admission as a
Member and Contributor's percentage Interest. In the event of
any conflict or inconsistency between the rights and
obligations of Contributor under the Limited Liability Company
Agreement and this Agreement, the provisions of this Agreement
shall control. Without limiting the immediately preceding
sentence, Sections 4.1(n), 8.7, 10.3(a) and 10.3(b) (and
Section 10.1 to the extent that it relates to the foregoing
subsections of Section 10.3) of the Limited Liability Company
Agreement shall not apply to Contributor. Associated shall
give Contributor written notice of any changes (which notice
shall include the full text of such changes) that are made in
the Limited Liability Company Agreement from time to time,
such notice to be given within fifteen (15) days following any
such change; provided that no amendment or modification to the
Limited Liability Company Agreement shall impose on
Contributor any additional financial obligations, other
obligations (except
8
for immaterial non-financial obligations) or any obligations
inconsistent with the two immediately preceding sentences.
(d) Conversion of Associated. If, prior to the Closing,
Associated shall be reorganized as, or converted or merged into, an entity taxed
as a corporation for federal income tax purposes, then Associated shall promptly
(and in any event not less than ten (10) days prior to the Closing) notify
Contributor thereof. If Associated has been reorganized as, or converted or
merged into, an entity taxed as a corporation for federal income tax purposes,
then at Contributor's sole option, exercisable by written notice to Associated
not less than ten (10) days prior to the Closing, the Contribution contemplated
by this Agreement shall be restructured as a merger of FirstMark with and into
Associated or, at Associated's option, a wholly owned subsidiary of Associated,
pursuant to which the Stock shall be converted into the right to receive the
consideration contemplated by this Section 3. If Contributor exercises its
option under this paragraph (d), each of Contributor, FirstMark and Associated
shall take all actions necessary to effect the transactions contemplated by this
Agreement as a merger in lieu of the Contribution.
(e) Trust Channels and Related DEMS Systems
(i) If at the Closing control of any DEMS License or
channels covered thereby is not permitted by the FCC to be transferred
as contemplated by this Agreement, the cash consideration for the
Contribution provided for in Section 3(c) above shall be reduced by
$618,750 for each channel control of which is not permitted to be
transferred to Associated and the Membership Percentage represented by
the Interest in Associated to be issued to Contributor at the Closing
shall be reduced by an amount equal to the product of (a) 0.6250% and
(b) the number of channels control of which is not permitted to be
transferred.
(ii) Any channels control of which is not permitted
to be transferred at the Closing (each, a "Trust Channel" and
collectively, the "Trust Channels") and the related DEMS Systems (each,
a "Related DEMS System" and collectively, the Related DEMS Systems"),
shall be conveyed by FirstMark prior to the Closing to a trust (the
"Trust") established by FirstMark pursuant to a trust agreement (the
"Trust Agreement") containing terms reasonably acceptable to FirstMark,
Contributor and Associated. The operations of the Trust Channels shall
be conducted by the trustee of the Trust in accordance with the
directions of Contributor, and neither Associated nor FirstMark shall
directly or indirectly control, supervise or direct, or attempt to
control, supervise or direct, such operations. After the Closing,
Associated, Contributor and FirstMark shall cooperate and use their
reasonable best efforts, at Associated's expense, to obtain all
Requisite Approvals for the transfer of control of each Trust Channel,
in which event, subject to Section 4(d) hereof, such Trust Channel and
Related DEMS
9
System shall be released from the Trust to FirstMark. Notwithstanding
the foregoing, if less than all of the channels for which FirstMark
holds a DEMS License are Trust Channels, no portion of the Related DEMS
System shall be conveyed by FirstMark to the Trust, but FirstMark shall
enter into arrangements reasonably acceptable to Contributor and
Associated and consistent with the FCC's rules giving the Trust rights
to use such DEMS System in connection with the operations of the Trust
Channels.
(iii) Concurrently with the release of any Trust
Channel and Related DEMS System (if any) from the Trust to FirstMark,
Associated shall deliver to Contributor the following consideration:
(A) $618,750 in cash with respect to each
Trust Channel and Related DEMS System (if any) so released,
which amount shall be paid to Contributor by wire transfer of
immediately available funds to an account designated by
Contributor to Associated not less than two (2) Business Days
prior to the release of the applicable Trust Channel and
Related DEMS System (if any) from the Trust (provided that the
aggregate cash consideration to be paid by Associated pursuant
to this Section 3 if control of all channels for which
FirstMark holds a DEMS License to construct DEMS Facilities or
provide DEMS in the Los Angeles SMSA and San Francisco SMSA is
transferred by Contributor shall not exceed $4,950,000; and
(B) with respect to each Trust Channel and
Related DEMS System (if any) so released from the Trust to
FirstMark, an Interest in Associated representing a 0.6250%
Membership Percentage (provided that the aggregate Interest in
Associated to be issued to Contributor if control of all
channels for which FirstMark holds a DEMS License to construct
DEMS Facilities or provide DEMS in the Los Angeles SMSA and
San Francisco SMSA is transferred by Contributor shall not
exceed a 5.00 % Membership Percentage).
(f) Certain Operating Expenses. Associated shall reimburse
Contributor in cash at the Closing or, with respect to any DEMS License
or channels covered thereby control of which is not permitted to be
transferred at the Closing, upon transfer of control of such DEMS
License or channels covered thereby, for all expenditures incurred and
paid by FirstMark or Contributor from and after the date six (6) months
after the date hereof required to fund actions deemed by Contributor
and/or FirstMark to be necessary or desirable to be taken in order to
fulfill customer requirements in connection with the regular operation
of the DEMS Systems, including, without limitation, the implementation
of marketing, construction and development plans and legal fees and
expenses related thereto
10
(collectively, the "Operating Expenses"). Reimbursements by Associated
for Operating Expenses under this Section 3(f) shall be made by wire
transfer of immediately available funds to an account previously
designated by Contributor to Associated, against receipt by Associated
of reasonably itemized invoices or other records documenting such
Operating Expenses.
Section 4. Conditions to Consummating the Contribution.
(a) Conditions to Associated's Obligation to Consummate the
Contribution. Associated's obligation to consummate the Contribution is subject
to satisfaction (or, to the extent permissible, waiver by Associated) of the
following conditions:
(i) the representations and warranties of Contributor
and FirstMark contained in this Agreement shall be true and accurate in
all material respects as of the date when made and (unless made as of a
specified date) as of the Closing Date as if made on and as of such
date;
(ii) Contributor and FirstMark shall have performed
in all material respects all of their respective agreements and
covenants contained in this Agreement which are required to be
performed by it on or prior to the Closing Date;
(iii) the parties hereto shall have received all
Requisite Regulatory Approvals, and all other required consents,
approvals or authorizations of any other third party, in connection
with the Contribution (collectively, the "Requisite Approvals") shall
have been obtained and the Requisite Regulatory Approvals shall not be
subject to administrative or judicial review, reconsideration or
appeal; and
(iv) Associated shall have received an opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Chartered, special FCC counsel to
Contributor, dated the Closing Date, in the form of Exhibit B hereto.
(b) Conditions to Contributor's Obligation to Consummate the
Contribution. Contributor's obligation to consummate the Contribution is subject
to satisfaction (or, to the extent permissible, waiver) of the following
conditions:
(i) the representations and warranties of Associated
contained in this Agreement shall be true and accurate in all material
respects as of the date when made and (unless made as of a specified
date) as of the Closing Date as if made on and as of such date;
11
(ii) Associated shall have performed in all material
respects all of its agreements and covenants contained in this
Agreement which are required to be performed by it on or prior to the
Closing Date; and
(iii) the parties hereto shall have received all
Requisite Approvals.
(c) Certain Regulatory Matters. Notwithstanding the provisions
of paragraphs (a)(iii) and (b)(iii) of this Section 4, if the Requisite
Approvals in connection with the Contribution have been obtained but contain
restrictions the effect of which is to prevent the transfer of control of a
portion of the DEMS Licenses or channels covered thereby, the parties hereto
shall use all commercially reasonable efforts to cause such restrictions to be
removed. If such restrictions have not been removed within ninety (90) days
after the obtaining of the Requisite Approvals, the conditions set forth in
paragraphs (a)(iii) and (b)(iii) of this Section 4 shall be deemed to have been
satisfied, and with respect to any DEMS License or channels covered thereby
which cannot be transferred at the Closing, the provisions of Section 3(e) shall
apply.
(d) Conditions to Release of Trust Channels. The conditions
set forth in paragraphs (a) and (b) above shall apply, mutatis mutandis, to the
release of any Trust Channel and the Related DEMS System (if any) to FirstMark,
and the payment of the consideration therefor, as contemplated by Section 3(e)
hereof.
Section 5. Termination; Extension Payments.
(a) If either (i) the Closing has not theretofore occurred or
(ii) the Closing has occurred but in connection therewith one or more Trust
Channels were conveyed to the Trust and all of such Trust Channels have not been
released to FirstMark from the Trust as contemplated by Section 3(e)(ii) hereof,
this Agreement and any Trust Agreement shall terminate on the second anniversary
of the date hereof; provided that if the Closing has not occurred or any Trust
Channels have not been released to FirstMark from the Trust by reason of the
breach by Contributor or FirstMark, on the one hand, or by Associated, on the
other hand, of any of its respective representations and warranties contained in
this Agreement, then the date of termination of this Agreement shall be
extended, at the option of the non-breaching party, for thirty (30) days from
the date on which this Agreement would otherwise have terminated; and provided,
further, that if the Closing has not occurred or any Trust Channels have not
been released to FirstMark from the Trust by reason of the breach by Contributor
or FirstMark, on the one hand, or by Associated, on the other hand, of any of
its respective covenants contained in this Agreement, then the date of
termination of this Agreement shall be extended, at the option of the
non-breaching party, for a period or periods not to exceed in the aggregate one
(1) year from the date on which this Agreement would otherwise have terminated.
(b) Notwithstanding the preceding paragraph (a), the date of
termination of this Agreement (and any Trust Agreement) may, at the option of
Associated, be
12
extended (collectively but not individually) for two successive one year periods
if, prior to the then scheduled termination date, Associated shall have paid or
caused to be paid to Contributor an Extension Payment by wire transfer of
immediately available funds to an account previously designated by Contributor
to Associated.
(c) If this Agreement terminates prior to the Closing, the
provisions of this Section 5(c), Sections 5(d), 5(e), 7(h)(v), 7(j), 8(f) (but
only in the event that there has been a Teledesic Settlement prior to such
termination and subject to the last sentence of Section 8(f)), 8(j), 8(k),
11(e), 11(f), 11(h), 11(j) and 11(l) hereof shall survive such termination
without limitation as to time, and all other provisions of this Agreement shall
become void and of no further force or effect; provided, however, that any
termination of this Agreement shall not relieve any party of any damages or
other amounts for which it would otherwise be liable by reason of any breach,
prior to such termination, of any of its representations and warranties or
covenants contained in this Agreement; and provided, further, that no party
shall have any liability under this Agreement for the failure of any
representation or warranty of such party which was true and correct as of the
date of this Agreement to continue to be true and correct after the date of this
Agreement, unless the failure of such representation or warranty to continue to
be true and correct results from the breach by such party of any of its
agreements or covenants contained in this Agreement.
(d) If this Agreement is terminated prior to the Closing by
reason of a breach of this Agreement by Contributor or FirstMark, Contributor
shall be obligated to pay to Associated, promptly (and in any event within two
(2) Business Days) following such termination, the sum of $600,000 in cash. If
this Agreement is terminated without fault of any party hereto, Contributor
shall be obligated to pay to Associated, promptly (and in any event within two
(2) Business Days) following such termination, the sum of $300,000 in cash.
(e) If this Agreement is terminated prior to the Closing, each
of Associated, Contributor and FirstMark agrees that neither it nor any of its
Affiliates shall, after such termination, oppose, challenge or in any manner
take an adverse position, directly or indirectly, with respect to any DEMS
application of the other party or any of its Affiliates or the grant to the
other party or any of its Affiliates of any DEMS license, in each case whether
in the 18 GHz frequency band or any other frequency band to which DEMS are
relocated by the FCC; provided that, subject to and without limitation of the
obligations of any party under the other provisions of this Agreement, the
provisions of this paragraph (e) shall not apply to any existing or future DEMS
application or DEMS license of any party to the extent such DEMS application or
DEMS license is with respect to a channel as to which the other party, currently
or in the future, holds a DEMS application or DEMS license.
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Section 6. Withdrawal of FirstMark DEMS Applications.
(a) Withdrawal. At such time or times prior to the Closing and
in such manner as Associated may specify, Contributor shall cause FirstMark
promptly to withdraw the FirstMark DEMS Applications (other than with respect to
channel 31 for the New York SMSA) and, upon the request and at the expense of
Associated, Contributor and FirstMark will assist and cooperate with Associated
in seeking to obtain FCC approval of any license applications filed by MSI or
Associated or any of their respective Affiliates with the FCC to provide DEMS in
the New York SMSA or the Boston SMSA. In consideration of the withdrawal by
FirstMark of the foregoing FirstMark DEMS Applications, upon the FCC's grant of
FirstMark's request for withdrawal of such FirstMark DEMS Applications and for
approval of this Agreement, Associated shall pay to Contributor the sum of
$50,000 in reimbursement of expenses incurred by Contributor and FirstMark in
connection with such FirstMark DEMS Applications.
(b) Conveyance to Trust. If, (i) either (x) prior to the
Closing, FirstMark is granted a DEMS license by the FCC pursuant to the
FirstMark DEMS Application with respect to channel 31 in the New York SMSA (the
"FirstMark DEMS Application License") or (y) the FirstMark DEMS Application
License has not been granted prior to the Closing and the FirstMark DEMS
Application with respect to channel 31 remains outstanding, and (ii) the
transfer of control at the Closing of the FirstMark DEMS Application License or
such FirstMark DEMS Application, as the case may be, is not permitted under the
terms of the Requisite Approvals, the FirstMark DEMS Application License or such
FirstMark DEMS Application, as the case may be, shall be conveyed by FirstMark
prior to the Closing to the Trust. After the Closing, Associated, Contributor
and FirstMark shall cooperate and use their reasonable best efforts, at
Associated's expense, to obtain all Requisite Approvals for the transfer of
control of the FirstMark DEMS Application License or such FirstMark DEMS
Application, as the case may be, in which event the FirstMark DEMS Application
License or such FirstMark DEMS Application, as the case may be, shall be
released from the Trust to FirstMark, without payment of any additional
consideration by Associated.
Section 7. Additional Covenants and Agreements of Contributor and FirstMark.
(a) Cooperation. From and after the date this Agreement,
Contributor and FirstMark shall use their reasonable efforts, and shall
cooperate with Associated, in each case at Associated's expense, to secure all
Requisite Approvals to enable Contributor, FirstMark and Associated to effect
the transactions contemplated by this Agreement, and shall otherwise use their
reasonable efforts, at Associated's expense, to
14
cause the consummation of such transactions in accordance with the terms and
conditions of this Agreement.
(b) Conduct of Business. Except as may be otherwise
contemplated by this Agreement or the Exhibits or Schedules hereto, or except as
Associated may otherwise consent to in writing, from the date of this Agreement
through the Closing, Contributor and FirstMark shall operate the business of
FirstMark solely in the ordinary course of business; it being understood that
the relocation by FirstMark of radio equipment from one site to another site in
connection with the fulfillment of customer build-out requirements shall not be
prohibited by this paragraph.
(c) Access. From the date of this Agreement and prior to the
Closing, Contributor and FirstMark shall provide Associated with such
information as Associated may from time to time reasonably request with respect
to FirstMark and the transactions contemplated by this Agreement, and shall
provide Associated and its representatives reasonable access during regular
business hours and upon reasonable notice to the properties, books and records
of FirstMark as Associated may from time to time reasonably request.
(d) Capital Stock. Neither FirstMark nor Contributor shall
issue, sell, transfer, pledge or otherwise encumber any shares of capital stock
of FirstMark, or grant or issue any option, warrant, right or convertible or
exchangeable security exercisable for, convertible into or exchangeable for
shares of capital stock of FirstMark, or make any other changes in the capital
structure of FirstMark, or enter into any contract with respect to any of the
foregoing.
(e) Dividends and Distributions. FirstMark shall not declare,
set aside, pay or make any dividend or other distribution or payment with
respect to shares of its capital stock, and shall not purchase or redeem any
shares of its capital stock.
(f) Debt; Liabilities. FirstMark shall not incur or assume any
indebtedness for borrowed money other than any such indebtedness that will be
paid in full prior to the Closing and shall not make any loans, advances or
capital contributions to, or investments in, any other Person. From the date of
this Agreement through the Closing, FirstMark shall incur no liabilities other
than liabilities arising in the ordinary course of business of the operations of
the DEMS Systems that will not, individually or in the aggregate, have a
material adverse effect on the assets, business or operations of FirstMark.
(g) Certain Agreements. FirstMark shall not (i) encumber
(unless such encumbrance is removed prior to the Closing without cost or expense
to Associated), sell, lease or otherwise dispose of any assets, or acquire any
assets other than in the ordinary course of business or as otherwise necessary
or desirable to fulfill customer requirements, (ii) authorize, propose or enter
into an agreement in principle or definitive agreement with
15
respect to any merger, consolidation, other business combination, liquidation or
dissolution pursuant to which FirstMark would be acquired or would acquire or
dispose of (in any such case, by merger, consolidation, acquisition or
disposition of stock or assets, or similar transaction) assets, (iii) assume,
guarantee, endorse (other than checks in the ordinary course of business) or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person, (iv) enter into any
commitment or transaction outside the ordinary course of business except as set
forth on Schedule 7(g) hereto, or (v) enter into any contract or commitment to
do any of the foregoing.
(h) Covenants Regarding DEMS Systems and FirstMark DEMS
Applications.
(i) Between the date of this Agreement and the
Closing, at Associated's expense, Contributor and FirstMark shall use
all commercially reasonable efforts to maintain in full force and
effect all necessary federal, state and local regulatory agency
authorizations relating to such DEMS System, and shall operate such
DEMS System in accordance with all Requirements of Law applicable
thereto.
(ii) Between the date of this Agreement and the
Closing, neither Contributor nor FirstMark shall sell or otherwise
dispose of, or create Liens or otherwise encumber, any of the DEMS
Systems (including without limitation any of the DEMS Licenses or DEMS
Facilities).
(iii) Upon and as a condition to Associated's
issuance to Contributor of any Interest, Contributor shall execute and
deliver, and thereby become a party to, any Equityholders Agreement,
subject to the last three sentences of Section 3(c) of this Agreement.
(iv) Except as contemplated by Schedule 7(g), between
the date of this Agreement and the Closing, all customer subscription
contracts with respect to DEMS to be provided through one or more of
the DEMS Systems entered into after the date hereof shall be entered
into by FirstMark only in the ordinary course of business and shall
contain only customary provisions.
(v) Until the Closing, or until such time prior to
the Closing as Associated directs Contributor to cause FirstMark to
withdraw a FirstMark DEMS Application pursuant to Section 6 hereof,
FirstMark shall, and Contributor shall cause FirstMark to, prosecute
such FirstMark DEMS Application, at Associated's expense, to the extent
required by the FCC's rules to retain FirstMark's eligibility and
qualifications for the DEMS licenses requested by such FirstMark DEMS
Application.
16
(vi) Neither Contributor, FirstMark nor any of their
Affiliates shall (A) oppose, challenge or in any manner take an adverse
position, directly or indirectly, with respect to (i) any existing or
future DEMS applications or licenses of Associated, DSC or MSI, in each
case whether in the 18 GHz frequency band or any other frequency band
to which DEMS are relocated by the FCC (and FirstMark shall promptly
withdraw or rescind any such previous opposition, challenge or adverse
position); provided that, subject to and without limitation of
Contributor's and FirstMark's obligations under the other provisions of
this Agreement, prior to the Closing the provisions of this clause (A)
shall not apply to any existing or future DEMS application or DEMS
license of Associated to the extent such DEMS application or DEMS
license is with respect to a channel as to which FirstMark holds a DEMS
License, or (ii) any change or modification to the rules generally
applicable to DEMS, DEMS licenses or DEMS frequencies proposed, ordered
or implemented by the FCC, so long as such change or modification would
not adversely affect FirstMark in a manner different (on a
proportionate and comparable basis) from Associated, MSI, DSC and their
Affiliates, or (B) seek authorizations, directly or indirectly, with
respect to any DEMS channel in the New York SMSA or the Boston SMSA, in
each case whether in the 18 GHz frequency band or any other frequency
band to which DEMS are relocated by the FCC (except pursuant to a
FirstMark DEMS Application).
(i) Noncompetition. Contributor agrees with Associated that,
from and after the date hereof, neither Contributor nor any of its Affiliates
will, alone or as a member, employee or agent of any partnership, corporation,
limited liability company or other business entity, or as an officer, agent,
employee, director, shareholder (except for passive investments of not more than
five percent (5%) of the outstanding shares of or any other equity interest in
any company or entity listed or traded on a national securities exchange or on
an over-the-counter securities market) of or investor in any partnership,
corporation, limited liability company or other business entity, directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or work for or permit the use of her or its
name by, or be connected in any manner with, any business (other than
Associated) or activity (including without limitation submitting any application
for a license to provide services or construct or operate equipment or
facilities) which engages in or proposes to engage in the provision in the
United States of DEMS in the 18 GHz frequency band or such other frequency band
to which DEMS are relocated by the FCC or the provision in Canada of fixed
wireless voice, video or data transmission services in any frequency band;
provided that the foregoing shall not apply to the ownership or operation by
Contributor of FirstMark and the business of FirstMark with respect to the DEMS
Systems and the FirstMark DEMS Applications to the extent consistent with the
other provisions of this Agreement. The parties intend that the covenant
contained in this Section 7(i) shall be deemed to be a series of separate
covenants, one for each county of each state of the United States and
17
province of Canada. Except for geographic coverage, each separate covenant shall
be deemed identical in terms to the covenant contained in this paragraph. If, in
any judicial proceeding, a court shall refuse to enforce all of the separate
covenants deemed included in this paragraph, because, taken together, they cover
too extensive a geographic area, the parties intend that those of such covenants
(taken, in the case of the states, territories or counties within any state in
order of the applicable states, territories or counties which are less populous)
which, if eliminated, would permit the remaining separate covenants to be
enforced in such proceedings shall, for the purpose of such proceedings, be
deemed eliminated from the provisions of this paragraph. The term "county" as
used herein shall be deemed to apply to other similar political subdivisions,
such as parishes, in those areas which have such other political subdivisions.
(j) Confidentiality. If Contributor or FirstMark obtains,
directly or indirectly, information or records, whether prepared by Associated,
its advisors or otherwise, and whether written or oral, concerning the business
of Associated, Contributor and FirstMark shall be bound by the provisions of
Section 8(j) with respect to such information or records to the same extent that
Associated would be bound with respect to Confidential Information.
(k) Intercompany Indebtedness. Prior to the Closing,
Contributor and FirstMark shall cause all outstanding indebtedness of FirstMark
to Contributor or any of her Affiliates to be cancelled or discharged without
any cost, liability (including, without limitation, any Tax liability) or
expense being incurred by FirstMark.
Section 8. Additional Covenants and Agreements of Associated.
(a) Cooperation by Associated. From and after the date of this
Agreement, Associated will use its reasonable efforts, and will cooperate with
Contributor, in each case at Associated's expense, to secure all Requisite
Approvals to enable Contributor and Associated to effect the transactions
contemplated by this Agreement, and will otherwise use its reasonable efforts to
cause the consummation of such transactions in accordance with the terms and
conditions of this Agreement.
(b) Conduct of Business. From the date of this Agreement
through the Closing, Associated shall not operate its business in any manner
with the intention of diminishing the value of the Interest to be received by
Contributor pursuant to this Agreement.
(c) Books and Records; Personnel. For a period of seven years
from the Closing Date:
(i) Associated shall not, and shall cause FirstMark
not to, dispose of or destroy any of the books and records of FirstMark
in their possession relating to periods prior to the Closing ("Books
and Records") without the prior written
18
consent of Contributor (which shall be deemed given if Contributor
fails to object in writing to such disposal or destruction with twenty
(20) days of receipt of notice from Associated of its intention to
effect such disposal or destruction).
(ii) Associated shall, and shall cause FirstMark to,
upon at least three (3) days prior written notice from Contributor,
allow Contributor and its agents reasonable access to all Books and
Records during normal working hours at Associated's principal place of
business or at any location where any Books and Records are stored, and
Contributor shall have the right, at its own expense, to make copies of
any Books and Records, in connection with (x) any pending or threatened
litigation in which Contributor or any of its Affiliates is involved,
(y) any investigation or proceeding of any Governmental Authority in
which Contributor or any of its Affiliates is involved, or (z) the
preparation of any Returns; provided, however, that any such access or
copying shall be had or done in such a manner so as not to interfere
with the normal conduct of Associated's or FirstMark's businesses, as
applicable.
(iii) Contributor shall, and shall cause its
representatives to, keep confidential all Books and Records and the
information contained therein.
(d) Interim Control of DEMS Systems. Without limiting Section
7 hereof, between the date of this Agreement and the Closing, Associated shall
not directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the operation of the DEMS Systems of FirstMark and its
Affiliates, and the operations of FirstMark and its Affiliates shall be the sole
responsibility of Contributor and FirstMark and its Affiliates.
(e) Opposition to DEMS Licenses. Neither Associated nor any of
its Affiliates shall oppose, challenge or in any manner take an adverse
position, directly or indirectly, with respect to any DEMS License (and
Associated or its Affiliates shall promptly withdraw or rescind any such
previous opposition, challenge or adverse position); provided that, subject to
and without limitation of Associated's obligations under the other provisions of
this Agreement, prior to the Closing, the provisions of this paragraph (e) shall
not apply to any channel covered by an existing or future DEMS License to the
extent such DEMS License is with respect to a channel as to which Associated
holds a DEMS license. Notwithstanding any other provision of this Agreement, if
the FCC revokes a DEMS License with respect to channel 31 in the Los Angeles
SMSA or channel 30 in the San Francisco SMSA and grants, pursuant to a decision
that is no longer subject to administrative or judicial review, reconsideration
or appeal, a DEMS license with respect to such channel, or a channel in
substitution for such channel, to MSI, DSC, Associated or any of their
respective Affiliates, then Contributor shall receive the consideration that she
would have received under Section 3(c) or Section 3(e), at the same time she
would have received such consideration under
19
Section 3(c) or 3(e), if such channel had been an asset of FirstMark at the
Closing and/or had been released from the Trust, as applicable.
(f) Teledesic Settlement. Associated agrees that (i) any
settlement with Teledesic with respect to DEMS licenses in the 18 GHz frequency
band which involves the relocation of DEMS to a frequency band other than 18 GHz
(a "Teledesic Settlement") will not adversely affect FirstMark in a manner
different (on a proportionate and comparable basis), after giving effect to
clause (ii) below, from Associated, MSI and DSC and their respective Affiliates
and (ii) Associated will reimburse Contributor for expenditures actually made by
FirstMark prior to the date of this Agreement (and as to which Associated
receives reasonable documentary evidence from FirstMark as to incurrence and
amount) in connection with the DEMS Systems to the same extent (on a
proportionate and comparable basis) and subject to the same conditions and
payable to Contributor by wire transfer of immediately available funds to an
account previously designated by Contributor to Associated at the same time as
Associated, MSI or DSC or their respective Affiliates receive, pursuant to a
Teledesic Settlement, reimbursement for expenditures actually made by them prior
to the date of this Agreement in connection with the DEMS licenses and DEMS
systems of Associated, MSI or DSC or their respective Affiliates; provided that
any such reimbursement of Contributor shall not exceed $600,000 in the
aggregate, and shall be reduced dollar for dollar to the extent that Contributor
or FirstMark receives any amounts from Teledesic pursuant to any separate
agreement, arrangement or understanding with Teledesic (and FirstMark and
Contributor agree promptly to notify Associated of their receipt of any such
payments). Associated agrees that it shall, promptly following receipt of FCC
approval of the Teledesic Settlement which is no longer subject to
administrative or judicial review, reconsideration or appeal, provide
Contributor with a true and correct copy of the agreement(s) providing for the
Teledesic Settlement, subject to execution of an appropriate confidentiality
agreement by Contributor. Without the prior written consent of Associated,
neither Contributor nor FirstMark nor any of their respective Affiliates shall
oppose, challenge, or in any manner take, directly or indirectly, an adverse
position with respect to, any Teledesic Settlement, or any term thereof, or any
plan adopted or order issued by the FCC to relocate DEMS to a frequency band
other than 18 GHz. If this Agreement is terminated prior to the Closing (x) by
reason of a breach of this Agreement by Contributor or FirstMark, the provisions
of clause (ii) of the first sentence of this paragraph shall be of no further
force or effect, (y) by reason of a breach of this Agreement by Associated, the
provisions of clause (ii) of the first sentence of this paragraph shall survive
termination, or (z) without fault of either party, the provisions of clause (ii)
of the first sentence of this paragraph shall survive termination, except that
the obligation of Associated under such clause shall be limited to 50% of the
expenditures reimbursable under such clause (ii) and not more than $300,000 in
the aggregate.
20
(g) Contributor Registration Rights.
(i) Contributor "Piggyback". Contributor shall have
the same rights with respect to registration, pursuant to a
registration statement filed by Associated under the Securities Act, of
equity securities of Associated issued to Contributor pursuant to this
Agreement as ▇▇▇▇▇ has pursuant to clause (A) of Section 4(d)(I) of the
▇▇▇▇▇ Employment Agreement. Associated shall, if requested in writing
by Contributor, use all reasonable efforts to cause to be included in
such registration statement up to an amount of the equity securities of
Associated then owned by Contributor (of the same class as the equity
securities of Associated then owned by or issuable to ▇▇▇▇▇) which were
issued to Contributor pursuant to this Agreement ("Contributor
Registrable Securities") proportionate to the amount of equity
securities which are then owned by or issuable to ▇▇▇▇▇ which are
entitled to be included in such registration statement (based on the
total amount of such equity securities then owned by or issuable to
▇▇▇▇▇ and the total amount of Contributor Registrable Securities then
owned by Contributor, respectively). If, in connection with an
underwritten offering registered pursuant to a registration statement,
the managing underwriter imposes a limitation on the amount of equity
securities which may be included in such registration statement, then
Associated shall be obligated to use all reasonable efforts to include
in such registration statement the Contributor Registrable Securities
validly requested by Contributor in accordance with the terms hereof to
be included in such registration statement (x) only after the inclusion
of all equity securities proposed to be sold by Associated for its own
account and (y) subject to reduction of the amount of Contributor
Registrable Securities and any other equity securities to be included
in such registration statement on behalf of any Person other than
Associated on a pro rata basis in accordance with the number of
Contributor Registrable Securities and such other equity securities
requested to be included in such registration statement.
(ii) Demand Registration Rights. In addition to the
registration rights afforded by clause (i) of this Section 8(g), at any
time after the first anniversary of the closing of Associated's initial
public offering (the "IPO"), Contributor shall be entitled to one
demand registration under the Securities Act and under such state
securities laws as Contributor may reasonably request (provided that
Associated shall not be required to consent to general service of
process in any jurisdiction where it is not then so subject) in respect
of Contributor Registrable Securities, provided that such demand
registration right shall apply only if the amount of Contributor
Registrable Securities to be registered (x) constitutes at least 50% of
the greatest amount of Contributor Registrable Securities owned by
Contributor at any time and (y) has an anticipated aggregate offering
price (before underwriters' fees, commissions and discounts) of at
least $10,000,000.
21
(iii) Restrictions. The registration rights of
Contributor provided for in this Section 8(g) shall not be transferable
to any transferee of Contributor Registrable Securities except (i)
during her lifetime by gratuitous transfers to grantor trusts,
charitable remainder trusts or to immediate family members or trusts
for their benefit, provided that any such transferee agrees in writing
to be bound by the provisions of this Section 8(g) or (ii) upon her
death by will or the laws of descent and distribution. In addition,
such registration rights shall be subject to Contributor entering into
underwriting (if applicable), indemnification, and other customary
agreements, including customary lock-up provisions requested by the
managing underwriter of any offering, and to Associated's right to
defer (or require Contributor to suspend sales pursuant to) any such
registration if (but only for so long as) it determines in good faith
that such registration (or continued sales) would require disclosure
which would be materially adverse to Associated's interests. Associated
shall keep any registration statement filed under clause (ii) above
effective for at least ninety (90) days (increased by the number of
days, if any, that sales under such registration statement are
suspended as provided above). Associated shall bear all registration
expenses (exclusive of underwriting fees, discounts and commissions)
under this Section 8(g) and in such connection shall provide
Contributor with indemnification and contribution against liabilities
under the securities laws in customary form.
(iv) Contributor agrees to execute a customary
lock-up agreement in connection with the IPO, whether or not
Contributor is a selling stockholder in the IPO.
(h) Tag-Along and Drag-Along Rights. If, prior to the time
that equity securities of Associated (of the same class as the Contributor
Registrable Securities) are publicly traded, the Original Shareholders shall
sell to a third party (other than an Affiliate of such Original Shareholder) any
of their equity interests in Associated at a time when Contributor holds any
equity interest in the Company (an "Equity Interest"):
(i) The Original Shareholders shall require the
purchaser of their equity interests to purchase, at Contributor's
election, the same percentage of the aggregate Equity Interest then
held by Contributor as the percentage of the aggregate equity interests
of the Original Shareholders which is being purchased; such purchase
from Contributor shall be made on the same terms and for the same
consideration as the purchase from the Original Shareholders; and
(ii) The Original Shareholders, at their election,
may require the purchaser of their equity interests to purchase, and
Contributor to sell, the same percentage of the aggregate Equity
Interest then held by Contributor as the percentage of the aggregate
equity interests of the Original Shareholders which is being purchased;
any such purchase from Contributor shall be made on the same
22
terms and for the same consideration as the purchase from the Original
Shareholders.
(i) Right of First Refusal. Upon the terms and subject to the
conditions of this Section 8(i), Contributor grants the Original Shareholders a
right of first refusal with respect to any sale or other disposition for value
by Contributor (a "Transfer") of any Equity Interest.
(i) If Contributor desires to effect a Transfer of
some or all of its Equity Interest pursuant to a bona fide offer (an
"Offer") from any person or entity (an "Offeror"), Contributor shall
give written notice of such Offer (a "First Refusal Notice") to each of
the Original Shareholders. The First Refusal Notice shall specify the
number or amount of securities comprising the Equity Interest proposed
to be transferred pursuant to such Offer (the "First Refusal
Interest"), the price proposed to be paid by the Offeror (the "Offer
Price"), the identity of the Offeror and the other terms and conditions
of such Offer, and shall be accompanied by a true and correct copy of
the Offer. If any part of the consideration proposed in the Offer
consists of property other than cash, the price proposed to be paid
pursuant to such Offer shall be deemed to include the fair market value
of such non-cash consideration, as determined in good faith by the
board of directors of Associated. If Contributor objects to the fair
market value, as so determined, Contributor may require that Associated
obtain a determination of the fair market value of such non-cash
consideration pursuant to the procedures set forth in paragraph (v) of
this Section 8(i), and such determination shall be final and binding on
all parties.
(ii) Each Original Shareholder shall have the option
to purchase the First Refusal Interest at the Offer Price and on such
other terms as are set forth in the Offer, by giving notice to
Contributor within thirty (30) days of receipt by such Original
Shareholder of the First Refusal Notice (an Original Shareholder which
gives such notice being referred to as an "Accepting Original
Shareholder"), and by purchasing such First Refusal Interest for the
Offer Price in cash, against delivery of the First Refusal Interest
(with appropriate transfer documentation) free and clear of any Liens
within fifteen (15) days following the expiration of such thirty (30)
day period; provided, however, that if Accepting Original Shareholders
elect in the aggregate to purchase more than 100% of the First Refusal
Interest, then the portion of the First Refusal Interest which may be
purchased by any Accepting Original Shareholder that has elected to
purchase more than such Accepting Original Shareholder's Pro Rata Share
(as defined below) of the First Refusal Interest shall be reduced
(based on each such Accepting Original Shareholder's Pro Rata Share),
but not below such Accepting Original Shareholder's Pro Rata Share; and
provided, further, that the date for such purchase may be deferred
solely to the extent necessary to obtain any
23
governmental consents or approvals required to complete such purchase
or, if applicable, to the extent necessary to complete the
determination of the fair market value of any non-cash consideration
proposed to be paid by the Offeror, as provided in paragraph (i) above.
For purposes of this paragraph (ii) of this Section 8(i), an Accepting
Original Shareholder's "Pro Rata Share" shall be the percentage which
such Accepting Original Shareholder's ownership interest in Associated
represents of the ownership interest in Associated of all Accepting
Original Shareholders.
(iii) If the Original Shareholders do not give timely
notice of their election to purchase the entire First Refusal Interest,
or if such notice is timely given but the Accepting Original
Shareholders fail to purchase the entire First Refusal Interest within
the applicable time period specified in this Section 8(i), then
Contributor may, within the 90-day period immediately following the
expiration of the period during which the Original Shareholders may
give notice of such election, or, if applicable, within the 90-day
period immediately following such failure to purchase the entire First
Refusal Interest, transfer the First Refusal Interest to the Offeror at
a price not less than the Offer Price and on the same terms and subject
to the same conditions as were set forth in the First Refusal Notice.
If Contributor does not complete such Transfer within such 90-day
period, no subsequent Transfer of all or any part of its Equity
Interest may be made without again complying with this Section 8(i), it
being understood and agreed that the retention by Contributor of a
security interest in some or part of the First Refusal Interest which
is transferred shall not mean that such Transfer has not been
completed.
(iv) If Contributor fails to comply with this Section
8(i) with respect to all or any part of its Equity Interest (including
without limitation any beneficial interest therein), any attempted or
purported Transfer thereof shall be void and of no force or effect.
(v) The fair market value of any non-cash
consideration or property the value of which is to be determined
pursuant to the last sentence of paragraph (i) of this Section 8(i)
shall be determined in accordance with the following procedure:
Contributor and Associated shall each select a nationally recognized
appraiser, which shall determine the valuation or other issue in
question. If the higher of the two original appraisal values is not
more than ten percent (10%) above the lower appraisal value, the value
in question shall be the value agreed upon by the two original
appraisers or, in the absence of such an agreement, the value in
question shall be the average of the two original appraisal values. If
the higher of the two original appraisal values is more than ten
percent (10%) above the lower appraisal value, the two appraisers shall
select a third nationally recognized appraiser who shall determine a
value which shall be at least
24
equal to the lower appraisal value and whose determination of the value
in question shall be final and binding on all parties. All costs and
expenses relating to any appraisal or review conducted under this
paragraph shall be borne by Associated.
(vi) This Section 8(i) shall not apply to the sale by
Contributor in the public market of Contributor Registrable Securities
registered under the Securities Act or pursuant to Rule 144 under the
Securities Act.
(j) Confidentiality.
(i) Associated shall, and shall cause its
representatives to, keep confidential all information and records,
whether prepared by Contributor, its advisors or otherwise, and whether
written or oral, which were obtained, directly or indirectly, by
Associated or its representatives concerning the business of FirstMark
("Confidential Information"). Associated shall, and shall cause its
representatives to, use Confidential Information solely in connection
with its analysis and review of the transactions contemplated by this
Agreement or in connection with operating the business of FirstMark.
(ii) Associated may disclose Confidential Information
to any of its directors, officers, employees, agents and advisors (each
a "Representative" and, collectively, the "Representatives") who need
to know such Confidential Information for the purpose of assisting
Associated in connection with the transactions contemplated by this
Agreement or with operating the business of FirstMark; provided,
however, that prior to making such disclosure, Associated shall advise
each such Representative of Associated's obligations under this Section
8(j) and Associated shall be responsible for any breach of this
Agreement by any such Representative. Associated may disclose
Confidential Information if required by legal process or by operation
of applicable law; provided, however, that Associated shall first
promptly advise and consult with Contributor and its counsel concerning
the information Associated proposes to disclose.
(iii) Associated's obligations under clauses (i) and
(ii) of this Section 8(j) do not apply to information which (x) was
known by Associated prior to such disclosure and not subject to any
confidentiality agreement or obligation of secrecy to Contributor or
FirstMark of which Associated is aware or reasonably should be aware,
(y) at the time of disclosure is generally available to and known by
the public or the telecommunications industry other than as a result of
disclosure in violation of clause (i) or (ii) of this Section 8(j) or
(z) was or becomes available to Associated on a non-confidential basis
from a source other than Contributor or its agents or advisors;
provided, however, that such source is
25
not bound by a confidentiality agreement or obligation of secrecy to
Contributor in respect thereof of which Associated is aware or
reasonably should be aware.
(iv) In the event that this Agreement is terminated,
all Confidential Information, whether or not then in Associated's
possession, and any copies thereof or notes or extracts therefrom,
shall be returned to Contributor, without retaining any copies thereof,
and Associated shall destroy, as soon as practicable, all copies of any
analyses, studies, compilations or other documents prepared by
Associated or any of its Representatives to the extent that they
contain, reflect or are generated from any Confidential Information.
(v) Associated acknowledges and agrees that any
breach by it of the provisions of this Section 8(j) will cause
Contributor irreparable injury and damage, for which Contributor cannot
be adequately compensated in damages. Associated, therefore, expressly
agrees that Contributor shall be entitled to seek injunctive relief
and/or other equitable relief to prevent any breach of the provisions
of this Section 8(j), or any part thereof, and to secure their
enforcement.
(vi) The provisions of this Section 8(j) shall not
survive the Closing, except that the provisions of this Section 8(j)
shall survive with respect to any DEMS Licenses and DEMS Systems unless
and until control thereof is transferred to Associated pursuant to this
Agreement.
(k) Non-disclosure of Financial Terms. Associated agrees that,
except as requested by the FCC or required by law or legal process or in
connection with any financing, strategic alliance, acquisition or disposition
transaction, it shall not disclose to any third party, other than its Affiliates
or Representatives, the financial terms of the transactions contemplated by this
Agreement without the prior written consent of Contributor.
(l) Anti-Dilution Rights. Associated agrees that the
Membership Percentage represented by the Interest to be issued to Contributor
under this Agreement (regardless of when any portion of such Interest is issued
hereunder) shall not be diluted by the first $75 million of equity investments
in Associated by the Original Shareholders and their Affiliates from the date of
this Agreement through August 19, 1997 and shall be diluted in respect of any
other equity investments by the Original Shareholders or their Affiliates after
the date of this Agreement based upon (A) the amount of such equity investment
and (B) the fair market value of Associated (as determined in good faith by the
board of directors of Associated).
26
Section 9. Tax Matters.
(a) Tax Indemnification by Contributor.
(i) Contributor shall be liable for, and shall
indemnify Associated and its Affiliates and hold them harmless from and
against, any Taxes of FirstMark for taxable periods ending on or before
the Closing Date ("Pre-Closing Tax Periods") or portions of taxable
periods ending on or before the Closing Date and any loss, damage,
liability or expense, including, but not limited to, reasonable fees
for attorneys and other outside consultants, incurred in connection
with such Taxes.
(ii) Payments required under this Section 9(a) shall
be made within 30 days of Associated furnishing Contributor with
written evidence that Associated has paid such amounts or such amounts
are due and payable to a Taxing Authority.
(b) Apportionment of Taxes. In order to apportion
appropriately any Taxes relating to any taxable period beginning prior to and
ending after the Closing Date ("Straddle Period"), the parties hereto shall, to
the extent permitted under applicable law, elect with the relevant Tax Authority
to treat for all purposes, the Closing Date as the last day of the taxable year
or period of FirstMark, and such period shall be treated as a short taxable year
and a Pre-Closing Tax Period for purposes of this Section 9. In any case where
applicable law does not permit FirstMark to treat the Closing Date as the last
day of the taxable year or period with respect to Taxes that are payable with
respect to a Straddle Period, the portion of any such Taxes that are allocable
to the portion of the taxable year ending on the Closing Date shall be deemed to
be equal to the amount which would be payable if the taxable year or period
ended on the Closing Date.
(c) Refunds.
(i) Contributor shall be entitled to any refunds of
Taxes attributable to FirstMark (including refunds paid by means of
credit against other or future Tax liabilities) for a Pre-Closing Tax
Period or the portion of a Straddle Period ending on or before the
Closing Date other than refunds arising from a carryback of a loss or
credit from any period other than a Pre-Closing Tax Period.
(ii) Associated shall forward to Contributor any
refunds to which Contributor is entitled (pursuant to the terms of this
Section 9(c)) within 5 days after receipt thereof. In the case of a
refund received in the form of a credit against other or future Tax
liabilities, reimbursement in respect of such refund shall be due on
the due date for payment of the Taxes against which such refund has
been credited.
27
(d) Cooperation. After the Closing Date, each of Associated
and Contributor shall make available to the other, as reasonably requested, and
to any Taxing Authority, all information, records and documents relating to Tax
liabilities or potential Tax liabilities relating to FirstMark and shall
preserve all such information, records and documents until the expiration of any
applicable statute of limitations or extension thereof. Associated shall render
such assistance as shall be reasonably requested by Contributor so as to comply
with the responsibilities imposed on Contributor by Section 9(f).
(e) Certain Other Definitions. For purposes of this Agreement
(i) "IRS" means the Internal Revenue Service; (ii) "Return" means all returns,
reports, declarations, estimates, information returns, statements and forms of
any nature regarding Taxes, including remittance advices, required to be filed
with any Taxing Authority or depository; (iii) "Tax" means any federal, state,
local or foreign tax, including, without limitation, income (net or gross),
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, and including any interest, penalties or additions to tax
imposed with respect thereto; and (iv) "Taxing Authority" means any Governmental
Authority, domestic or foreign, having jurisdiction over the assessment,
determination, collection, or other imposition of Tax.
(f) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement ("Transfer Taxes") shall be
paid by Contributor when due, and Contributor shall file all necessary Returns
and other documentation with respect to all such Transfer Taxes, and, if
required by applicable law, Associated will, and will cause FirstMark to, join
in the execution of any such Returns and other documentation. Associated shall
reimburse Contributor for one-half of all Transfer Taxes and one-half of the
cost of filing Returns relating to Transfer Taxes.
(g) Tax Treatment of Indemnity Payments. The Tax treatment of
all indemnity payments made by either party to or for the benefit of the other
party under this Agreement shall be treated by the parties hereto as an
adjustment to the consideration.
(h) Certain Representations. Contributor and FirstMark hereby
jointly and severally represent and warrant to Associated that (i) except as set
forth on Schedule 9(h)(i), FirstMark has filed or has had filed on its behalf in
a timely manner (within any applicable extension periods) with the appropriate
Taxing Authority all income and other materials Returns with respect to Taxes of
FirstMark; (ii) all material Taxes with respect to FirstMark have been paid in
full or have been provided for in accordance with
28
generally accepted accounting principles on Schedule 10(a)(x); (iii) there are
no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local or foreign income or other
material Returns required to be filed by or with respect to FirstMark; (iv) none
of the Returns of or with respect to FirstMark is currently being audited or
examined by any Taxing Authority; and (v) no deficiency for any income or other
material Taxes has been assessed with respect to FirstMark which has not been
abated or paid in full. FirstMark is not, and has not at any time been, a member
of a consolidated group for federal income tax purposes.
Section 10. Representations and Warranties.
(a) Representations and Warranties of Contributor and
FirstMark. Contributor and FirstMark hereby jointly and severally represent and
warrant to Associated as follows:
(i) Capitalization. The authorized capital stock of
FirstMark consists of one thousand (1,000) shares of common stock, par
value $.01 per share, of which one hundred (100) shares are issued and
outstanding and owned of record and beneficially by Contributor. All of
the shares comprising the Stock are validly issued, fully paid and
non-assessable and are held by Contributor free and clear of all Liens.
There are outstanding no securities convertible into, exchangeable for,
or carrying the right to acquire, equity securities of FirstMark, or
subscriptions, warrants, options, rights or other arrangements or
commitments obligating FirstMark to issue or dispose of any securities
or any ownership interest therein. The Contribution of the Stock to
Associated pursuant to Section 3 hereof will vest in Associated legal
and valid title to the Stock, free and clear of all Liens (other than
Liens created by Associated).
(ii) Litigation. There is no action or proceeding in
any court or before any Governmental Authority pending or, to
Contributor's knowledge, threatened against Contributor or any of its
Affiliates, with respect to which there is a reasonable likelihood of a
determination which would have a material adverse affect on the ability
of Contributor to perform its obligations under this Agreement or which
is otherwise material to FirstMark. Neither Contributor nor any of its
Affiliates is subject to any outstanding order, ruling, judgment or
decree which would have a material adverse effect on the ability of
Contributor to perform its obligations under this Agreement or which is
otherwise material to FirstMark.
(iii) Corporate Organization. FirstMark is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(iv) Enforceability. This Agreement has been duly
executed and delivered by, and constitutes the valid and binding
obligation of, Contributor and
29
FirstMark, enforceable against Contributor and FirstMark in accordance
with its terms.
(v) No Violation; No Consents or Approvals. The
execution, delivery and performance by Contributor and FirstMark of
this Agreement does not conflict with, result in a breach of or cause a
default under, with or without the giving of notice or the passage of
time, or both, or require any consent or approval of any party pursuant
to, the certificate of incorporation of FirstMark or any material
agreement or instrument to which Contributor or FirstMark is a party or
by which either of them or any of their respective properties is bound,
nor does it conflict with or violate any Requirement of Law or require
any consent or approval of any Governmental Authority other than the
Requisite Regulatory Approvals.
(vi) DEMS Licenses; FirstMark DEMS Applications.
(A) FirstMark duly and validly holds each of
the DEMS Licenses listed on Schedule I, which are the only
licenses for DEMS granted to FirstMark or any of its
Affiliates as of the date of this Agreement. Each of the DEMS
Licenses has been validly issued, is in full force and effect,
has not been suspended, revoked, canceled, or modified in any
adverse way, is not subject to any conditions or requirements
that have not been imposed upon all such licenses generally,
and, except as set forth on Schedule 10(a)(vi) hereto, is not
subject to any pending regulatory or judicial review. To the
best knowledge of Contributor and FirstMark, other than
objections by Teledesic, there is not pending any application,
petition, objection, or other pleading with the FCC or any
court of appeals which questions the validity of or contests
any of the DEMS Licenses. To the best knowledge of Contributor
and FirstMark, no pending or threatened action or matter has
occurred that would inhibit or preclude the renewal of any
DEMS License in the ordinary course.
(B) FirstMark has, at all times, operated
the DEMS Systems in material compliance with the
Communications Act of 1934, as amended (the "Act"), the rules
of the FCC, and the terms of the DEMS Licenses. No
noncompliance with the Act, the rules of the FCC or the terms
of the DEMS Licenses has occurred with respect to the DEMS
Licenses which permits, or after notice or lapse of time or
both would permit, revocation or termination of any DEMS
License or would result in any impairment of the rights of
FirstMark with respect to the DEMS Licenses. All applications
and material reports required by the rules of the FCC have
been timely filed and all representations made in such
applications and reports are truthful and accurate in all
material respects.
30
No radio equipment used in the operation of the DEMS Systems
has been modified from its manufacturers' type-accepted
specifications or causes interference to other FCC-licensed
radio station facilities. All structures that support radio
equipment used in the operation of the DEMS Systems are, and
since their construction have been, reported, registered,
marked, lighted, inspected and maintained in accordance in all
material respects with the rules of the FCC and the standards
of the Federal Aviation Administration.
(C) Schedule I includes a list of all
applications for additions to or modifications of the DEMS
Systems that are pending as of the date of this Agreement
before the FCC.
(D) Except as disclosed on Schedule
10(a)(vi) hereto, FirstMark possesses all authorizations
required by any PUC or other Governmental Authority with
jurisdiction over the DEMS Systems, including, without
limitation, certificates of public convenience and necessity,
permits necessary for the use of land or construction of
facilities, and zoning variances (collectively, the "Local
Authorizations"). A list of all Local Authorizations in effect
as of the date of this Agreement is included in Schedule I.
The Local Authorizations are in full force and effect, have
not been suspended, revoked, canceled, or modified in any
adverse way, and are not subject to any conditions or
requirements that have not been imposed upon all wireless
communications providers generally and are not subject to any
pending regulatory or judicial review. To the best knowledge
of Contributor and FirstMark, there is not pending any
application, petition, objection, or other pleading with any
state, county, or other local regulatory agency or court of
appeals which questions the validity of or contests any of the
Local Authorizations. FirstMark has at all times operated the
DEMS Systems in material compliance with all state, county,
and other local statutes and ordinances. All facilities used
in the operation of the DEMS Systems are, and since their
construction have been, in material compliance with all
applicable land use and zoning statutes and ordinances.
(E) No communications facility used in
connection with the DEMS Systems has been constructed by
FirstMark under circumstances where such construction may have
significantly affected the environment pursuant to the rules
of the FCC, without the preparation of an environmental
assessment and a prior determination by the FCC that such
construction would result in no significant environmental
effect.
31
(F) The FirstMark DEMS Applications are the
only applications of FirstMark or any of its Affiliates for
any DEMS license.
(vii) Subscription Contracts. Schedule 10(a)(vii)
hereto (as supplemented at the Closing by identifying all additions
thereto between the date hereof and such date) sets forth all
subscription contracts for the provision of DEMS entered into by
FirstMark. Accurate and complete copies of all contracts listed on
Schedule 10(a)(vii) have been provided to Associated.
(viii) Tangible Assets. All material tangible assets
comprising a part of the DEMS Systems are in good working order and
condition.
(ix) Intellectual Property. FirstMark has, and upon
consummation of the Contribution will have, all intellectual property
rights associated with the DEMS Systems and such intellectual property
rights do not and will not infringe upon the intellectual property
rights of any Person.
(x) No Undisclosed Assets or Liabilities. Schedule
10(a)(x) hereto sets forth all assets and liabilities of FirstMark as
of the date of this Agreement. Between the date of this Agreement and
the Closing, except as expressly permitted by this Agreement, the
Schedules and Exhibits hereto, FirstMark will not incur any liabilities
other than liabilities arising in the ordinary course of business of
the operations of the DEMS Systems that will not, individually or in
the aggregate, have a material adverse effect on the assets, business
or operations of FirstMark.
(b) Representations and Warranties of Associated. Associated
hereby represents and warrants to Contributor and FirstMark as follows:
(i) Capitalization. Schedule 10(b)(i) sets forth the
outstanding Membership Percentage and the capital account of each
Member as of the date of this Agreement. As of the date of this
Agreement, except pursuant to the ▇▇▇▇▇ Employment Agreement and under
Associated's Equity Incentive Plan, there are outstanding no securities
or other instruments convertible into, exchangeable for, or carrying
the right to acquire, any Interest, or subscriptions, warrants,
options, rights or other arrangements or commitments (other than this
Agreement) obligating Associated to issue any Interest, or any
ownership interest therein.
(ii) Corporate Organization. Associated is a limited
liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(iii) Corporate Power and Authority. Associated has
the requisite limited liability company power and authority to enter
into this Agreement, to
32
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by
Associated of this Agreement and the consummation by Associated of the
transactions contemplated hereby have been duly authorized by all
requisite limited liability company action on the part of Associated,
and no other limited liability company proceedings on the part of
Associated or its members are necessary to authorize this Agreement and
the transactions contemplated hereby. The Original Shareholders have
irrevocably waived all rights under Section 5.1(d) of the Limited
Liability Company Agreement in connection with the transactions
contemplated by this Agreement. This Agreement has been duly executed
and delivered by Associated and constitutes the valid and binding
obligation of Associated, enforceable against Associated in accordance
with its terms.
(iv) No Violation. The execution, delivery and
performance by Associated of this Agreement does not conflict with,
result in a breach of or cause a default under, with or without the
giving of notice or the passage of time, or both, or require any
consent or approval of any party pursuant to, its operating agreement
or any material agreement or instrument to which it is a party or by
which it or any of its property is bound, nor does it conflict with or
violate any Requirement of Law or require any consent or approval of
any Governmental Authority other than the Requisite Regulatory
Approvals.
(v) Litigation. As of the date of this Agreement,
there is no litigation pending or, to Associated's knowledge,
threatened against Associated or any of its Affiliates with respect to
which there is a reasonable likelihood of a determination which would
have a material adverse effect on the ability of Associated to perform
its obligations under this Agreement. As of the date of this Agreement,
neither Associated nor any of its Affiliated is subject to any
outstanding orders, rulings, judgments or decrees which would have a
material adverse effect on the ability of Associated to perform its
obligations under this Agreement.
(vi) Acquisition of DEMS Licenses. As of the date of
this Agreement, Associated and its Affiliates have no agreement or
understanding with any Person (other than Contributor or FirstMark)
with respect to the direct or indirect purchase or sale of any DEMS
license or any Person which holds any DEMS license, and as of the date
of this Agreement, neither Associated nor any of its Affiliates is
engaged in any discussions or negotiations relating to any such
purchase or sale.
33
Section 11. Miscellaneous.
(a) Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under any Requirement of Law to perform
its obligations hereunder and to consummate and make effective the transactions
contemplated to be consummated by such party under this Agreement. Without
limitation of the generality of the foregoing, each party hereto (i) agrees to
use all reasonable efforts to obtain, and to cooperate with the other party in
obtaining, as promptly as practicable as contemplated by this Agreement, any and
all Requisite Approvals, and (ii) agrees that it will not take any action, or
enter into any agreement, which is inconsistent with, or which would impair or
restrict in any manner, its right or ability to promptly perform its obligations
hereunder.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, personal
representatives and permitted assigns of the parties hereto, provided that
neither this Agreement nor any rights or obligations hereunder may be assigned
or delegated by Contributor without Associated's prior written consent. For
purposes of this Agreement the term "successor" includes, without limitation,
any Person who or which acquires in a single or series of related transactions
more than 50% of the assets, earnings or voting stock of a party.
(c) Indemnification; Joint and Several Liability of FirstMark
and Contributor Prior to Closing.
(i) From and after the Closing, Contributor shall be
liable for, and shall indemnify Associated and hold her harmless from
and against, any and all losses, claims, damages or liabilities
incurred by Associated, or to which Associated becomes subject, to the
extent that such losses, claims, damages or liabilities result from the
breach by Contributor or FirstMark of any of their respective
representations and warranties or covenants contained in this
Agreement. In addition, Contributor shall be liable for, and shall
indemnify Associated and its Affiliates (including FirstMark) and hold
them harmless from and against, any and all losses, claims, damages or
liabilities incurred by Associated or any of its Affiliates, or to
which any of them becomes subject, to the extent that such losses,
claims, damages or liabilities result from FirstMark's former status as
an Affiliate of Contributor. Payments required under this paragraph
shall be made within 30 days of Associated's request therefor.
(ii) From and after the Closing, Associated shall be
liable for, and shall indemnify Contributor and hold her harmless from
and against, any and all losses, claims, damages or liabilities
incurred by Contributor, or to which Contributor becomes subject, to
the extent that such losses, claims, damages or
34
liabilities result from the breach by Associated of any of its
representations and warranties or covenants contained in this
Agreement. Payments required under this paragraph shall be made within
30 days of Contributor's request therefor.
(iii) Contributor and FirstMark shall be jointly and
severally liable for any breach by either of them prior to the Closing
of their obligations hereunder; provided that, if the Closing has
occurred, Contributor shall be solely liable for any such breach.
(d) Survival. The representations and warranties of the
parties contained herein shall survive the Closing of the transactions
contemplated hereby. The covenants and agreements contained herein to be
performed or complied with prior to the Closing (or termination of the Trust
Agreement, if applicable) shall expire at the Closing (or termination of the
Trust Agreement, if applicable). The covenants and agreements contained herein
to be performed or complied with after the Closing shall survive the Closing in
accordance with their terms without limitation as to time unless otherwise
specifically indicated. Nothing in this Section 11(d) shall limit the rights and
remedies of any party for any breach by another party of any of its
representations, warranties, covenants or other agreements under this Agreement.
(e) Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) and the other agreements and instruments which may be
entered into in connection herewith constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and shall
supersede any prior expressions of intent or understanding with respect to the
transactions provided for herein and therein.
(f) Costs and Expenses. Except as otherwise provided in this
Agreement, each party agrees to bear its own expenses, fees and costs incurred
in connection with the transactions contemplated by this Agreement.
(g) Amendment. Any amendment hereto shall be effective only if
in writing and signed by each of the parties hereto.
(h) Waiver; Cumulative Rights. No provision of this Agreement
shall be deemed to have been waived by any act or knowledge of either party or
of such party's agents, officers or employees, but only by an instrument in
writing signed by such party and delivered to the other party hereto specifying
such waiver. The failure or delay of either party to require performance by the
other party of any provision hereof shall not affect its right to require
performance of such provision unless and until such performance has been waived
in writing. Each and every right hereunder is cumulative and may be exercised in
whole or in part from time to time.
(i) Notices. All notices, demands, requests, certificates or
other communications under this Agreement shall be in writing and shall be
mailed by certified
35
or registered mail (return receipt requested) with charges prepaid, hand
delivered or sent by facsimile transmission or by commercial courier to the
address set forth below for each of the parties (or at such other address as
shall be specified by a party by like notice to the other party):
(i) if to Associated:
Associated Communications, L.L.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
The Associated Group, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Contributor or FirstMark:
▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o FirstMark Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
36
with copies to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Starr & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed delivered when received; provided that any notice
delivered after business hours or on a Saturday, Sunday or legal holiday at the
place of such delivery shall be deemed for purposes of computing any time period
hereunder to have been delivered on the next business day in such place of
delivery. Nothing in this Section 11(i) shall be deemed to constitute consent to
the manner and address for service of process in connection with any legal
proceeding (including litigation arising out of or in connection with this
Agreement), which service shall be effected as required by applicable law.
(j) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of New York,
without reference to its conflicts of law principles.
(k) Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(l) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
37
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereof on the date first above written.
ASSOCIATED COMMUNICATIONS, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman & CEO
FIRSTMARK COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:President and Chief Executive Officer
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Signed and agreed upon, as to
Sections 8(h) and 8(i) only.
MICROWAVE SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DIGITAL SERVICES CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President