EXHIBIT 99.1
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME
ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION IS AVAILABLE. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
OFFERED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is entered into
as of December 18, 2002 between Motorola, Inc., a Delaware corporation (the
"Purchaser"), and Next Level Communications, Inc., a Delaware corporation (the
"Company").
Whereas the Company designs and markets broadband communications
equipment that enables telephone companies and other communications service
providers to cost-effectively deliver a full suite of voice, high-speed data and
digital video services over the existing copper telephone wire infrastructure,
as described in the Company's Annual Report on Form 10-K for the period ending
December 31, 2001 filed on April 1, 2002, and the other documents of the Company
on file with the United States Securities and Exchange Commission (together, the
"SEC Documents"); and
Whereas the Company desires to sell to the Purchaser, and the Purchaser
desires to acquire: (i) shares of the Company's duly authorized Series A-2
Convertible Preferred Stock (the "Series A-2 Preferred") and (ii) warrants to
purchase shares of common stock, par value $0.01 per share, of the Company (the
"Common Stock"), pursuant to an exemption from registration under the United
States Securities Act of 1933, as amended (the "Securities Act"), provided by
Rule 506 of Regulation D promulgated thereunder ("Regulation D").
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
SECTION 1.
ISSUANCE OF THE SHARES AND THE WARRANTS.
1.1 Purchase and Sale of Securities; the Closing. In reliance upon the
representations of the Company contained in Section 1.2 and the representations
of the Purchaser contained in Section 1.3, and subject to the terms and
conditions described herein, the Company shall sell to the Purchaser and the
Purchaser shall purchase from the Company: (i) 26,506 shares of Series A-2
Convertible Preferred Stock (the "Shares"), at a purchase price per share of
Eight Hundred Thirty Dollars ($830.00); and (ii) (A) a warrant to purchase
220,000 shares of Common Stock at an exercise price per share equal to $2.00,
and upon other terms as provided in the form attached hereto as Exhibit A-1, and
upon other terms as provided in the form attached hereto as
Exhibit A-1, and (B) a warrant to purchase 7,951,807 shares of Common Stock at
an exercise price per share equal to $0.83, and upon other terms as provided in
the form attached hereto as Exhibit A-2, and upon other terms as provided in the
form attached hereto as Exhibit A-2 (the warrants described in this clause (ii),
the "Warrants"). (The Shares, the Warrants and the Common Stock underlying the
Shares and the Warrants are referred to herein collectively as the
"Securities"). The Shares and the Warrants shall be sold to the Purchaser in
consideration of the payment by the Purchaser to the Company of Twenty Two
Million United States Dollars (US$22,000,000), consisting of (i) the
cancellation, concurrently herewith, of $10,000,000 of principal amount of
indebtedness incurred pursuant to the Credit Agreement (Multi-Draw Term Loan
Facility) dated as of May 16, 2001 by and between the Company and the Purchaser,
as amended (the "Credit Agreement") (for avoidance of doubt, interest pursuant
to the Credit Agreement shall accrue on such principal amount through the date
of this Agreement) and (ii) funds in the amount of $12,000,000 paid by the
Purchaser to the Company concurrently herewith (collectively, the "Purchase
Price"). The Shares shall be convertible into Common Stock at an initial
conversion ratio of 1000 shares of Common Stock for each Share (as further
provided in the Certificate of Designation, Rights and Preferences of the Series
A-2 Convertible Preferred Stock in the form attached hereto as Exhibit B (the
"Certificate")). The closing (the "Closing") of the purchase and sale of the
Securities shall be held as of 10:00 a.m., local time on December 18, 2002 (the
"Closing Date"), at the Century City, California offices of Xxxxxx & Xxxxxx,
counsel to the Purchaser, or at such other time or place or on such other date
as the parties hereto may mutually agree.
On the Closing Date, the Purchaser will deliver to the Company
immediately available funds in the amount of $12,000,000 by wire transfer to
such Company account as is designated by the Company in writing. On the Closing
Date, the Company will deliver to the Purchaser executed Warrants, certificates
representing the Shares in proper legal form and an amendment to the previously
executed Registration Rights Agreement with respect to the Common Stock
underlying the Shares and the Warrants in the form attached hereto as Exhibit C
(the "Registration Rights Agreement Amendment").
1.2 Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser that on the date
hereof and as of the Closing Date:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation in each jurisdiction in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it requires such qualification and in which the failure
so to qualify would (x) adversely affect the legality, validity or
enforceability of this Agreement or the related transaction documents, (y) have
or result in a material adverse effect on the results of operations, assets or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under this Agreement or any of the related
transaction documents (any of (x), (y) or (z), a "Material Adverse Effect"). For
purposes of this Agreement, Material Adverse Effect will not include general
economic and industry conditions. The Company has all requisite power to
transact the business it transacts and proposes to transact, to execute and
2
deliver this Agreement and all other documents and agreements contemplated
hereby and thereby, and to perform the provisions hereof and thereof and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement
and all other documents and agreements contemplated hereby to be executed,
delivered and performed by the Company, and the consummation of the transactions
contemplated hereby or thereby, have been duly authorized and approved by the
Company. This Agreement and all other documents and agreements contemplated
hereby to be executed and delivered by the Company have each been duly
authorized, executed and delivered by, and each is the valid and binding
obligation of, the Company, enforceable against it in accordance with its terms,
except as may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or by legal or equitable principles relating to
or limiting creditors' rights generally.
(c) The authorized capital stock of the Company is 400,000,000
shares of Common Stock, par value $.01 per share, of which approximately
86,000,000 shares are issued and outstanding as of the date hereof; 70,000,000
shares of Class B Non-Voting Common Stock, par value $.01 per share, none of
which are issued and outstanding; and 10,000,000 shares of preferred stock, par
value $.01 per share, of which (i) 9,000,000 shares have been designated as
Series A Convertible Preferred Stock and of which 6,912,442 are issued and
outstanding immediately prior to the close; (ii) 750,000 shares have been
designated as Series A-1 Convertible Preferred Stock and of which 513,870 are
issued and outstanding immediately prior to the close, and (iii) 50,000 shares
have been designated as Series A-2 Convertible Preferred Stock and of which none
will be issued and outstanding immediately prior to the close. The Shares will,
when issued, be duly and validly issued, fully paid and nonassessable; the
Common Stock underlying the Shares will, when issued upon conversion, be duly
and validly issued, fully paid and nonassessable; and the Common Stock
underlying the Warrants will, when issued upon exercise, be duly and validly
issued, fully paid and nonassessable. As of the Closing Date, except as
disclosed in the SEC Documents and except, with respect to clause (i), the stock
options issued pursuant to existing stock option plans that have been previously
disclosed in writing to the Purchaser, (i) the Company will not have outstanding
any stock or securities convertible or exchangeable for any shares of its
capital stock other than the Warrants and will not have outstanding any rights
or options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock, other than
the Warrants; (ii) the Company will not be subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock, except with respect to the Series A-2 Preferred, the Series A-1
Convertible Preferred Stock and the Series A Convertible Preferred Stock; (iii)
there are no statutory or contractual stockholders' preemptive rights or other
similar rights with respect to the issuance of the Warrants hereunder; and (iv)
there are no agreements among the Company's stockholders with respect to the
voting or transfer of the company's capital stock. The Company will use the
proceeds from the sale of the Securities to finance current operations and not
to make any payments or distributions to debt or equity holders, in their
capacity as such, other than to the Purchaser.
(d) The consummation of the transactions contemplated by this
Agreement and the performance of the terms and provisions of this Agreement and
the other documents and agreements contemplated hereby or thereby will not: (i)
contravene, result in any breach of, or
3
constitute a default under any indenture, mortgage, deed of trust, bank loan or
credit agreement, corporate charter, bylaws or other material agreement or
instrument to which the Company is a party or by which the Company or any of its
properties is bound; (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order of any court, arbitrator or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (collectively,
"Governmental Person") applicable to the Company; (iii) violate any material
provision of any statute or other rule or regulation of any Governmental Person
applicable to the Company; (iv) violate or conflict with the terms of any
"lockup" or similar provision of any underwriting or similar agreement to which
the Company or its subsidiaries is a party; and (v) result in the creation or
imposition of any lien, claim or other encumbrance upon any of the assets of the
Company.
(e) No consent, approval or authorization of, or registration,
filing or declaration with, any person or entity not obtained as of the Closing
Date is required for the transfer, sale or issuance of the Securities or the
valid delivery of the Securities or for the performance by the Company of this
Agreement and the other documents and agreements contemplated hereby, other than
the filings, registrations or qualifications under securities laws or that may
be required to be made or obtained in connection with the offers, transfer, sale
or delivery of the Securities or any interest therein. Neither the Company nor
any of its affiliates, nor any person acting on its or their behalf has offered
or will offer or sell the Securities in the United States by means of any form
of general solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act.
(f) Upon issuance (including payment of the purchase or
exercise price therefor), the Purchaser shall acquire good and marketable title
to the Securities free and clear of all covenants, conditions, restrictions,
taxes, security interests, liens, pledges, charges, encumbrances, rights of
first refusal, options and adverse claims or rights of any kind whatsoever
arising through the Company or pursuant to any agreement entered into by the
Company.
(g) The Securities have been duly and validly authorized will
not subject the holders thereof to personal liability solely by reason of being
such holders.
(h) There is no pending or, to the actual knowledge of the
Company, threatened action, suit, proceeding or investigation before any
Governmental Person having jurisdiction over the Company that would or (i)
adversely affect the Company's execution or performance under this Agreement or
the Warrants or (ii) except as set forth in the SEC Documents, materially
adversely affect the results of the operations of the Company. Since the date of
the latest audited financial statements included in the SEC Documents, except as
specifically disclosed in the SEC Documents or public earnings announcements as
of the date of this Agreement, (a) there has been no event, occurrence or
development that has or that is reasonably likely to result in a Material
Adverse Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company's financial statements pursuant to United States
generally accepted accounting principles or required to be disclosed in filings
made with the Securities and Exchange Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors, (d) the
Company has not declared or made any payment or distribution of cash or other
4
property to its stockholders or officers or directors (other than in compliance
with existing Company stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares of
its capital stock. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
(i) The SEC Documents consisting solely of the Company's
Annual Report on Form 10-K for the period ending December 31, 2001 and all
filings of the Company with the Securities and Exchange Commission made
thereafter (i) were prepared in all material respects in accordance with the
requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(j) No broker's or finder's or placement fee or commission
will be payable to any broker or agent engaged by the Company or any of its
officers, directors or agents with respect to the issue of the Securities or the
transactions contemplated by this Agreement. The Company agrees to indemnify the
Purchaser and its agents and hold them harmless from and against any claim,
demand or liability for broker's or finder's or placement fees or similar
commissions, whether or not payable by the company, alleged to have been
incurred in connection with such transactions, other than any broker's or
finder's fees payable to persons engaged by the Purchaser without the knowledge
of the Company.
(k) All representations and warranties of the Company set
forth in this Agreement, the Warrants and the Registration Rights Agreement are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
1.3 Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents, warrants and covenants to the Company that on
the date hereof, as of the Closing Date and as of the date of any conversion of
the Shares, exercise of the Warrants or any transfer of the Securities by it:
(a) The Purchaser has all requisite power to execute and
deliver this Agreement and any Securities exercised or converted, and all other
documents and agreements contemplated hereby and thereby, and to perform the
provisions hereof and thereof and to consummate the transactions contemplated
hereby and thereby.
(b) The execution, delivery and performance of this Agreement
and any Securities exercised or converted, and all other documents and
agreements contemplated hereby and thereby, and the consummation of the
transactions contemplated hereby or thereby, have been and will be prior to such
exercise or conversion duly authorized and approved by the
5
Purchaser. This Agreement, and all other documents and agreements contemplated
hereby, including any Securities exercised or converted, have each been, or will
be upon exercise or conversion, duly authorized, executed and delivered by, and
each is the valid and binding obligation of, the Purchaser enforceable against
the Purchaser in accordance with its terms, except as may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws or by legal or equitable principles relating to or limiting creditors'
rights generally.
(c) The Purchaser is an "accredited investor" within the
meaning of Regulation D under the Securities Act, and is acquiring the
Securities for investment for its own account, and not with a view to
distribution subject, nevertheless, to any requirement of law that the
disposition of its property shall at all times be within its control. The
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of purchasing the
Securities. The Purchaser is aware that it may be required to bear the economic
risk of an investment in the Securities for an indefinite period, and it is able
to do so. The Purchaser acknowledges (i) that the Securities being acquired by
it are not being registered under the Securities Act on the grounds that (A) the
offer and sale of the Securities are exempt from registration under Section 4(2)
of the Securities Act as not involving any public offering, or (B) such issuance
is exempt from registration under Rule 506 of Regulation D and (ii) the
Company's reliance on such exemptions is predicated in part on the
representations made to the Company by the Purchaser in this Section 1.3.
(d) The Purchaser acknowledges and agrees that until one year
after the conclusion of the transactions contemplated hereby, an offer or sale
of the Securities within the United States may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than
in accordance with Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act. The Purchaser acknowledges that
the exemption from registration provided by Rule 144 may not be available.
SECTION 2.
CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
The Purchaser's obligation to purchase and pay for the Shares and the
Warrants on the Closing Date shall be subject to the satisfaction on or before
the Closing Date of the following conditions:
2.1 Proceedings Satisfactory. All proceedings taken on or prior to the
Closing Date in connection with the issuance of the Shares and the Warrants and
the consummation of the transactions contemplated hereby and all documents and
papers relating thereto shall be reasonably satisfactory in form and substance
to the Purchaser and its counsel. Without limiting the generality of the
foregoing, (i) all shareholder approvals required in connection with the Shares
and the Warrants shall have been obtained, (ii) all board of director approvals
required in connection with the Shares and the Warrants shall have been
obtained, including, without limitation, approval of an independent committee of
the Company's board of directors as advised by an independent financial advisor,
(iii) any required filings and approvals under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, shall have been made or obtained, as
6
applicable, (iv) any required filings and approvals under the NASD rule 4350, as
amended, shall have been made or obtained, as applicable, and (v) any required
filings and approvals with respect to any other third party shall have been made
or obtained, as applicable.
2.2 Representations True. All representations and warranties of the
Company contained herein shall be true and correct in all respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date and the Company shall
have performed in all respects all agreements on its part required to be
performed under this Agreement on or prior to the Closing Date.
2.3 The Purchase by the Purchaser Permitted by Applicable Laws. The
sale and the payment for the Shares and the Warrants: (i) shall not be
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion; (ii) shall not subject the Purchaser to any penalty
under or pursuant to any applicable law or governmental regulation; and (iii)
shall be permitted by the laws and regulations of the jurisdictions to which the
Purchaser is subject.
2.4 Execution and Delivery of Documents. The Purchaser shall have
received, duly executed and delivered and in form and substance reasonably
satisfactory to the Purchaser and its counsel: (i) certificates representing the
Shares, (ii) the Warrants, (iii) the Registration Rights Agreement, (iv)
evidence that the Certificate of Designation for the Series A-2 Preferred,
together with any necessary amendments thereto, has been filed on or prior to
the Closing Date with the Secretary of State of the State of Delaware, (v)
evidence that amendments to the Certificate of Designation for the Series A
Preferred and to the Certificate of Designation for the Series A-1 Preferred, in
each case as previously agreed to by the Purchaser, have been filed on or prior
to the Closing Date, and (vi) such other documents and information as the
Purchaser may reasonably request.
2.5 No Material Adverse Effect. Except as previously disclosed in the
SEC Documents or public earnings announcements as of the date of this Agreement,
since December 31, 2001, there has been no event, occurrence or development that
has or that is reasonably likely to result in a Material Adverse Effect. In
addition, no investigation, action, suit or proceeding shall have been
threatened or instituted against the Company or the Purchaser, which, in any
such case, in the judgment of the Purchaser, challenges, or might result in a
challenge to, the consummation of the transactions contemplated hereby, or which
claims, or might give rise to a claim for, damages against the Purchaser as a
result of the consummation of such transactions.
2.6 Fees and Expenses; Accrued Interest on Convertible Promissory Note.
The Company shall have paid the fees and expenses of the Purchaser described in
Section 3.3 that have accrued as of the Closing Date. The Company also shall
have paid all accrued interest on the Convertible Promissory Note through the
date hereof.
SECTION 3.
COVENANTS.
The Company covenants and agrees that both before and after the
issuance of the Shares and the Warrants:
7
3.1 Corporate Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the Company's
corporate existence in accordance with the rights (charter and statutory),
licenses and franchises of the Company; provided, however, that the foregoing
shall not restrict any merger involving the Company, whether or not it is the
surviving corporation.
3.2 Compliance with Laws. The Company shall comply in all respects with
all applicable laws, statutes and regulations of any Governmental Person, a
violation of which would result in a Material Adverse Effect.
3.3 Payment of Expenses. In the event the transactions contemplated by
this Agreement are consummated, the Company shall promptly pay to the Purchaser
all reasonable costs and out-of-pocket expenses of the Purchaser, including
without limitation its reasonable attorneys' fees, incurred in connection with
the negotiation, preparation, execution and delivery of this Agreement, the
Certificates representing the Shares, the Warrants and any other documents
related to the Purchaser's investment in the Company, and defense or enforcement
costs related thereto.
3.4 Public Information. The Company shall make available at all times
current public information with respect to the Company within the meaning of
Rule 144(c) under the Securities Act.
3.5 Encumbrances. The Company shall cause the Securities to be, upon
delivery, conversion or exercise, as the case may be, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges, security
interests, rights of first refusal or other encumbrances arising through the
Company or pursuant to any agreement entered into by the Company.
3.6 Authorization. The Company will have at all times authorized and
reserved for issuance, free from preemptive rights, a sufficient number of
shares of Common Stock to satisfy the conversion and exercise rights of the
Purchaser pursuant to the terms and conditions of the Certificate and the
Warrants and to satisfy the issuance of any other shares of Common Stock that
are reserved for issuance or that are issuable upon the exercise, conversion,
exchange or satisfaction of any outstanding securities or obligations or rights
of the Company. The Company shall not issue any of its Series A-1 Preferred to
any person other than the Purchaser and shall not issue any other sub-Series of
its Series A-1 Preferred to any other person if, after such issuance, the
Purchaser would not then hold a majority of the Series A-1 Preferred.
SECTION 4.
TAXES.
The Company will pay all taxes (including interest and penalties),
other than taxes imposed on the income of the Purchaser, which may be payable in
respect of the execution and delivery of this Agreement or of the execution and
delivery (but not the subsequent transfer) of any of the Securities or of any
amendment of, or waiver or consent under or with respect to, this Agreement or
of any of the Securities and will save the Purchaser and all subsequent holders
8
of the Securities harmless against any loss or liability resulting from
nonpayment or delay in payment of any such tax.
SECTION 5.
MISCELLANEOUS.
5.1 Private Placement; Legend. The Purchaser acknowledges and agrees
that the Securities have not been registered under the Securities Act and, to
the extent they constitute securities subject to registration under Section 5 of
the Securities Act, may not be offered or sold unless registered under the
Securities Act, or an exemption from such registration requirements is
available. The certificates or instruments representing or evidencing the Shares
shall bear a legend in substantially the following form, unless counsel to the
Company shall have advised the Company that such legend is no longer needed:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT DATED AS OF SEPTEMBER 26, 2002, (THE "SECURITIES PURCHASE
AGREEMENT") A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED TO THE HOLDER ON REQUEST TO THE SECRETARY
OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAW, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAW.
The Warrants shall bear a legend in substantially the following form, unless
counsel to the Company shall have advised the Company that such legend is no
longer needed:
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER
RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR
THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE
OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH
9
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.
5.2 Indemnification. The Company agrees to indemnify, defend and hold
harmless the Purchaser and its successors, assigns, subsidiaries, affiliates and
all of the officers, directors, employees, partners and agents (including
attorneys and accountants) of each of the aforementioned persons or entities,
and each of them, from and against any and all losses, claims, damages,
liabilities, expenses, demands, causes of action, suits, debts, obligations,
rights, promises, acts, agreements and damages of any kind or nature whatsoever,
whether at law or in equity, whether known or unknown, foreseen or unforeseen,
heretofore or hereafter arising out of, relating to, connected with or
incidental to the failure of any representation or warranty made by the Company
or in any other documents or agreements contemplated hereby or the failure of
the Company to comply in all material respects with the covenants contained in
this Agreement or in any other documents or agreements contemplated hereby.
5.3 Reliance on Representations. All representations, warranties,
covenants and agreements of the Company and the Purchaser herein shall be deemed
to be material and to have been relied upon by the Purchaser or the Company, as
applicable, and shall survive the execution and delivery of this Agreement and
of the Securities.
5.4 Survival of the Representations, Warranties, etc. The respective
agreements, representations, warranties, indemnities and other statements made
by or on behalf of the Company and the Purchaser, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement and will
survive delivery of any payment for the Securities.
5.5 Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Company, the Purchaser and each of their
respective successors and assigns. The Purchaser shall be permitted to transfer
the Securities in accordance with their terms and the terms of this Agreement
and in accordance with applicable restrictions under applicable federal and
state securities laws.
5.6 Notices. All notices and other communications provided for in this
Agreement shall be in writing and delivered by registered or certified mail,
postage prepaid, or delivered by overnight courier (for next business day
delivery) or telecopied, addressed as set forth on the signature page hereof, or
at such other address as any of the parties hereto may hereafter designate by
notice to the other parties given in accordance with this Section. Any such
notice or communication shall be deemed to have been duly given on the seventh
day after being so mailed, the next business day after delivery by overnight
courier, when received when transmitted by telecopy with confirmation of
successful transmission or upon receipt when delivered personally.
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement. The
original signature
10
pages shall be forwarded to the Company or its counsel and the Company or its
counsel will provide all of the parties hereto with a copy of the entire
Agreement.
5.8 Amendments. This Agreement may only be amended by a writing duly
executed by the parties hereto.
5.9 Severability. If any term or provision of this Agreement or any
other document executed in connection herewith shall be determined to be illegal
or unenforceable, all other terms and provisions hereof and thereof shall
nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
5.10 GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER
JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT OR PORTION THEREOF, THIS
AGREEMENT AND ALL AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO
OR THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
5.11 Entire Agreement. This Agreement (including its exhibits) contains
the entire Agreement of the parties hereto with respect to the transactions
contemplated hereby and supersedes all previous oral and written, and all
previous contemporaneous oral negotiations, commitments and understandings.
5.12 Further Assurances. Each party agrees promptly to execute and
deliver such documents and to take such other acts as are reasonably necessary
to effectuate the purposes of this Agreement.
5.13 Headings. The headings contained herein are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
5.14 WAIVER OF JURY TRIAL. EACH PARTY HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING
TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, THE SECURITIES OR ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE SECURITIES.
5.15 Third-Party Beneficiary. Any permitted transferee of any part of
the Securities shall be a third party beneficiary of the Company's obligations
under this Agreement or the Warrants, as applicable. Such person shall have all
the rights of a third party beneficiary with respect to the enforcement against
the Company of any provision of this Agreement or the Warrants.
11
5.16 Waiver of Credit Agreement Section 2.08. The Purchaser hereby
waives any requirement of Section 2.08 of the Credit Agreement that would
require the Purchase Price or any portion thereof to be used concurrently
herewith or promptly thereafter to pay obligations as described in such Section
2.08; provided, however, that the Purchaser reserves the right to have the
Purchase Price count toward the applicable limits of such Section 2.08 and be
applied as provided therein upon any subsequent triggering event under such
Section 2.08. The preceding waiver shall be effective only in the specific
instance described herein and for the specific purpose for which it was given,
and nothing contained herein shall be construed to limit or bar any rights or
remedies of the Purchaser which it may have on any other occasion with respect
to the Credit Agreement, the terms and conditions of which shall remain in full
force and effect except as specifically set forth in this Section 5.16.
5.17 Fulfillment of Commitment; Waivers Superceded. The Purchaser and
the Company agree that the Purchaser's purchase of the Shares in accordance with
Section 1.1 completely fulfills the Purchaser's obligations under the March 29,
2002 letter agreement providing for a $35,000,000 financing commitment from the
Purchaser to the Company. The Purchaser and the Company agree that the
amendments to the Certificates of Designation described in Section 2.4 supercede
any prior waivers by the Purchaser with respect to the provisions of such
Certificates of Designation.
5.18 Presentation to Board of Directors of Liquidation Events. In the
certificates of designation for the Series A, Series A-1 and Series A-2
preferred stock of the Company, the following events, in order to constitute
"Liquidation Events" (as defined in such certificates of designation) require
the approval of a majority of the members of the Company's Board of Directors
who are not affiliated with any holder of any such preferred stock: (i) a "Sale"
of the Company, (ii) a voluntary liquidation, dissolution and/or winding up of
the Company's affairs, and (iii) a voluntary bankruptcy petition or bankruptcy
petition led by any holder of any such preferred stock. Prior to engaging in any
such "Liquidation Event" that is defined by reference to approval of such
members of the Company's Board of Directors, the Company will obtain the vote
(either affirmative or negative) of such members of its Board of Directors on
any such event.
[SIGNATURE PAGE FOLLOWS]
12
In witness whereof, the parties hereto execute this Agreement as of the
date first set forth above.
THE PURCHASER:
MOTOROLA, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
------------------------------------
Address for Notices:
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Treasurer
Fax: (000) 000-0000
THE COMPANY:
NEXT LEVEL COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Zar
------------------------------------
Address for Notices:
Next Level Communications, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
13
EXHIBITS A-1 AND A-2
FORMS OF WARRANTS
A-1
EXHIBIT B
CERTIFICATE OF DESIGNATION,
RIGHTS AND PREFERENCES
OF THE
SERIES A-2 CONVERTIBLE PREFERRED STOCK
OF
NEXT LEVEL COMMUNICATIONS, INC.
B-1
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT AMENDMENT
C-1
