Execution Version
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MASTER INVESTMENT AGREEMENT
by and among
TERRESTAR CORPORATION,
TERRESTAR NETWORKS INC.,
and
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
and
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.
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Execution Version
Table of Contents
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ARTICLE I
DEFINITIONS
Section 1.01 Specific Definitions............................................2
Section 1.02 Other Terms.....................................................2
ARTICLE II
SALE AND PURCHASE
Section 2.01 Sale and Purchase...............................................2
Section 2.02 Closings........................................................2
Section 2.03 The Company's Deliveries to the Purchaser.......................2
Section 2.04 The Company's Deliveries to the Exchangeable Note Trustee.......3
Section 2.05 The Parent's Deliveries to the Purchaser........................4
Section 2.06 Purchaser's Deliveries to the Company...........................4
Section 2.07 Independent Nature of the Purchaser's Obligations and Rights....4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT
Section 3.01 Organization, Good Standing and Qualification...................5
Section 3.02 Capital Structure...............................................5
Section 3.03 Corporate Authority; Approval and Fairness......................8
Section 3.04 The Indentures..................................................8
Section 3.05 The Notes and the Guarantees....................................8
Section 3.06 Valid Issuance of Parent Equity Securities......................9
Section 3.07 No Violation or Default.........................................9
Section 3.08 No Conflict.....................................................9
Section 3.09 No Consents Required...........................................10
Section 3.10 Company Financial Statements...................................10
Section 3.11 Undisclosed Liabilities; etc...................................11
Section 3.12 Absence of Certain Changes.....................................11
Section 3.13 Independent Accountants........................................12
Section 3.14 Litigation.....................................................12
Section 3.15 Tax Matters....................................................13
Section 3.16 Title to Real and Personal Property............................13
Section 3.17 Environmental Matters..........................................14
Section 3.18 Employee Benefits..............................................14
Section 3.19 Labor Matters..................................................16
Section 3.20 Insurance......................................................18
Section 3.21 Intellectual Property..........................................18
Section 3.22 No Undisclosed Relationships...................................19
Section 3.23 Related Party Transactions.....................................20
Section 3.24 Company Not an "Investment Company"............................20
Section 3.25 Accounting Controls............................................20
Section 3.26 Material Contracts.............................................20
Section 3.27 No Unlawful Payments; Compliance with Certain Laws.............21
Section 3.28 Solvency.......................................................21
Section 3.29 Brokers........................................................22
Section 3.30 Licenses and Permits...........................................22
Section 3.31 Rule 144A Eligibility..........................................22
Section 3.32 No Integration.................................................22
Section 3.33 No Stabilization...............................................22
Section 3.34 Margin Rules...................................................22
Section 3.35 No Restriction on Distributions................................23
Section 3.36 Contemporaneous Purchase.......................................23
Section 3.37 Regulatory.....................................................23
Section 3.38 Complete Disclosure............................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 Authorization..................................................24
Section 4.02 No Conflicts...................................................24
Section 4.03 Certain Fees...................................................24
Section 4.04 Purchase in Ordinary Course....................................24
Section 4.05 Unregistered Securities........................................24
ARTICLE V
CONDITIONS
Section 5.01 Conditions Precedent to the Obligations of the Purchaser at
each Closing...................................................26
Section 5.02 Conditions Precedent to the Obligations of the Company.........27
Section 5.03 Additional Conditions Precedent to the Final Closing...........28
Section 5.04 Additional Documents...........................................28
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 Blue Sky Compliance............................................28
Section 6.02 Supplying Information..........................................29
Section 6.03 No Integration.................................................29
Section 6.04 No General Solicitation or Directed Selling Efforts............29
Section 6.05 No Stabilization...............................................29
Section 6.06 Offering of Exchangeable Notes to Existing Stockholders........29
Section 6.07 Network Capacity Agreement.....................................29
Section 6.08 Regulatory.....................................................29
Section 6.09 Stockholder Approval...........................................30
Section 6.10 Filings........................................................31
Section 6.11 Withholding Certificates.......................................31
Section 6.12 Company Board; Voting Rights...................................32
ARTICLE VII
MISCELLANEOUS
Section 7.01 Use of Proceeds................................................32
Section 7.02 Termination by Mutual Consent..................................32
Section 7.03 Termination by the Purchaser or the Company....................32
Section 7.04 Interpretation; Severability...................................32
Section 7.05 Survival.......................................................32
Section 7.06 Waivers; Remedies; Amendments..................................33
Section 7.07 Indemnification................................................33
Section 7.08 Binding Effect; Assignment.....................................34
Section 7.09 Non-Disclosure.................................................34
Section 7.10 Communications.................................................34
Section 7.11 Entire Agreement...............................................35
Section 7.12 Governing Law..................................................36
Section 7.13 Fees and Expenses..............................................36
Section 7.14 Execution in Counterparts......................................36
Schedules and Exhibits
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Exhibit A - Defined Terms
Exhibit B - Form of Indenture for Exchangeable Notes (including Form of
Exchangeable Note)
Exhibit C - Form of Spectrum Contribution Agreement
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Second Supplemental Indenture to the Indenture, dated
February 14, 2007, between TerreStar Networks Inc., the guarantors
party thereto and U.S. Bank National Association in respect of 15%
Senior Secured PIK Notes due 2014
Exhibit F - Form of Certificate of Designations for the Series D Preferred Stock
of TerreStar Corporation
Exhibit G - Form of Xxxxxx, Xxxx & Xxxxxxxx LLP Opinion
Exhibit H - Form of Dechert LLP Opinion
Exhibit I - Form of General Counsel Opinion
Exhibit J - Reserved
Exhibit K - Form of Xxxxxxxx, Xxxxxx & Finger, P.A. Opinion
Exhibit L - Form of Officers' Certificate
MASTER INVESTMENT AGREEMENT
This MASTER INVESTMENT AGREEMENT, dated as of February 5, 2008 (this
"Agreement"), is by and among TERRESTAR CORPORATION, a Delaware corporation (the
"Parent"), TERRESTAR NETWORKS INC., a Delaware corporation (the "Company"), and
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., ("Harbinger Master Fund"), and
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, LP ("Harbinger Special
Situations Fund", and together with Harbinger Master Fund, "Harbinger," or the
"Purchaser").
WHEREAS, the Company desires to issue and sell $150,000,000 in aggregate
principal amount of its 6-1/2% Senior Exchangeable Paid-in-Kind Notes, due June
15, 2014 (the "Exchangeable Notes") pursuant to an Indenture (the "Exchangeable
Notes Indenture") among the Company, Parent, the guarantors from time to time
party thereto and U.S. Bank National Association, as Trustee substantially in
the form attached as Exhibit A;
WHEREAS, the Company has outstanding $537,500,000 in aggregate principal
amount of its 15% Senior Secured PIK Notes, due February 15, 2014 (the "Secured
Notes") issued under the Indenture (the "Secured Notes Indenture") dated as of
February 14, 2007, between the Company, the guarantors party thereto, and U.S.
Bank National Association, as Trustee, which Secured Notes are held by several
investors including the Purchaser;
WHEREAS, the Parent desires to issue and sell to the Purchaser one (1)
share of its Series D Preferred Stock, par value $.01 per share (the "Series D
Preferred");
WHEREAS, the Company desires to issue and sell to the Purchaser up to
$75,000,000 in aggregate principal amount of the Exchangeable Notes;
WHEREAS, (i) the Company intends to issue and sell up to $75,000,000 in
aggregate principal amount of the Exchangeable Notes, (ii) Parent intends to
issue and sell one (1) share of the Series C Preferred Stock, par value $.01 per
share (the "Series C Preferred"), and (iii) the Company intends to issue and
sell up to $50,000,000 in additional aggregate principal amount of the Secured
Notes pursuant to the Supplemental Secured Notes Indenture to another party in
transactions that are intended to be completed simultaneously with the
completion of the transactions to be completed at the Initial Closing under this
Agreement (such Exchangeable Notes, Secured Notes and share of Series C
Preferred being referred to herein as the "Other Purchaser Securities"); and
WHEREAS, the Parent may following, and subject to, the approval of its
shareholders, issue up to 60 million shares of its common stock (or junior
preferred stock convertible into common stock) in exchange for the contribution
of the Spectrum from the Purchaser and a third party;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Specific Definitions. As used in this Agreement, and unless
the context requires a different meaning, the terms defined in Exhibit A have
the meanings specified or referred to therein.
Section 1.02 Other Terms. Other terms defined elsewhere in the text of this
Agreement shall, unless otherwise indicated, have the meanings indicated
throughout this Agreement.
ARTICLE II
SALE AND PURCHASE
Section 2.01 Sale and Purchase. Subject to the terms and conditions hereof
each of the Company and the Parent, as applicable, hereby agrees to issue and
sell to the Purchaser and the Purchaser hereby agrees to purchase from the
Company, the Purchased Securities for the Purchase Price.
Section 2.02 Closings. The consummation of the sale and purchase of the
Initial Purchased Securities and the Additional Purchased Securities, if any,
hereunder (the "Initial Closing") shall take place on the Initial Closing Date,
and the consummation of the sale and purchase of the Spectrum Shares pursuant to
the Spectrum Contribution Agreement shall take place in accordance with the
terms of the Spectrum Contribution Agreement (the "Final Closing" and, together
with the Initial Closing each a "Closing") shall take place in accordance with
the terms of the Spectrum Contribution Agreement. Each Closing shall take place
at the offices of Xxxxxxx XxXxxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 2.03 The Company's Deliveries to the Purchaser. At each Closing,
the Company will deliver, or cause to be delivered, to the Purchaser:
(a) A certificate (or certificates) representing the Purchased
Securities to be issued and delivered at such Closing;
(b) In the case of the Initial Closing a cross-receipt executed by the
Company certifying that it has received a wire transfer as of the relevant
Closing Date in an amount equal to the aggregate Purchase Price of the
Purchased Securities to be purchased by the Purchaser at such Closing;
(c) A written opinion from Xxxxxx Xxxx & Xxxxxxxx LLP, special counsel
for the Company and the Guarantors, dated the relevant Closing Date and
addressed to the Purchaser, in substantially the form attached hereto as
Exhibit G or otherwise in a form reasonably acceptable to the Purchaser;
(d) A written opinion from Dechert LLP, investment company act counsel
for the Company and the Guarantors, dated the relevant Closing Date and
addressed to the Purchaser, in substantially the form attached hereto as
Exhibit H or otherwise in a form reasonably acceptable to the Purchaser;
(e) A written opinion from Xxxxxxx Xxxxxxx, the General Counsel of the
Company, dated the relevant Closing Date and addressed to the Purchaser, in
substantially the form attached hereto as Exhibit I or otherwise in a form
reasonably acceptable to the Purchaser;
(f) A written opinion from Xxxxxxxx, Xxxxxx & Finger, P.A., Delaware
counsel for the Company and the Guarantors, dated the relevant Closing Date
and addressed to the Purchaser, in substantially the form attached hereto
as Exhibit K or otherwise in a form reasonably acceptable to the Purchaser;
(g) An executed copy of each of the Operative Documents and executed
copies of the Purchase Money Credit Agreement and the Purchase Money
Security Agreement to be delivered on such Closing Date;
(h) In the case of the Initial Closing, evidence reasonably
satisfactory to the Purchaser of the issuance to another purchaser or
purchasers of and payment by such other purchaser or purchasers for an
aggregate principal amount of Exchangeable Notes equal to $150,000,000 less
the principal amount of Exchangeable Notes required to be purchased by the
Purchaser on such Initial Closing Date;
(i) A certificate of the Secretary of the Company and the Parent,
dated the relevant Closing Date, in form and substance reasonably
satisfactory to the Purchaser, certifying as to (i) the certificate of
incorporation of each of the Company and the Parent; (ii) the by-laws of
each of the Company and the Parent; (iii) the resolutions of the board of
directors of each of the Company and the Parent authorizing the execution
and performance of each of the Operative Documents to be executed on or
before such Closing Date by the Company and the valid issuance of the
Purchased Securities to be issued and delivered on such Closing Date; and
(iv) incumbency and signatures of the officers of each of the Company and
the Parent executing each of the Operative Documents and any related
certificates; and
(j) In the case of the Initial Closing, a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and the
Parent, dated as of the relevant Closing Date, in substantially the form
attached hereto as Exhibit L.
Section 2.04 The Company's Deliveries to the Exchangeable Note Trustee. At
the Initial Closing, the Company will deliver, or cause to be delivered, to the
Exchangeable Note Trustee:
(a) An executed copy of the Exchangeable Notes Indenture;
(b) A certificated note evidencing the Exchangeable Notes sold to the
Purchaser at the Initial Closing; and
(c) Such certificates, opinions and other documents as reasonably
requested by the Exchangeable Notes Trustee.
Section 2.05 The Parent's Deliveries to the Purchaser. At the Initial
Closing, the Parent will deliver, or cause to be delivered to the Purchaser, a
certificate representing one (1) share of the Series D Preferred issued to the
Purchaser. The Parent will also deliver evidence of the issuance of the Series C
Preferred in a manner reasonably satisfactory to the Purchaser.
Section 2.06 Purchaser's Deliveries to the Company. At the Initial Closing,
the Purchaser will deliver, or cause to be delivered, to the Company:
(a) Payment to the Company of the Purchase Price of the Purchased
Securities to be Purchased by the Purchaser at such Closing by wire
transfer of immediately available funds to the account designated by the
Company;
(b) A cross-receipt executed by the Purchaser and delivered to the
Company certifying that it has received the Purchased Securities to be
Purchased by the Purchaser at such Closing as of the relevant Closing Date,
as evidenced by the certificate referenced in Section 2.03(a) or Section
2.05(a), as applicable;
(c) A copy of the Operative Documents, dated as of the Initial Closing
Date and executed by the Purchaser; and
(d) The Voting Agreement contemplated by Section 6.09(d).
Section 2.07 Independent Nature of the Purchaser's Obligations and Rights.
The obligations of the Purchaser under this Agreement are several and not joint
with the obligations of any purchaser of the Other Purchased Securities, and the
Purchaser shall not be responsible in any way for the performance of the
obligations of any other person. The representations and warranties of the
Purchaser under this Agreement are several and not joint with the
representations and warranties of any other purchaser of the Other Purchased
Securities and the Purchaser shall not be deemed to have made any
representations and warranties with respect to any purchase of Other Purchased
Securities. Nothing contained herein, and no action taken by the Purchaser
related hereto, shall be deemed to constitute the Purchaser as a partner or a
joint venturer or create a presumption that the Purchaser is in any way acting
in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement with any other person. The Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement, and it shall not be
necessary for any other person to be joined as an additional party in any
proceeding for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT
Each of the Parent and the Company acknowledges that (i) the representations and
warranties in this Article III have been a material and necessary inducement for
the Purchaser to agree to enter into this Agreement and the other Operative
Documents and to acquire all of the Purchased Securities to be acquired by it
and (ii) the Purchaser is relying on such representations and warranties. Except
as set forth in the corresponding sections or subsections of the disclosure
schedule delivered to the Purchaser by the Company and the Parent concurrently
with the execution and delivery of this Agreement (the "Disclosure Schedule"),
or to the extent that the qualifying nature of such disclosure with respect to
another section or subsection is reasonably apparent on the face of the
Disclosure Schedule, each of the Company and the Parent hereby represents and
warrants to the Purchaser that:
Section 3.01 Organization, Good Standing and Qualification. Each of the
Parent and the Company and their respective Subsidiaries is a corporation duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of incorporation and has all requisite corporate or
similar power and authority to own, lease and operate its properties and Assets
and to carry on its business as presently conducted and is qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
where the ownership or operation of its properties or conduct of its business
requires such qualification except to the extent that the failure to be so
qualified has not had and would not reasonably be expected to have a Material
Adverse Effect. Each of the Parent and the Company has made available to the
Purchaser a complete and correct copy of the Parent's and the Company's and
their respective Subsidiaries' certificates of incorporation and bylaws
(collectively, "Organizational Documents"), each as amended to date. The
Parent's and the Company's and their respective Subsidiaries' Organizational
Documents so delivered are in full force and effect. Neither the Parent, the
Company nor any of their respective Subsidiaries has violated any of the
provisions of its Organizational Documents. Section 3.01(a) of the Disclosure
Schedule contains a correct and complete list as of the date hereof of each
jurisdiction where the Parent, the Company and/or each of their respective
Subsidiaries is organized and/or qualified to do business.
(b) A true and complete list as of the date hereof of all of the
Parent's and the Company's respective Subsidiaries, together with the
percentage of the outstanding capital stock of each Subsidiary owned by the
Company or the Parent and each other Subsidiary, is set forth on Section
3.01(b) of the Disclosure Schedule. Except as disclosed in Section 3.01(b)
of the Disclosure Schedule, neither the Parent nor the Company directly or
indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
Section 3.02 Capital Structure. As of the date hereof the authorized
capital stock of the Company consists of 50,000,000 shares of common stock, par
value $0.01 per share (the "Company Common Shares"), of which 37,885,230 shares
were outstanding as of the close of business on September 30, 2007. Each Company
Common Share is entitled to one (1) vote on all matters submitted to a vote or
other action by the shareholders of the Company. All of the issued and
outstanding Company Common Shares have been duly authorized, validly issued and
are fully paid and nonassessable, and have been issued in compliance with all
applicable federal and state securities laws. As of the date hereof other than
213,763 Company Common Shares reserved for issuance under the Company Stock
Option Plan, the Company has no Company Common Shares reserved for issuance.
Section 3.02 of the Disclosure Schedule contains a correct and complete list as
of the date hereof of each outstanding option to purchase Company Common Shares
under the Company Stock Option Plan, including (i) the number of Company Common
Shares subject to such Company Stock Option, (ii) the exercise price of such
Company Stock Option, (iii) the date on which such Company Stock Option was
granted, (iv) the applicable vesting schedule and expiration date of such
Company Stock Option. Except as set forth in Section 3.02 of the Disclosure
Schedule, each of the outstanding shares of capital stock or other securities of
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and owned by the Company, free and clear of any Lien.
Except as set forth above and in Section 3.02 of the Disclosure Schedule, as of
the date hereof, there are no outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights, calls,
commitments, preemptive or other rights or agreements of any kind that obligate
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock or other securities of the Company or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or that give any Person a right to subscribe for or acquire, any securities of
the Company or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding (collectively, the
"Company Equity Rights"). There are no voting agreements, trusts, proxies or
other agreements, instruments or undertakings with respect to the voting of the
capital stock of the Company to which the Company nor, to the Company's
knowledge, is there any such agreement, as of the date hereof to which a
shareholder of the Company is a party. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter other than, on
and after the Initial Closing, the Exchangeable Notes. As of the date hereof,
the outstanding shares of the Company's capital stock are owned as set forth in
Section 3.02 of the Disclosure Schedule.
(b) Each Company Stock Option (A) was granted in compliance with all
applicable Laws and all of the terms and conditions of the Company Stock
Option Plan pursuant to which it was issued, (B) qualifies for the tax and
accounting treatment afforded to such Company Stock Option in the Company's
Tax Returns and the Financial Statements, respectively, (C) was otherwise
properly disclosed in the Financial Statements and (D) has an exercise
price at least equal to the fair market value of a Company Common Share or
Company Preferred Share, as applicable, on a date no earlier than the date
of the corporate action authorizing the grant and has a grant date
identical to the date of the corporate action authorizing the grant. The
Company has provided to the Purchaser true and complete copies of the
Company Stock Option Plans and the forms of all agreements evidencing the
Company Stock Options. No consent of the holder of any Company Stock Option
is required in connection with the actions contemplated by Article II
hereof, and such actions so contemplated comport with the Company Stock
Option Plan and the underlying agreements evidencing the Company Stock
Options.
(c) As of the date hereof the authorized capital stock of the Parent
consists of (i) 200,000,000 shares of common stock, par value $0.01 per
share (the "Parent Common Shares"), of which 86,359,015 shares were
outstanding as of the close of business on September 30, 2007, and (ii)
5,000,000 shares of preferred stock, par value $0.01 per share of which (A)
450,000 shares are designated as Series A Cumulative Convertible Preferred
Stock, par value $0.01 per share (the "Parent Series A Preferred Shares"),
of which 90,000 shares were outstanding as of the close of business on
September 30, 2007 and (B) 500,000 shares are designated as Series B
Cumulative Convertible Preferred Stock, par value $0.01 per share (the
"Parent Series B Preferred Shares"), of which 318,500 shares were
outstanding as of the close of business on September 30, 2007. Each Parent
Common Share and each Parent Preferred Share is entitled to one (1) vote on
all matters submitted to a vote or other action by the shareholders of the
Parent. All of the issued and outstanding Parent Common Shares and Parent
Preferred Shares have been duly authorized and validly issued and are fully
paid and nonassessable, and have been issued in compliance with all
applicable federal and state securities laws. As of the date hereof, other
than 11,984,503 Parent Common Shares reserved for issuance under the Parent
Stock Option Plans, 12,256,226 Parent Common Shares reserved for issuance
upon conversion of the Parent Preferred Shares and no more than 4,213,400
Parent Common Shares reserved for issuance upon exercise of outstanding
warrants, the Parent has no Parent Common Shares or Parent Preferred Shares
reserved for issuance. Section 3.02 of the Disclosure Schedule contains a
correct and complete list as of the date hereof of each outstanding option
to purchase Parent Common Shares under the Parent Stock Option Plans,
including (i) the number of Parent Common Shares subject to such Parent
Stock Option, (ii) the exercise price of such Parent Stock Option, (iii)
the date on which such Parent Stock Option was granted, and (iv) the
applicable vesting schedule and expiration date of such Parent Stock
Option. Except as set forth in Section 3.02 of the Disclosure Schedule,
each of the outstanding shares of capital stock or other securities of each
of the Parent's Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable and owned, directly or indirectly, by the Parent, free
and clear of any Lien. Except as set forth above and in Section 3.02 of the
Disclosure Schedule, as of the date hereof there are no outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, calls, commitments, preemptive or other rights
or agreements of any kind that obligate the Company or any of its
Subsidiaries to issue or sell any shares of capital stock or other
securities of the Parent or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or that
give any Person a right to subscribe for or acquire, any securities of the
Parent or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding (collectively,
the "Parent Equity Rights"). There are no voting agreements, trusts,
proxies or other agreements, instruments or undertakings with respect to
the voting of the capital stock of the Parent to which the Parent nor, to
the Parent's knowledge, is there any such agreement as of the date hereof
to which a shareholder of the Parent is a party. The Parent does not have
outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the shareholders of the Parent on
any matter.
(d) As of the date hereof, each Parent Stock Option (A) was granted in
compliance with all applicable Laws and all of the terms and conditions of
the Parent Stock Option Plan pursuant to which it was issued, (B) qualifies
for the tax and accounting treatment afforded to such Parent Stock Option
in the Parent's Tax Returns and the Financial Statements, respectively, (C)
was otherwise properly disclosed in the Financial Statements and (D) has an
exercise price at least equal to the fair market value of a Parent Common
Share or Parent Preferred Share, as applicable, on a date no earlier than
the date of the corporate action authorizing the grant and has a grant date
identical to the date of the corporate action authorizing the grant. The
Parent has provided to the Purchaser true and complete copies of the Parent
Stock Option Plans and the forms of all agreements evidencing the Parent
Stock Options. No consent of the holder of any Parent Stock Option is
required in connection with the actions contemplated by Article II hereof,
and such actions so contemplated comport with the Parent Stock Option Plans
and the underlying agreements evidencing the Parent Stock Options.
Section 3.03 Corporate Authority; Approval and Fairness. Each of the
Company and the Parent has all requisite corporate power and authority and each
has taken all corporate action necessary in order to execute, deliver and
perform its obligations under each Operative Document except, in the case of the
Initial Closing, for Stockholder Approval.. Assuming the due authorization,
execution and delivery of each of the Operative Documents by the parties
thereto, each Operative Document is a valid and binding agreement of the Company
and/or the Parent, as applicable, enforceable against the Company and/or the
Parent, as applicable, in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. For the purposes of this Section 3.03(a), the term "Operative
Documents" shall not include the Indentures.
(b) The boards of directors of each of the Company and the Parent have
(unanimously in the case of the Parent's board of directors and by an
affirmative vote of all directors present at a meeting in the case of the
Company's board of directors) (i) determined that the transactions
contemplated by the Operative Documents are fair to and in the best
interests of the Company or the Parent and its shareholders, as applicable,
(ii) approved and authorized the execution, delivery and performance of the
Operative Documents in accordance with the provisions of the DGCL and (iii)
adopted a board resolution recommending to the shareholders of Parent that
they approve the issuance of the Spectrum Shares and the other transactions
under the Operative Agreements that are subject to a shareholder vote. No
other corporate proceedings are necessary to authorize the Operative
Documents or to complete the transactions contemplated by the Operative
Documents.
Section 3.04 The Indentures. Each of the Indentures has been duly
authorized by the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the Guarantors in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability (collectively, the "Enforceability Exceptions"); and on the
relevant Closing Date, each of the Indentures will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules and regulations of the Commission
applicable to an indenture that is qualified thereunder.
Section 3.05 The Notes and the Guarantees. The Exchangeable Notes and the
Secured Notes have been duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided in the Indentures, as
applicable, and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms subject
to the Enforceability Exceptions, and will be entitled to the benefits of the
Indentures, as applicable; and the Guarantees have been duly authorized by each
of the Guarantors and, when the Exchangeable Notes and the Secured Notes have
been duly executed, authenticated, issued and delivered as provided in the
relevant Indentures, as applicable, and paid for as provided herein, will be
valid and legally binding obligations of each of the Guarantors, enforceable
against each of the Guarantors in accordance with their terms, subject to the
Enforceability Exception, and will be entitled to the benefits of the
Indentures, as applicable.
Section 3.06 Valid Issuance of Parent Equity Securities. The Junior
Preferred and the Parent Common Shares issuable upon exchange of the
Exchangeable Notes and the Parent Common Shares issuable upon conversion of the
Junior Preferred have been duly and validly reserved for issuance upon such
conversion or exchange in accordance with their terms and, when issued upon such
conversion or exchange or otherwise, will be duly authorized and validly issued,
fully paid and nonassessable and free of any liens or encumbrances other than
restrictions on transfer set forth in the Operative Documents and under
applicable state and federal securities laws. The Series C Preferred to be
issued pursuant to this Agreement at the Initial Closing, when paid for and then
issued, as provided in this Agreement, will be duly authorized and validly
issued, fully paid and nonassessable and free of any liens or encumbrances other
than restrictions on transfer set forth in the Operative Documents and under
applicable state and federal securities laws. The Junior Preferred to be issued
pursuant to the Spectrum Contribution Agreement at the closing thereunder, when
paid for and then issued, as provided in the Spectrum Contribution Agreement,
will be duly authorized and validly issued, fully paid and nonassessable and
free of any liens or encumbrances other than restrictions on transfer set forth
in the Operative Documents and under applicable state and federal securities
laws.
Section 3.07 No Violation or Default. Except as disclosed in Section 3.07
of the Disclosure Schedule, neither any of the Guarantors, the Parent, nor the
Company is (i) in violation of its Organizational Documents; (ii) in default,
and no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which any of the Guarantors or the
Company is a party or by which any of the Guarantors or the Company is bound or
to which any of the property or assets of the Guarantors or the Company is
subject; or (iii) in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clause (ii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 3.08 No Conflict. Except as disclosed in Section 3.08 of the
Disclosure Schedule, the execution, delivery and performance of the Operative
Documents by the Company and the Parent, and the consummation by the Company and
the Parent of the transactions contemplated thereby do not and will not
constitute or result in (i) a conflict with, or a breach or violation of, the
Company's, the Parent's or any of their respective Subsidiaries' Organizational
Documents, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 3.09 have been obtained and all filings and
obligations described in Section 3.09 have been made or complied with, a
conflict with or violation of any Law applicable to the Parent and the Company
or any Subsidiary or by which any material property or Asset of the Company, the
Parent or any Subsidiary is bound or affected, (iii) a breach or violation of, a
default under, the acceleration of any obligations under, or the creation of any
Lien (with or without notice, lapse of time or both) on the Assets of the
Company, the Parent or any of their respective Subsidiaries pursuant to, any
Contract binding upon the Company, the Parent or any of their respective
Subsidiaries or any Law or governmental or non-governmental permit or license to
which the Company, the Parent or any of their respective Subsidiaries is subject
or (iv) any change in the rights or obligations of any party under any of the
Contracts, except, in the case of clauses (iii) or (iv) above, for any conflict,
breach, violation, default, acceleration, creation or change that, individually
or in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect or prevent, materially delay or impair the ability of
the Company or the Parent to consummate the transactions contemplated by this
Agreement. Section 3.08 of the Disclosure Schedule sets forth a correct and
complete list of Contracts of the Company, the Parent and their respective
Subsidiaries pursuant to which consents or waivers are or may be required prior
to consummation of the transactions contemplated by this Agreement (whether or
not subject to the exception set forth with respect to clauses (iii) and (iv)
above).
Section 3.09 No Consents Required. No consent, approval, authorization,
order, registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution, delivery and
performance by the Company, the Parent and each of the Guarantors of each of the
Operative Documents to which each is a party, the issuance and sale of the
Purchased Securities (including the Guarantees) and compliance by the Company,
the Parent and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Operative Documents, except
for (i) such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under applicable state securities laws in
connection with the purchase of the Purchased Securities by the Purchaser ; (ii)
such consents, approvals, authorizations, orders, registrations or
qualifications as may be required (A) by the FCC in connection with the
transactions contemplated by the Spectrum Contribution Agreement or (B) under
the HSR Act in connection with the transactions contemplated by the Spectrum
Contribution Agreement and in respect of the exchange of the Exchangeable Notes
for Parent Common Shares; and (iii) such consents, approvals, authorizations,
orders, registrations or qualifications the failure of which to obtain or make,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect.
Section 3.10 Company Financial Statements. Each of the Company and the
Parent has delivered to the Purchaser: (i) such entity's unaudited consolidated
balance sheet as of December 31, 2006 (the "FYE Date") and the related unaudited
consolidated statements of operations, consolidated statements of convertible
preferred stock and shareholders' deficit and consolidated statements of cash
flows for the year ended December 31, 2006, together with all related notes and
schedules (collectively the "2006 Financial Statements") and (ii) such entity's
unaudited consolidated balance sheet as of September 30, 2007 (the "Most Recent
Balance Sheet") and the related unaudited consolidated statements of operations
and consolidated statements of cash flows for the nine months then ended (the
"Interim Financial Statements" and, together with the 2006 Financial Statements,
the "Financial Statements"). The Financial Statements fairly present the
consolidated financial position of the Company, the Parent and their
Subsidiaries and the results of operations and cash flows of the business of the
Company, the Parent and their Subsidiaries as of the dates thereof and for the
periods set forth therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to notes and normal, recurring year-end audit
adjustments that are not expected to be material in effect). The Financial
Statements have been prepared in accordance with GAAP consistently applied
during the periods involved, except as noted in Section 3.10 of the Disclosure
Schedule.
Section 3.11 Undisclosed Liabilities; etc. Except as set forth on Section
3.11 of the Disclosure Schedule, the Company, the Parent and their respective
Subsidiaries do not have any liabilities or obligations of any nature (whether
known, unknown, absolute, accrued, contingent or otherwise, whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other Person and whether due or to become due), except (i) as
and to the extent disclosed on and adequately reserved against in the Financial
Statements; (ii) for liabilities and obligations incurred in the ordinary course
of business consistent with past practice; (iii) liabilities and obligations
incurred under the Secured Notes, the Exchangeable Notes, and the vendor
financing loan agreement executed concurrently herewith and expenses incurred in
connection with the foregoing; (iv) liabilities and obligations incurred under
and pursuant to the terms of Material Contracts or contracts publicly filed with
the Commission (excluding any liabilities in respect of any breach or violation
thereof); or (v) in the aggregate amount not exceeding $10,000,000 incurred
since September 30, 2007.
Section 3.12 Absence of Certain Changes. Since the FYE Date, except as
specifically set forth on Section 3.12 of the Disclosure Schedule and except to
the extent recorded or accrued on the consolidated balance sheet of the Company
or the Parent as of September 30, 2007 and, as of any date after the Initial
Closing, except as permitted by the terms of the Purchased Securities issued on
the Initial Closing Date, the Company, the Parent and their respective
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than according to, the ordinary and
usual course of such business and since September 30, 2007, there has not been
any Material Adverse Effect except as set forth in Section 3.12 of the
Disclosure Schedule. Without limiting the generality of the foregoing, except as
set forth on Section 3.12 of the Disclosure Schedule or subsequent to the date
hereof as approved by the Purchaser, the Company, the Parent and their
respective Subsidiaries have not since the FYE Date:
(a) declared, set aside, made or paid any dividend or distribution,
payable in cash, stock, property or otherwise, on any share of their
capital stock or directly or indirectly redeemed, purchased or otherwise
acquired any such shares;
(b) issued or sold any shares of any class of their capital stock
(other than options, warrants or other derivative securities exercisable
for Parent Common Shares, Company Common Shares or common stock of any of
the Parent's or the Company's Subsidiaries and any shares of such common
stock issued pursuant to the exercise thereof);
(c) suffered or permitted the creation of any Lien on any property of
the Parent, the Company or any of their Subsidiaries, other than Permitted
Liens;
(d) written down the value of any asset of the Parent, the Company or
their Subsidiaries or written off as uncollectible any accounts or notes
receivable or any portion thereof except in the ordinary course of
business;
(e) except as required pursuant to existing written, binding
agreements in effect prior to the date of this Agreement and set forth in
Section 3.12 of the Disclosure Schedule or as otherwise required by
applicable Law as of the date hereof, (i) increased the compensation, bonus
or pension, welfare, severance or other benefits of, paid any bonus to, or
made any new equity awards to any director, officer or employee of the
Company, the Parent or any of their respective Subsidiaries having an
annual salary or remuneration in excess of $350,000 or (ii) forgiven any
loans to directors, officers or employees of the Company, the Parent or any
of their respective Subsidiaries;
(f) changed in any material respect its accounting practices, policies
or principles, other than as required by GAAP;
(g) sold, assigned, pledged, encumbered, transferred or otherwise
disposed of (i) any Assets (excluding Intellectual Property) (other than
the sales or the licensing of their products to customers in the ordinary
course of business) or (ii) any Intellectual Property (other than licensing
of their products in the ordinary course of business and on a non-exclusive
basis);
(h) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or government body, other than in the ordinary
course of business;
(i) adopted a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization;
(j) terminated, or suffered the resignation of, any executive officer
or group of employees of the Parent, the Company or their Subsidiaries;
(k) as of the date hereof suffered any damage, destruction or loss
(whether or not covered by insurance) affecting any Asset resulting in any
liability, loss, claim, damages, costs or expenses in excess of $1,000,000
individually or $2,500,000 in the aggregate; or
(l) agreed to, whether in writing or otherwise, or taken any other
action or omitted to take any action that would result in the occurrence
of, any of the foregoing.
Section 3.13 Independent Accountants. Xxxxxxxx LLP, who has certified
certain financial statements of the Company and the Parent is the independent
registered public accounting firm with respect to the Company within the
applicable rules and regulations adopted by the Commission and the Public
Company Accounting Oversight Board (United States) and as required by the
Securities Act.
Section 3.14 Litigation. As of the date hereof other than as set forth on
Section 3.14 of the Disclosure Schedule, there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company or the Parent, threatened against
the Company, the Parent or any of their Subsidiaries. As of the date hereof none
of the Company, the Parent or their Subsidiaries, or any material property or
Asset of the Company, the Parent or any of their Subsidiaries is subject to any
settlement or similar agreement with any Governmental Authority, or to any
order, judgment, decree, injunction or award of any Governmental Authority.
Section 3.15 Tax Matters. The Company, the Parent and their Subsidiaries
have filed or caused to be filed all material Tax Returns that are or were
required to be filed by or with respect to them, either separately or as a
member of a group of corporations, pursuant to applicable Law. All Tax Returns
filed by (or that include on a consolidated basis) the Company, the Parent and
their Subsidiaries are true, complete and correct in all material respects.
Section 3.15(a) of the Disclosure Schedule contains a true, complete and correct
list of all such Tax Returns filed for taxable years ending 2006, 2005 and 2004,
all of which have been made available to the Purchaser. The Company, the Parent
and each of their Subsidiaries have paid, or made provision for the payment of,
all material Taxes that have or are reasonably likely to have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by the Company, the Parent or any of their Subsidiaries, except such
Taxes, if any, as are listed in Section 3.15(a) of the Disclosure Schedule and
are being contested in good faith. There does not exist any material actual or
proposed additional Tax assessment against the Company, the Parent or any of
their Subsidiaries.
(b) The Tax Returns of the Company, the Parent and each of their
Subsidiaries have not been audited by the Internal Revenue Service (the
"IRS") or relevant state tax authorities, and such returns are closed by
the applicable statute of limitations for all taxable years through 2000.
No waivers of statutes of limitations as to any Tax matters relating to the
Company, the Parent or any of their Subsidiaries are in effect or have been
requested by a Governmental Authority. Section 3.15(b) of the Disclosure
Schedule contains a true, complete and correct list of all audits of all
such Tax Returns, including a reasonably detailed description of the nature
and outcome of each audit. All deficiencies proposed as a result of such
audits have been paid, reserved against, settled, or are being contested in
good faith by appropriate proceedings.
(c) There exists no proposed Tax assessment against the Company, the
Parent or any of their Subsidiaries except as disclosed in the Financial
Statements. All Taxes that the Company, the Parent or any of their
Subsidiaries is or was required by Law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Authority or other Person.
(d) There are no Liens relating or attributable to Taxes with respect
to, or in connection with, the assets of the Company, the Parent or their
Subsidiaries other than Liens for Taxes that are not yet due.
Section 3.16 Title to Real and Personal Property. Each of the Company and
the Parent have good and marketable title in fee simple to, or have valid rights
to lease or otherwise use, all items of real property and good and valid title
to, or have valid rights to lease or otherwise use, all items of personal
property, that, in each case, are material to the business of the Company or the
Parent, as applicable, except, in each case, as would not reasonably be expected
to have a Material Adverse Effect. Such property rights are in each case free
and clear of all liens, encumbrances, claims and defects and imperfections of
title except (i) those that do not materially interfere with the use made and
proposed to be made of such property by the Company or the Parent or (ii) those
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect or (iii) Permitted Lien.
Section 3.17 Environmental Matters. (a) The Company, the Parent and their
Subsidiaries have complied at all times in all material respects with all
applicable Environmental Health and Safety Laws, hold all environmental permits
material to the conduct of the business of the Company, the Parent and their
Subsidiaries and are in compliance in all material respects with their
respective environmental permits; (b) no property currently owned, leased or
operated by the Company or the Parent (including soils, groundwater, surface
water, buildings or other structures) is contaminated with any Hazardous
Substance; (c) no property formerly owned, leased or operated by the Company,
the Parent or any of their Subsidiaries was contaminated with any Hazardous
Substance during or prior to such period of ownership or operation; (d) neither
the Company, the Parent nor any of their Subsidiaries is subject to material
liability for any Hazardous Substance disposal or contamination on any third
party property; (e) neither the Company, the Parent nor any of their
Subsidiaries has released or is aware of any past or present threat of release
of any Hazardous Substance that has been or could reasonably be expected to be
material; (f) neither the Company, the Parent nor any of their Subsidiaries has
received any notice, demand, letter, claim or request for information alleging
that the Company, the Parent or any of their Subsidiaries may be in violation of
or subject to liability under any Environmental Health and Safety Law; (g)
neither the Company, the Parent nor any of their Subsidiaries is subject to any
order, decree, injunction or other agreement with any Governmental Authority or
any indemnity or other agreement with any third party relating to liability
under any Environmental Health and Safety Law or relating to Hazardous
Substances; (h) there are no other circumstances or conditions involving the
Company, the Parent or any of their Subsidiaries that could reasonably be
expected to result in any material claim, liability, investigation, cost or
restriction on the ownership, use or transfer of any property pursuant to any
Environmental Health and Safety Law; and (i) the Company and the Parent have
made available to the Purchaser copies of all written environmental reports,
studies, assessments, sampling data and other environmental information in its
possession relating to the Company, the Parent or their Subsidiaries or their
respective current and former properties or operations.
Section 3.18 Employee Benefits. All benefit and compensation plans,
contracts, policies or arrangements covering current or former employees or
other service providers of the Company, the Parent and their Subsidiaries and
current or former directors of the Company or the Parent, including, but not
limited to, "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
deferred compensation, severance, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the "Benefit
Plans"), other than Benefit Plans maintained outside of the United States
primarily for the benefit of employees working outside of the United States
(such plans hereinafter being referred to as "Non-U.S. Benefit Plans") are
listed on Section 3.18(a) of the Disclosure Schedule, and each Benefit Plan
which has received a favorable opinion letter from the Internal Revenue Service
National Office, including any master or prototype plan, has been separately
identified. True and complete copies of all Benefit Plans listed on Section
3.18(a) of the Disclosure Schedule, including, but not limited to, any trust
instruments, insurance contracts and, with respect to any employee stock
ownership plan, loan agreements forming a part of any Benefit Plans, and all
amendments thereto have been provided or made available to the Purchaser.
(b) Section 3.18(b) of the Disclosure Schedule also sets forth the
names, corporate and functional titles, hire dates and, the 2007 and target
2008 annual salaries, incentive compensation, bonuses and other
compensation of all executive officers and current directors of each of the
Company and the Parent as of the date hereof.
(c) Each Benefit Plan complies in form and has been operated in
substantial compliance with its terms and the requirements of ERISA, the
Code and other applicable laws. Each U.S. Benefit Plan which is subject to
ERISA (the "ERISA Plans") that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA ("Pension Plan") and that is intended
to be qualified under Section 401(a) of the Code, has received a favorable
determination letter from the IRS, or is comprised of a master or prototype
plan that has received an opinion from the IRS, covering all tax law
changes prior to the Economic Growth and Tax Relief Reconciliation Act of
2001 or has applied to the IRS for such favorable determination letter
within the applicable remedial amendment period under Section 401(b) of the
Code, and to the knowledge of the Company and the Parent, no event has
occurred that could reasonably be expected to result in revocation of any
such favorable determination letter or the loss of the qualification of
such ERISA Plan under Section 401(a) of the Code. Neither the Company, the
Parent nor any of their Subsidiaries has engaged in a transaction with
respect to any ERISA Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company, the
Parent or any Subsidiary to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA in an amount which would be
material. Neither the Company, the Parent nor any of their Subsidiaries has
incurred or reasonably expects to incur a material tax or penalty imposed
by Section 4980F of the Code or Section 502 of ERISA.
(d) Neither the Company, the Parent, any or their Subsidiaries nor any
entity which is considered one employer with the Company or the Parent
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate") (x) maintains or contributes to or has within the past six
years maintained or contributed to a Pension Plan that is subject to
Subtitles C or D of Title IV of ERISA or (y) maintains or has an obligation
to contribute to or has within the past six years maintained or had an
obligation to contribute to a multiemployer plan as defined in Section
3(37) of ERISA. All contributions required to be made under each Benefit
Plan, as of the date hereof, have been timely made and all obligations in
respect of each Benefit Plan have been properly accrued and reflected in
the Financial Statements.
(e) As of the date hereof, there is no material pending or, to the
knowledge of the Company or the Parent threatened, litigation relating to
the Benefit Plans. Neither the Company, the Parent nor any of their
Subsidiaries has any obligations for retiree health and life benefits under
any Benefit Plan or collective bargaining agreement. The Company, the
Parent or their Subsidiaries may amend or terminate any such plan at any
time without incurring any liability thereunder other than in respect of
claims incurred prior to such amendment or termination.
(f) There has been no amendment to, announcement by the Company, the
Parent or any of their Subsidiaries relating to, or change in employee
participation or coverage under, any Benefit Plan which would increase
materially the expense of maintaining such plan above the level of the
expense incurred therefor for the most recent fiscal year. Neither the
execution of this Agreement, shareholder approval of this Agreement nor the
consummation of the transactions contemplated hereby will (w) entitle any
employees of the Company, the Parent or any of their Subsidiaries to
severance pay or any increase in severance pay upon any termination of
employment after the date hereof, (x) accelerate the time of payment or
vesting or result in any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable
or result in any other material obligation pursuant to, any of the Benefit
Plans, (y) limit or restrict the right of the Company or the Parent to
merge, amend or terminate any of the Benefit Plans or (z) result in
payments under any of the Benefit Plans which would not be deductible under
Section 162(m) or Section 280G of the Code. No Benefit Plan or other
agreement provides any employee, director or other service provider of the
Company, the Parent or their Subsidiaries with any amount of additional
compensation if such individual is provided amounts subject to excise or
additional taxes imposed under Sections 409A or 4999 of the Code.
(g) The Company, the Parent and their Subsidiaries have no material
liability by reason of an individual who performs or performed services for
the Company, the Parent or any of their Subsidiaries in any capacity being
improperly excluded from participating in a Benefit Plan; and each of the
employees of the Company, the Parent and their Subsidiaries has been
properly classified by the Company, the Parent and their Subsidiaries as
"exempt" or "non-exempt" under applicable Law.
Section 3.19 Labor Matters. Except as set forth in Section 3.19 of the
Disclosure Schedule:
(a) Neither the Company, the Parent nor any of their Subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company, the Parent or their
Subsidiaries, nor are they under any current obligation to bargain with any
bargaining agent on behalf of any such persons, nor, to the knowledge of
the Company and the Parent, are there or have there been any organizational
campaigns, petitions or other unionization activities seeking recognition
of a collective bargaining unit which could affect the Company, the Parent
or any of their Subsidiaries;
(b) There are no controversies, strikes, slowdowns or work stoppages
pending or, to the knowledge of the Company or the Parent after due
inquiry, threatened between the Company, the Parent or any of their
Subsidiaries, on the one hand, and any of their respective employees, on
the other hand, and neither the Company nor the Parent has experienced any
such controversy, strike, slowdown or work stoppage within the past three
years;
(c) Neither the Company, the Parent nor any of their Subsidiaries has
breached or otherwise failed to comply with the provisions of any
collective bargaining or union Contract and, to the knowledge of the
Company and the Parent, there are no grievances outstanding against the
Company, the Parent or any of their Subsidiaries under any such contract
that could have a Material Adverse Effect;
(d) There are no unfair labor practice complaints pending against the
Company, the Parent or any of their Subsidiaries before the National Labor
Relations Board or any other Governmental Authority or any current union
representation questions involving employees of the Company, the Parent or
any of their Subsidiaries that could have a Material Adverse Effect;
(e) The Company, the Parent and their Subsidiaries are currently in
compliance in all material respects with all applicable Laws relating to
the employment of labor, including those related to wages (including the
payment of overtime), hours, worker classifications (including proper
classification of any independent contractors or consultants), collective
bargaining, unemployment insurance, workers' compensation, discrimination,
record-keeping and the payment and withholding of Taxes and other sums as
required by the appropriate Governmental Authority and have withheld and
paid to the appropriate Governmental Authority or are holding for payment
not yet due to such Governmental Authority all amounts required to be
withheld from employees of the Company, the Parent or their Subsidiaries
and are not liable for any arrears of wages, Taxes, penalties or other sums
for failure to comply with any of the foregoing;
(f) To the knowledge of the Company and the Parent, each employee of
the Company or the Parent who is located in the United States and is not a
United States citizen has all necessary approvals, authorizations and
papers necessary to work in the United States in accordance with applicable
Law;
(g) Each of the Company, the Parent and their Subsidiaries has paid in
full to all employees, or adequately reserved in accordance with the
Company's and the Parent's historical accounting practices, policies and
principles consistently applied, all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees
except to the extent as has not had, and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect;
(h) There is no claim with respect to payment of wages, salary or
overtime pay that has been asserted or, to the knowledge of the Company or
the Parent, is now pending or threatened before any Governmental Authority
with respect to any persons currently or formerly employed by the Company,
the Parent or any of their Subsidiaries except to the extent as has not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(i) As of the date hereof neither the Company, the Parent nor any of
their Subsidiaries is a party to, or otherwise bound by, any consent decree
with, or citation by, any Governmental Authority relating to employees or
employment practices;
(j) There is no charge or proceeding with respect to a material
violation of any occupational safety or health standards that has been
asserted or is now pending or, to the knowledge of the Company or the
Parent, threatened with respect to the Company or the Parent;
(k) As of the date hereof there is no charge of discrimination in
employment or employment practices, for any reason, including, without
limitation, age, gender, race, religion or other legally protected
category, or any alleged violation of any privacy Laws, which has been
asserted or, to the knowledge of the Company or the Parent, is now pending
or threatened before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction in
which the Company, the Parent or any of their Subsidiaries has employed or
currently employs any person;
(l) As of the date hereof, neither the Company, the Parent nor any of
their Subsidiaries has received written notice of the intent of any
federal, state, local or foreign Governmental Authority responsible for the
enforcement of labor or employment laws to conduct an investigation with
respect to or relating to the Company, the Parent or any of their
Subsidiaries and no such investigation is in progress or has been conducted
in the past; and
(m) Except as set forth in Section 3.19(m) of the Disclosure Schedule,
as of the date hereof neither the Company, the Parent nor any of their
Subsidiaries is aware that any officer or key employee intends to terminate
employment with the Company, the Parent or their Subsidiaries, as
applicable.
Section 3.20 Insurance. The Parent, the Company and each of their
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Parent, the
Company and their Subsidiaries are engaged. As of the date hereof neither the
Parent, the Company nor any Subsidiary has received notice of cancellation or
termination of any insurance policy, nor has the Parent, the Company or any
Subsidiary been denied or had revoked or rescinded any policy of insurance.
Neither the Parent, the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would be expected to have a
Material Adverse Effect.
Section 3.21 Intellectual Property. As of the date hereof, Section 3.21(a)
of the Disclosure Schedule sets forth a true and complete list of all (x)
Registered or otherwise material Owned Intellectual Property and (y) material
Licensed Intellectual Property other than intellectual property rights licensed
in conjunction with acquisition of computer hardware, software, and other
products used in the ordinary course of business.
(b) All Owned Intellectual Property is valid, subsisting and
enforceable, and is not subject to any outstanding order, judgment or
decree restricting its use or adversely affecting the Parent's, the
Company's or their Subsidiaries' rights thereto. Except to the extent as
would not have a Material Adverse Effect, all Licensed Intellectual
Property is valid, subsisting and enforceable, and is not subject to any
outstanding order, judgment or decree restricting its use or adversely
affecting the Parent's, the Company's or their Subsidiaries' rights
thereto.
(c) Neither the Company, the Parent nor any of their Subsidiaries is
violating or has violated any Intellectual Property rights except to the
extent as has not had and would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Section 3.21(c) of the
Disclosure Schedule, as of the date hereof, there are no suits, actions,
reissues, interferences, arbitrations, mediations, oppositions,
cancellations, Internet domain name dispute proceedings or other
proceedings (collectively, "Suits") pending, or to the knowledge of the
Company and the Parent, threatened, concerning any claim that the Parent,
the Company or any of their indemnitees have violated any Intellectual
Property rights.
(d) Except as set forth on Section 3.21(d) of the Disclosure Schedule,
as of the date hereof there are no Suits or claims pending, or to the
knowledge of the Company and the Parent, threatened, concerning the Owned
Intellectual Property. Except as set forth on Section 3.21(d) of the
Disclosure Schedule, as of the date hereof to the knowledge of the Company
and the Parent, there are no Suits or claims pending or threatened
concerning the Licensed Intellectual Property or the right of the Company,
the Parent or any Subsidiary to use the Licensed Intellectual Property.
(e) The Company, the Parent and their Subsidiaries own or otherwise
hold valid rights to use all Business Intellectual Property used or
contemplated to be used in the operation of the Business as currently
contemplated to be conducted in the future. All such rights are free of all
Liens (other than Permitted Liens). The completion of the transactions
contemplated by this Agreement and the Operative Documents will not alter
or impair the ownership or right of the Company, the Parent or any
Subsidiary to use any of the Business Intellectual Property. The Business
Intellectual Property constitutes all material Intellectual Property,
Computer Software, Computer Hardware and Data that is contemplated to be
used in, or necessary for the conduct of the Business as currently
contemplated to be conducted in the future. To the knowledge of the Company
and the Parent, as of the date hereof no Person is violating any Business
Intellectual Property.
(f) The Company, the Parent and their Subsidiaries have timely made
all filings and payments with the appropriate foreign and domestic agencies
required to maintain in subsistence all Registered Owned Intellectual
Property, except to the extent any failure to make such payments or filings
would not, individually or in the aggregate, have a Material Adverse
Effect. All documentation necessary to confirm and effect the Company's,
the Parent's and their Subsidiaries' ownership of the Owned Intellectual
Property, if acquired from other Persons, has been recorded in the United
States Patent and Trademark Office, the United States Copyright Office and
other official offices, except to the extent as would not have a Material
Adverse Effect.
Section 3.22 No Undisclosed Relationships. No relationship, direct or
indirect, exists between or among the Company or the Parent, on the one hand,
and the directors, officers, stockholders or other affiliates of the Company or
the Parent, on the other, that would be required by the Securities Act to be
described in a registration statement to be filed with the Commission.
Section 3.23 Related Party Transactions. Except as disclosed in Section
3.23 of the Disclosure Schedule, as of the date hereof neither the Company, the
Parent nor any employee or Affiliate of the Company or the Parent: (a) has any
cause of action or other claim whatsoever against, or owes any amounts to, the
Company or the Parent except for claims of employees in the ordinary course of
business, such as for accrued vacation pay or for accrued benefits under an
employee benefit plan maintained by the Company or the Parent; (b) owns,
directly or indirectly, in whole or in part, any tangible or intangible property
which the Company or the Parent is using or which is necessary for the business
of the Company or the Parent; (c) owns any direct or indirect interest of any
kind in, or is an Affiliate or employee of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any Person that is (i) a competitor, supplier, customer, client,
distributor, lessor, tenant, creditor or debtor of the Company or the Parent,
(ii) engaged in a business related to the business of the Company or the Parent
or (iii) participating in any transaction to which the Company or the Parent is
a party; or (d) otherwise is or has been a party to any Contract or transaction
with the Company or the Parent.
Section 3.24 Company Not an "Investment Company". Neither the Company nor
the Parent is, nor, after receipt of payment for the Purchased Securities and
application of the proceeds of this offering will then be, required to register
as an "investment company" under the Investment Company Act and each of the
Parent and the Company will take all reasonable steps to assure that it will not
become subject to registration as an "investment company" under the Investment
Company Act.
Section 3.25 Accounting Controls. The Company and the Parent each maintain
a system of internal accounting controls designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP,
including, but not limited to internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as disclosed in Section 3.25 of the Disclosure Schedule,
there are no material weaknesses or significant deficiencies in the Company's or
the Parent's internal controls.
Section 3.26 Material Contracts. Section 3.26 of the Disclosure Schedule
contains a true, correct and complete list or description, as of the date
hereof, of all Contracts to which the Parent, the Company or any of their
Subsidiaries is a party or by which any of them are otherwise bound which: (a)
are with any Governmental Authority, (b) are material to the Business
Intellectual Property, including but not limited to Contracts granting the
Parent, the Company or their Subsidiaries rights to use the Business
Intellectual Property and trademark coexistence agreements, trademark consent
agreements and nonassertion agreements, or (c) are otherwise material to the
business of either the Parent and its Subsidiaries or the Company and its
Subsidiaries, in each case taken as a whole, other than, in each of the
foregoing cases, Contracts that have been publicly filed with the Commission
(each such Contract referred to in clauses (a), (b) and (c), a "Material
Contract"). All Material Contracts are valid, binding and in full force and
effect as to the Parent, the Company and their Subsidiaries, and, except as
disclosed on Section 3.07 of the Disclosure Schedule, there is no material
default by the Parent, the Company or their Subsidiaries with respect to any
such Material Contracts or, to the knowledge of the Company or the Parent, by
any other party thereto.
Section 3.27 No Unlawful Payments; Compliance with Certain Laws. (a)
Neither the Company, the Parent nor, to the best knowledge of the Company or the
Parent, any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or the Parent has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(b) The operations of the Company and the Parent are and have been
conducted at all times in compliance, in all material respects, with
applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively,
the "Money Laundering Laws") and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator
involving the Company or the Parent with respect to the Money Laundering
Laws is pending or, to the best knowledge of the Company or the Parent,
threatened.
(c) None of the Company, the Parent or, to the knowledge of the
Company or the Parent, any director, officer, agent, employee or affiliate
of the Company or the Parent is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department
of the Treasury ("OFAC"); and the Company and the Parent will not directly
or indirectly use the proceeds of the offering of the Purchased Securities
hereunder, or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
Section 3.28 Solvency. On and immediately after the relevant Closing Date,
each of the Company and the Parent (after giving effect to the issuance of the
Purchased Securities and the other transactions related thereto) will be
Solvent. As used in this paragraph, the term "Solvent" means, with respect to a
particular date and with respect to a particular entity, that on such date (i)
the present fair market value (or present fair saleable value) of the assets of
such entity is not less than the total amount required to pay the liabilities of
such entity on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured; (ii) assuming consummation of
the issuance of the Purchased Securities as contemplated by this Agreement, such
entity is not incurring debts or liabilities beyond its ability to pay as such
debts and liabilities mature; (iii) such entity is not engaged in any business
or transaction, and does not propose to engage in any business or transaction,
for which its property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in which such
entity is engaged; and (iv) such entity is not a defendant in any civil action
that would result in a judgment that such entity is or would become unable to
satisfy.
Section 3.29 Brokers. There is no broker, finder or other party that is
entitled to receive from the Company or the Parent any brokerage or finder's fee
or other fee or commission as a result of any transactions contemplated by this
Agreement, excluding payments that may be due pursuant to Section 7.13(ii)
hereof.
Section 3.30 Licenses and Permits. Except as disclosed in Section 3.30 of
the Disclosure Schedule, each of the Company and the Parent possesses all
licenses, certificates, permits and other authorizations issued by, and has made
all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of its respective properties or the conduct of its business,
except where the failure to possess or make the same would not, individually or
in the aggregate, have a Material Adverse Effect; and except as disclosed in
Section 3.30 of the Disclosure Schedule, neither the Company nor the Parent has
received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in the
ordinary course.
Section 3.31 Rule 144A Eligibility. On the relevant Closing Date, the
Purchased Securities issued on such Closing Date will not be of the same class
as securities listed on a national securities exchange registered under Section
6 of the Exchange Act or quoted in an automated inter-dealer quotation system,
as of its respective date.
Section 3.32 No Integration. Neither the Company, the Parent nor any of
their affiliates (as defined in Rule 501(b) of Regulation D) has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act), that
is or will be integrated with the sale of the Purchased Securities in a manner
that would require registration of the Purchased Securities under the Securities
Act.
Section 3.33 No Stabilization. Neither the Company, the Parent nor any of
the Guarantors has taken, directly or indirectly, any action designed to or that
could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Purchased Securities.
Section 3.34 Margin Rules. Neither the issuance, sale and delivery of the
Purchased Securities nor the application of the proceeds thereof by the Company
or the Parent will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board of Governors.
Section 3.35 No Restriction on Distributions. Except as disclosed in
Section 3.35 of the Disclosure Schedule, no Subsidiary of the Company or the
Parent is currently prohibited, directly or indirectly, from paying any
dividends to the Company or the Parent, from making any other distribution on
such Subsidiary's capital stock, from repaying to the Company or the Parent any
loans or advances to such Subsidiary from the Company or the Parent or from
transferring any of such Subsidiary's property or assets to the Company or the
Parent or any other Subsidiary of the Company or the Parent.
Section 3.36 Contemporaneous Purchase. The Company and Parent have entered
into definitive agreements (the "Other Securities Agreements") in substantially
the form made available to the Purchaser with respect to the issuance, sale and
purchase of the Other Purchaser Securities. Such Other Securities Agreements
have been duly authorized, executed and delivered by the Company and the Parent
and each of them is a valid and binding agreement of the Company and/or the
Parent, as applicable, enforceable against the Company and/or the Parent, as
applicable, in accordance with its terms, subject to the Enforceability
Exceptions.
Section 3.37 Regulatory
(a) Section 3.37 of the Disclosure Schedule includes a complete list
as of the date hereof of all FCC licenses and authorizations held by the
Company and all of the Industry Canada licenses and authorizations held by
TerreStar Canada (the "FCC and Industry Canada Licenses"), and as of the
date hereof all of the FCC and Industry Canada Licenses are in full force
and effect. The FCC and Industry Canada Licenses are not subject to any
condition other than (i) those conditions specifically included in such FCC
and Industry Canada Licenses, (ii) such conditions as may appear in FCC or
Industry Canada orders or decisions of general applicability that may be
relevant to the FCC and Industry Canada licenses and (iii) such conditions
as may appear in FCC or Industry Canada orders or decisions of general
applicability that may be relevant to the FCC and Industry Canada Licenses
\. Other than authorizations sought in the pending applications and not yet
filed applications, all of which are included in Section 3.37 of the
Disclosure Schedule (the "FCC and Industry Canada Applications"), the FCC
and Industry Canada Licenses are, as of the date hereof, the only FCC and
Industry Canada licenses, permits and authorizations required for the
Company to provide mobile satellite communications service and to develop
an integrated satellite and terrestrial communications network in the
United States. Except as specified in Section 3.37 of the Disclosure
Schedule, as of the date hereof, the pending FCC applications are complete
in all material respects.
(b) As of the date hereof, the FCC and Industry Canada Licenses are
not subject to any proceeding other than the FCC and Industry Canada
Application proceedings and those proceedings (i) affecting the mobile
satellite industry, the wireless industry or telecommunications providers
generally; or (ii) which would not reasonably be expected to result in
suspension, termination, revocation, non-renewal or other material adverse
effect on, the FCC and Industry Canada Licenses. As of the date hereof,
none of the FCC or Industry Canada Licenses is threatened in writing by the
FCC or Industry Canada with suspension or cancellation nor is the Company
or TerreStar Canada the subject of any investigation or enforcement action
by the FCC or Industry Canada.
(c) Except as specified in Section 3.37 of the Disclosure Schedule, as
of the date hereof, the Company and TerreStar Canada have made all material
reports, met all the requirements and conditions of the FCC and Industry
Canada Licenses, including meeting required milestones, and paid all fees
required to date by the FCC and Industry Canada.
Section 3.38 Complete Disclosure. No representation or warranty made by the
Company or the Parent in this Agreement, including the Disclosure Schedule, or
in any certificate furnished or to be furnished to the Purchaser pursuant to
this Agreement, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser acknowledges that (i) the representations and warranties in this
Article IV have been a material and necessary inducement for each of the Parent
and the Company to agree to enter into this Agreement and the other Operative
Documents and to issue the Purchased Securities and (ii) each of the Parent and
the Company is relying on such representations and warranties. The Purchaser
represents and warrants to the Company that:
Section 4.01 Authorization. The Purchaser has full power and authority to
enter into this Agreement. This Agreement has been duly and validly authorized,
executed and delivered by the Purchaser and constitutes a valid and legally
binding obligation of the Purchaser, enforceable in accordance with its terms,
subject to the Enforceability Exceptions.
Section 4.02 No Conflicts. The execution, delivery and performance by the
Purchaser of this Agreement and compliance by the Purchaser with the terms and
provisions hereof and thereof, and the purchase of the Purchased Securities by
the Purchaser do not and will not constitute a breach of, or a default under,
the Organizational Documents of the Purchaser, or any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Purchaser is a party or by which it may be
bound or to which its properties is subject, nor will any such action result in
any violation of any existing Law (assuming compliance with the Securities Act
and applicable securities and Blue Sky Laws of any other jurisdiction) to which
the Purchaser or its property is subject.
Section 4.03 Certain Fees. No fees or commissions for which the Company
could be liable (including pursuant to Section 7.13 (ii) hereof) are or will be
payable by the Purchaser to brokers, finders, or investment bankers with respect
to the purchase of any of the Purchased Securities or the consummation of the
transactions contemplated by this Agreement.
Section 4.04 Purchase in Ordinary Course. The Purchaser is purchasing the
Purchased Securities in the ordinary course of its business and the Purchaser
has not entered into any arrangement with any person to resell the Purchased
Securities or to participate in the distribution of the Purchased Securities.
Section 4.05 Unregistered Securities.
(a) Investment. The Purchased Securities are being acquired for its
own account and with no intention of distributing the Purchased Securities
or any part thereof, and the Purchaser has no present intention of selling
or granting any participation in or otherwise distributing the same in any
transaction in violation of the Securities Act or the securities or blue
sky laws of any other jurisdiction. If the Purchaser should in the future
decide to dispose of any of the Purchased Securities, the Purchaser
understands and hereby agrees that it may do so only in compliance with the
Securities Act and applicable securities and blue sky laws of any other
jurisdiction, as then in effect, which may include a sale contemplated by
any registration statement pursuant to which the Purchased Securities are
then being offered.
(b) Exemption. The Purchaser understands that (i) the Purchased
Securities (A) have not been registered under the Securities Act or any
state securities Laws, (B) will be issued in reliance upon an exemption
from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) thereof and/or Regulation D
promulgated thereunder and (C) will be issued in reliance upon exemptions
from the registration and prospectus delivery requirements of state
securities laws which relate to private offerings, and (ii) the Purchaser
must therefore bear the economic risk of such investment indefinitely
unless a subsequent disposition thereof is registered under the Securities
Act and applicable state securities laws or is exempt therefrom. The
Purchaser acknowledges that the Company is relying in part upon the truth
and accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser
set forth herein in order to determine the availability of such exemptions
and the eligibility of the Purchaser to acquire the Purchased Securities.
(c) Nature of Purchaser. The Purchaser represents and warrants to the
Company that (i) it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act and (ii) by reason of its business and
financial experience it has such knowledge, sophistication and experience
in making similar investments and in business and financial matters
generally so as to be capable of evaluating the merits and risks of the
prospective investment in the Purchased Securities, is able to bear the
economic risk of such investment and, at the present time, would be able to
afford a complete loss of such investment;
(d) Legend. It is understood that any certificates evidencing the
Purchased Securities will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER (A) UNDER THE INSTRUMENT
PURSUANT TO WHICH THEY WERE ISSUED AND (B) UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I)
REGISTERED UNDER THE APPLICABLE SECURITIES LAWS, (II) SUCH
TRANSACTION IS PURSUANT TO RULE 144, RULE 144A OR REGULATION
S UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (III) AN
OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY
TO THE COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH
OPINION STATES THAT THE SECURITIES MAY BE TRANSFERRED
WITHOUT SUCH REGISTRATION."
The certificates evidencing the Purchased Securities shall not be required
to contain such legend or any other legend after (i) such securities are
registered for resale under the Securities Act, (ii) following any sale of
such securities pursuant to and in accordance with Rule 144, (iii) if such
securities are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act
(including controlling judicial interpretations and pronouncements issued
by the Staff of the Commission).
(e) No General Solicitation or Advertising. The Purchaser acknowledges
that it is not purchasing the Purchased Securities as a result of any
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television.
(f) Independent Evaluation. The Purchaser has independently evaluated
the merits of its decision to purchase the Purchased Securities, has not
relied on the advice of any placement agent or financial advisor in making
such decision. The Purchaser has been afforded the opportunity, directly
and through any advisors, to ask questions of the Company and the Parent.
ARTICLE V
CONDITIONS
Section 5.01 Conditions Precedent to the Obligations of the Purchaser at
each Closing. The obligation of the Purchaser to acquire the Purchased
Securities at each Closing is subject to the satisfaction, at or before such
Closing, of each of the following conditions:
(a) Representations and Warranties. In the case of the Initial
Closing, each of the representations and warranties of the Company and the
Parent contained herein shall be true and correct as of the date when made
and, unless expressly stated to refer to an earlier date, as of such
Closing Date as though made on and as of such date.
(b) Performance. Each of the Company and the Parent shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it at or prior to such Closing,
including, without limitation, delivering or causing the delivery of those
items required to be delivered pursuant to Section 2.03, Section 2.04,
Section 2.05 and .Section 2.06.
(c) No Material Adverse Effect. No Material Adverse Effect (other
than, and to the extent, disclosed in Section 3.12 of the Disclosure
Schedule) shall have occurred since September 30, 2007.
(d) Consents and Approvals. All consents, authorizations, approvals,
permits, or waivers, if any, that are required in connection with the
execution and delivery of the Operative Documents, the Purchase Money
Credit Agreement and the Purchase Money Security Agreement or the
consummation of the transactions contemplated thereby, (other than, in the
case of the Initial Closing, the Spectrum Contribution Agreement)
including, without limitation, the lawful issuance and sale of the
Purchased Securities pursuant to this Agreement, shall be duly obtained and
effective as of such Closing.
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by this Agreement.
(f) Preferred Stock. The Parent shall have filed with the Secretary of
State of the State of Delaware:
(i) a certificate of designations with respect to the Series C
Preferred in substantially the form attached as Exhibit F hereto; and
(ii) a certificate of designations with respect to the Series D
Preferred in substantially the form attached as Exhibit G hereto.
(g) Payment of Fees and Expenses. The Company and the Parent shall
have paid or cause to have been paid the expenses of the Purchaser required
to be paid by the Purchaser pursuant to Section 7.13(ii), including fees
and expenses of counsel to the Purchaser billed through such Closing Date.
(h) Board of Directors. Within seven (7) days of the Initial Closing,
the Purchaser shall have received evidence reasonably satisfactory to it
that, through resignations and appointments to the Board of Directors of
the Parent and the Company, the Board of Directors of the Parent and the
Company consist of eight individuals including two nominees of the
Purchaser, all of whom shall meet the requirements of a Continuing Director
as defined in the Secured Notes Indenture.
(i) Stockholder Approval. In the case of the Initial Closing, the
Purchaser shall have received evidence reasonably satisfactory to it that
the voting agreements contemplated by Section 6.09(c) have been executed
and delivered and remain in full force and effect.
Section 5.02 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell the Purchased Securities at each Closing is
subject to the satisfaction or waiver by the Company, at or before such Closing,
of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Purchaser contained herein shall be true and correct as
of the date when made and as of such Closing Date as though made on and as
of such date.
(b) Performance. The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Purchaser at or prior to such Closing, including,
without limitation, delivering or causing the delivery of those items
required to be delivered pursuant to Section 2.06; and
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 5.03 Additional Conditions Precedent to the Final Closing.
(a) Both Parties. The obligations of the parties to complete the
transactions contemplated by the Spectrum Contribution Agreement at the
Final Closing is subject to the satisfaction at or before the Final Closing
of each of the following conditions, in addition to the conditions set
forth in Section 5.01 and Section 5.02:
(i) HSR. The waiting period applicable to the Parent's and the
Purchaser's consummation of the transactions contemplated by the Spectrum
Contribution Agreement under the HSR Act, shall have expired or been
terminated.
(ii) Stockholder Approval. The Stockholder Approval for the
issuance of the Spectrum Shares contemplated to be issued pursuant to the
Spectrum Contribution Agreement shall have been received.
(b) The Purchaser. The obligations of the Purchaser to complete the
transactions contemplated by the Spectrum Contribution Agreement at the
Final Closing is subject to the condition that the Stockholder Approval
contemplated by Section 6.09 shall be effective on or before July 23, 2008.
Section 5.04 Additional Documents. On or prior to such Closing Date, the
Company and the Guarantors shall have furnished to the Purchaser such further
certificates and documents as the Purchaser may reasonably request.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 Blue Sky Compliance. The Company will qualify the Purchased
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Purchaser shall reasonably request and will continue such
qualifications in effect so long as required for the offering and resale of the
Purchased Securities; provided that neither the Company, the Parent nor any of
the Guarantors shall be required to (i) qualify as a foreign corporation or
other entity or as a dealer in securities in any such jurisdiction where it
would not otherwise be required to so qualify, (ii) file any general consent to
service of process in any such jurisdiction or (iii) subject itself to taxation
in any such jurisdiction if it is not otherwise so subject.
Section 6.02 Supplying Information. While the Purchased Securities remain
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will, during any period in which the
Company is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, furnish to holders of the Purchased Securities and prospective
purchasers of the Purchased Securities designated by such holders, upon the
request of such holders or such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 6.03 No Integration. Neither the Company, the Parent nor any of
their affiliates (as defined in Rule 501(b) of Regulation D) will, directly or
through any agent, sell, offer for sale, solicit offers to buy or otherwise
negotiate in respect of, any security (as defined in the Securities Act), that
is or will be integrated with the sale of the Purchased Securities in a manner
that would require registration of the Purchased Securities under the Securities
Act.
Section 6.04 No General Solicitation or Directed Selling Efforts. None of
the Company, the Parent or any of their affiliates or any other person acting on
its or their behalf (other than Harbinger and EchoStar, as to which no covenant
is given) will (i) solicit offers for, or offer or sell, the Purchased
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act or (ii)
engage in any directed selling efforts within the meaning of Regulation S, and
all such persons will comply with the offering restrictions requirement of
Regulation S.
Section 6.05 No Stabilization. Neither the Company nor the Parent will
take, directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Purchased Securities.
Section 6.06 Offering of Exchangeable Notes to Existing Stockholders. Prior
to the Initial Closing Date, the Company shall offer (such offer, the
"Exchangeables Offering") to issue and sell to up to nine (9) holders of the
Parent Common Shares all of which are institutional "accredited investors," as
defined in Rule 501(a) under the Securities Act such stockholder's share of an
aggregate of $50,000,000 aggregate principal amount of Exchangeable Notes (the
"Exchangeables Offering Securities"). Each such stockholder who agrees to
purchase the Exchangeables Offering Securities must so specify in writing to the
Company before 12:00 midnight on the day prior to the Initial Closing Date and
shall purchase such Exchangeable Offering Securities at the Initial Closing. The
Purchaser agrees to purchase from the Company 50% of the aggregate principal
amount of the Exchangeables Offering Securities not purchased by such
stockholders pursuant to this Section 6.06.
Section 6.07 Network Capacity Agreement. During the period after execution
of this Agreement and before October 1, 2008, the Company, the Parent and
EchoStar agree to negotiate in good faith and to use commercially reasonable
efforts to reach agreement on a commercial agreement between the Company, the
Parent and EchoStar which would be consistent with the milestone set forth in
section 1(d)(ii) of the Secured Notes.
Section 6.08 Regulatory. (a) The Company shall (i) use its reasonable best
efforts not to surrender, or to permit a materially adverse modification of,
revocation of, forfeiture of, or failure to renew under regular terms, any of
the FCC and Industry Canada Licenses that are material to its business, or cause
the FCC or Industry Canada to institute any proceeding for the revocation,
suspension, or materially adverse modification of any such FCC and Industry
Canada Licenses that are material to its business; and (ii) comply in all
material respects with all requirements and conditions of the FCC and Industry
Canada Licenses.
(b) On or before February 29, 2008, the Company shall file with the
FCC a request for declaratory ruling pursuant to Section 310(b) of the
Communications Act of 1934, as amended, for the purpose of bringing the
Company into full compliance with the FCC's alien ownership rules and
regulations.
(c) The Company shall file with the FCC a request for an extension of
the September 30, 2008 milestone for launching the satellite and the
November 30, 2008 milestone for the satellite being operational. The
Company shall use reasonable best efforts to cause TerreStar Canada to file
with Industry Canada a request for an extension of the November 30, 2008
milestone for placing the satellite into its assigned orbital position.
Such requests shall seek sufficient additional time so as to take into
account the new satellite manufacturing delays and shall be filed
sufficiently in advance of the current milestones so that the FCC and
Industry Canada can reasonably be expected to act on the requests on a
timely basis.
Section 6.09 Stockholder Approval.
(a) The Parent will take, in accordance with applicable law and its
certificate of incorporation and bylaws, all actions reasonably necessary
or advisable to obtain the vote of its stockholders necessary to approve
(i) the issuance of the Spectrum Shares and the transactions contemplated
by the Spectrum Contribution Agreement (ii) the issuance of Junior
Preferred upon exchange of the Exchangeable Notes (and Parent Common Shares
upon conversion of Junior Preferred) and (iii) the increase in the
authorized number of Parent Common Shares necessary to give effect to the
foregoing and issue the Spectrum Shares and Junior Preferred issuable upon
exchange of the Exchangeable Notes (and Parent Common Shares upon
conversion of the Junior Preferred) (the "Stockholder Approval"). The
Parent's Board of Directors shall recommend such approval and take all
lawful action to solicit such approval. The Parent shall use all
commercially reasonable efforts to obtain from its stockholders written
consents in favor thereof and if required by applicable law in order to
consummate the transactions contemplated by the Spectrum Contribution
Agreement, Parent, acting through its Board of Directors, shall take all
action necessary to obtain written consent or convene a meeting of its
stockholders as promptly as practicable for the purpose of voting upon the
approval thereof.
(b) The Parent represents and warrants that the affirmative vote in
favor of the Stockholder Approval by holders of a majority of outstanding
shares of Parent Common Stock is sufficient to obtain the Stockholder
Approval in accordance with applicable law and the certificate of
incorporation and bylaws of the Parent.
(c) The Parent agrees with the Purchaser that on or prior to the
Initial Closing Date it will obtain voting agreements in a form reasonably
approved by the Purchaser from Parent stockholders, representing at least a
majority of the outstanding shares of Common Stock, representing binding
irrevocable commitments to vote in favor of the Stockholder Approval (each
a "Voting Agreement") that are sufficient to obtain the Stockholder
Approval in accordance with applicable law and the Parent's certificate of
incorporation and bylaws (subject only to compliance with the requirements
for filing and distribution of an information statement under Regulation
14C under the Exchange Act).
(d) The Purchaser agrees to deliver a Voting Agreement with respect to
all shares of Common Stock beneficially owned by it, as disclosed in the
most recent form 13D (or an amendment thereto) of Purchaser or its
affiliates filed with the SEC on September 19, 2007.
Section 6.10 Filings. (a) If required by applicable securities legislation,
or order, or if required by any securities commission, stock exchange or other
regulatory authority, at the request of and at the sole expense of the Company,
the Purchaser will provide reasonable assistance to the Company in filing
reports, questionnaires, undertakings and other documents with respect to the
issue of the Purchased Securities.
(b) As soon as reasonably practicable after the date hereof, but in no
event later than 30 days following the date hereof, the Parent and the
Purchaser shall each file with the Federal Trade Commission and the
Antitrust Division of the Department of Justice Notification and Report
Forms relating to the transactions contemplated under the Spectrum
Contribution Agreement and in respect of the potential exchange of the
Exchangeable Notes as required by the HSR Act in order to consummate the
transactions contemplated hereby and thereby. The Parent and the Purchaser
shall (i) cooperate and coordinate with one another in the making of such
filings, (ii) supply the other with any information that may be required to
effectuate such filings, and (iii) promptly supply any additional
information that may be required by, and use its commercially reasonable
efforts (including, without limitation, meeting with any regulators and
providing relevant materials and making available relevant employees), to
seek to resolve promptly any objections that may be asserted by, the
Federal Trade Commission, the Department of Justice or the competition or
merger control authorities of any other Governmental Entity; provided,
however, that the Purchaser shall not be required to agree to any
divestiture of any properties, assets or businesses, or the imposition of
any limitation on its ability to conduct businesses or to own or exercise
control of its assets and properties.
(c) The Purchaser shall provide all information reasonably requested
by the Company to enable it to make FCC filings.
Section 6.11 Withholding Certificates. The Purchaser shall deliver to the
Company, as applicable, either (i) two copies of a properly completed and duly
executed applicable Internal Revenue Service Form W-9 or (ii) a certificate to
the effect that Buyer is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, is not a "10-percent shareholder" within the meaning of Section
881(c)(3)(B) of the Code and is not a controlled foreign corporation as
described in Section 881(c)(3)(C) of the Code, and two copies of a properly
completed and duly executed Internal Revenue Service Form W-8BEN or Form W-8IMY
transmitting one or more for W-8BENs. At the reasonable request of the Company,
the Purchaser shall provide replacement forms if previously provided forms are
no longer effective.
Section 6.12 Company Board; Voting Rights. The Parent and the Company will
take all actions reasonably required such that (a) the Boards of Directors of
the Parent and the Company would as promptly as practicable following the
Initial Closing, but in no event more than seven (7) days following the Initial
Closing, have eight (8) members, including two representatives nominated by the
Purchaser and two representatives nominated by the purchaser(s) of the Other
Purchased Securities and (b) the Purchaser and the purchaser(s) of Other
Purchased Securities would have the same voting rights in respect of the Company
as are set forth in the Certificate of Designations with respect to the Parent.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Use of Proceeds. The proceeds from the sale of the Securities
will be used in a manner consistent with the Business Plan approved by the Board
of Directors of Parent following the reconstitution of the Parent's Board of
Directors as contemplated by Section 6.12.
Section 7.02 Termination by Mutual Consent. This Agreement may be
terminated and the sale and purchase of the Purchased Securities hereunder may
be abandoned at any time prior to the Initial Closing, by mutual written consent
of (a) the Company, (b) the Parent and (c) the Purchaser.
Section 7.03 Termination by the Purchaser or the Company. This Agreement
may be terminated and the sale and purchase of the Purchased Securities may be
abandoned at any time prior to the Initial Closing by action of either (a) the
Company or (b) the Purchaser if the Initial Closing shall not have been
consummated by February 8, 2008, provided that the right to terminate this
Agreement pursuant to this Section 7.03 shall not be available to any party that
has breached its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure of a condition to the
consummation of the sale and purchase of the Purchased Securities .
Section 7.04 Interpretation; Severability. Article, Section, Schedule, and
Exhibit references are to this Agreement, unless otherwise specified. All
references to instruments, documents, contracts, and agreements are references
to such instruments, documents, contracts, and agreements as the same may be
amended, supplemented, and otherwise modified from time to time, unless
otherwise specified. The word "including" shall mean "including but not limited
to." Whenever any party has an obligation under this Agreement, the expense of
complying with that obligation shall be an expense of such party unless
otherwise specified. If any provision of this Agreement is held to be illegal,
invalid, not binding, or unenforceable, such provision shall be fully severable
and this Agreement shall be construed and enforced as if such illegal, invalid,
not binding, or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions shall remain in full force and effect.
Section 7.05 Survival. The indemnities, covenants, representations and
warranties of the Company, the Parent and the Purchaser contained in this
Agreement or made by or on behalf of the Company, the Parent or the Purchaser
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Purchased Securities and shall
remain in full force and effect, regardless of any termination of this Agreement
or any investigation made by or on behalf of the Company, the Parent or the
Purchaser.
Section 7.06 Waivers; Remedies; Amendments.
(a) No Waiver; Remedies Cumulative. No failure or delay on the part of
any party in exercising any right, power, or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power, or remedy preclude any other or further exercise thereof or
the exercise of any right, power, or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to a party at law or in equity or otherwise.
(b) Amendments and Modifications. Except as otherwise provided herein,
no amendment, waiver, consent or modification of any provision of this
Agreement shall be effective unless signed by each of the parties hereto
affected by such amendment, waiver, consent or modification. Any amendment,
supplement or modification of or to any provision of this Agreement, any
waiver of any provision of this Agreement, and any consent to any departure
by any party hereto from the terms of any provision of this Agreement shall
be effective only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on any party hereto in any case shall
entitle any party hereto to any other or further notice or demand in
similar or other circumstances.
Section 7.07 Indemnification. In addition to all other rights and remedies
available to the Purchaser, each of the Company and the Parent shall indemnify,
defend and hold harmless the Purchaser and its affiliates and their respective
partners, members, officers, directors, employees, agents and representatives
(collectively, the "Purchaser Representatives"; and together with the Purchaser,
the "Purchaser Indemnified Persons") against all losses, assessments, damages,
liabilities, costs and expenses (including, but not limited to, interest,
penalties and reasonable legal and accounting fees and expenses) (collectively,
"Damages") and none of the Purchaser Indemnified Persons shall be liable to the
Company, the Parent or any other stockholder of the Company or the Parent for or
with respect to any and all Damages related thereto or incurred in enforcing
this Section 7.07, in connection with:
(i) any breach of a representation or warranty by the Company or
the Parent under (a) this Agreement, including Article III of this
Agreement, (b) any of the other Operative Documents, (c) any of the
exhibits or schedules thereto, or (d) any of the certificates or other
documents furnished pursuant thereto by or on behalf of the Company or the
Parent; and
(ii) any breach of any covenant or agreement by the Company or
the Parent under (a) this Agreement (except Section 6.09(c) hereof); (b)
any of the other Operative Documents; (c) any of the exhibits or schedules
thereto; or (d) any of the certificates or other documents furnished
pursuant thereto by or on behalf of the Company or the Parent.
(b) All indemnification rights hereunder shall survive the execution
and delivery of the Operative Documents and the consummation of the
transactions contemplated herein and therein, notwithstanding any inquiry
or examination made for or on behalf of, or any knowledge of the Purchaser
and/or any of the other Purchaser Indemnified Persons or the acceptance by
the Purchaser of any certificate or opinion.
Section 7.08 Binding Effect; Assignment. This Agreement shall be binding
upon the Company, the Parent, the Purchaser, and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and permitted assigns.
Section 7.09 Non-Disclosure. Notwithstanding anything herein to the
contrary, the Confidentiality Agreements shall remain in full force and effect
according to their terms regardless of any termination of this Agreement.
Section 7.10 Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by registered or certified mail, return
receipt requested, telecopy, air courier guaranteeing overnight delivery or
personal delivery to the following addresses:
(a) If to the Purchaser:
Harbinger Capital Partners Master Fund I, Ltd.
Harbinger Capital Partners Special Situations Fund, L.P.
c/o Harbinger Capital Partners Funds
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
with copies to (such copies not constituting notice hereunder):
Xxxxxxx Management Corporation
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Facsimile: 000-000-0000
and
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
(b) If to the Company:
TerreStar Networks Inc.
00000 Xxxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(c) If to the Parent:
TerreStar Corporation
00000 Xxxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the Company or the Purchaser may designate in
writing. All notices and communications shall be deemed to have been duly given
at the time delivered by hand, if personally delivered; upon actual receipt if
sent by certified mail, return receipt requested, or regular mail, if mailed;
when receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.
Section 7.11 Entire Agreement. This Agreement and the other agreements and
documents referred to herein are intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those set
forth or referred to herein or therein with respect to the rights granted by the
Company, the Parent or any of their Affiliates or the Purchaser or any of its
Affiliates set forth herein or therein. This Agreement and the other agreements
and documents referred to herein supersede all prior agreements and
understandings between the parties with respect to such subject matter.
Section 7.12 Governing Law. This Agreement will be construed in accordance
with and governed by the laws of the State of New York without regard to
principles of conflicts of laws.
Section 7.13 Fees and Expenses. The Company and the Parent shall bear (i)
their own expenses and legal fees incurred on their behalf with respect to this
Agreement and the transactions contemplated hereby and (ii) the expenses and
legal fees (excluding any broker, finder or investment banker fees) incurred by
the Purchaser with respect to this Agreement and the transactions contemplated
hereby.
Section 7.14 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth.
TERRESTAR CORPORATION
By: _____________________________________
Name: ______________________________
Title: ______________________________
TERRESTAR NETWORKS INC.
By: _____________________________________
Name: ______________________________
Title: ______________________________
[Signature Page to Harbinger Master Investment Agreement]
THE PURCHASER:
HARBINGER CAPITAL PARTNERS
MASTER FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C., as investment manager
By: _____________________________________
Name: ______________________________
Title: ______________________________
HARBINGER CAPITAL PARTNERS SPECIAL
SITUATIONS FUND, L.P.
By: Harbinger Capital Partners Special
Situations GP, LLC, as general partner
By: _____________________________________
Name: ______________________________
Title: ______________________________
[Signature Page to Harbinger Master Investment Agreement]
SCHEDULE 2.02
Exchangeable Notes to be Issued by the Company
----------------------------------------------
Additional Purchased
Purchaser Initial Purchased Securities Securities
--------------------- ------------------------------- -----------------------
HARBINGER ........... $50,000,000 aggregate principal 50% of the aggregate
amount principal amount of any
of the $50,000,000
aggregate principal
amount of Exchangeable
Notes offered to
shareholders of the
Parent pursuant to
Section 6.06 and not
purchased by such
shareholders
=============================== =======================
Series D Preferred to be Issued by the Parent
---------------------------------------------
Purchaser Initial Purchased Securities
--------------------------------------- -------------------------------------
HARBINGER ..................... One (1) Share of Series D Preferred
EXHIBIT A
DEFINED TERMS
"2007 Financial Statements" has the meaning specified in Section 3.10.
"Additional Purchased Securities" means the Purchased Securities, if any,
to be purchased by the Purchaser pursuant to Section 6.06 hereof.
"Affiliate" means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, "controlling," "controlled by,"
and "under common control with") means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning specified in the preamble to this Agreement.
"Assets" means all of the properties and assets (real, personal or mixed,
tangible or intangible, and including Intellectual Property), used or held for
use in connection with or material to the continued operation of the business of
the Company, the Parent and/or their Subsidiaries, as the case may be.
"Benefit Plans" has the meaning specified in Section 3.18.
"Business" means the respective businesses of the Company and the Company's
Subsidiaries.
"Business Day" has the meaning specified in the Exchangeable Note
Indenture.
"Business Intellectual Property" means the Owned Intellectual Property and
the Licensed Intellectual Property, and all Computer Software, Computer Hardware
and Data.
"Business Plan" means a business plan for the Company and the Parent
adopted following the Closing but prior to February 29, 2007.
"CCTV" means CCTV Wireless, Inc.
"Closing" has the meaning specified in Section 2.02.
"Closing Date" means:
(i) with respect to the Initial Closing, the Initial
Closing Date; and
(ii) with respect to the Final Closing, if any the Final
Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the United States Securities and Exchange Commission.
"Company" has the meaning specified in the preamble to this Agreement.
"Company Common Shares" has the meaning specified in Section 3.02(a).
"Company Equity Right" has the meaning specified in Section 3.02(a).
"Company Preferred Shares" has the meaning specified in Section 3.02(a).
"Company Stock Option" means any outstanding option to purchase Company
Common Shares.
"Company Stock Option Plan" means the TerreStar Networks Inc. 2002 Stock
Incentive Plan.
"Computer Hardware" means any computer hardware, equipment and peripherals
of any kind and of any platform, including desktop and laptop personal
computers, handheld computerized devices, servers, mid-range and mainframe
computers, process control and distributed control systems, and all network and
other communications and telecommunications equipment.
"Computer Software" means any and all computer programs, including
operating system and applications software, implementations of algorithms, and
program interfaces, whether in source code or object code form (including, but
not limited to, all of the foregoing that is installed on the Computer Hardware)
and all documentation, including user manuals relating to the foregoing.
"Confidentiality Agreement" means the Confidentiality Agreement, dated as
of January 2, 2008, between the Parent and Harbinger.
"Contract" means any loan agreement, indenture, letter of credit (including
related letter of credit applications and reimbursement obligations), mortgage,
security agreement, pledge agreement, deed of trust, bond, note, guarantee,
surety obligation, warranty, license, franchise, permit, power of attorney,
invoice, quotation, purchase order, lease, endorsement agreement, and any other
agreement, contract, instrument, obligation, offer, commitment, plan,
arrangement or understanding, written or oral, express or implied, to which a
Person is a party or by which any of its properties, assets or Intellectual
Property may be bound or affected, in each case as amended, supplemented, waived
or otherwise modified
"Damages" has the meaning specified in Section 7.07(a).
"Data" means all information and data, whether in printed or electronic
form and whether contained in a database or otherwise.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Schedule" has the meaning specified in Article II.
"DTC" means the Depository Trust Company.
"Enforceability Exceptions" has the meaning specified in Section 3.04.
"Environmental Health and Safety Laws" means any Federal, state, local or
foreign statute, Law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection, investigation
or restoration of the environment, health, safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, indoor air, employee exposure, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
"ERISA" has the meaning specified in Section 3.18(a).
"ERISA Affiliate" has the meaning specified in Section 3.18(d).
"ERISA Plans" has the meaning specified in Section 3.18(c).
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Exchangeable Notes Indenture" means the Indenture to be dated as of
February 5, 2008 among the Company, the Guarantors and the Exchangeable Note
Trustee, relating to the issuance of the Exchangeable Notes, in substantially
the form attached as Exhibit B to the Agreement.
"Exchangeable Note Trustee" means the Trustee, as defined in the
Exchangeable Notes Indenture.
"Exchangeable Notes" has the meaning specified in the recitals to this
Agreement.
"Exchangeables Offering" has the meaning specified in Section 6.06.
"Exchangeables Offering Securities" has the meaning specified in Section
6.06.
"FCC and Industry Canada Licenses" has the meaning specified in Section
3.37.
"Financial Statements" has the meaning specified in Section 3.10.
"FINRA" means the Financial Industry Regulatory Authority.
"FYE Date" has the meaning specified in Section 3.10.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Authority" means, with respect to a particular Person, the
country, state, county, city and political subdivisions in which such Person or
such Person's Property is located or that exercises valid jurisdiction over any
such Person or such Person's Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them that exercises valid
jurisdiction over any such Person or such Person's Property.
"Guarantees" means the guarantees made by each of the Guarantors with
respect to the Purchased Securities.
"Guarantors" means with respect to a particular Indenture, the guarantors
of the Company's obligations under such Indenture.
"Harbinger" has the meaning specified in the recitals to this Agreement.
"Harbinger Capital" has the meaning specified in the recitals to this
Agreement.
"Harbinger Master Fund" has the meaning specified in the recitals to this
Agreement.
"Harbinger Special Situations Fund" has the meaning specified in the
recitals to this Agreement.
"Hazardous Substance" means any substance that is: (A) listed, classified
or regulated pursuant to any Environmental Health and Safety Law; (B) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint, polychlorinated biphenyls, radioactive material or radon; or (C) any
other substance that may be the subject of regulatory action by any Governmental
Authority in connection with any Environmental Health and Safety Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1977, as
amended.
"Indentures" means the Exchangeable Note Indenture, the Secured Note
Indenture and the Supplemental Secured Note Indenture.
"Initial Closing" has the meaning specified in Section 2.02.
"Initial Closing Date" shall mean the date on which conditions set forth in
Sections 5.01 and 5.02 with respect to the Initial Closing shall be satisfied or
waived in accordance with this Agreement, or at such other time and date as the
parties hereto mutually shall agree.
"Initial Purchased Securities" means the securities set forth opposite the
Purchaser's name under the columns entitled "Initial Purchased Securities" on
Schedule 2.02 hereto.
"Intellectual Property" means all rights, priorities and privileges
relating to intellectual property, including, without limitation, (a) foreign
and domestic trademarks, service marks, brand names, certification marks,
collective marks, d/b/a's, Internet domain names, logos and other source or
business identifiers, symbols, trade dress, assumed names, fictitious names,
trade names, corporate names, company names, business names, and other indicia
of origin, all applications and registrations for all of the foregoing, and all
goodwill associated therewith and symbolized thereby, registrations and
recordings thereof, and all applications in connection therewith, including, but
not limited to, all extensions, modifications and renewals of same; (b) foreign
and domestic inventions, discoveries and ideas, whether patentable or not, and
all patents, registrations, and applications therefor, including, but not
limited to, divisions, continuations and continuations-in-part and including,
but not limited to, extensions and reissues; (c) Trade Secrets; (d) foreign and
domestic published and unpublished works of authorship, whether copyrightable or
not, copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof; and
(e) all other intellectual property or proprietary rights and claims or causes
of action arising out of or related to any infringement, misappropriation or
other violation of any of the foregoing, including, but not limited to, rights
to recover for past, present and future violations thereof.
"Interim Financial Statements" has the meaning specified in Section 3.10.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, and the rules and regulations of the Commission
promulgated thereunder.
"IRS" has the meaning set forth in Section 3.15(b).
"Junior Preferred" means the Series E Junior Participating Preferred Stock
of the Parent, par value $0.01 per share, (i) to be issued upon exchange of
certain of the Exchangeable Notes issued to the Purchaser pursuant to the terms
of the Exchangeable Note Indenture and (ii) to be issued pursuant to the terms
of the Spectrum Contribution Agreement to the Purchaser.
"Law" means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law, rule or regulation or common
law.
"Licensed Intellectual Property" means Intellectual Property that the
Parent, the Company and their Subsidiaries are licensed or otherwise permitted
by other Persons to use.
"Lien" has the meaning specified in the Exchangeable Note Indenture.
"Material Adverse Effect" shall mean any change, event, occurrence, fact,
condition, circumstance, development or effect (whether or not arising in the
ordinary course of business) that, individually or in the aggregate with any
other changes, events, occurrences, facts, conditions, developments or effects,
has had or is reasonably likely to have a material adverse effect on (A) the
Assets, business, financial condition or results of operations of the Company
and its Subsidiaries, taken as a whole, or the Parent and its Subsidiaries,
taken as a whole or (B) the currently proposed development of the Company's or
the Parent's products, technology or Intellectual Property, except, in the case
of either (A) or (B), for any change, event, occurrence, fact, condition,
development or effect resulting principally from or arising principally in
connection with (i) any effect of the public announcement or pendency of the
issuance of the Securities including any termination of any contractual
relationships with any customers, vendor or employees of the Parent or the
Company due to the Purchaser's participation in this Agreement, (ii) the taking
of any action required by the terms of this Agreement, (iii) changes affecting
the industry in which the Company operates or changes in global or national
economic conditions (provided in each case that such changes do not have a
unique or disproportionate impact on the Company or the Parent); or (iv) changes
in law or in generally accepted accounting principles applicable to the Company
or the Parent.
"Material Contract" has the meaning specified in Section 3.26.
"Money Laundering Laws" has the meaning specified in Section 3.27(b).
"Most Recent Balance Sheet" has the meaning specified in Section 3.10.
"Non-U.S. Benefit Plans" has the meaning specified in Section 3.18(a).
"OFAC" has the meaning specified in Section 3.27(c).
"Operative Documents" means this Agreement, the Guarantees, the Indentures,
the Spectrum Contribution Agreement and the Registration Rights Agreement.
"Organizational Documents" has the meaning specified in Section 3.01(a).
"Other Purchaser Securities" has the meaning specified in the Recitals.
"Other Securities Agreements" has the meaning specified in Section 3.36.
"Owned Intellectual Property" means Intellectual Property owned by the
Parent, the Company or their Subsidiaries.
"Parent" has the meaning specified in the recitals to this Agreement.
"Parent Common Shares" has the meaning specified in Section 3.02(c).
"Parent Equity Right" has the meaning specified in Section 3.02(c).
"Parent Preferred Shares" means the Parent Series A Preferred Shares and
the Parent Series B Preferred Shares.
"Parent Stock Option" means any outstanding option to purchase Parent
Common Shares or Parent Preferred Shares.
"Parent Stock Option Plans" means the Parent's 2004 Restricted Share Plan,
its 2002 Stock Option Plan and its 2006 Equity Incentive Plan.
"Pension Plan" has the meaning specified in Section 3.18(c).
"Permitted Lien" has the meaning specified in the Exchangeable Note
Indenture.
"Person" means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
"PORTAL Market" shall mean the Private Offerings, Resales and Trading
through Automated Linkages Market.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchase Money Credit Agreement" means the Purchase Money Credit
Agreement, dated as of February 5, 2008, by and among the Company, the Parent,
the guarantors party thereto, U.S. Bank National Association, as Collateral
Agent, Harbinger, EchoStar Corporation, and the other lenders party thereto.
"Purchase Money Security Agreement" means the Purchase Money Security
Agreement, dated as of February 5 2008, by and among the Company, U.S. Bank
National Association, as Collateral Agent, and the lenders party thereto.
"Purchase Price" means:
(i) with respect to Exchangeable Notes forming part of the Initial
Purchased Securities, the aggregate principal amount of the Exchangeable
Notes set forth opposite the Purchaser's name under the column "Initial
Purchased Securities" on Schedule 2.02 hereto;
(ii) with respect to Exchangeable Notes forming part of the Additional
Purchased Securities, the aggregate principal amount of the Exchangeable
Notes the Purchaser is required to purchase pursuant to 6.06.
(iii) with respect to the Series D Preferred, $0.01.
"Purchased Securities" means the Initial Purchased Securities and the
Additional Purchased Securities.
"Purchaser" has the meaning specified in the preamble to this Agreement.
"Purchaser Indemnified Persons" has the meaning specified in Section
7.07(a).
"Purchaser Representatives" has the meaning specified in Section 7.07(a).
"Registered" means issued, registered, renewed or the subject of a pending
application.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of February 5, 2008, in substantially the form attached as
Exhibit D to the Agreement.
"Regulation D" means Regulation D under the Securities Act.
"Regulation S" means Regulation S under the Securities Act.
"sale" (and "sell" shall have a correlative meaning) means, with respect to
any shares, the sale, transfer, assignment or similar disposition (excluding
pledge, encumbrance or hypothecation) of such shares in which cash, securities
or other property is received as consideration.
"Secured Notes Indenture" has the meaning specified in the recitals to this
Agreement.
"Secured Note Trustee" has the meaning specified in the Secured Notes
Indenture.
"Secured Notes" has the meaning specified in the recitals to this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations of the Commission promulgated thereunder.
"Series C Preferred" has the meaning specified in the recitals to this
Agreement.
"Series D Preferred" has the meaning specified in the recitals to this
Agreement.
"Solvent" has the meaning specified in Section 3.28.
"Spectrum" shall mean those certain 1.4 GHz band licenses described in the
Spectrum Contribution Agreement.
"Spectrum Contribution Agreement" shall mean the Spectrum Contribution
Agreement, dated as of February 5, 2008, by and between the Parent and the
Purchaser, in substantially the form attached as Exhibit C to the Agreement.
"Spectrum Shares" shall mean the Junior Preferred issuable to the Purchaser
pursuant to the terms of the Spectrum Contribution Agreement.
"Stockholder Approval" has the meaning specified in Section 6.09.
"Subsidiaries" shall mean, as to the Company or the Parent, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board or other persons performing similar functions of
that entity are at the time directly or indirectly owned by the Company or the
Parent, as applicable.
"Suits" has the meaning specified in Section 3.21(c).
"Supplemental Secured Notes Indenture" means the Second Supplemental
Indenture dated as of February 5, 2008 among the Company, the Guarantors and the
Secured Note Trustee, relating to the issuance of the Secured Notes, pursuant to
this Agreement, in substantially the form attached as Exhibit E to the
Agreement.
"Tax" means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs, duties, capital stock,
severances, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy, license,
estimated, real property, personal property, windfall profits or other taxes,
duties, fees or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions.
"Tax Return" means all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trade Secrets" means confidential and proprietary information, trade
secrets and know-how, including, but not limited to, processes, schematics,
databases, formulae, drawings, prototypes, models, designs and customer lists.
"Trust Indenture Act" has the meaning specified in Section 3.04.
EXHIBIT B
[FORM OF INDENTURE FOR EXCHANGEABLE NOTES
(INCLUDING FORM OF EXCHANGEABLE NOTE)]
[See attached]
EXHIBIT C
[FORM OF SPECTRUM CONTRIBUTION AGREEMENT]
[See attached]
EXHIBIT D
[FORM OF REGISTRATION RIGHTS AGREEMENT]
[See attached]
EXHIBIT E
[FORM OF SECOND SUPPLEMENTAL INDENTURE TO THE INDENTURE,
DATED FEBRUARY 14, 2007, BETWEEN TERRESTAR NETWORKS INC., THE
GUARANTORS PARTY THERETO AND U.S. BANK NATIONAL ASSOCIATION IN
RESPECT OF 15% SENIOR SECURED PIK NOTES DUE 2014]
[See attached]
EXHIBIT F
[FORM OF CERTIFICATE OF DESIGNATIONS FOR THE SERIES D PREFERRED
STOCK OF TERRESTAR CORPORATION]
[See attached]
SK 03773 0003 853013
