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EXHIBIT 10.7
EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS AGREEMENT, made this __ day of June, 1999 (this "Agreement"), by
and between American Telecasting, Inc., a Delaware corporation (the "Pledgor"),
and Sprint Corporation, a Kansas corporation (the "Pledgee").
A. Pledgor and Pledgee have entered into a Borrowing Agreement
("Borrowing Agreement") of even date.
B. In order to induce Pledgee to enter into the Borrowing
Agreement, Pledgor has agreed to pledge Pledgor's stock in American
Telecasting of Michiana, Inc., a Delaware corporation and a
wholly-owned subsidiary of Pledgor ("Subsidiary").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and undertakings hereinafter set forth, the parties agree as follows:
1. Pledge. Pledgor hereby pledges and grants a security interest to
Pledgee in 1,000 shares of stock in the Subsidiary represented by Certificate
No. 1, issued in the name of the Pledgor (the "Pledged Shares"). Concurrently
herewith, the Pledged Shares, together with a stock power duly endorsed in
blank, are delivered to Pledgee. The Pledgee shall hold the Pledged Shares as
security for Advances (as defined in the Borrowing Agreement) under the
Borrowing Agreement and any and all other indebtedness, obligations and
liabilities of Pledgor to Pledgee and its successors and assigns under the
Borrowing Agreement or this Agreement.
2. Rights and Duties Respecting Collateral. Pledgee shall be under no
duty or obligation to act in any manner with respect to the Pledged Shares other
than in the safe keeping thereof. Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Shares in its
possession if the Pledged Shares are accorded treatment substantially the same
as that which Pledgee accords its own property; provided, however, that Pledgee
shall have no obligation to take any steps to preserve rights against any other
parties with respect to the Pledged Shares.
3. Voting Rights. During the term of this pledge, and so long as the
Pledgor is not in default under this Agreement, Pledgor shall have the right to
vote the Pledged Shares on all corporate questions, except the Pledged Shares
shall not be voted in contravention of paragraph 5 hereof.
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4. Representations and Covenants. The Pledgor represents and warrants,
as of the date hereof unless otherwise indicated, and agrees as follows:
(a) The Pledged Shares have been duly authorized and validly
issued and are fully paid and nonassessable and do now and will,
throughout the term of this pledge, constitute all of the issued and
outstanding capital stock of any class issued by Subsidiary.
(b) The Pledgor is, and at all times during the term of this
pledge will be, the legal, beneficial and record owner of the Pledged
Shares free and clear of any lien, security interest, option, contract
right or other charge or encumbrance, except for the security interest
created by this Agreement, and the Pledgor will warrant and defend the
title thereto, and the lien created by this Agreement thereon, against
all claims of all persons, and will maintain and preserve such lien.
(c) The Pledgor has the unrestricted right, power and
authority to execute this Agreement, to perform the Pledgor's
obligations hereunder and to transfer and create a security interest in
the Pledged Shares in the manner and for the purpose contemplated
hereby.
(d) The pledge and delivery of the Pledged Shares pursuant to
this Agreement create a valid and perfected first priority security
interest in the Pledged Shares in favor of the Pledgee.
(e) Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and holds those Federal Communications Commission ("FCC") licenses
listed in Attachment A. The FCC licenses are in full force and effect
and authorize the Subsidiary to provide wireless cable services to more
than 150,000 protected service area households.
(f) The Pledgor acknowledges that the Pledgee's actions under
this Agreement may require the prior approval of the FCC or relevant
governmental regulatory authority, as contemplated by Section 7(c)
hereof.
5. Conduct of Business. Except for actions taken to implement the
Agreement and Plan of Merger by and among Pledgee, DD Acquisition Corporation
and Pledgor dated as of April 26, 1999 (the "Merger Agreement") and the
transactions contemplated thereby and except as set forth in the Company
Disclosure Letter (as defined in the Merger Agreement), Pledgor hereby agrees
that at all times during the term of this pledge the Subsidiary will comply in
all material respects with all applicable laws and regulations wherever its
business is conducted and use all commercially reasonable efforts on a basis
consistent with
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past practice and consistent with the Pledgor's business plan (i) to continue to
provide wireless cable television services to its subscriber base, (ii) to
maintain and protect the FCC licenses and other rights necessary to conduct its
business and (iii) to preserve substantially intact its business organization,
and Pledgor shall not authorize or permit, without the prior written consent of
the Pledgee, (a) any issuance of new stock of the Subsidiary or any warrants,
options, or other rights to acquire stock of the Subsidiary, (b) any share
dividend, reclassification, readjustment, or other change in the capital
structure of the Subsidiary, (c) any merger or consolidation of the Subsidiary
or the sale, lease or other transfer of all or substantially all of its
properties and assets, (d) any transfer of any FCC licenses to provide wireless
cable services owned by Subsidiary as of the date hereof or acquired at any time
hereafter, the surrender by Subsidiary of the right to use any FCC license to
provide wireless cable service, the creation of a security interest in any such
FCC licenses or the proceeds generated from the use of such licenses, or the
entering into by Subsidiary of any leasing or licensing agreements, take-or-pay
arrangements or other affiliations, alignments or agreements with respect to the
FCC licenses, except that the Subsidiary may renegotiate any Channel Lease (as
defined in the Merger Agreement) in the ordinary course of business, (e) except
as set forth in the Company Disclosure Letter, the disposition of any business
or assets of Subsidiary in a single transaction or series of transactions in
which the aggregate consideration is $100,000 or greater, (f) the issuance by
Subsidiary of any indebtedness for borrowed money or the guarantee by Subsidiary
of any such indebtedness, (g) the making of loans or advances to any person
other than the Pledgor (other than loans or advances less than $50,000 made in
the ordinary course of business consistent with past practice), (h) the payment
by Subsidiary of dividends or other distributions with respect to its capital
stock, (i) any increase in the compensation or benefits of directors, officers
and employees of the Subsidiary (other than increases in the ordinary course of
business consistent with past practice) or (j) any amendment of the Certificate
of Incorporation or Bylaws of the Subsidiary.
6. Events of Default. Pledgor shall be in default under this Agreement
upon the occurrence and continuance of any of the following events or
conditions:
(a) The occurrence of an Event of Default under the Borrowing
Agreement.
(b) The attempted sale or encumbrance of any of the Pledged
Shares, or the making of any levy, seizure or attachment thereof or
thereon.
(c) Any representation or warranty made by the Pledgor in this
Agreement proves to have been incorrect in any material respect when
made.
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(d) Default in the performance, or breach, of any material
covenant of the Pledgor in this Agreement, which default is not
remedied.
7. Remedies.
(a) In the event that the Pledgor is in default under this Agreement
as provided in Section 6 hereof, the Pledgee shall have the rights and
remedies provided in the Uniform Commercial Code in force in the State
of Kansas, and in addition the Pledgee may do any one or more of the
following, to the extent permitted by applicable law, in such order as
it may elect:
(i) cause any or all of the Pledged Shares to be transferred into
its name or that of its nominee and obtain registration of
such transfer or transfers, without thereby effecting a
foreclosure of the pledge evidenced hereby, the Pledgor hereby
irrevocably constituting and appointing such Pledgee and any
nominee of such Pledgee the attorney-in-fact of the Pledgor
for such purpose, with full power of substitution;
(ii) vote any and all of the Pledged Shares and give any and all
consents, waivers and ratifications in respect thereof and
otherwise act with respect thereto as though it were the
outright owner thereof, the Pledgor hereby irrevocably
constituting and appointing the Pledgee and any nominee of
such Pledgee the proxy and attorney-in-fact of the Pledgor for
such purpose, with full power of substitution; and
(iii) upon ten days' notice to the Pledgor, sent by registered mail,
and without liability for any diminution in price which may
have occurred, sell all the Pledged Shares in such manner and
for such price as the Pledgee may determine, the Pledgor
hereby waiving and releasing any and all rights or equity of
redemption which it otherwise might have after sale hereunder.
At any public or private sale the Pledgee shall be free to
purchase all or any part of the Pledged Shares free from any
such right or equity of redemption. The Pledgor agrees that in
any sale of any of the Pledged Shares whenever a default shall
have occurred and be continuing hereunder, Pledgee is hereby
authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law,
including, without limitation, compliance with such procedures
as may restrict the number of prospective bidders and
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purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such
prospective bidders and purchasers to persons who will
represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution
or resale of such Pledged Shares, or in order to obtain any
required approval of the sale or of the purchaser by any
governmental regulatory authority or official, and the Pledgor
further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Pledgee be
liable or accountable to the Pledgor for any discount allowed
by reason of the fact that such Pledged Shares are sold in
compliance with any such limitation or restriction. For the
purpose hereof, any agreement to sell all or any part of the
Pledged Shares shall be treated as a sale thereof, and Pledgee
shall be free to carry out such sale pursuant to such
agreement and the Pledgor shall not be entitled to the return
of any of the Pledged Shares subject thereto, notwithstanding
that, subsequent to such Pledgee's entering into such an
agreement, the Pledgor may have cured all defaults under this
Agreement.
(b) The proceeds of any sale hereunder of the Pledged Shares shall
be applied first to the payment of all costs and expenses of
collection, sale and delivery, including reasonable attorneys' fees and
expenses in connection therewith, whether or not involving a case or
proceeding before a federal or state court, and next to such of the
obligations of the Pledgor to Pledgee in such order as the Pledgee may
in its sole discretion determine. The balance, if any, of such proceeds
and moneys shall be paid to the Pledgor or such other person or persons
as may legally be entitled thereto. If the proceeds of such sale are
insufficient to pay such costs and expenses and to satisfy such
obligations of the Pledgor, the Pledgor shall remain liable for such
deficiency.
(c) Notwithstanding anything to the contrary contained herein or in
the Borrowing Agreement, the Pledgee will not take any action
(including the exercise of voting rights by the Pledgee with respect to
the Pledged Shares) pursuant to this Agreement or the Borrowing
Agreement that would constitute or result in any assignment of any FCC
license or any change of control of the Subsidiary without first
obtaining the prior approval of the FCC or the relevant governmental
regulatory authority if, under the law existing at such time, such
assignment of any FCC license or change of control would require the
prior approval of the FCC or such governmental regulatory
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authority. Prior to the exercise by the Pledgee of any power, right,
privilege or remedy pursuant to this Agreement which requires any
consent, approval, recording, qualification or authorization of any
governmental regulatory authority or instrumentality upon the request
of the Pledgee, the Pledgor will execute and deliver, or will cause the
execution and delivery of, all applications, certificates, instruments
and other documents and papers that the Pledgee may require to obtain
such governmental consent, approval, recording, qualification or
authorization. Without limiting the generality of the foregoing, the
Pledgor will use its best efforts upon the request of the Pledgee to
obtain from the appropriate governmental regulatory authorities the
necessary consents and approvals, if any, (i) for the granting to the
Pledgee pursuant hereto of the security interests provided for in this
Agreement to the extent, if any, such security interests may be granted
under existing statutes or regulations and (ii) for the change of
control of Subsidiary and/or the assignment or transfer of the FCC
licenses to the Pledgee or its designee upon or following default under
this Agreement.
8. Return of Pledged Shares. Following payment in full of the Advances
under the Borrowing Agreement and satisfaction of all obligations and payment of
all other amounts due under the Borrowing Agreement or this Agreement, the
Pledgee will, upon written demand by the Pledgor, promptly redeliver to the
Pledgor the Pledged Shares and any stock powers related thereto without recourse
to Pledgee and the Pledgee shall execute and deliver such documents and
instruments as the Pledgor may reasonably request to evidence such termination
and release.
9. Waiver. Pledgor waives any right that it may have to require Pledgee
to proceed against any other person, to proceed against or exhaust the Pledged
Shares or any part thereof, or to pursue any other remedy that Pledgee may have.
Pledgor consents to any and all extensions of time, renewals, waivers, or
modifications of any of the terms and conditions of any of the documents
creating any indebtedness in accordance with the terms of such documents, to the
release of Pledged Shares or any part thereof without substitution, and to the
release, substitution, or addition of parties primarily or secondarily liable on
any of the indebtedness. Notice of any of the above is hereby waived by Pledgor.
10. Expenses. The Pledgor will upon demand pay to Pledgee the amount of
any and all expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, whether or not involving a case or proceeding
before any federal or state court, that such Pledgee may incur in connection
with (a) the custody or preservations of, or the sale of, collection from or
other realization upon, any of the Pledged Shares, (b) the exercise or
enforcement of any
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of the rights of Pledgee hereunder, or (c) the failure by the Pledgor to perform
or observe any of the provisions hereof.
11. Indemnification. Neither Pledgee, nor any director, officer, agent
or employee of Pledgee, shall be liable for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, except for its or their
own gross negligence or willful misconduct. The Pledgor hereby agrees to
Indemnify and hold harmless Pledgee and its officers, directors, employees,
agents, representatives, successors and assigns from and against any and all
liability incurred by any of them hereunder or in connection herewith, unless
such liability shall be due to its or their own gross negligence or willful
misconduct.
12. General Provisions.
(a) Rights Sustained. Any failure of the Pledgee to exercise
any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any time and from time to time
thereafter.
(b) Cumulative Remedies. No remedy or election under this
Agreement shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.
(c) Governing Law. This Agreement and the rights and duties of
the parties hereto shall be governed in all respects by the law of the
State of Kansas.
(d) Continuing Agreement. This Agreement is a continuing
Agreement and shall apply notwithstanding the insolvency of Pledgor.
(e) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Pledgee may assign or transfer, in
whole or in part, its security interest hereunder.
(f) Headings. The paragraph headings of this Agreement are for
convenience only and shall not limit or define the meaning or content
of this Agreement. All pronouns and variations thereof shall be deemed
to refer to the singular or plural, as the context may require.
(g) Prior and Subsequent Agreements. This instrument contains
the entire agreement between the parties regarding the pledge of the
Pledged Shares. This Agreement shall not be modified in any way except
by a writing executed by both parties.
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(h) Severability. Any provisions of this Agreement which shall
prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provision of this Agreement, and such other
provisions shall remain in full force and effect.
(i) Notices. All notices, requests, demands and other
communications under this Agreement shall be given, made and received
in the manner provided in the Borrowing Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement.
AMERICAN TELECASTING, INC.
By:
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Name:
Title:
SPRINT CORPORATION
By:
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Name:
Title:
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ATTACHMENT A
American Telecasting of Michiana, Inc.
BTA Authorization No. B126, Elkhart, Indiana
BTA Authorization Xx. X000, Xxxxx Xxxx, Xxxxxxx
MMDS Xxxxxxx XXX000, Xxxxxxx, Xxxxxxx
MDS Station KNSC421, Mishawaka, Indiana
Receive-Only Earth Station E980232, Mishawaka, Indiana
