EXHIBIT 10.23
EXECUTION COPY
WILDBLUE COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "AGREEMENT," which term shall include all
Exhibits and Schedules hereto) is entered into as of the 9th day of December,
2002, by and between Wildblue Communications, Inc., a Delaware corporation (the
"COMPANY"), and Liberty Satellite & Technology, Inc., a Delaware corporation
(the "INVESTOR").
RECITALS
A. The Investor desires to subscribe for and purchase from the Company,
and the Company desires to issue and sell to the Investor, 290,000 shares,
Series 2 (the "SHARES") of a new class of preferred stock of the Company to be
designated the Senior Convertible Preferred Stock, par value $.001 per share
(the "SENIOR PREFERRED STOCK"), and warrants to purchase 290,000 shares of
Series 2 Senior Preferred Stock, for the consideration and on the terms and
conditions set forth in this Agreement.
B. The obligations of each of the Company and the Investor are
conditioned upon the Company's receipt of subscriptions for the Senior Preferred
Stock, of even date herewith, in the aggregate amount of at least $145 million,
but not more than $205 million. For each $29 million of subscription to the
Senior Preferred Stock as of the date hereof (except for the Series 6 Senior
Preferred Stock, which shall be limited to $11 million of subscription), the
Company will issue a different series of the Senior Preferred Stock, each of
which, other than the Series 6 Senior Preferred Stock, will carry the right to
elect one of up to six members of the Company's Board of Directors (the "BOARD
OF DIRECTORS"), subject to the terms and conditions set forth in the Fifth
Charter (as defined below).
C. The obligations of each of the Company and the Investor are also
conditioned upon the effectiveness of the proposed transactions described in
that certain Agreement of Stockholders of even date herewith, by and among the
Company and certain existing stockholders of the Company (the "STOCKHOLDERS"), a
copy of which is attached hereto as EXHIBIT B (the "AGREEMENT OF STOCKHOLDERS").
The Agreement of Stockholders provides that each of the following separate
actions, in order, will be completed on the Closing Date (as defined below) or
on such other date as specified in the Agreement of Stockholders, and shall be
effective in the following order:
- the establishment, pursuant to Section 151(g) of the Delaware
General Corporation Law ("DGCL") and Article IV, Section B.1 of the
Company's Fourth Amended and Restated Certificate of Incorporation, as
amended (the "CHARTER"), of a new series of preferred stock of the
Company, to be designated the Series H Non-Voting Preferred Stock of the
Company, par value $.001 per share ("SERIES H PREFERRED STOCK"),
pursuant to the Series H Preferred Certificate of Designation (as
hereinafter defined);
- the declaration of a dividend to the holders of all shares of
Old Preferred Stock
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(as hereinafter defined) then outstanding, such dividend to be in the
form of shares of Series H Preferred Stock, payable pursuant to Article
IV, Section C.1(a) of the Charter;
- the automatic conversion of all shares of Old Preferred Stock
then outstanding into shares of common stock of the Company, par value
$.001 per share (the "OLD COMMON STOCK") at the then-effective Series A
Conversion Price, the then-effective Series B Conversion Price, the
then-effective Series C Conversion Price, the then-effective Series E
Conversion Price, the then-effective Series F Conversion Price, and the
then-effective Series G Conversion Price, as the case may be (as each
respective Conversion Price is defined in the Charter), by written
consent of holders of at least 58% of the shares of the Old Preferred
Stock then outstanding, voting together on an as-converted basis as a
single class pursuant to Article IV, Section C.5(b)(i), of the Charter;
and
- the adoption, execution and filing of a Fifth Amended and
Restated Certificate of Incorporation of the Company (the "FIFTH
CHARTER"), substantially in the form of EXHIBIT C attached hereto, which
provides for, among other things (i) the creation of the Senior
Preferred Stock, (ii) the reclassification of each share of Series H
Preferred Stock into one share of Junior Non-Voting Preferred Stock of
the Company, par value $.001 per share (the "JUNIOR PREFERRED STOCK"),
(iii) the reclassification of each share of Old Common Stock into one
share of new Series A Common Stock (as defined below) and (iv) the
creation of the Series B Common Stock (as hereinafter defined).
D. Concurrently with the execution of this Agreement, the Stockholders
holding a sufficient number of the issued and outstanding shares of Old
Preferred Stock as of the date hereof for the approval of the transactions
contemplated by the Agreement of Stockholders have executed and delivered the
Agreement of Stockholders. After issuance of the Dividend Shares and conversion
of the Old Preferred Stock into Common Stock in accordance with the Agreement of
Stockholders, the Stockholders will hold a sufficient number of the issued and
outstanding shares of Series H Preferred Stock (assuming the issuance of no
additional shares of Series H Preferred Stock other than the Dividend Shares)
and Old Common Stock as of the date of the filing of the Fifth Charter with the
Secretary of State of the State of Delaware for the approval of the transactions
contemplated by the Agreement of Stockholders. Such Stockholders have granted an
irrevocable proxy to vote or execute a written consent of the Stockholder in
lieu of a meeting, in favor of each of the transactions described in the
Agreement of Stockholders that requires a vote or approval of any of the
stockholders of the Company, and to otherwise to use all reasonable efforts to
cause each of such actions to be consummated, for the benefit of the Company and
the Investor, as a third party beneficiary to the Agreement of Stockholders.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be bound hereby, the parties hereby covenant and agree as follows:
SECTION I
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DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. As used in this Agreement, the following terms have the
corresponding meanings set forth below:
"ACTIONS" has the meaning given in Section 4.6.
"AFFILIATE" means, when used with reference to a specified Person, any
Person that directly or indirectly Controls or is Controlled by or is under
common Control with the specified Person; PROVIDED that the Company shall not be
deemed an Affiliate of any Investor, and no Investor shall be deemed an
Affiliate of any Other Investor, for purposes of this Agreement.
"AGGREGATE PURCHASE PRICE" has the meaning given in Section 2.2.
"AGREEMENT" has the meaning given in the Preamble of this Agreement.
"AGREEMENT OF STOCKHOLDERS" has the meaning given in the Recitals to this
Agreement.
"ARIANESPACE AGREEMENTS" means each of (i) the Launch Services Agreement
(the "LAUNCH SERVICES AGREEMENT"), dated February 17, 2000, between the Company
(f/k/a iSky, Inc.) and Arianespace S.A., a company organized under the laws of
France ("AE"), as amended by the First Amendment to the Launch Services
Agreement, dated January 18, 2001, between the Company and AE, (ii) the
Arianespace Customer Loan Agreement, dated as of February 17, 2000, between the
Company (f/k/a iSky, Inc.) and Arianespace Finance S.A., a company organized
under the laws of Luxembourg, and (iii) the Arianespace Multiparty Agreement,
and all amendments thereto.
"ARIANESPACE MULTIPARTY AGREEMENT" means the Multiparty Agreement, dated as
of February 17, 2000, among Arianespace S.A., a company organized under the laws
of France, Arianespace Finance S.A., a company organized under the laws of
Luxembourg, and the Company (f/k/a iSky, Inc.), and all amendments thereto.
"AUDITED FINANCIAL STATEMENTS" has the meaning given in Section 4.13.
"AUDITED STATEMENTS DATE" has the meaning given in Section 4.13
"BOARD OF DIRECTORS" has the meaning given in the Recitals to this
Agreement.
"BUSINESS ACTION PLAN" has the meaning given in Section 4.24.
"BYLAWS" means the bylaws of the Company as in effect on the date of this
Agreement, and all amendments thereto.
"CERCLA" has the meaning given in Section 4.32.
"CSFB" has the meaning given in Section 3.1(t).
"CHARTER" has the meaning given in the Recitals to this Agreement.
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"CLAIMS" has the meaning given in Section 2.4.
"CLOSING" has the meaning given in Section 2.3.
"CLOSING DATE" has the meaning given in Section 2.3.
"CLOSING DOCUMENTS" means this Agreement, the Warrant Certificate, the
Investor Rights Agreement, the Agreement of Stockholders, the Series H Preferred
Certificate of Designation, the Fifth Charter and all other documents
contemplated therein and thereby, and all annexes, exhibits and schedules
thereto.
"CODE" has the meaning given in Section 4.27.
"COMPANY" has the meaning given in the Preamble of this Agreement.
"COMPANY'S INTELLECTUAL PROPERTY" has the meaning given in Section 4.20.
"CONFIDENTIAL INFORMATION" has the meaning given in Section 6.16.
"CONTRACT" has the meaning given in Section 4.23.
"CONTROL" and its derivative terms means, when used with reference to a
specified Person, the ownership of securities of such Person having sufficient
voting power to elect a majority of the Board of Directors of such Person, or
the ownership of at least 50% of the economic value of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"CONVERSION SHARES" has the meaning given to such term in the Agreement of
Stockholders.
"DGCL" has the meaning given in the Recitals to this Agreement.
"DIVIDEND SHARES" has the meaning given to such term in the Agreement of
Stockholders.
"ECHOSTAR" means Echostar Communications Corporation, a Nevada corporation,
and/or its subsidiary, EchoStar Satellite Corporation, a Colorado corporation.
"ENVIRONMENTAL LAWS" has the meaning given in Section 4.32.
"EQUITY RIGHT" has the meaning given in Section 3.1(m).
"EQUIVALENT" has the meaning given in Section 4.15.
"EXISTING INVESTOR RIGHTS AGREEMENT" means that certain Amended and
Restated Investor Rights Agreement, originally dated as of October 19, 1999, by
and among the Company and certain stockholders of the Company, as amended by the
First Amendment to the Amended and Restated Investor Rights Agreement, dated as
of March 16, 2000, and the Second Amendment to the Amended and Restated Investor
Rights Agreement, dated as of October 19, 2000.
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"FCC" means the U.S. Federal Communications Commission or any bureau or
division thereof acting on delegated authority.
"FCC APPLICATIONS" has the meaning given in Section 6.15.
"FCC LICENSES" means (i) the Company's FCC authorization to construct,
launch and operate a geostationary satellite system using 500 MHz of Ka-band
uplink and downlink spectrum at each of the 73(Degree) and 109.2(Degree) West
Longitude orbital locations and (ii) KaStarCom's FCC authorization to construct,
launch, and operate a geostationary satellite system using 500 MHz of Ka-band
uplink and downlink spectrum at each of the 73(Degree) and 109.2(Degree) West
Longitude orbital locations and 1000 MHz of Ka-band uplink and downlink spectrum
at the 111(Degree) West Longitude orbital location.
"FCC TRANSFER OF CONTROL APPLICATIONS" means the applications for the FCC's
consent to the transfers of control of the FCC Licenses filed or to be filed in
connection with the transactions contemplated by this Agreement and the
KaStarCom Purchase Agreement.
"FIFTH CHARTER" has the meaning given in the Recitals to this Agreement.
"FINAL ORDER" means an order issued by the FCC (i) which grants an
application, petition or request without any condition or qualification which is
materially adverse to the Investor or to the operation of the business of the
Company (as it is presently proposed to be operated), and (ii) for which the
time within which any party in interest or the FCC may seek administrative or
judicial reconsideration or review set forth in applicable Regulatory Provisions
has expired, and no petition for such reconsideration or review has been timely
filed with the FCC or with the appropriate court.
"GAAP" means generally accepted accounting principles in the United States,
applied on a consistent basis.
"GOVERNMENTAL APPROVAL" means any applicable authorization, approval,
consent, license, lease, ruling, permit, tariff, certification, exemption,
notice, filing or registration by or with any Governmental Person.
"GOVERNMENTAL PERSON" means any federal, state, local or other government,
any political subdivision or any governmental, judicial, public or statutory
instrumentality, tribunal, agency (including those pertaining to health, safety
or the environment), authority, body or entity, or other regulatory bureau,
authority, body or entity having legal jurisdiction over the matter or Person in
question.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, including the rules and regulations promulgated thereunder.
"INDEMNIFIED LIABILITIES" has the meaning given in Section 7.10(a).
"INDEMNIFIED PARTY" has the meaning given in Section 7.10(a).
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"INITIAL ORDER" means an order issued by the FCC (i) which grants an
application, petition or request without any condition or qualification which is
materially adverse to the Investor or to the operation of the business of the
Company (as it is presently proposed to be operated), and (ii) for which the
time within which any party in interest or the FCC may seek administrative or
judicial reconsideration or review set forth in applicable Regulatory Provisions
has not yet expired.
"INTELSAT" means Intelsat USA Sales Corp., a Delaware corporation and
subsidiary of Intelsat Ltd., a Bermuda corporation.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"INVESTOR" has the meaning given in the Preamble of this Agreement.
"INVESTOR RIGHTS AGREEMENT" means the Investor Rights Agreement to be
entered into on the Closing Date, by and among the Company and the Investors (as
defined therein), substantially in the form attached hereto as EXHIBIT D.
"JUNIOR PREFERRED STOCK" has the meaning given in the Recitals to this
Agreement.
"KA-BAND" means the space-to-earth (downlink) frequencies at 17.7 - 20.2
GHz and the corresponding earth-to-space (uplink) frequencies at 27.5 - 30.0
GHz.
"KaStarCom" means KaStarCom World Satellite, LLC.
"KaStarCom FINANCIAL STATEMENTS" has the meaning given in Section 4.13.
"KaStarCom LICENSES" has the meaning given in Section 4.37(a).
"KaStarCom PURCHASE AGREEMENT" has the meaning given in Section 4.13.
"KNOWLEDGE," "KNOWN" and "KNOWS," whether or not capitalized herein and
when used with respect to matters covered by any representation, warranty,
covenant or other provision of this Agreement applicable to any party to this
Agreement means the knowledge and beliefs of each of the senior executive
officers of such party who are responsible for such matters, either as actually
held by such person or as such person should have known after reasonable
inquiry.
"LAWS" means all federal, state, territorial, municipal, local or other
statutes, regulations or bylaws applicable to the parties hereto, including all
orders, notices, rules, decisions, codes, guidelines, policies, directions,
permits, approvals, licenses and similar authorizations issued, rendered or
imposed by any level of government including any ministry, department or
administrative or regulatory agency or authority.
"LICENSED INTELLECTUAL PROPERTY" has the meaning given in Section 4.21.
"LIEN" means any lien, mortgage, encumbrance, charge, pledge, lease,
security interest, claim, assessment, restriction (including restrictions on
transfer), option or right of any kind
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(including any conditional sale or other title retention agreement).
"MANAGEMENT OPTION PLAN" has the meaning given in Section 3.1(h).
"MATERIAL ADVERSE CHANGE" when used with reference to the Company, means
any material change, event, violation, inaccuracy, circumstance or effect that
is materially adverse to the business, assets (including intangible assets),
capitalization, financial condition, prospects or results of operations of the
Company and its Subsidiaries, taken as a whole, and any change in any Contract,
any FCC License or any other Governmental Approval which, in the aggregate, is
materially adverse, including without limitation any materially adverse change
in any vendor, vendor relationship or ability of a vendor to perform under any
Contract; PROVIDED, HOWEVER, that the loss of any of the following shall not, by
itself, be considered a Material Adverse Change: (i) the Company's FCC License
at 73(Degree) West Longitude, (ii) KaStarCom's FCC License at 111(Degree) West
Longitude (but only if the FCC has granted (or within 60 days of such loss
grants) by Final Order Telesat's request to use the Ka-band capacity on the Anik
F2 satellite for the provision of two-way broadband communication services in
the United States), or (iii) KaStarCom's FCC License at 73(Degree) West
Longitude.
"NRTC" means National Rural Telecommunications Cooperative, a District of
Columbia cooperative corporation.
"OLD COMMON STOCK" has the meaning given in the Recitals to this Agreement.
"OLD PREFERRED STOCK" means all shares of the Company's Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock and Series G Preferred
Stock, each par value $.001 per share, issued and outstanding under the Charter
as of the date hereof.
"OTHER INVESTORS" has the meaning given in Section 3.1(e).
"PER SHARE PURCHASE PRICE" has the meaning given in Section 2.1.
"PERMITS" has the meaning given in Section 4.32.
"PERSON" means a natural person, corporation, limited partnership, general
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, business trust or other organization, whether or not a
legal entity, or a government or agency or any political subdivision thereof.
"QUALIFYING HOLDER" has the meaning given in Section 6.16(a).
"REGULATORY PROVISIONS" means all applicable requirements of the Federal
Communications Act of 1934, as amended, including the policies, rules, decisions
and regulations of the FCC as may be amended from time to time.
"REPORTING COMPANY" has the meaning given in Section 6.16(a).
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"REQUIRED INVESTORS" means (i) prior to the Closing, any number of Other
Investors, or the Investor and/or any number of Other Investors, subscribing in
the aggregate for at least 90% of the total number of shares of Senior Preferred
Stock subscribed for, in the aggregate, by the Investor and all Other Investors
pursuant to the Subscription Agreements and (ii) after the Closing, the holders
of at least 90% of the total number of such shares of Senior Preferred Stock.
"SEC" has the meaning given in Section 5.9.
"SATELLITE SHARING AGREEMENT" has the meaning given in Section 4.38.
"SCHEDULES" means the schedules appended to this Agreement.
"SECURITIES" has the meaning given in Section 6.10.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and all
rules and regulations adopted thereunder.
"SENIOR PREFERRED STOCK" has the meaning given in the Recitals to this
Agreement.
"SERIES A COMMON STOCK" means the Series A Common Stock, par value $.001
per share, of the Company, to be established under the Fifth Charter.
"SERIES B COMMON STOCK" means the Series B Common Stock, par value $.001
per share, of the Company, to be established under the Fifth Charter.
"SERIES H PREFERRED CERTIFICATE OF DESIGNATION" means the Certificate of
Designation, Rights, Preferences and Privileges of the Series H Preferred Stock,
in substantially the form attached hereto as EXHIBIT G.
"SERIES H PREFERRED STOCK" has the meaning given in the Recitals of this
Agreement.
"SHARES" has the meaning given in the Recitals of this Agreement.
"STOCKHOLDERS" has the meaning given in the Recitals of this Agreement.
"SUBSCRIPTION AGREEMENTS" has the meaning given in Section 4.39 of this
Agreement.
"SUBSIDIARY" when used with respect to a Person means any business entity
that a Person or its Subsidiary either (x) is a general partner in, or (y)
directly or indirectly owns or controls at least 50% of the voting securities or
other interests of (PROVIDED such voting securities have by their terms the
voting power to elect at least 50% of the board of directors (or its functional
equivalent)) of such entity. For purposes of this Agreement, the Company's
Subsidiaries shall include those entities listed in SCHEDULE 4.2.
"TELESAT" means Telesat Canada, a corporation organized under the laws of
Canada.
"UNAUDITED BALANCE SHEET" has the meaning given in Section 4.13.
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"UNDERLYING SHARES" has the meaning given in Section 2.1.
"VOTING AGREEMENT" means that certain Fourth Amended and Restated Voting
Agreement, dated as of June 1, 2002, by and among the Company and certain
stockholders of the Company.
"WALK AWAY DATE" has the meaning given in Section 7.1(a)(ii).
"WARRANT SHARES" has the meaning given in Section 2.1.
"WARRANT CERTIFICATE" means the Stock Purchase Warrant certificate which
evidences the Warrants issued by the Company in favor of the Investor, in
substantially the form attached hereto as EXHIBIT H.
"WARRANT SHARES" has the meaning given in Section 2.1.
"WARRANTS" has the meaning given in Section 2.1.
"WILDBLUE LICENSES" has the meaning given in Section 4.37(a).
SECTION II
PURCHASE; CLOSING
2.1 AUTHORIZATION. At the Closing and upon completion of the actions
contemplated by the Agreement of Stockholders, including without limitation the
filing and effectiveness of the Fifth Charter, the Company will have authorized
the issuance and sale of, and shall have reserved for issuance, (i) the Shares
at a purchase price of $100.00 per share (the "PER SHARE PURCHASE PRICE"), which
Shares shall have the rights, privileges and preferences of shares of Senior
Preferred Stock, Series 2, set forth in the Fifth Charter, (ii) the number of
shares of Series B Common Stock into which such Shares shall be convertible
pursuant to the Fifth Charter, (iii) warrants to purchase up to 290,000
additional shares of Series 2 Senior Preferred Stock (the "WARRANTS"), on the
terms and conditions set forth in the Warrant Certificate to be executed at the
Closing by the Company in favor of the Investor, (iv) the number of shares of
Series 2 Senior Preferred Stock issuable upon exercise of all the Warrants (the
"WARRANT SHARES"), (v) the number of shares of Series B Common Stock issuable
upon conversion of the Warrant Shares, and (vi) the number of shares of Series A
Common Stock into which the shares of Series B Common Stock referred to in
clauses (ii) and (v) of this Section 2.1 shall be convertible pursuant to the
Fifth Charter (the Warrant Shares, the shares of Series B Common Stock referred
to in clauses (ii) and (v) of this Section 2.1, and the shares of Series A
Common Stock referred to in clause (vi), of this Section 2.1 are collectively
referred to herein as the "UNDERLYING SHARES").
2.2 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations and
warranties made herein, the Company shall issue and sell to the Investor and the
Investor shall buy from the Company the Shares and the Warrants, for such
purchase price which is equal to the product of the Per Share Purchase Price
multiplied by the number of Shares being purchased by the Investor, which amount
is set forth in
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EXHIBIT A opposite the Investor's name (the "AGGREGATE PURCHASE PRICE").
2.3 CLOSING PAYMENT. The purchase and sale of the Shares and Warrants
shall take place at a closing (the "CLOSING") to be held on such date and at
such time and location as the Company and the Investor shall mutually agree.
Such date and time of Closing is herein referred to as the "CLOSING DATE." At
the Closing, the Investor will pay the Aggregate Purchase Price to the Company
in cash.
2.4 POTENTIAL ASSIGNMENT OF CLAIMS. Pursuant to that certain Subscription
Agreement between the Company and Intelsat, dated as of the date hereof,
Intelsat has the right to pay up to $20 million of its aggregate purchase price
for shares of Senior Preferred Stock and warrants for Senior Preferred Stock by
the assignment of any rights to collect monies that are due and payable to
Intelsat and that are not in dispute ("CLAIMS") that Intelsat may have
immediately prior to the Closing against any vendor of the Company, on terms and
conditions to be agreed by Intelsat and the Company; PROVIDED that such Claims
are due and payable within 90 days of the Closing (and not subject to vendor
financing); PROVIDED, FURTHER, that such vendor consents to the assignment and
agrees that the full amount of such Claims may be fully set off against claims
that such vendor may then have against the Company which are due and payable not
more than 90 days after the Closing without adversely affecting any other rights
or obligations of the Company with respect to such vendor; PROVIDED, FURTHER,
that the Required Investors and the Company have consented (which consents may
not be unreasonably withheld) to the terms and conditions of such assignment.
2.5 DELIVERIES. At the Closing (or at the time otherwise specifically
stated in this Agreement):
(a) the Investor will deliver payment of the Aggregate Purchase Price, by
wire transfer of immediately available funds to an account designated for such
purpose by the Company in writing prior to the Closing;
(b) each of the Company, the Investor, the Other Investors and the
Stockholders shall execute and deliver the Closing Documents to which it is a
party, as specified in Section III of this Agreement and in the Agreement of
Stockholders;
(c) the Company shall deliver to the Investor a duly executed stock
certificate in proper form, registered in the Investor's name, representing the
Shares to be purchased by the Investor at the Closing; and
(d) the Company shall deliver to the Investor a duly executed Warrant
Certificate in substantially the form attached hereto as EXHIBIT H, registered
in the Investor's name, representing the right to purchase the Warrant Shares.
SECTION III
CONDITIONS TO CLOSING
3.1 INVESTOR CONDITIONS. The obligation of the Investor to purchase the
Shares at the Closing
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shall be subject to and conditioned upon the satisfaction, or waiver by the
Investor, prior to or at the Closing, of each of the following conditions:
(a) The representations and warranties of the Company contained in this
Agreement and the other Closing Documents shall, if specifically qualified by
materiality, be true and correct and, if not so qualified, be true and correct
in all material respects, in each case as of the Closing Date, and all covenants
and agreements of the Company contained in this Agreement and the other Closing
Documents shall have been performed or complied with, as applicable, in all
material respects on or prior to the Closing Date.
(b) Since the Audited Statements Date (as hereinafter defined), there shall
have been no Material Adverse Change and the Company shall not have suffered any
material loss (whether or not insured) by reason of physical damage caused by
fire, earthquake, accident or other calamity which substantially affects the
value of its assets, properties or business, certified by the Company's
Secretary.
(c) The Company shall have delivered to the Investor:
(i) resolutions of the Board of Directors authorizing the
execution, delivery and performance of the Closing
Documents and of all agreements and documents to which the
Company is a party and the consummation of the transactions
contemplated thereby;
(ii) a certificate of incumbency of the Company's officers
executing the Closing Documents, dated the Closing Date;
(iii) a certificate of good standing of the Company from the
office of the Secretary of State of Delaware, as of a date
not more than 5 days prior to the Closing Date;
(iv) an opinion of outside legal counsel to the Company, in
substantially the form attached hereto as EXHIBIT E, dated
the Closing Date and in form and substance reasonably
acceptable to the Investor;
(v) an opinion of outside legal counsel to the Company with
respect to FCC matters, in substantially the form attached
hereto as EXHIBIT F, dated the Closing Date and in form and
substance reasonably acceptable to the Investor; and
(vi) a certificate of compliance, dated the Closing Date,
executed by an officer of the Company certifying that each
of the conditions specified in this Section 3.1 have been
satisfied or waived in writing by the Investor.
(d) The Company and the Stockholders shall have performed all of their
respective obligations required to be completed on or prior to the Closing
pursuant to the Agreement of Stockholders.
(e) The Company has received subscriptions for the Senior Preferred Stock,
dated as of even
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date herewith, in the aggregate amount of at least $145 million, but not more
than $205 million, from the Investor and other investors reasonably acceptable
to the Investor (collectively, the "OTHER INVESTORS"), and the sales and
issuances of Senior Preferred Stock and warrants provided for therein shall be
consummated concurrently with the Closing hereunder.
(f) The Company shall have obtained all consents, approvals, or waivers
(and such shall be in effect as of the Closing) from Governmental Persons and
third parties, including without limitation any of its stockholders and the FCC
(in the case of the FCC, such consents, approvals and waivers shall include
without limitation Final Order(s) approving the FCC Transfer of Control
Applications) necessary (in the reasonable judgment of the Investor) for the
execution, delivery and performance of this Agreement and the other Closing
Documents. Upon issuance of Initial Order(s) approving the FCC Transfer of
Control Applications, Investor shall consider in good faith the waiver of the
requirement of Final Order(s) approving such FCC Transfer of Control
Applications based on its evaluation, as informed by advice of FCC counsel, of
the likelihood that such Initial Order(s) will be modified, amended, vacated or
overturned. Investor shall not unreasonably withhold consent to such waiver and
shall not withhold consent to such waiver for reasons unrelated to the status of
such Initial Order(s). Investor shall notify the Company of its decision with
respect to waiver no later than 10 days after the occurrence of each of (i) the
issuance of the Initial Order(s), and (ii) the elapse of 30 days from the
issuance of such Initial Order(s).
(g) No action or proceeding before any court or Government Person will be
pending wherein a judgment, decree or order would prevent any of the
transactions contemplated by this Agreement and the other Closing Documents,
cause any such transaction to be declared unlawful or rescinded, or could be
reasonably likely to subject any party hereto or thereto to a material fine in
connection with any such transaction.
(h) All stock option plans and stock incentive plans of the Company shall
have been terminated and all options (whether vested or unvested) and other
rights to acquire capital stock or other equity interests of the Company, any
Subsidiary or any other Person in which the Company has equity interests or
rights to acquire equity interests, of any employee of the Company (including
without limitation any such rights pursuant to employment agreements) as of the
Closing Date shall have been terminated, except as set forth in SCHEDULE
3.1(h)(A), and the Company shall have reserved up to 7.5% of the outstanding
shares of Series A Common Stock on a fully diluted and as-converted basis
(including without limitation shares of Series A Common Stock issuable upon
conversion of Series B Common Stock) immediately after the Closing (including
all Series A Common Stock issuable as a result of conversion of all Old
Preferred Stock and all Senior Preferred Stock outstanding, but excluding shares
issuable upon exercise of the Warrants and all Equity Rights listed on SCHEDULE
3.1(m) hereto) pursuant to a new stock option plan satisfactory to the Investor
and having the terms set forth on SCHEDULE 3.1(h)(B) (the "MANAGEMENT OPTION
PLAN"), for the purpose of attracting and retaining senior management and such
other personnel as will be required by the Company's business.
(i) The Investor shall have received all such counterpart originals or
certified or other copies of such documents as the Investor may have reasonably
requested.
12
(j) The FCC has granted by Initial Order, no later than December 15, 2002,
and by Final Order, no later than the Closing Date, Telesat's request to use the
Ka-band capacity on the Anik F2 satellite for the provision of two-way broadband
communication services in the United States, pursuant to authorization
reasonably acceptable to the Investor which can be relied upon by the Company to
market its services to end users.
(k) All applicable waiting periods pursuant to the HSR Act in connection
with the transactions contemplated by this Agreement and the other Closing
Documents shall have expired or terminated prior to the Closing. Subject to
Section 7.4 hereof, the aggregate fees incurred pursuant to this Section 3.1(k)
and pursuant to a corresponding provision in any other Subscription Agreement,
shall be advanced only by the subscribers to the Senior Preferred Stock
(including without limitation the Investor) which incur such fees, with each
such subscriber bearing its PRO RATA amount based on the aggregate amount to be
funded by such subscribers at the Closing, and the Company shall reimburse the
Investor pursuant to Section 6.19 or Section 7.4 hereof.
(l) Except as set forth on SCHEDULE 3.1(l) hereto, and subject to Section
6.6 hereof, each voting agreement, stockholders' agreement, investors' rights
agreement, registration rights agreement and other similar agreement with
respect to rights of any beneficial or record owner of securities of the
Company, as in effect immediately prior to the Closing and to which the Company
is a party, shall have been terminated, except that the Existing Investor Rights
Agreement shall remain in effect as modified pursuant to Section 4.1 of the
Investor Rights Agreement attached hereto as EXHIBIT D.
(m) Except as listed on SCHEDULE 3.1(m) hereto, each warrant, option
agreement, rights agreement or other agreement, rights or securities (each an
"EQUITY RIGHT") representing the right to purchase or otherwise acquire equity
securities of the Company or securities or other rights that are exercisable,
exchangeable and/convertible for or into equity securities of the Company shall
have been terminated, and SCHEDULE 3.1(m) sets forth the maximum number of
shares of Common Stock of the Company that each respective Equity Right entitles
its holder thereto.
(n) Between the date hereof and the Closing, the Company has performed all
such actions enumerated in the budget set forth in SCHEDULE 7.1(a)(ii) hereto,
as such budget may be amended with the prior consent of the Required Investors.
(o) [Intentionally Omitted.]
(p) The amount of the liabilities and/or other financial commitments or
obligations (including but not limited to outstanding termination fees) of the
Company due under, and any other outstanding obligations or commitments
(including but not limited to the "Right of First Refusal" under Section 3(c) of
the Arianespace Multiparty Agreement) of the Company pursuant to, the
Arianespace Agreements, shall be acceptable to the Investor in its reasonable
judgment, and the Company shall have entered into a written agreement (or
agreements) with the other parties to the Arianespace Agreements, in form and
substance reasonably acceptable to the Investor.
(q) The employees of the Company as of the Closing Date are sufficient to
run the business
13
as conducted on the date hereof.
(r) Telesat shall have executed and delivered a written agreement in such
form as is satisfactory to the Investor in its reasonable judgment, stating that
the funding to the Company pursuant to the Subscription Agreements satisfies the
Company's funding commitment obligations under the Second Amended and Restated
Ka-Band Payload License Agreement, dated as of December 17, 2001, between
Telesat and the Company.
(s) The Company shall have obtained all assurances (as are satisfactory to
the Investor in its reasonable judgment), whether in writing or otherwise, from
Space Systems/Loral, Inc., a Delaware corporation, that its business
relationship with the Company and construction of the Wildblue 1 satellite is as
set forth in the Business Action Plan.
(t) The Company and Credit Suisse First Boston Corporation ("CSFB") shall
have executed and delivered a written agreement, on terms satisfactory to the
Investor in its reasonable judgment, which provides for the termination of all
rights of CSFB and obligations of the Company under, and the full satisfaction
and release of all claims of CSFB against the Company in connection with, that
certain Engagement Letter Agreement, dated as of April 5, 2001, between CSFB and
the Company (including but not limited to the right of CSFB to a "Placement Fee"
under Section 8 (and/or Section 2(a)) of the Engagement Letter in connection
with this Agreement, any other Subscription Agreement or any other agreement or
issuance of securities or other rights by the Company on or after the date
hereof), without any payment or amount due from the Company other than (i) the
reimbursement of expenses in an aggregate amount not to exceed $121,000 and (ii)
such other amounts as shall be approved by the Investor in its reasonable
judgment.
(u) The Board of Directors of Intelsat and Intelsat, Ltd., a Bermuda
corporation and parent of Intelsat, shall have approved this Agreement and the
other Closing Documents to which Intelsat is a party, and shall have authorized
the transactions contemplated hereby and thereby to which Intelsat is a party.
(v) In connection with that certain agreement between the Company and TRW,
Inc. ("TRW"), dated as of February 14, 2000, the Company and TRW shall have
executed and delivered a written amendment or other agreement which confirms
that TRW is entitled to acquire only either (i) 7,162.5 shares of Old Preferred
Stock (prior to the Closing) or (ii) 7,162 shares of Series A Common Stock and
cash payment for 0.5 of one share of Series A Common Stock (on and after the
Closing), pursuant to Section 11 of such February 14, 2000 agreement, in each
case on terms and conditions satisfactory to the Investor in its reasonable
judgment.
3.2 COMPANY CONDITIONS. The obligation of the Company to sell and issue
the Shares and Warrants at the Closing and thereafter pursuant to this Agreement
shall be subject to and conditioned upon satisfaction, or waiver by the Company,
prior to or at the Closing, of each of the following conditions:
(a) The representations and warranties of the Investor contained in this
Agreement and the other Closing Documents shall, if specifically qualified by
materiality, be true and correct and, if
14
not so qualified, be true and correct in all material respects, in each case as
of the Closing Date and all covenants and agreements of the Investor contained
in this Agreement and the other Closing Documents shall have been performed or
complied with, as applicable, in all material respects on or prior to the
Closing Date.
(b) The Investor shall have obtained all consents, approvals or waivers
(and such shall be in effect as of the Closing) from Governmental Persons and
third parties necessary for the execution, delivery and performance of this
Agreement and the other Closing Documents by the Investor, as applicable.
(c) The Company shall have received subscriptions for the Senior Preferred
Stock, dated as of even date herewith, in the aggregate amount of at least $145
million (inclusive of the Aggregate Purchase Price under this Agreement).
(d) The Stockholders shall have performed their obligations under the
Agreement of Stockholders.
(e) The Fifth Charter shall have been approved by the requisite
stockholders of the Company.
(f) No action or proceeding before any court or Governmental Person will be
pending wherein a judgment, decree or order would prevent any of the
transactions contemplated hereby or thereby or cause such transactions to be
declared unlawful or rescinded.
(g) The Company has received from the Investor all such counterpart
originals or certified or other copies of such documents as the Company may have
reasonably requested from the Investor.
(h) The Investor shall have approved the Company budget as set forth in
SCHEDULE 7.1(a)(ii) hereto.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth on the schedules attached hereto (the
"SCHEDULES") and as referenced in the Schedules to the Sections of this Section
IV to which such disclosure applies, the Company represents and warrants to the
Investor as follows (for the purposes of this Section IV only, the "Company"
shall mean the Company, each of its Subsidiaries and, unless specifically
indicated otherwise, KaStarCom):
4.1 ORGANIZATION AND AUTHORITY. The Company is a corporation (or limited
liability company, as the case may be) validly existing and in good standing
under the laws of the jurisdiction of its incorporation (or organization, as the
case may be). The Company has full power and authority to enter into and perform
this Agreement and the other agreements contemplated hereby to which it is a
party. The Company is duly licensed or qualified to do business as a foreign
corporation (or limited liability company, as the case may be) and is in good
standing under the laws of all other jurisdictions in which the character of the
properties owned or leased by it therein or in
15
which the transaction of its business makes such qualification necessary, except
for jurisdictions where failure to so qualify could not reasonably be expected
to cause a Material Adverse Change. The Company has all requisite corporate (or
limited liability company, as the case may be) power and authority to own its
properties, to carry on its business as now conducted, and to enter into and
perform its obligations under the Closing Documents.
4.2 SUBSIDIARIES.
(a) SCHEDULE 4.2 sets forth (i) the name of each Subsidiary of the
Company; (ii) the name of each corporation, partnership, joint venture or other
entity (other than such Subsidiaries) in which the Company or any of its
Subsidiaries has, or pursuant to any agreement has the right or obligation to
acquire at any time by any means, directly or indirectly, an equity interest or
investment; (iii) in the case of each of such corporations or limited liability
companies described in clauses (i) and (ii), (A) the jurisdiction of
incorporation or organization, (B) the percentage of each class of voting
capital stock (or similar interests) owned by the Company or any of its
Subsidiaries, (C) a description of any contractual limitations on the holder's
ability to vote or alienate such securities, (D) a description of any
outstanding options or other rights to acquire securities of such corporation or
limited liability company, and (E) a description of any other contractual charge
or impediment which would limit or impair the Company's or any of its
Subsidiaries' ownership of such entity or interest or its ability effectively to
exercise the full rights of ownership of such entity or interest; and (iv) in
the case of each of such entities that is neither a corporation nor a limited
liability company, information substantially equivalent to that provided
pursuant to clause (iii) above with regard to corporate entities. SCHEDULE 4.2
shall also indicate all entities merged with and into the Company since
inception.
(b) Each entity listed in SCHEDULE 4.2 has been duly organized, is
validly existing and in good standing under the laws of the jurisdiction of its
organization, has the corporate (or limited liability company, as the case may
be) power and authority to own and lease its properties and to conduct its
business and is duly registered, qualified and authorized to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such registration,
qualification or authorization, except where the failure to be so registered,
qualified, authorized or in good standing would not reasonably be expected to
have a Material Adverse Change. All of the issued and outstanding equity or
other participating interests of each entity's Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable, and, to the
extent owned by the Company as indicated on SCHEDULE 4.2, are owned free and
clear of any Lien, restriction or equity, except as set forth in SCHEDULE 4.2.
There are no outstanding options, warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any issued or unissued shares of capital stock (or similar interests) of
any entity listed on SCHEDULE 4.2.
4.3 AUTHORIZATION; BINDING EFFECT.
The Company has, and as of the Closing will have, all requisite corporate (or
limited liability company, as the case may be) power and authority to execute,
deliver and perform this Agreement, each other Closing Document and each other
document or instrument executed by it in connection herewith or therewith or
pursuant hereto or thereto, and to consummate the
16
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the other Closing Documents and the issuance
of the Securities, and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary action on
the part of the Company. This Agreement and each of the other Closing Documents
that has been executed as of the date hereof is, and each of the Closing
Documents will be as of the Closing, duly executed and delivered by the Company
and will be the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights in general or by general principles of
equity. The execution, delivery and performance by the Company of this Agreement
and each of the other Closing Documents and the performance by the Company of
its obligations hereunder and thereunder were duly and validly authorized by the
Board of Directors (or similar governing body) prior to the execution and
delivery of this Agreement and the other Closing Documents by the parties.
4.4 NO BREACH; NO DEFAULT.
Neither the execution, delivery or performance of this Agreement or the other
agreements contemplated hereby to which the Company is a party, including
without limitation the other Closing Documents, nor the consummation of the
transactions contemplated hereby or thereby by the Company (a) conflicts with or
results in any breach of, (b) constitutes a default (with or without notice,
lapse of time, or both) under, (c) results in a violation of, or (d) gives any
third party any right to accelerate any obligation of the Company under any
Contract (as hereinafter defined) to which the Company is a party or by which
any of its assets are bound.
4.5 NO BANKRUPTCY OR INSOLVENCY.
The Company has not filed any voluntary petition in bankruptcy or been
adjudicated bankrupt or insolvent, filed any petition or answer seeking any
reorganization, liquidation, dissolution or similar relief under any federal
bankruptcy, insolvency, or other debtor relief law, or sought or consented to or
acquiesced in the appointment of any trustee, receiver, conservator or
liquidator of all or any substantial part of its properties. To the Company's
Knowledge, no court of competent jurisdiction has entered an order, judgment or
decree approving a petition filed against the Company seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any federal bankruptcy act, or other debtor relief law,
and no other liquidator of the Company or of all or any substantial part of its
properties has been appointed.
4.6 NO LITIGATION.
There are no actions, suits, investigations, proceedings or Governmental
Approval processes (collectively, "ACTIONS") of any type pending or, to the
Knowledge of the Company, threatened, against the Company which if adversely
determined could cause a Material Adverse Change. To the best Knowledge of the
Company, there is no Action against any director, officer or employee of the
Company in connection with the business of the Company. The Company is not
operating under, or subject to, or in default with respect to, any order, writ,
injunction or decree affecting
17
the ability of the Company to enter into this Agreement or perform its
obligations contemplated under the Closing Documents to which it is a party.
There is no Action by the Company, as a plaintiff, that is currently pending or
which the Company currently intends to initiate.
4.7 TAXES.
The Company has filed all tax returns and reports required by law. These returns
and reports are true and correct in all material respects. There are no pending
claims asserted for taxes (including, without limitation, AD VALOREM taxes) or
assessments upon the Company or its assets, nor are there any tax Liens
outstanding against the Company or any of its assets. The Company has paid or
caused to be paid to federal, state, local and foreign authorities all amounts
required to be paid by federal, state, local and foreign law or regulations,
including, without limitation, with respect to withholding from the wages of the
Company's employees.
4.8 GOVERNMENTAL CONSENTS AND NOTICES.
No consent, approval or authorization of or designation, declaration or filing
with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Securities, or the consummation of any other
transaction contemplated hereby, except as may be provided in this Agreement
(including approval of the FCC), and except qualification (or taking such action
as may be necessary to secure an exemption from qualification, if available) of
the offer and sale of the Securities under applicable state and federal
securities laws, which qualification if required, will be accomplished in a
timely manner. The Company has met or will meet all conditions of Regulation D
promulgated under the Securities Act applicable to "issuers" (as defined in such
Regulation D) so that the offer, sale or issuance of the Securities, or the
consummation of any other transaction contemplated hereby, is exempt from the
registration requirements of Section 5 of the Securities Act.
4.9 ADDITIONAL CONSENTS AND NOTICES.
No filing, registration, qualification, notice, consent, approval or
authorization to, with or from any Person (excluding Governmental Persons) is
necessary in connection with the execution and delivery by the Company of this
Agreement or the other Closing Documents to which it is a party, or the
consummation by the Company of the transactions contemplated hereby and thereby,
except that (i) consent of the Stockholders is required for the conversion of
the Old Preferred Stock as contemplated by the Agreement of Stockholders, (ii)
consent of the holders of at least a majority of the Old Common Stock issued and
outstanding as of the Closing Date, voting as a single class, is required for
approval of the Fifth Charter and (iii) consent of such parties listed on
SCHEDULE 4.9 is required to terminate as of the Closing Date each agreement
listed on SCHEDULE 4.9.
4.10 NO BROKERS.
The Company has not entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of the Company to pay any
finder's fees, brokerage or
18
agents commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, and the Company has no Knowledge of any claim or basis for any claim for
payment of any finder's fees, brokerage or agents commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
4.11 COMPLIANCE WITH LAWS.
The Company is not in violation of or in default under any order of any court,
governmental authority or arbitration board or tribunal to which the Company is
a party or, to the best of its Knowledge, to which it is subject. Except for any
violations that individually and in the aggregate would not cause a Material
Adverse Change, the Company is in compliance with all Laws applicable to it, its
business operations and its properties. The Company has made all filings and
registrations, has obtained all Governmental Approvals, and has taken all
actions and given all notices required by applicable Laws or Governmental
Approvals and regulations in connection with its business as now conducted,
except for any such Governmental Approvals which, if not obtained, would not
cause a Material Adverse Change.
4.12 CORPORATE RECORDS.
The corporate (or limited liability company) minute books of the Company, copies
of which were made available for inspection by the Investor, contains true and
complete copies of all Certificates of Incorporation (or Certificates of
Formation) and Bylaws (or operating agreements), and the minutes of all meetings
of directors (or managers) and committees and stockholders (or members) and
consent resolutions of the Company and all of its Subsidiaries reflecting all
actions taken by the directors (or managers) or stockholders (or members)
without a meeting, from the date of incorporation or organization, as the case
may be, of the Company or such Subsidiary, as the case may be, to the Closing
Date. The officers and directors (or managers) of the Company are as set forth
in SCHEDULE 4.12.
4.13 FINANCIAL STATEMENTS; OTHER LIABILITIES.
(a) The unaudited consolidated balance sheet of the Company (excluding
KaStarCom for purposes of this Section 4.13(a)), as of September 30, 2002 (the
"UNAUDITED BALANCE SHEET"), and the Company's audited consolidated balance sheet
and related consolidated statements of operations, consolidated statements of
comprehensive loss, consolidated statements of stockholders' equity (deficit)
and consolidated statements of cash flows as at, and for the years ended,
December 31, 2001 and December 31, 2000, together with the report of the
independent certified public accountants (the "AUDITED FINANCIAL STATEMENTS"),
copies of which have been furnished to the Investor, are attached hereto as
SCHEDULE 4.13A. The Audited Financial Statements were audited by a firm of
independent certified public accountants and fairly present the financial
condition of the Company at December 31, 2001 (the "AUDITED STATEMENTS DATE"),
the last date for which financial information of the Company was audited by
independent certified public accountants. The Audited Financial Statements and
related schedules and notes have been prepared in accordance with GAAP
consistently applied throughout the periods involved, except as disclosed
therein. Except for the omission of the requisite footnotes and
19
subject to non-material adjustments, the Unaudited Balance Sheet has been
prepared in accordance with GAAP, and the omission of such footnotes does not
result in the failure to disclose any material liability or obligation,
contingent or otherwise, or other material financial information. Since the
Audited Statements Date, except as disclosed in the Unaudited Balance Sheet,
there has been no Material Adverse Change and the Company has not suffered any
material loss (whether or not insured) by reason of physical damage caused by
fire, earthquake, accident or other calamity which substantially affects the
value of its assets, properties or business.
(b) The unaudited balance sheet of KaStarCom, as of September 30, 2002, and
related statements of profit and loss and cash flows for the period ended
September 30, 2002 (the "KaStarCom FINANCIAL STATEMENTS"), copies of which have
been furnished to the Investor, are attached hereto as SCHEDULE 4.13B. The
KaStarCom Financial Statements are in accordance with the books and records of
KaStarCom, fairly present the financial position of KaStarCom and its results of
operations as of and for the periods indicated therein. KaStarCom has no
liabilities except for liabilities reflected and reserved against in the
KaStarCom Financial Statements. Since September 30, 2002, KaStarCom has made all
payments with respect to its accounts payable in a timely fashion and in the
ordinary course of business. Since September 30, 2002, except as disclosed on
SCHEDULE 4.13B, there has been no material change, event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, assets
(including intangible assets), capitalization, financial condition, prospects or
results of operations of KaStarCom, or any change in any material contracts or
licenses which, in the aggregate, is materially adverse, and KaStarCom has not
suffered any material loss (whether or not insured) by reason of physical damage
caused by fire, earthquake, accident or other calamity which substantially
affects the value of its respective assets, properties or business.
4.14 INDEBTEDNESS; UNDISCLOSED LIABILITIES.
SCHEDULE 4.14A sets forth all of the Company's indebtedness and other
obligations to repay debt to any person, including stockholders of the Company.
The Company has no material liabilities or obligations, either accrued,
absolute, contingent or otherwise, which are not reflected or provided for in
the Audited Financial Statements or which have not been incurred in the ordinary
course of business, consistent with past practice, since the Audited Statements
Date. SCHEDULE 4.14B sets forth the top twenty creditors of and/or contracting
parties with the Company, in descending order as to the amounts of liabilities
and/or other financial commitments for which the Company is liable and/or has
committed, to such creditor or contracting party.
4.15 CAPITALIZATION.
SCHEDULE 4.15A sets forth a true, accurate and complete capitalization table
setting forth all outstanding capital stock of the Company, including the name
of the holder and the class or series issued. Except as set forth in SCHEDULE
4.15A or as contemplated under this Agreement, the Company has not authorized or
issued any other class or series of capital stock and there are no outstanding
rights, warrants, options, subscriptions, agreements, redemption rights,
understandings or commitments giving anyone any right to require the Company to
sell or issue
20
any capital stock or other equity interest in the Company. Neither the Company,
nor, to the Company's Knowledge, any of the Company's stockholders are party to
any stockholders agreements or other agreements providing voting rights,
registration rights, rights of first refusal or similar rights. SCHEDULE 4.15B
sets forth a true, accurate and complete capitalization table setting forth all
outstanding capital stock of the Company, after taking into account the
completion of the transactions contemplated by the Agreement of Stockholders,
and sets forth the identity of each record holder of capital stock of the
Company, including holders of securities, warrants, options, rights or other
instruments exchangeable, exercisable and/or convertible for or into shares of
capital stock of the Company (each an "EQUIVALENT"), and the specific type,
class and/or series of such securities and/or Equivalents held by such Person
and the amounts of such securities and/or Equivalents, and the amounts and types
of such securities for or into which such Equivalents are exchangeable,
exercisable or convertible.
4.16 TITLE TO SECURITIES.
Each of the Securities, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Upon issuance of the Securities to the Investor by
the Company in accordance with the terms of this Agreement, the Investor will
receive good and marketable title to all of the Securities, free and clear of
all Liens, except as set forth in the Investor Rights Agreement, the Fifth
Charter, any Warrant Certificate and applicable law. The shares of Old Common
Stock and Old Preferred Stock of the Company outstanding as of the date hereof
have been duly authorized, validly issued, fully paid and nonassessable, and
were issued in compliance with all applicable securities laws or exemptions
therefrom. Each of the Securities, when issued, will be issued in compliance
with the requirements of the Securities Act and applicable state securities laws
or exemptions therefrom.
4.17 TITLE TO PROPERTY AND ASSETS.
The Company has good and marketable title to all of its properties and assets
used by it in the conduct of its business (including, without limitation, the
properties and assets reflected in the Audited Financial Statements except any
thereof since disposed of for value in the ordinary course of business), and all
leases and licenses to which the Company is a party are, in all material
respects, in full force and effect. None of such properties, assets, leasehold
interests or license interests is subject to a contract of sale not in the
ordinary course of business, or subject to any Liens, except for (i) statutory
liens for the payment of current taxes that are not yet delinquent and (ii)
liens, encumbrances and security interests which arise in the ordinary course of
business (other than in connection with the incurrence of debt by the Company),
and which, in the case of (i) or (ii) above, do not affect material properties
and assets of the Company. The foregoing representations and warranties in this
Section 4.17 do not apply to the FCC Licenses held by the Company and the
spectrum underlying such licenses, which remain the property of the United
States government.
4.18 CONDITION OF PERSONAL PROPERTY.
All material tangible personal property, equipment and fixtures included within
the assets of the Company or contemplated to be used in the ordinary course of
business are in good,
21
merchantable or in reasonably repairable condition and are suitable for the
purposes for which they are used. All of the equipment, including equipment
leased to others, is well maintained and in good operating condition, reasonable
wear and tear excepted.
4.19 REAL PROPERTY.
SCHEDULE 4.19 contains a list of all real property owned by the Company or in
which the Company has a leasehold or other interest, including a description of
the principal terms (including rents, termination dates and renewal conditions)
of any such rental, lease or other arrangements affecting such property, copies
of which have been previously provided to the Investor.
4.20 THE COMPANY'S INTELLECTUAL PROPERTY.
SCHEDULE 4.20 sets forth a list of each patent, trademark, servicemark, logo,
trade name, domain name, copyright, trade secret, invention, computer software
or other item of intellectual property, including any and all registrations,
applications, and renewals for registration therefor, which are owned by the
Company. In each case, the registration number, date of issuance or
registration, and a brief description of such property is set forth in SCHEDULE
4.20. The property referenced in SCHEDULE 4.20, together with all designs,
methods, inventions and know-how related thereto and all trademarks, trade
names, service marks, logos and copyrights claimed or used by the Company which
have not been registered, are hereinafter referred to as the "COMPANY'S
INTELLECTUAL PROPERTY."
4.21 LICENSED INTELLECTUAL PROPERTY.
Schedule 4.21 sets forth a list of all licenses authorizing the Company to use
computer software, patents, trademarks, servicemarks, logos, tradenames,
copyrights, trade secrets, inventions or other items of intellectual property
used or useful to the Company's business (other than commercially available
standardized form "shrinkwrap" or "clickwrap" software) (the items set forth on
SCHEDULE 4.21 are collectively referred to herein as the "LICENSED INTELLECTUAL
PROPERTY").
4.22 INTELLECTUAL PROPERTY RIGHTS AND INTERESTS.
The Company's Intellectual Property and the Licensed Intellectual Property
constitute all such material proprietary rights which are owned or held by the
Company and which are reasonably necessary to, or used in the conduct of, the
business of the Company as currently conducted. To the Company's Knowledge, it
has taken all reasonably necessary steps required under applicable law to
protect its trade secrets. To the Knowledge of the Company, the Company owns or
has valid rights to use the Company's Intellectual Property and the Licensed
Intellectual Property without conflict with the rights of others. No person or
corporation has made or, to the Knowledge of the Company, threatened to make any
claim that the Company's use of the Company's Intellectual Property and the
Licensed Intellectual Property is in violation of any license held by the
Company or infringes any proprietary right or interest of any third party. To
the Knowledge of the Company, no third party is infringing upon any of the
Company's Intellectual Property or is in violation of any license to use the
Company's Intellectual Property
22
granted by the Company. The Company holds the Company's Intellectual Property
and the Licensed Intellectual Property free and clear of all Liens. The
Company's Intellectual Property (other than any intellectual property duly
acquired or licensed from third parties) was developed entirely by the employees
of or consultants to the Company during the time they were employed or retained
by the Company, and to the Knowledge of the Company, at no time during
conception or reduction to practice of the Company's Intellectual Property were
any such employees or consultants operating under any grant from a governmental
entity or agency or subject to any employment agreement or invention assignment
or non-disclosure agreement or any other obligation with a third party that
would materially and adversely affect the Company's rights in the Company's
Intellectual Property. The Company's Intellectual Property does not, to the
Knowledge of the Company, include any invention or other intellectual property
of such employees or consultants made prior to the time such employees or
consultants were employed or retained by the Company nor any intellectual
property of any previous employer of such employees or consultants nor the
intellectual property or any other person or entity.
4.23 CONTRACTS AND AGREEMENTS.
SCHEDULE 4.23 sets forth a description of each of the following items, each of
which requires aggregate future payments in excess of $1,000,000 or is otherwise
material to the operations, affairs or prospects of the Company (including
without limitation completion of satellite construction and restarting of the
business). In each case, the Company has made available to the Investor true and
complete copies of all documents and complete descriptions of all oral
agreements and understandings, if any, referred to in this Section 4.23 (each
item referenced in this Section 4.23 is referred to herein as a "CONTRACT", and
collectively as the "CONTRACTS"):
(a) deeds, lease agreements or other documents relating to the ownership or
lease of real property;
(b) equipment leases or other documents permitting the Company to use
personal property owned by a third party;
(c) all notes, loan agreements, indentures, commitments or debt
arrangements under which the Company has incurred a debt obligation to any
person or under which the Company is entitled to borrow money from any Person;
(d) all employment and consulting agreements, executive compensation plans,
bonus plans, profit-sharing plans, deferred compensation agreements, employee
pension or retirement plans, employee stock purchase and stock option plans,
group life insurance, hospitalization insurance or other plans or arrangements
providing for benefits to employees of the Company;
(e) all material strategic alliance, joint venture and similar agreements;
(f) any material agreement relating to the Company's Intellectual Property;
(g) all agreements containing any rights of first refusal, exclusivity
provisions, noncompetition agreements, or most favored customer or similar terms
granting preferential business treatment; and
23
(h) any other material contracts, understandings and commitments to which
the Company is a party, or to which it or any of its assets or properties are
subject.
4.24 BUSINESS ACTION PLAN.
(a) Attached hereto as SCHEDULE 4.24 is certain information regarding (i)
management's assessment of the Company's present plan, based on specified
contractual obligations and planned scheduled events, of actions to be taken to
achieve a launch of the business using the Anik F2 Ka-band payload and the
commencement of commercial operations of the Company, and (ii) material
Contracts and relationships, including amounts presently owing thereunder and
amounts required to be funded by the Company to continue each Contract in effect
and/or restart performance by the other party thereto, and including a
description of disputes arising thereunder that could reasonably be expected to
be adverse to the Company. All information disclosed in SCHEDULE 4.24 hereto is
collectively referred to as the "BUSINESS ACTION PLAN".
(b) All information set forth in the Business Action Plan is true, correct
and complete in all material respects, PROVIDED, HOWEVER, that to the extent the
Business Action Plan refers to planned or future events, such information is the
Company's current plan, based on its current business model, prepared in good
faith and based on reasonable assumptions.
(c) The financial projections attached as ANNEX A to the Business Action
Plan were prepared by the Company in good faith and based on reasonable
assumptions.
4.25 NO BREACH OR DEFAULT.
The Company is not in default under any Contract to which it is a party or by
which it is bound, nor, to the best of its Knowledge, has any event occurred
which, after the giving of notice or the passage of time or both, would
constitute a default under any such Contract, and the Company has no Knowledge
that the parties to such Contracts will not fulfill their obligations under such
Contracts in all material respects or are threatened with insolvency.
4.26 INSURANCE.
SCHEDULE 4.26 contains a list and description of all insurance policies of any
type which are held by the Company (or which otherwise insure the Company's
properties), specifying the insurer, amount of coverage, type of insurance,
policy number and any pending claims thereunder. No claim of any type has been
made under any of such policies.
4.27 TAX ELECTIONS.
The Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended (the "CODE"), to be treated as an "S" corporation or a collapsible
corporation pursuant to Section 341(f) or Section 1362(a) of the Code, nor has
it made any other elections pursuant to the Code (other than elections which
relate solely to matters of accounting, depreciation or amortization) which
would have a material effect on the Company, its financial condition, its
business as presently conducted or presently proposed to be conducted or any of
its properties or material assets.
24
4.28 INTERESTED PARTY TRANSACTIONS.
To the Knowledge of the Company, no officer, director or stockholder of the
Company or any "associate" (as such term is defined in Rule 405 promulgated
under the Securities Act) of any such person has had, either directly or
indirectly, a material interest in: (i) any person or entity which purchases
from or sells, licenses or furnishes to the Company any goods, property,
technology, intellectual or other property rights or services; or (ii) any
contract or agreement to which the Company is a party or by which it may be
bound or affected. The Company is not indebted, directly or indirectly, to any
of its officers, directors or stockholders or to their respective spouses,
children or other relatives, in any amount whatsoever other than in connection
with expenses or advances of expenses to officers, employees or contractors
incurred in the ordinary course of business or relocation expenses of employees
and which are not, individually or in the aggregate, material. To the Company's
Knowledge, none of the Company's officers, directors or stockholders, or any of
their relatives, are, directly or indirectly, indebted to the Company or have
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation which competes with the Company except that officers,
directors and/or stockholders of the Company may own stock in (but not exceeding
one percent of the outstanding capital stock of) any publicly traded companies
that may compete with the Company or with which the Company has a business
relationship. The Company is not a guarantor or indemnitor of any indebtedness
or other financial obligation or commitment of any other person, firm or
corporation. SCHEDULE 4.28 also outlines the details of any such interested
party transaction as described in this Section 4.28.
4.29 LABOR AGREEMENTS AND ACTIONS.
The Company is not bound by or subject to (and none of its assets or properties
is bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the Knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company. The Company has no
Knowledge that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company. The Company has no
present intention to terminate the employment of any officer, key employee or
any group of key employees. The employment of each officer and employee of the
Company is terminable at the will of the Company. The Company has complied in
all material respects with all applicable state and federal laws related to
employment. To the Company's Knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in material violation of any
term of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company or otherwise; and to the Company's Knowledge the continued
employment by the Company of its present employees, and the performance of the
Company's contracts with its independent contractors, will not result in any
such material violation. The Company has not received any notice alleging that
any such violation has occurred. No employee of the Company has been granted the
right to continued employment by the Company or to any material compensation
following termination of employment with the Company. The Company has provided
the Investor with true and complete
25
copies, as of the date hereof, of all documents, written agreements and complete
descriptions of all oral agreements and understandings, if any, regarding
employment, severance, compensation and all other agreements with its employees
and independent contractors.
4.30 EMPLOYEE BENEFIT PLANS.
The Company does not have, nor has it ever had, any Employee Benefit Plans, as
defined in the Employee Retirement Income Security Act of 1974, as amended.
4.31 INVESTMENT COMPANY ACT; OPERATING COMPANY.
The Company is not an "investment company" nor is the Company directly or
indirectly controlled by or acting on behalf of any Person which is an
"investment company" within the meaning of the Investment Company Act. The
Company is primarily engaged in the production or sale of a product or service,
other than the investment of capital.
4.32 ENVIRONMENTAL MATTERS.
Except as would not, individually or in the aggregate, be reasonably expected to
have a material adverse effect on the general affairs, management, business,
condition (financial or otherwise), prospects or results of operations of the
Company and its Subsidiaries, taken as a whole, (i) each of the Company and its
Subsidiaries is in compliance with and not subject to liability under applicable
Environmental Laws, (ii) each of the Company and its Subsidiaries has made all
filings and provided all notices required under any applicable Environmental
Law, and has and is in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (iii) there is
no civil, criminal or administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter or
request for information pending or, to the Knowledge of the Company or any of
its Subsidiaries, threatened against the Company or any of its Subsidiaries
under any Environmental Law, (iv) no lien, charge, encumbrance or restriction
has been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by the Company or any
of its Subsidiaries, (vi) none of the Company or any of its Subsidiaries has
received notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any comparable state law, and (vi) no
property or facility of the Company or any of its Subsidiaries is (i) listed or
proposed for listing on the National Priorities List under CERCLA or (ii) listed
in the Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list maintained
by any state or local governmental authority. For purposes of this Agreement,
(A) "ENVIRONMENTAL LAWS" means the common law and all applicable federal, state
and local laws or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (x) emissions, discharges,
releases or threatened releases of hazardous materials into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (y) the use, treatment, storage, disposal or
handling of hazardous materials, and (z) underground and above ground storage
tanks and related piping, and emissions, discharges, releases or threatened
releases
26
therefrom, and (B) "PERMITS" means all licenses, permits, certificates,
consents, orders, approvals and other authorizations from all federal, state,
local and other governmental authorities, all self-regulatory organizations and
all courts and other tribunals, presently required or necessary for the Company
and its Subsidiaries to own or lease, as the case may be, and to operate their
respective properties and to carry on their respective businesses as now or
proposed to be conducted with respect to applicable Environmental Laws.
4.33 DISCLOSURE.
The Company has fully provided the Investor with all the information which the
Investor has requested for deciding whether to consummate the transactions
contemplated by this Agreement and the other Closing Documents. None of this
Agreement, any other Closing Document or any other statements or certificates
made or delivered in connection herewith or therewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading; PROVIDED, HOWEVER, that the
foregoing shall not apply to (i) forward looking statements or other predictions
about future events set forth in the Business Action Plan pursuant to Section
4.24(a) or Section 4.24(b) hereof, or (ii) the financial projections attached to
the Business Action Plan pursuant to Section 4.24(c) hereof. There are no facts
known to the Company which could cause a Material Adverse Change that have not
been set forth in the Closing Documents or the schedules and exhibits thereto.
4.34 NONCONTRAVENTION. The Company is not in, nor to its Knowledge will
the conduct of its business as proposed to be conducted result in any, material
violation, breach or default of any term of the Certificate of Incorporation or
the Bylaws, or in any material respect of any term or provision of any mortgage,
indenture, contract, agreement or instrument to which the Company is a party or
by which it may be bound, or of any provision of any foreign or domestic local,
state or federal judgment, decree, order, statute, rule or regulation applicable
to or binding upon the Company, if noncompliance could reasonably be expected to
cause a Material Adverse Change. The execution, delivery and performance of and
compliance with this Agreement and the other Closing Documents, and the
consummation of the transactions contemplated hereby and thereby, will not
result in any such violation or default, or be in conflict with or constitute,
with or without the passage of time or the giving of notice or both, either a
default under the Certificate of Incorporation or Bylaws or any agreement or
contract of the Company, or, to the Company's Knowledge, a violation of any
statutes, laws, regulations, rules or orders, or an event which results in the
creation of any Lien upon any asset of the Company.
4.35 REGISTRATION RIGHTS.
Other than pursuant to the Investor Rights Agreement, the Company has not
granted any registration rights (which have not been previously terminated) to
any other person with respect to its securities.
4.36 ORDINARY COURSE.
Since the Audited Statements Date, the Company has operated its business in the
ordinary course of business consistent with past practices, and there has not
been any event which would
27
constitute a Material Adverse Change.
4.37 FCC MATTERS.
(a) The FCC Licenses issued to the Company (for purposes of this Section
4.37(a) and Section 4.37(b) only, the term "Company" shall not include
KaStarCom) (the "WILDBLUE LICENSES") were properly issued by the FCC and are
validly held by the Company. The FCC Licenses issued to KaStarCom (the
"KaStarCom LICENSES") were properly issued by the FCC and are validly held by
KaStarCom. Except as set forth in SCHEDULE 4.37(a)(i), the Company has always
controlled the Wildblue Licenses and the systems authorized thereunder, and
KaStarCom has always controlled the KaStarCom Licenses and the systems
authorized thereunder. The Company has timely and completely performed all
obligations required to date under the Wildblue Licenses and is in full
compliance with all Regulatory Provisions, and KaStarCom has timely and
completely performed all obligations required to date under the KaStarCom
Licenses and is in full compliance with all Regulatory Provisions. SCHEDULE
4.37(a)(ii) sets forth all material filings, applications and other reports
submitted in connection with the FCC Licenses. Except as set forth in SCHEDULE
4.37(a)(iii), the Company has taken all actions required of the Company to date
to achieve international coordination of the systems authorized under the FCC
Licenses. Except as set forth in SCHEDULE 4.37(a)(iv), such Ka-band systems have
been designed and constructed to comply with, and are in full compliance with,
all obligations required under the FCC Licenses and the applicable Regulatory
Provisions, including the construction milestone requirements currently imposed
on Ka-band providers.
(b) No Person other than the Company has any right, title or interest in,
or with respect to, the Wildblue Licenses. No Person other than KaStarCom has
any right, title or interest in, or with respect to, the KaStarCom Licenses.
(c) The FCC Licenses are in full force and effect and are unimpaired by
any adverse condition (other than those set forth in the FCC Licenses). No
application or action is pending for the renewal or modification of the FCC
Licenses, and no application, complaint or action is pending or, to the
Knowledge of the Company, threatened, that may result in the revocation,
modification, non-renewal or suspension of the FCC Licenses or the imposition of
any administrative or judicial sanction with respect to the Company. The Company
has no Knowledge of any failure of the Company to comply (whether or not known
by or disclosed to the FCC or any other Person) in all material respects with
all Regulatory Provisions applicable to, and with the terms and conditions of,
the FCC Licenses, including any due diligence obligations or reporting
requirements associated with the FCC Licenses.
(d) Except as contemplated by this Agreement and the other Closing
Documents, no consent of, with or to the FCC is required under the applicable
Regulatory Provisions to be obtained or made by the Company in connection with
the transactions contemplated by this Agreement and the other Closing Documents.
4.38 KaStarCom AGREEMENTS. The Company, KaStarCom and the holders of the
membership interests of KaStarCom not already held by the Company have executed
a definitive agreement for the purchase by the Company of 100% of the
outstanding membership interests of
28
KaStarCom not currently owned by the Company for aggregate consideration equal
to 2,840 shares of Old Common Stock, in accordance with the terms of that
certain Stock Purchase Agreement, dated as of August 30, 2002, between the
Company and the Members (as defined therein), a copy of which has been provided
to the Investor prior to the date hereof (the "KaStarCom PURCHASE AGREEMENT").
In addition, the Company and KaStarCom are parties to a Satellite System Sharing
Agreement dated as of August 1, 2002, between the Company and KaStarCom, a copy
of which has been provided to the Investor prior to the date hereof (the
"SATELLITE SHARING AGREEMENT"). Each of the KaStarCom Purchase Agreement and the
Satellite Sharing Agreement is in full force and effect and has not been
amended, restated or otherwise modified, nor any provision thereof waived in
whole or in part (including without limitation the right to terminate the
agreement), nor any termination or other date thereunder extended, and such
agreements are the only agreements to which the Company and KaStarCom and/or any
of the Members of KaStarCom are party relating to any of KaStarCom's FCC
Licenses or any matter related to the purchase of KaStarCom by the Company or
any rights of KaStarCom with respect to any satellite capacity or spectrum of
the Company or any of its subsidiaries. The only condition to the closing under
the KaStarCom Purchase Agreement that has not been fulfilled on or before the
date hereof is FCC approval of the transfer provided for therein.
4.39 SIMILAR AGREEMENTS AND TERMS OF SECURITIES. Set forth on
SCHEDULE 4.39 hereto is a list of each subscription agreement (including this
Agreement) for Senior Preferred Stock entered into by the Company on even date
herewith (each such agreement is referred to herein as a "SUBSCRIPTION
AGREEMENT", and collectively, as the "SUBSCRIPTION AGREEMENTS"), the aggregate
purchase price pursuant to each Subscription Agreement, and the type and number
of securities and underlying securities relating thereto. Except with respect to
identity and legal form of the subscriber, the aggregate purchase price paid,
the series designation of the shares of Senior Preferred Stock (and warrants
therefor) being purchased (and the differences among such series of Senior
Preferred Stock, all of which are set forth in the Fifth Charter), the number of
such shares and warrants purchased (and resulting proportionate difference in
the number of underlying shares to be issued in respect thereof) and the right
of Intelsat to pay a portion of its purchase price by the assignment of certain
claims pursuant to Section 2.4 hereof, this Agreement, and the terms of the
other Closing Documents and the Securities to be issued in connection herewith
and therewith, are substantially identical to the other Subscription Agreements
and the terms of the closing documents and securities to be issued in connection
therewith.
SECTION V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to the Company with respect to
the purchase of the Shares, Warrants and Underlying Shares as follows:
5.1 ORGANIZATION AND AUTHORITY. The Investor is a corporation validly
existing and in good standing under the laws of Delaware. The Investor has full
power and authority to enter into and perform this Agreement and the other
agreements contemplated hereby to which it is a party. The Investor has all
requisite corporate power and authority to own its properties, to carry on its
29
business as now conducted, and to enter into and perform its obligations under
the Closing Documents.
5.2 AUTHORIZATION; BINDING EFFECT.
The Investor has, and as of the Closing will have, all requisite [corporate]
power and authority to execute, deliver and perform this Agreement, each other
Closing Document to which it is a party, and each other document or instrument
executed by it in connection herewith or therewith or pursuant hereto or thereto
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the other Closing
Documents to which the Investor is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of the Investor. This Agreement
and each of the other Closing Documents to which the Investor is a party that
has been executed as of the date hereof is, and will be as of the Closing, duly
executed and delivered by the Investor and will be the legal, valid and binding
obligation of the Investor, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.
5.3 GOVERNMENTAL CONSENTS. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Investor is required in connection with the valid execution, delivery and
performance by the Investor of this Agreement, including the purchase of
Securities pursuant to this Agreement, or the consummation of any other
transaction contemplated hereby, except as may be provided in this Agreement
(including approval of the FCC).
5.4 ADDITIONAL CONSENTS AND NOTICES. No filing, registration,
qualification, notice, consent, approval or authorization to, with or from any
Person (excluding any Governmental Person) is necessary in connection with the
execution, delivery and performance by the Investor of this Agreement or the
other Closing Documents to which it is a party, or the consummation by the
Investor of the transactions contemplated hereby and thereby.
5.5 PURCHASE FOR OWN ACCOUNT.
The Investor is acquiring the Shares, the Warrants and the Underlying Shares for
investment for its own account, not as a nominee or agent, and not with a view
to, or for the resale in connection with, any distribution thereof. The Investor
understands that the Shares, the Warrants and the Underlying Shares to be
purchased have not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Investor's
representations as expressed herein.
5.6 DISCLOSURE OF INFORMATION.
The Investor has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the offering of the Shares,
the Warrants and the Underlying
30
Shares, and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to the Investor or to
which it had access. The foregoing, however, does not in any way limit or modify
the representations and warranties made by the Company in Section IV hereof.
5.7 INVESTMENT EXPERIENCE.
The Investor understands that the purchase of the Shares, the Warrants and the
Underlying Shares involves substantial risk. The Investor has experience as an
investor in securities of companies in the development stage and acknowledges
that the Investor is able to fend for itself, can bear the economic risk of its
investment in the Shares, the Warrants and the Underlying Shares, and has such
knowledge and experience in financial or business matters that the Investor is
capable of evaluating the merits and risks of this investment in the Shares, the
Warrants and the Underlying Shares, and protecting its own interests in
connection with this investment.
5.8 ACCREDITED INVESTOR STATUS.
The Investor is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act.
5.9 RESTRICTED SECURITIES.
The Investor understands that the Shares, the Warrants and the Underlying Shares
are characterized as "restricted securities" under the Securities Act inasmuch
as they are being acquired from the Company in a transaction not involving a
public offering and that under the Securities Act and applicable regulations
thereunder such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144 of the U.S. Securities and
Exchange Commission (the "SEC"), as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act. The Investor
understands that the Company is under no obligation to register any of such
securities sold hereunder except as provided in the Investor Rights Agreement.
The Investor understands that no public market now exists for any of such
securities and that it is uncertain whether a public market will ever exist for
such securities.
5.10 NO BROKERS OR FINDERS.
The Company has not, and will not, incur, directly or indirectly, as a result of
any action taken by the Investor, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement.
SECTION VI
COVENANTS
Without limiting any other covenants and provisions hereof, and unless
specifically stated
31
otherwise in this Section VI, the Company (and for purposes of Section 6.13,
Section 6.15 and Section 6.16(c) hereof, the Investor), covenants and agrees
that:
6.1 LIMITATION ON ADDITIONAL ISSUANCES OF STOCK.
(a) From and after the date hereof, the Company shall not issue any shares
of Series H Preferred Stock or Junior Preferred Stock other than as Dividend
Shares in accordance with the Agreement of Stockholders.
(b) From and after the date hereof through the Closing Date, except for the
other Subscription Agreements, the Company shall not enter into any agreement
for the sale of shares of Senior Preferred Stock with any Person (other than as
approved by the Investor); PROVIDED that the Company may enter into an agreement
for the sale of shares of Senior Preferred Stock with a Person who is a
stockholder of the Company IF AND ONLY IF (i) the aggregate amount of
subscriptions for the Senior Preferred Stock dated as of even date herewith is
at least $145 million but not more than $156 million, (ii) such stockholder
shall be entitled to purchase not more than its PRO RATA share of the Senior
Preferred Stock, on a fully diluted (other than with respect to warrants,
options, rights and any other securities of the Company that are exercisable for
cash in an amount exceeding the fair market value of the securities of the
Company into which they are exercisable, and in the case of such instruments
that entitle the holder thereof to a "cashless" exercise, then the number of
shares of Old Common Stock for which such instruments could be exercised, at the
fair market price of Old Common Stock on the date hereof) and as-converted basis
as of the date hereof (PROVIDED that each stockholder's PRO RATA share shall be
reduced proportionately to ensure compliance with the restriction set forth in
the immediately following clause (iii), to the extent such additional
stockholder's participation in the subscription of Senior Preferred Stock would
exceed the limitation set forth in such clause (iii)), (iii) such proposed sale
would not result in the aggregate amount of funds payable to the Company as
consideration for all the issued and outstanding shares of Senior Preferred
Stock to exceed $205 million, (iv) such additional stockholder executes and
delivers the Agreement of Stockholders and the Investor Rights Agreement, (v)
such additional stockholder executes and delivers a subscription agreement on
substantially the same terms as this Agreement (or on such other terms that are
less favorable to such additional stockholder than this Agreement is to the
Investor or otherwise as approved by the Investor), (vi) such additional
stockholder executes and delivers substantially the same closing documentation
as delivered by the Investor at the Closing, and (vii) the purchase by such
additional stockholder of shares of Senior Preferred Stock or the execution of a
subscription agreement by such stockholder in furtherance thereof shall not
cause or be reasonably expected to cause the Closing to be delayed. Notice of
the election of any such stockholder to participate in the subscription of
Senior Preferred Stock pursuant to this Section 6.1(b) must be received by the
Company not more than fifteen (15) days after the date hereof, and the closing
of the sale of Senior Preferred Stock to such stockholder must occur
simultaneously with the Closing.
(c) From and after the date hereof through and including the Closing Date,
except for issuances of Old Common Stock pursuant to Equivalents or other
agreements entered into on or prior to the date hereof entitling the holders of
such instruments to receive shares of Old Common Stock (including but not
limited to options paid to management under the existing
32
management option plan, shares to be issued to KaStarCom pursuant to the
transaction agreements disclosed in Section 4.38 and the issuances of Old Common
Stock upon conversion of Old Preferred Stock), the Company shall not issue any
additional shares of Old Common Stock or enter into any agreement to issue
shares of Series A Common Stock (other than upon reclassification of the Old
Common Stock) or Series B Common Stock without the prior written consent of the
Required Investors, except in compliance with the terms and conditions of the
Fifth Charter.
6.2 NRTC DISTRIBUTION AGREEMENT. From the period commencing on the date
hereof and ending on the 60th day after the Closing Date, the Company will
negotiate with NRTC in good faith with regard to terms and conditions on which
the Company would be willing (subject to consummation of the Closing), to enter
into a master distribution, marketing and branding agreement with NRTC. If such
negotiations do not result in the execution of a definitive distribution
agreement, then (i) NRTC shall be entitled to match the terms and conditions of
any distribution agreement that the Company may subsequently enter into on a
non-exclusive basis with respect to any geographic territory, and (ii) the
Company shall not enter into any distribution agreement that is exclusive in a
specified geographic territory, unless NRTC shall have previously failed to
accept the Company's offer to enter into a distribution agreement for such
territory on terms and conditions that were not, in the aggregate, more
favorable to the Company than the terms of such exclusive third party
distribution agreement.
6.3 INTELSAT SATELLITE AND GROUND OPERATIONS AGREEMENT. From the period
commencing on the date hereof and ending on the 60th day after the Closing Date,
the Company will negotiate with Intelsat in good faith with regard to the terms
and conditions on which the Company would be willing (subject to consummation of
the Closing), to enter into one or more agreements with Intelsat regarding the
provision of services to the Company related to satellite and ground segment
operations and management of satellite construction and launch programs and
missions. In that connection, the parties acknowledge that (i) the Company is a
party to certain existing agreements with third parties with respect to some or
all of the services that Intelsat wishes to provide to the Company, (ii) nothing
in this Agreement is intended to induce the Company to breach or abrogate any
third party agreement and (iii) the Company will consider the existing terms and
conditions of all such third party agreements, including without limitation
termination provisions, penalties and buy-out clauses, in connection with the
Company's evaluation of any offer by Intelsat with respect to satellite and
ground operation services. If such negotiations do not result in execution of a
definitive agreement between the Company and Intelsat with respect to any such
services, then the Company shall not enter into any new agreement for satellite
and ground operation services, or exercise any optional renewal rights with
respect to an existing third party agreement for such services, unless Intelsat
shall have previously failed to accept the Company's offer to enter into an
agreement for such services on terms and conditions that were not, in the
aggregate, more favorable to the Company than the terms of such third party
agreement or renewal.
6.4 OPERATION OF BUSINESS; FINANCIAL INFORMATION.
(a) Subject to Section 6.4(d) below, the Company shall use commercially
reasonable efforts to preserve the value and utility of its properties and
assets used by it in the conduct of its
33
business (including, without limitation, the properties and assets reflected in
the Audited Financial Statements except any thereof since disposed of for value
in the ordinary course of business), the goodwill of its suppliers and others
having business relations with the Company, to perform and observe all the
terms, covenants and conditions required to be performed and observed by the
Company under the Contracts and the FCC Licenses. From the period commencing on
the date hereof and ending on the Closing Date, the Company shall not agree to
materially modify the deliverables pursuant to, or waive the performance of any
material obligation of, any of the Contracts without the consent of the Required
Investors, which consent shall not be unreasonably withheld. The Company shall
take all actions reasonably necessary to keep the FCC Licenses in full force and
effect.
(b) The Company shall use commercially reasonable efforts to retain such
employees as are employed by the Company as of the date hereof and are necessary
in the operation of the business of the Company in the reasonable judgment of
the Company.
(c) The Company shall use commercially reasonable efforts to consummate, as
soon as practicable, the closing of the KaStarCom purchase pursuant to the
KaStarCom Purchase Agreement. The Company shall not amend, restate, modify or
waive (in whole or in part) any provision of or right under the KaStarCom
Purchase Agreement or the Satellite Sharing Agreement. The Company shall
preserve all rights that it has to terminate the KaStarCom Purchase Agreement in
the event that the closing thereunder has not occurred on or prior to December
31, 2003, or if the FCC issues an order rejecting KaStarCom's application to
approve a change in control. In addition, the Company shall preserve all rights
that it has to terminate the Satellite Sharing Agreement in the event that
KaStarCom fails to pay the purchase price thereunder or any installments
thereof, when due. The Company shall promptly inform the Investor of any change
in status of each of the KaStarCom Purchase Agreement and the Satellite Sharing
Agreement, until the Closing.
(d) The Company shall take no action, other than in the ordinary course of
business, which is not set forth in the Business Action Plan, and shall use
reasonable efforts to take all actions in the Business Action Plan which are
identified therein as actions to be taken on or before the Closing; PROVIDED,
HOWEVER, that the Company shall be obligated to expend only available funds to
take such actions, including without limitation funds available as a result of
any loan made by the Investor and Other Investors as provided in Section
7.1(a)(ii) hereof, and the Company shall use such funds only in a manner
consistent with the monthly budget set forth on SCHEDULE 7.1(a)(ii) hereto,
unless the Required Investors have given their prior written consent otherwise.
(e) Except for (i) the transactions contemplated by this Agreement, the
other Closing Documents or set forth in SCHEDULE 6.4(e) hereto, or (ii) pursuant
to the budget set forth in SCHEDULE 7.1(a)(ii) hereto, without the prior written
consent of the Required Investors (which consent shall not be unreasonably
withheld, but shall be based on all relevant circumstances, including without
limitation the financial condition of the Company), the Company will not:
(i) increase the compensation or benefits of, or pay any bonus
to, any director, officer, employee or consultant;
34
(ii) grant any severance or termination pay to any director,
officer, employee or consultant, or enter into, amend or
restate any employment agreement or arrangement with any
director, officer or employee;
(iii) establish, adopt, amend or restate any of its employee
benefit plans or other benefit arrangements (other than to
provide the same benefits as provided by the Company
immediately prior to such action);
(iv) grant any award under any bonus, incentive, stock option,
performance or other compensation plan or arrangement
(including without limitation the grant of stock options,
stock appreciation rights, stock-based or stock-related
awards, performance units or restricted stock), or remove
restrictions of any existing plan or other arrangement or
agreement, or any award made thereunder;
(v) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital
stock;
(vi) redeem, purchase or otherwise acquire any shares of capital
stock of the Company or any securities or obligations
convertible into or exchangeable for any shares of capital
stock of the Company, or any options, warrants or conversion
or other rights to acquire any shares of capital stock of the
Company or any such securities or obligations, or any other
securities thereof;
(vii) effect any reorganization, recapitalization, merger or share
exchange;
(viii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for,
shares of its capital stock;
(ix) issue, deliver, award, grant or sell, or authorize the
issuance, delivery, award, grant or sale (including the grant
of any limitations in voting rights or other encumbrances)
of, any shares of any class of capital stock of the Company,
any Subsidiary or any other entity in which the Company has
an equity interest or right to acquire an equity interest
(including shares held in treasury but excluding shares
issuable upon the exercise of options outstanding on the date
hereof in accordance with their terms as of the date hereof),
any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or
options to acquire, any such shares, or amend or otherwise
modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms more favorable to
the holders thereof;
(x) propose or adopt any amendment to, or restatement of, the
Company's certificate of incorporation or bylaws; or
35
(xi) authorize, or commit or agree to do any of the foregoing.
6.5 ECHOSTAR AGREEMENT. The Company shall use all commercially reasonable
efforts to enter into a definitive distribution and joint marketing agreement
with Echostar that is reasonably acceptable to the Investor and supersedes all
prior term sheets and agreements between the Company and Echostar regarding
distribution and joint marketing arrangements.
6.6 TERMINATION OF CERTAIN RIGHTS AND AGREEMENTS; MODIFICATION OF EQUITY
RIGHTS. The Company shall use its reasonable best efforts to cause the
termination prior to the Closing of all rights and agreements as described in
Section 3.1(h) (except as otherwise contemplated by SCHEDULE 3.1(h)(a)), Section
3.1(l) (except as set forth on SCHEDULE 3.1(l)) and Section 3.1(m)(except as set
forth on SCHEDULE 3.1(m)), including without limitation stock options, warrants,
other rights with respect to securities of the Company, voting agreements,
stockholders' agreements, investors' rights agreements, registration rights
agreements and similar agreements. If the Voting Agreement is not terminated
prior to the Closing, and the Required Investors determine that the Voting
Agreement requires the Company to have, after the Closing, a Board of Directors
of more than seven members, then the Company will use all reasonable efforts to
assist, and will fully cooperate with, the Investor in determining an
alternative method for the holders of Senior Preferred Stock (other than Series
6 Senior Preferred Stock) to have the same proportionate representation and
voting power on the Board of Directors as such parties would have if the
aggregate number of directors on the Board of Directors were the sum of (i) the
number of directors which the holders of Senior Preferred Stock may separately
elect pursuant to the Fifth Charter and (ii) two, and the Board of Directors
were elected as provided in the Fifth Charter and the amended and restated
bylaws to be adopted by the Company pursuant to Section 6.20 hereof.
6.7 REPRESENTATIONS AND WARRANTIES. The Company will not, will not permit
any of its Subsidiaries to, and will use commercially reasonable efforts to
cause KaStarCom not to, take or agree to take any action on or prior to the
Closing Date that could reasonably be expected to result in any of its
representations or warranties hereunder being untrue.
6.8 ADVICE OF CHANGES. The Company will give prompt notice to the
Investor upon becoming aware of (i) the occurrence, or failure to occur, of any
event which would be likely to cause any representation or warranty of the
Company contained in this Agreement to be untrue or inaccurate and (ii) any
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement on or
prior to the Closing Date. The Company will use its commercially reasonable
efforts to prevent or promptly remedy any matter which is or would be the
subject of any such notice. No notice pursuant to this Section 6.8 will affect
any representations, warranties, covenants, agreements, obligations or
conditions set forth herein.
6.9 REASONABLE EFFORTS; FURTHER ASSURANCES. The Company will use
reasonable efforts to cause to be fulfilled the conditions of its obligations
under this Agreement and the other Closing Documents. From time to time, as and
when requested by the Investor, the Company will execute and deliver, or cause
to be executed and delivered, all such documents and instruments and will take,
or cause to be taken, all such reasonable actions, as the Investor may
reasonably
36
deem necessary or desirable to consummate the transactions contemplated by this
Agreement and the other Closing Documents. The Company shall not take any action
or fail to take any action which would reasonably be expected to frustrate the
intent and purposes of this Agreement or the transactions contemplated hereby.
6.10 COMPLIANCE WITH SECURITIES LAWS. The Company shall obtain all
necessary Blue Sky law permits and qualifications, if any, or have the
availability of exemptions therefrom, required by any state for the offer and
sale or distribution of the Shares, the Warrants, the Warrant Shares, the
Underlying Shares, the Dividend Shares and the Conversion Shares (all such
securities referenced in this Section 6.10 are collectively referred to herein
as the "SECURITIES").
6.11 EXCLUSIVITY; NOTICE OF POTENTIAL TRANSACTIONS. As long as this
Agreement shall be in full force and effect, (i) neither the Company nor any of
its officers, employees, agents, representatives or directors, shall solicit,
initiate, encourage or engage in any negotiations with any Person, relating to
the sale of any capital stock or Equivalents of the Company, the merger of the
Company or any of its Subsidiaries with, the acquisition of the Company or any
of its Subsidiaries by, or sale of any material asset (whether or not tangible)
of the Company or any of its Subsidiaries to, any Person, other than the
transactions contemplated hereby and by the other Subscription Agreements and
(ii) the Company shall immediately inform the Investor of any offer, proposal or
inquiry concerning any of the foregoing of which the Company or any of its
officers, employees, agents, representatives or directors receives or has
Knowledge.
6.12 USE OF PROCEEDS OF INTERIM FUNDING. In the event the Investor
provides interim funding to the Company pursuant to Section 7.1(a)(ii) hereof,
the Company shall use such funds only in accordance with the monthly budget set
forth on SCHEDULE 7.1(a)(ii) and any related loan documents between the Company
and the Investor, unless the Investor has given its prior written consent
otherwise.
6.13 HSR FILINGS. The Company and the Investor shall use reasonable
efforts to make, no later than 20 days after the execution and delivery of this
Agreement, any and all of their respective filings pursuant to the HSR Act as
may be required in connection with the transactions contemplated by this
Agreement and the Closing Documents.
6.14 AGREEMENT OF STOCKHOLDERS. As long as this Agreement shall be in full
force and effect, the Company will take all actions reasonably required to
ensure that the Investor receives the benefits of the Agreement of Stockholders.
The Company and/or the Board of Directors will not (without the prior written
consent of the Required Investors) amend or restate the Agreement of
Stockholders, avoid or seek to avoid the observance or performance of any of the
obligations of the Company or the Board of Directors thereunder, or take any
other action which would deprive the Investor of the benefits of the Agreement
of Stockholders, but will at all times in good faith assist in the carrying out
of all the provisions of the Agreement of Stockholders and in the taking of all
such actions as may be necessary or appropriate in order to protect the benefits
to the Investor thereunder.
6.15 FCC APPLICATIONS. The Company, the Investor and the Other Investors
shall prepare, execute and file with the FCC as promptly as practicable, all FCC
applications and filings,
37
including without limitation the FCC Transfer of Control Applications, necessary
(in the reasonable judgment of the Investor) to be filed by the parties hereto
with the FCC with respect to the execution, delivery and performance of this
Agreement and the other Closing Documents (collectively, the "FCC APPLICATIONS")
and any other necessary or desirable instruments or documents in connection
therewith. The Company, the Investor and the Other Investors shall prosecute the
FCC Applications with all reasonable diligence and otherwise use their
reasonable efforts to obtain all necessary consents and approvals from the FCC
as expeditiously as practicable. Investor and the Company will promptly provide
each other and the Other Investors with a copy of any pleading, objection,
complaint, order or other document served on such person relating to the FCC
Applications. Investor and the Company will not, and each of them will use its
reasonable efforts not to cause or permit any of its officers, directors,
members, partners, stockholders or other Affiliates to, take any action that
could reasonably be expected to adversely affect the likelihood of obtaining all
necessary consents and approvals from the FCC or for the same becoming Final
Orders. If reconsideration or judicial review is sought with respect to any of
the necessary consents and approvals from the FCC, the party affected shall
vigorously oppose such efforts for reconsideration or judicial review.
6.16 INFORMATION; CONFIDENTIALITY.
(a) BASIC FINANCIAL INFORMATION. From and after the date of this Agreement
and for so long as the Company is not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, or
otherwise reports on an annual and a quarterly basis on forms provided for such
annual and quarterly reporting pursuant to the rules and regulations promulgated
by the SEC (in either case, a "REPORTING COMPANY"), the Company shall furnish to
the Investor, so long as the Investor and its Affiliates hold in the aggregate
at least 7.5% of the aggregate shares of Senior Preferred Stock outstanding, or
shares of Common Stock issued directly or indirectly upon conversion thereof, or
if lesser, at least 75% of the Shares purchased by Investor hereunder (such
Investor, a "QUALIFYING HOLDER"):
(i) as soon as practicable after the end of each fiscal year of
the Company (and in any event within ninety (90) days
thereafter), a complete copy of an audit report of the
Company which shall include at least the consolidated balance
sheet of the Company, as at the end of such fiscal year, and
consolidated statements of income, cash flow and changes in
stockholders' equity of the Company for such year, all
prepared in accordance with generally accepted accounting
principles consistently applied, certified by the Company's
independent public accounting firm; and
(ii) for each of the Company and KaStarCom, as soon as practicable
after the end of the first, second, and third quarterly
accounting periods in its respective fiscal year (and in any
event within thirty-five (35) days thereafter), a
consolidated balance sheet as at the end of each such
quarterly period, and consolidated statements of income and
cash flow, for such period and for the current fiscal year to
date, all prepared in accordance with generally accepted
accounting principles consistently applied, certified by its
respective chief financial officer.
38
(b) ADDITIONAL INFORMATION AND ACCESS RIGHTS. So long as the Company is not
a Reporting Company and the Investor is a Qualifying Holder, the Company shall
permit the Investor, or its authorized representative(s), to visit and inspect
any of the properties of the Company, including its books of accounts and other
records, and to discuss its affairs, finances, and accounts with the Company's
officers and its independent public accountants, all at such reasonable times
and as often as any such person may reasonably request.
(c) CONFIDENTIALITY. The Investor covenants and agrees that it shall not at
any time, directly or indirectly, disclose, divulge, reveal, report, publish,
transfer or use, for any purpose whatsoever, any Confidential Information (as
defined below) received by the Investor pursuant to this Section 6.16, except to
the extent necessary, in the Investor's reasonable business judgment and with
due regard to the interests of the Company or the Investor's interests as a
holder of capital stock of the Company, to the Investor's employees and
representatives, including without limitation its legal counsel and accountants,
who shall similarly be bound by the obligation of confidentiality set forth in
this Section 6.16(c). For the purposes hereof, "CONFIDENTIAL INFORMATION" means
the Company's trade secrets and other proprietary and confidential information,
including without limitation the following: (i) contracts, proposals and other
documentation embodying or related to the Company's agreements with its
customers, vendors, suppliers, licensors, and/or licensees; (ii) information
identifying former, current and/or prospective customers, vendors and/or
suppliers, and/or contacts with the same (including, but not limited to, lists
or business cards thereof); (iii) financial statements and other financial
information; (iv) business processes and marketing information, strategies and
plans; website information; (v) pricing information, policies and strategies,
including, lists, discount terms, quoting procedures, pricing, marketing and
sales; (vi) automated systems information and documentation; (vii) proprietary
software programs, information, materials and documentation; (viii) order taking
and quality control methods; (ix) purchasing information; (x) mailing lists;
(xi) employee information and data; (xii) internal documents and communications;
(xiii) trade secrets, discoveries, proprietary databases, concepts, designs,
drawings, artwork and ideas, whether or not patentable or protectable by
copyright; (xiv) the Company's name and its trade names, trademarks and domain
names; and (xv) all materials or information related to the business or
activities of the Company and/or the manner in which it does business which is
made available only to employees with a need to know.
6.17 DISAPPEARING CLOSING CONDITIONS. Notwithstanding anything contained
in Section 7.1(b) hereof, the Company will use all commercially reasonable
efforts to cause to be satisfied prior to June 30, 2003, each condition which,
but for the application of Section 7.1(b) hereof, would otherwise be a condition
to the obligations of the Investor with respect to the Closing.
6.18 SUBSCRIPTION ADJUSTMENT. If at any time prior to or immediately
following the Closing, the actual capitalization of the Company is not as set
forth on SCHEDULE 4.15B, and such discrepancy adversely affects the Investor (as
determined in the reasonable judgment of the Investor), then the Company shall
adjust the number of shares of Senior Preferred Stock and warrants to acquire
shares of Senior Preferred Stock issued to the Investor pursuant to this
Agreement, in a manner reasonably satisfactory to the Investor, so that the
Investor receives the same benefits as if there had been no such discrepancy.
The Company shall also use its best efforts to make any amendments to the
Certificate of Incorporation or other agreements of the
39
Company as are necessary to authorize and reserve for issuance any such
additional shares of Senior Preferred Stock or Common Stock into which such
Senior Preferred Stock is convertible.
6.19 REIMBURSEMENT OF FEES. The Company shall reimburse the Investor at
Closing for one-half of the fees advanced by the Investor pursuant to Section
3.1(k) hereof.
6.20 AMENDMENT AND RESTATEMENT OF BYLAWS. Simultaneously with the Closing
the Company shall adopt amended and restated bylaws, in such form as is
reasonably acceptable to the Required Investors, which bylaws shall provide,
among other things, (i) that the total number of directors of the Company shall
be fixed by the Board of Directors, subject to the provisions of the Fifth
Charter and (ii) that if the total number of directors of the Company is more
than the sum of (A) the number of directors which the holders of Senior
Preferred Stock may separately elect pursuant to the Fifth Charter and (B) two,
then each additional director in excess of such sum must be approved by
unanimous vote of the Board of Directors.
SECTION VII
MISCELLANEOUS
7.1 TERMINATION; EFFECT OF TERMINATION.
(a) This Agreement may be terminated and the transactions contemplated by
this Agreement and the other Closing Documents at any time prior to the Closing
Date, whether before or after the receipt of any approval of stockholders or
other approvals as may be required hereunder, as follows:
(i) by the mutual written agreement of the Company and the
Investor;
(ii) by either the Company or the Investor if the Closing shall
not have been consummated on or prior to December 20, 2002
(such date, including as it may be changed pursuant to this
Section 7.1(a)(ii), is referred to as the "WALK AWAY DATE");
PROVIDED, HOWEVER, that the right to terminate pursuant to
this Section 7.1(a)(ii) shall not be available to any party
whose failure to perform any of its obligations under this
Agreement resulted in, or has been the cause or a substantial
cause of, the failure of the Closing to occur prior to the
Walk Away Date; PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing clauses of this Section
7.1(a)(ii), the Investor may extend the Walk Away Date to
January 31, 2003, for any reason, if the Investor and the
Other Investors who elect to extend the Walk Away Date
pursuant to their respective Subscription Agreements, shall
collectively (on a PRO RATA basis) provide $2,000,000 of
funding to the Company on or before December 20, 2002, on
substantially the terms, and pursuant to the monthly budget,
as set forth in SCHEDULE 7.1(a)(ii) attached hereto; PROVIDED
FURTHER, HOWEVER, that notwithstanding the foregoing clauses
of this Section 7.1(a)(ii), the Investor may further extend
the Walk Away Date up to June 30, 2003, if (A) the Investor
determines in its
40
reasonable judgment that the consent of the FCC or another
third party is required and cannot be obtained by January 31,
2003, (B) for the period from December 20, 2002 to the
earlier of June 30, 2003 or the Closing Date, the Investor
and the Other Investors who elect to extend the Walk Away
Date pursuant to their respective Subscription Agreements,
shall collectively provide funds in the aggregate amount of
at least $5,000,000 (inclusive of the $2,000,000 funded to
the Company pursuant to the immediately preceding proviso) to
the Company on substantially the terms, and pursuant to such
monthly budget, as set forth in SCHEDULE 7.1(a)(ii) attached
hereto, and (C) the Investor shall provide such portion of
the aggregate funds to be provided to the Company pursuant to
the immediately preceding clause (B) which is equal to the
result of (x) $5,000,000, multiplied by (y) a fraction, the
numerator of which is the Aggregate Purchase Price and the
denominator of which is $145,000,000;
(iii) by either the Company or the Investor if there shall be any
Law that makes consummation of the transactions contemplated
by this Agreement illegal or otherwise prohibited or if any
Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall not be subject to appeal
or shall have become final and unappealable; and
(iv) by either of the Company or the Investor (A) if there shall
have been a breach of any representation, warranty, covenant
or agreement set forth in this Agreement on the part of
another party or (B) if any representation or warranty of
another party set forth in this Agreement shall have become
untrue, in any such case such that the breach of such
representation, warranty, covenant or agreement could
reasonably be expected to have a Material Adverse Change if
not remedied prior to the Closing Date.
(b) If the Walk Away Date is extended beyond January 31, 2003 pursuant to
the third proviso in Section 7.1(a)(ii) hereof, then notwithstanding anything to
the contrary in this Agreement (but without impairment of Section 6.17 hereof),
the conditions set forth in Section 3.1(n), Section 3.1(p), Section 3.1(r),
Section 3.1(s), Section 3.1(t), Section 3.1(u) and Section 3.1(v) hereof shall
not be conditions to the obligations of the Investor with respect to the
Closing.
(c) If this Agreement is terminated by any party pursuant to Section 7.1(a)
hereof, this Agreement forthwith shall become void and there shall be no
liability or obligation hereunder on the part of the Company or the Investor or
any of their respective Affiliates, stockholders, directors, officers, agents,
employees or representatives, except to the extent such termination results from
the willful breach by either the Company or the Investor of any of its
respective representations, warranties, covenants or agreements contained in
this Agreement, and except to the extent contemplated by Section 7.4 hereof.
41
7.2 LEGEND.
Each certificate for Securities will be imprinted with a legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OFFERED FOR
SALE, TRANSFER OR ASSIGNMENT UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH
SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE ACCEPTABLE TO THE ISSUER OF THESE SECURITIES, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
PURSUANT TO SECTION 151(f) OF THE DELAWARE GENERAL CORPORATION LAW, THE
CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE
POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL, OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS."
7.3 SURVIVAL.
The representations, warranties, covenants and agreements of the Investor and
the Company set forth in this Agreement shall survive indefinitely after the
Closing Date (except for statutory remedies, which shall continue for the
statutory period) and the consummation of the transactions contemplated hereby,
notwithstanding any examination made for or on behalf of the Investor or the
Company, the knowledge of the Investor or the Company, or any of their officers,
directors, stockholders, employees or agents, or the acceptance of any
certificate or opinion.
7.4 EXPENSES. Except as otherwise provided in this Agreement or the other
Closing Documents, each party will pay all of its expenses, including attorneys'
and accountants' fees, in connection with the negotiation of this Agreement and
the other Closing Documents, the performance of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated by this
Agreement and the other Closing Documents; PROVIDED, HOWEVER, that (i) if this
Agreement is terminated by the Investor pursuant to Section 7.1(a)(iv) hereof,
then all expenses and fees incurred by the Investor in connection with this
Agreement shall be promptly reimbursed by the Company, (ii) if this Agreement is
terminated by the Company pursuant to Section 7.1(a)(iv) hereof, then the
Investor's PRO RATA share (based on the aggregate number of shares of Senior
Preferred Stock subscribed for by the Investor and the Other Investors) of all
expenses and fees incurred by the Company in connection with this Agreement and
the other Subscription Agreements shall be promptly reimbursed by the Investor
and (iii) if this Agreement is terminated pursuant to Section 7.1(a) hereof (but
other than by the Company pursuant to Section 7.1(a)(iv) hereof), the Company
shall promptly pay the Investor an amount equal to one-half of the fees paid by
the Investor pursuant to Section 3.1(k) hereof.
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7.5 THIRD PARTY BENEFICIARIES. This Agreement does not create any rights
in any parties who are not otherwise a party to this Agreement.
7.6 ENTIRE AGREEMENT. This Agreement, together with all exhibits and
schedules referenced herein (including the executed originals of all agreements
referenced as exhibits), constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof.
7.7 AMENDMENT AND WAIVER. Neither this Agreement, any other Subscription
Agreement, other Closing Document or any Security, nor any term, covenant,
agreement or condition hereof or thereof, may be amended, waived, supplemented,
discharged, otherwise modified or terminated, except by a written instrument
signed by each of (i) the Company, (ii) the Investor and (iii) the Required
Investors (which may include the Investor); PROVIDED, HOWEVER, that either party
to this Agreement may in writing waive (i) any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
(ii) compliance with any of the conditions to its obligations set forth in this
Agreement. The Company shall give notice of any such waivers under this Section
7.7 to each of the Other Investors.
7.8 NOTICES. Except as otherwise expressly set forth in this Agreement,
all notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and shall be
mailed by registered or certified mail, postage prepaid, or otherwise delivered
by hand, by nationally recognized overnight courier, or by same day receipted
messenger service, addressed in each case (i) if to the Investor, at the
Investor's address set forth in EXHIBIT A, or at such other address as the
Investor shall have furnished to the Company in writing pursuant to this notice
provision, (ii) if to any other holder of any Shares, at the record address of
such holder furnished to the Company in connection with the holding of its
securities of the Company, or at such other address as such holder shall have
furnished to the Company in writing pursuant to this notice provision, or (iii)
if to the Company, to Wildblue Communications, Inc., 0000 Xxxx Xxxxxxx Xxxx,
Xxxxx 000X, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attn: Xxxxx Xxxxx, with a copy to
Xxxxxxxxxx Hyatt & Xxxxxx, P.C., 000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxxxxx 00000-0000, Attn: Xxxx X. Xxxxxxx, Esq., or to such other address as
the Company (or Xxxxxxxxxx Xxxxx & Xxxxxx, P.C.) may provide to the Investor and
the other holders pursuant to this notice provision. Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
or having been given (i) when delivered personally, at the time of receipt by
the addressee, (ii) if delivered by overnight courier, one business day after
depositing the same with such courier, (iii) if delivered by same day messenger,
upon delivery to the addressee or the addressee's agent or employee or, if
delivered to a residence, to any adult person at such residence, or (iv) if sent
by mail, at the earlier of its receipt or three (3) business days after the same
has been deposited in a regularly maintained receptacle for the deposit of the
United States mail, addressed and mailed as aforesaid.
7.9 ASSIGNMENT.
This Agreement and all of the provisions hereof will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement and rights and obligations hereunder may be
assigned in whole or in part by the Investor (and its
43
assignees) to (i) an Affiliate of the Investor, or (ii) one or more transferees
or assignees of not less than one hundred percent (100%) of all Shares purchased
or to be purchased by the Investor pursuant to this Agreement (as adjusted for
any stock splits, stock dividends or stock combinations). Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by the
Company without the prior written consent of the Investor.
7.10 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Investor and its
stockholders, members, partners, officers, directors, employees and agents (each
an "INDEMNIFIED PARTY") from and against (a) any and all damages, losses and
other liabilities of any kind, including, without limitation, judgments and
costs of settlement, and any and all actions, causes of action or suits
initiated against any party to this Agreement by third parties, and (b) any and
all costs and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) in connection therewith (collectively, the "INDEMNIFIED
LIABILITIES") incurred by the Investor and its stockholders, members, partners,
officers, directors, employees and agents as a result of, or arising out of (i)
any investigative, administrative or judicial proceeding or claim brought or
threatened relating to or arising out of this Agreement and any of the other
Closing Documents, or the transactions contemplated hereby and thereby; or (ii)
any breach of, or inaccuracy in, any representation, warranty or covenant
(including, without limitation, the use of proceeds, the status of the FCC
Licenses and the necessity of obtaining prior FCC approval to implement this
Agreement) of the Company made or incorporated by reference in any of the
Closing Documents, or any breach by the Company of any covenant or agreement
made in any of the Closing Documents; if and to the extent such agreement to
indemnify may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which shall be permissible under applicable law.
(b) If a claim by a third party is made against an Indemnified Party and if
such Indemnified Party intends to seek indemnity with respect thereto under this
Agreement, the Indemnified Party shall promptly notify the Company in writing
setting forth such claims in reasonable detail. The Company shall have twenty
(20) days after receipt of such notice to undertake, through counsel of its own
choosing and at is own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with it in connection therewith; PROVIDED,
HOWEVER, that the Indemnified Party may participate in such settlement or
defense through counsel chosen by such Indemnified Party, PROVIDED that the fees
and expenses of such counsel shall be borne by such Indemnified Party unless the
Indemnified Party shall have reasonably determined that representation by the
same counsel would be inappropriate due to actual or potential differing
interests between them and, in that event, the fees and expenses of such counsel
shall be paid by the Company and the Company shall not assume the defense of
such action or proceeding on the Indemnified Party's behalf. If the Company
assumes such defense, the Indemnified Party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Company, it being understood that the Company shall
control such defense. In the event that the Company assumes such defense, the
Indemnified Party shall cooperate with the Company in such defense and make
available, at the Company's' expense, all pertinent records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Company, subject to attorney-client privilege. The
Indemnified
44
Party shall not pay or settle any claim which the Company is contesting without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Without the prior written consent of the Company, which
consent shall not be unreasonably withheld, the Company shall not settle any
claim with respect to the Indemnified Party unless such settlement contains an
unconditional release of the Indemnified Party from any and all liability with
respect to such third party claim. If the Company does not notify the
Indemnified Party within twenty (20) days after the receipt of such Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, settle
or compromise the claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement.
(c) The Indemnified Party can elect that the amounts or any portion thereof
due it under this Section 7.10 shall be paid in the form of cash and/or
additional shares of the same Series of Senior Preferred Stock held by such
party, such amount of shares to be determined by dividing (x) the difference
between the amounts owed hereunder to the Investor less the amounts to be paid
in cash by (y) the lesser of (i) the fair market value of one share of Senior
Preferred Stock on the date of payment as determined by the Board of Directors
acting in good faith or (ii) the Per Share Purchase Price; PROVIDED, HOWEVER,
that the consent of the Required Investors is required before any amounts owing
hereunder to the Investor may be paid in the form of cash; PROVIDED, FURTHER,
that all holders of Senior Preferred Stock subscribed to on the date hereof
electing to receive, and receiving, shares of Senior Preferred Stock (or shares
of a new series of preferred stock of the Company having comparable terms)
pursuant to this Section 7.10 and the corresponding provisions of the
Subscription Agreements relating to such holders' shares of Senior Preferred
Stock, shall receive securities each having the same designations, rights,
preferences and privileges, including but not limited to the liquidation
preference, priority, conversion price, per share purchase price and voting
rights.
7.11 REMEDIES UPON ERRORS IN SECTION 4.15. If the Company breaches its
representation and warranties contained in Section 4.15 (including the Schedules
listed therein), the Investor may, at the election of the Required Investors, in
lieu of any other remedy specified in this Agreement, accept an adjustment in
the number of shares of its Senior Preferred Stock (or other shares of Company
stock) in order to maintain its respective equity percentage, as specified in
this Agreement and the other agreements contemplated hereby.
7.12 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held by a court of competent
jurisdiction to be prohibited by or invalid under applicable law, such
provisions will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
7.13 NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
7.14 CAPTIONS. The captions used in this Agreement are for convenience of
reference only and
45
do not constitute a part of this Agreement and will not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement will be enforced and construed as if no caption had
been used in this Agreement.
7.15 GOVERNING LAW. Disputes arising under this Agreement shall be
governed by and interpreted and construed in accordance with the substantive law
of the State of New York applicable to contracts made and performed solely
therein.
7.16 JURISDICTION AND VENUE. ANY JUDICIAL PROCEEDING INVOLVING ANY
DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE RIGHTS OR INTERESTS OF THE INVESTOR OR THE COMPANY OR THE BREACH OR ALLEGED
BREACH OF THIS AGREEMENT, WHETHER ARISING DURING OR AT OR AFTER THE TERMINATION
OF THIS AGREEMENT (EACH OF THE FOREGOING DISPUTES, CONTROVERSIES AND CLAIMS
HEREINAFTER REFERRED TO AS AN "AGREEMENT DISPUTE"), SHALL BE BROUGHT ONLY IN A
FEDERAL OR STATE COURT LOCATED IN THE COUNTY, CITY AND STATE OF NEW YORK, AND
EACH OF THE PARTIES HERETO (i) UNCONDITIONALLY ACCEPTS THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY AND (ii) IRREVOCABLY WAIVES
ANY OBJECTION SUCH PARTY MAY NOW HAVE OR HEREAFTER HAS AS TO THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING AN AGREEMENT DISPUTE.
7.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
7.18 PUBLIC ANNOUNCEMENTS. Unless otherwise required by applicable law or
by obligations pursuant to any listing agreement with or rules of any securities
exchange, the National Association of Securities Dealers, Inc. or The Nasdaq
Stock Market, each party shall use commercially reasonable efforts to consult
with, and use commercially reasonable efforts to accommodate the comments of the
other parties before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions contemplated
hereby. Notwithstanding the preceding sentence, upon execution of this Agreement
and upon the Closing, the Company and the Investor shall consult with each other
with respect to the issuance of a joint press release with respect to this
Agreement and the transactions contemplated hereby.
[SIGNATURES BEGIN ON THE IMMEDIATELY FOLLOWING PAGE]
46
SIGNATURE PAGE FOR THE WILDBLUE COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement on the day and year first above written.
THE COMPANY:
WILDBLUE COMMUNICATIONS, INC.
By:
Printed Name:
Title:
INVESTOR:
LIBERTY SATELLITE & TECHNOLOGY, INC.
By:
Printed Name:
Title:
47
EXHIBIT A
INVESTOR NAME AND ADDRESS:
Liberty Satellite & Technology, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
NO. OF SHARES SUBSCRIBED:
290,000 shares of Series 2 Senior Preferred Stock
NO. OF WARRANT SHARES SUBSCRIBED:
290,000 shares of Series 2 Senior Preferred Stock
AGGREGATE PURCHASE PRICE:
$29,000,000
EQUITY INTEREST IN THE COMPANY (AS A PERCENTAGE OF OUTSTANDING SERIES A COMMON
STOCK) ON AN AS-CONVERTED BASIS REPRESENTED BY INVESTMENT (EXCLUDING WARRANTS):
14.440%
NY01:144579.2
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