Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment to Form S-1 HTML 115K
2: EX-4.6 Investor Rights Agreement 14 77K
3: EX-9.1 Voting Agreement 10 44K
4: EX-10.10 Agreement 9 47K
5: EX-10.11 Amendment to Agreement 31 128K
6: EX-10.12 Agreement and Undertaking 2 14K
7: EX-10.25 Form of Subscription Agreement 45 169K
8: EX-10.26 Market Operation, Spectrum Lease and Sublicense 190 679K
Agreement
9: EX-10.29 Subscription Agreement 21 97K
10: EX-10.30 Master Supply Agreement 105 316K
11: EX-10.31 Side Agreement 17 77K
12: EX-10.39 Vendor Agreement 12± 50K
13: EX-10.40 Subscription Service Addendum to Vendor Agreement 39 100K
14: EX-10.41 Co-Marketing Agreement 22 86K
15: EX-10.42 Purchase and Sale Agreement 48 166K
16: EX-10.45 Bundled Wireless Broadband Services Agreement 32 83K
17: EX-10.46 Subscription Agreement 29 113K
18: EX-10.47 Side Agreement 3 21K
19: EX-10.48 Amended and Restated Limited Liability Company 58 207K
Agreement
20: EX-10.51 Common Stock Purchase Agreement 51 217K
21: EX-10.52 Mobile Wimax Network Collaboration Agreement 36 112K
22: EX-10.53 Stock Purchase Agreement 81 340K
23: EX-10.55 Wireless Broadband System Services Agreement 20 48K
24: EX-10.56 Wireless Broadband System Infrastructure Agreement 146 358K
25: EX-10.57 Wireless Broadband Cpe Supply Agreement 40 94K
26: EX-10.58 Side Letter Agreement 9 51K
27: EX-10.59 Master Royalty and Use Agreement 196 648K
28: EX-10.60 Master Royalty and Use Agreement 103 325K
29: EX-10.61 Membership Interest Purchase Agreement 51 181K
30: EX-10.62 Purchase Agreement 64 201K
31: EX-10.63 Educational Broadband Service Long Term De Facto 84 276K
Transfer Lease Agreement
32: EX-21.1 List of Subsidiaries 2± 13K
EXHIBIT 10.53
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
CLEARWIRE CORPORATION
NEXTNET WIRELESS, INC.
AND
MOTOROLA, INC.,
DATED JUNE 30, 2006
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE ............................................. 1
1.1 Purchase and Sale of the Shares ............................... 1
1.2 Purchase Price ................................................ 1
1.3 Allocation of Purchase Price .................................. 2
1.4 Closing ....................................................... 2
ARTICLE II ADJUSTMENT TO PURCHASE PRICE ................................. 2
2.1 Pre-Closing Calculation ....................................... 2
2.2 Post-Closing Calculation ...................................... 3
2.3 Dispute Notice ................................................ 3
2.4 Adjustments ................................................... 3
2.5 Withholding ................................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER .................... 4
3.1 Authority ..................................................... 4
3.2 Validity ...................................................... 5
3.3 Due Organization .............................................. 5
3.4 Subsidiaries .................................................. 6
3.5 Capital Structure; Ownership of Shares ........................ 7
3.6 Transactions with Affiliates .................................. 7
3.7 Financial Statements .......................................... 8
3.8 Interim Change ................................................ 9
3.9 Accounts Receivable and Bank Accounts ......................... 10
3.10 Insurance ..................................................... 10
3.11 Title to Assets ............................................... 11
3.12 Real Property ................................................. 11
3.13 Personal Property Leases ...................................... 12
3.14 Customers and Suppliers ....................................... 12
3.15 Licenses and Permits .......................................... 12
3.16 Material Contracts ............................................ 13
3.17 Tax Matters ................................................... 15
3.18 Product Warranty .............................................. 18
3.19 Product Liability ............................................. 19
3.20 Legal Proceedings ............................................. 19
3.21 Environmental Matters ......................................... 20
3.22 Compliance with Law ........................................... 21
3.23 Intellectual Property ......................................... 21
3.24 Liabilities ................................................... 24
3.25 Employees and Subcontractors .................................. 24
3.26 Employee Benefits ............................................. 25
3.27 Import and Export Control Laws ................................ 28
3.28 Foreign Corrupt Practices Act ................................. 28
3.29 Brokers and Change of Control Payments ........................ 29
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3.30 Investment Company Act ........................................ 29
3.31 Financial Controls ............................................ 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER .................. 29
4.1 Authority ..................................................... 30
4.2 Validity ...................................................... 30
4.3 Due Organization .............................................. 30
4.4 Brokers ....................................................... 30
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS ..................... 30
5.1 Conduct of Business ........................................... 30
5.2 Exclusivity ................................................... 33
ARTICLE VI ADDITIONAL AGREEMENTS ........................................ 34
6.1 Notice of Developments ........................................ 34
6.2 Access to Information ......................................... 34
6.3 Further Action ................................................ 35
6.4 Public Announcements .......................................... 35
6.5 Appropriate Action; Consents; Filings ......................... 35
6.6 Non-Competition; No-Solicitation .............................. 36
6.7 Transition .................................................... 37
ARTICLE VII ACQUIRED EMPLOYEE MATTERS ................................... 38
7.1 Acquired Employees ............................................ 38
7.2 Compensation .................................................. 38
7.3 Severance ..................................................... 38
7.4 Paid Time Off ................................................. 38
7.5 Service Credit ................................................ 39
7.6 401(k)Plan .................................................... 39
7.7 Other Employee Benefit Plans .................................. 39
7.8 Employee Communications ....................................... 40
ARTICLE VIII TAX MATTERS ................................................ 40
8.1 Allocation of Liability for Taxes ............................. 40
8.2 Tax Return Filing and Payment of Taxes ........................ 41
8.3 Tax Contests; Audit Responsibilities .......................... 41
8.4 Code Section 338 Election ..................................... 42
8.5 Cooperation ................................................... 42
8.6 Option Exercises After Closing ................................ 43
8.7 Taxes Not Subject to Limitations .............................. 44
ARTICLE IX CONDITIONS PRECEDENT ......................................... 44
9.1 Conditions to Obligations of Seller and Purchaser ............. 44
9.2 Additional Conditions to Obligations of Purchaser ............. 45
9.3 Additional Conditions to Obligations of Seller ................ 47
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ARTICLE X TERMINATION AND AMENDMENT ..................................... 48
10.1 Termination ................................................... 48
10.2 Effect of Termination ......................................... 49
10.3 Amendment ..................................................... 49
10.4 Fees and Expenses ............................................. 49
10.5 Extension; Waiver ............................................. 49
ARTICLE XI SURVIVAL AND INDEMNIFICATION ................................. 50
11.1 Survival ...................................................... 50
11.2 Indemnification ............................................... 50
11.3 Limitations on Indemnification ................................ 51
11.4 Matters Involving Third Parties ............................... 52
11.5 Other Indemnification Provisions .............................. 54
11.6 No Circular Recovery .......................................... 54
ARTICLE XII GENERAL PROVISIONS .......................................... 54
12.1 Notices ....................................................... 54
12.2 Interpretation ................................................ 56
12.3 Counterparts .................................................. 56
12.4 Entire Agreement, No Third-Party Beneficiaries ................ 56
12.5 Governing Law ................................................. 56
12.6 Assignment .................................................... 56
12.7 Severability .................................................. 56
12.8 Enforcement of this Agreement ................................. 57
12.9 Extension; Waiver ............................................. 57
12.10 Disputes ...................................................... 57
12.11 Jurisdiction .................................................. 58
12.12 Authorship .................................................... 58
12.13 No Joint Venture .............................................. 58
ARTICLE XIII DEFINITIONS ................................................ 59
EXHIBITS
Exhibit A Sample Working Capital Calculation
Exhibit B Opinion of Counsel to Seller and NextNet
Exhibit C Form of Release Agreement
Exhibit D Commercial Agreements
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
this 30th day of June, 2006 by and among Clearwire Corporation, a Delaware
corporation ("SELLER"), NextNet Wireless, Inc., a Delaware corporation
("NEXTNET"), and Motorola, Inc., a Delaware corporation ("PURCHASER"). Except as
otherwise set forth herein, capitalized terms used herein shall have the
meanings set forth in Article XIII.
RECITALS
WHEREAS, NextNet and its Subsidiaries are engaged in the design,
development and sale of modems, base stations and other equipment that enable
deployment of non-line-of-sight, wireless broadband connectivity (the
"BUSINESS");
WHEREAS, Seller owns, beneficially and of record, all of the issued and
outstanding shares of capital stock of NextNet (the "SHARES"); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to
purchase from Seller, all of the Shares, upon the terms and subject to the
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the Parties agree as set forth below.
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller shall sell,
assign, transfer, convey and deliver to Purchaser, free and clear of any and all
Encumbrances (other than restrictions on transfer under applicable securities
Laws), and Purchaser shall purchase, all of the Shares.
1.2 PURCHASE PRICE. In consideration for the sale of the Shares pursuant to
Section 1.1, upon the terms and subject to the conditions set forth in this
Agreement, Purchaser shall pay to Seller an amount equal to Fifty Million
Dollars ($50,000,000), subject to adjustment in accordance with Article II (as
so adjusted in accordance with Article II, the "PURCHASE PRICE"). At the
Closing, Purchaser shall pay to Seller the payment determined pursuant to
Section 2.1 minus the Closing Indebtedness Amount (the "CLOSING PAYMENT") by
wire transfer of immediately available funds to a single United States account
designated in writing to Purchaser by Seller at least three (3) Business Days
prior to the Closing. In addition, at the Closing, Purchaser shall pay the
Closing Indebtedness Amount to such lenders and other creditors in accordance
with the payoff letters provided by such creditors as contemplated by Section
9.2(e)(ix).
1.3 ALLOCATION OF PURCHASE PRICE. Within one hundred twenty (120) days
after the Closing Date, Purchaser shall prepare and deliver to Seller an
allocation schedule (the "ALLOCATION SCHEDULE") pursuant to which the Purchase
Price and the liabilities of NextNet (plus other relevant items) for which such
election is made will be allocated in accordance with Code sections 338 and 1060
to the assets of NextNet for all purposes (including Tax and financial
accounting purposes). Seller shall review the Allocation Schedule and, if it
disagrees in good faith with such schedule, shall provide written notice to
Purchaser of such disagreement not later than thirty (30) days after Purchaser's
delivery of the Allocation Schedule or shall be deemed to have accepted the
Allocation Schedule. If Seller disagrees in good faith with the Allocation
Schedule, Purchaser and Seller shall negotiate in good faith in order to
mutually agree with respect thereto. Purchaser, Seller and NextNet will file all
Tax Returns (including amended returns and claims for refund) and information
reports in a manner consistent with such allocations and agree not to take any
position during the course of any audit or other proceeding inconsistent with
such allocations unless required by a determination of the applicable taxing
authority that is final. Seller shall cooperate with Purchaser to take actions
necessary and appropriate (including filing or providing to Purchaser such
additional forms, returns, elections, schedules and other documents) as may be
required to effect and preserve a timely Section 338(h)(10) Election. Purchaser
and Seller shall make appropriate adjustments to the Allocation Schedule to
reflect changes in the Purchase Price.
1.4 CLOSING. The closing of the transactions contemplated by this Agreement
(the "CLOSING") shall occur at the offices of Winston & Strawn LLP, 35 West
Wacker Drive, Chicago, Illinois, on such date and at such time as Seller and
Purchaser may mutually agree, which date shall be as soon as practicable, but in
no event later than three (3) Business Days after satisfaction or waiver of such
conditions, or at such other time and place as Purchaser and Seller may agree in
writing (the "CLOSING DATE"). All documents delivered and actions taken at
Closing shall be deemed to have been delivered or taken simultaneously and shall
be deemed to be effective as of 11:59 P.M. (Central Standard Time) on the
Closing Date, and no such delivery or action shall be considered effective or
complete unless or until all other such deliveries or actions are completed or
waived in writing by the Party against whom such waiver is sought to be
enforced.
ARTICLE II
ADJUSTMENT TO PURCHASE PRICE
2.1 PRE-CLOSING CALCULATION.
(a) At least three (3) Business Days prior to the Closing Date, Seller
shall prepare and deliver to Purchaser a consolidated balance sheet of NextNet
and its Subsidiaries (the "PRE-CLOSING BALANCE SHEET") setting forth the
Preliminary Working Capital. The Pre-Closing Balance Sheet shall be calculated
in accordance with GAAP consistently applied and applied on a basis consistent
with the Financial Statements, and shall be reasonably acceptable to Purchaser.
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(b) If the Preliminary Working Capital is less than $8,000,000, then
the Closing Payment shall be equal to $50,000,000 minus such difference. If the
Preliminary Working Capital is greater than $8,000,000, then the Closing Payment
shall be equal to $50,000,000.
2.2 POST-CLOSING CALCULATION. Within sixty (60) days following the Closing
Date, Purchaser shall prepare and deliver to Seller a consolidated balance sheet
of NextNet and its Subsidiaries as of the Closing Date (the "POST-CLOSING
BALANCE SHEET") setting forth the Closing Working Capital as of the Closing
Date. The Post-Closing Balance Sheet shall be prepared in accordance with GAAP
consistently applied and applied on a basis consistent with the Financial
Statements, and include an accrual for all unpaid Transaction Expenses. In
connection therewith, from and after the Closing, Purchaser shall provide Seller
with reasonable access to all NextNet records and work papers necessary to
compute the Closing Working Capital. The calculation of the Closing Working
Capital as delivered to Seller shall be final and binding on the Parties unless,
within thirty (30) days after delivery to Seller, Seller shall deliver to
Purchaser a Dispute Notice. After delivery of a Dispute Notice, Purchaser and
Seller shall promptly negotiate in good faith with respect to the subject of the
Dispute Notice, and if they are unable to reach an agreement within ten (10)
Business Days after delivery to Purchaser of the Dispute Notice, the dispute
shall be submitted to the Independent Auditor. The Independent Auditor shall be
directed to issue a final and binding decision within thirty (30) days of
submission of the Dispute Notice, as to the issues of disagreement referred to
in the Dispute Notice and not resolved by the Parties. The calculation of the
Closing Working Capital, as so adjusted by agreement or by the Independent
Auditor (if required), shall be final and binding on the Parties. "WORKING
CAPITAL" shall mean the amount equal to the total current assets (excluding cash
and cash equivalents and any deferred tax assets) of NextNet and its
Subsidiaries less the total current liabilities (excluding the current portion
of installment loan and any Indebtedness for Borrowed Money and Transaction
Expenses) of NextNet and its Subsidiaries, calculated in accordance with GAAP
consistently applied and applied on a basis consistent with the Financial
Statements. A sample calculation of Working Capital as of April 30, 2006 is
attached hereto as Exhibit A.
2.3 DISPUTE NOTICE. In connection with the calculations of the Closing
Working Capital, a "DISPUTE NOTICE" shall mean a written notice from Seller
indicating disagreement with the calculation of the Closing Working Capital, and
summarizing the items in dispute. The "INDEPENDENT AUDITOR" shall mean a
national public accounting firm with no material relationship to either Seller
or Purchaser or their respective Affiliates chosen by agreement of Seller or
Purchaser, or, if they are unable to agree, shall mean a national firm with no
such material relationship chosen by lot. The fees and expenses of the
Independent Auditor retained as a result of any dispute related to any statement
shall be equitably allocated by the Independent Auditor. The full force and
effect of the representations and warranties set forth in this Agreement or the
Ancillary Agreements shall in no way be diminished by any adjustment pursuant to
this Article II.
2.4 ADJUSTMENTS.
(a) Following the Closing, if the Closing Working Capital and the
Preliminary Working Capital are each less than $8,000,000:
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(i) if the Closing Working Capital is less than the Preliminary
Working Capital, then Seller shall pay to Purchaser the amount of the
difference; and
(ii) if the Closing Working Capital is greater than the
Preliminary Working Capital, then Purchaser shall pay to Seller the amount
of the difference.
(b) Following the Closing, if the Closing Working capital is greater
than $8,000,000 and the Preliminary Working Capital is less than $8,000,000,
then Purchaser shall pay to Seller the amount of the difference between
$8,000,000 and the Preliminary Working Capital.
(c) Following the Closing, if the Closing Working Capital is less than
$8,000,000 and the Preliminary Working Capital is greater than $8,000,000, then
Seller shall pay to Purchaser the amount of the difference between $8,000,000
and the Closing Working Capital.
(d) Following the Closing, if the Closing Working Capital and the
Preliminary Working Capital are each greater than $8,000,000, then neither
Seller nor Purchaser shall be required to make an adjustment payment (in which
case the Purchase Price as finally determined shall be equal to $50,000,000).
(e) Any payment required pursuant to this Section 2.4 shall be made
within three (3) Business Days of the final determination of the Closing Working
Capital in accordance with Section 2.2, by wire transfer of immediately
available funds, as directed by the recipient in writing, accompanied by
interest on such amount from the date of final determination to the date of
payment computed at the rate of eight percent (8.00%) per annum, compounded
monthly, on the basis of a 365-day year.
2.5 WITHHOLDING. Purchaser shall be entitled to deduct and withhold from
any and all payments made under this Agreement such amounts as may be required
to be deducted and withheld under applicable Laws. To the extent such amounts
are withheld and paid to the appropriate taxing authority in accordance with
applicable Laws, such withheld amount shall be treated for all purposes of this
Agreement as having been paid to the Person to whom such amounts would have
otherwise been paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that the statements made in
this Article III are true, correct and complete as of the date of this Agreement
(except to the extent expressly made as of an earlier date, in which case as of
such date), except as set forth in the Schedules accompanying this Agreement:
3.1 AUTHORITY. Each of Seller and NextNet has the full right, power and
authority, without the Consent of any other Person, to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to carry out
the transactions contemplated hereby and thereby. All acts or proceedings
required to be taken by Seller and NextNet to authorize the sale
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of the Shares and the execution, delivery and performance of this Agreement and
the Ancillary Agreements to which it is a party, and all transactions
contemplated hereby and thereby, have been duly and properly taken.
3.2 VALIDITY. This Agreement and the Ancillary Agreements to which it is a
party have been (or, in the case of such agreements to be executed after the
date hereof and at or prior to Closing, will be), and the documents to be
delivered by Seller at Closing will be, duly executed and delivered and,
assuming the due execution and delivery of the other parties hereto or thereto,
do constitute or will constitute, as the case may be, valid and legally binding
obligations of Seller and NextNet, as applicable, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. Except as set
forth in Schedule 3.2, the execution and delivery by each of Seller and NextNet
of this Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation of any Encumbrance of any kind upon the Shares or the assets of
NextNet or the termination or acceleration of any Indebtedness or other
obligation of NextNet, and are not prohibited by, do not violate or conflict
with any provision of, and do not constitute a default under or a breach of (a)
the Certificate of Incorporation or Bylaws of Seller or NextNet, (b) any note,
bond, indenture, contract, agreement, License and Permit or other instrument to
which Seller or NextNet is a party or by which Seller or NextNet or any of their
respective assets are bound, except, with respect to Seller, to the extent that
any such violation or conflict would not have a Material Adverse Effect, (c) any
order, writ, injunction, decree or judgment of any Governmental Authority
applicable to Seller or NextNet, or (d) any Law applicable to Seller or NextNet.
Except as set forth in Schedule 3.2, no Consent of any Person, including any
Governmental Authority, is required for the execution and delivery by each of
Seller and NextNet of this Agreement, the documents to be delivered at Closing
or the consummation by Seller and NextNet of the transactions contemplated
hereby, except, with respect to Seller, to the extent that the failure to obtain
any Consent would not have a Material Adverse Effect.
3.3 DUE ORGANIZATION.
(a) NextNet is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, and has full power and
authority and all requisite rights, licenses, permits and franchises to own,
lease and operate its assets and to carry on the Business. NextNet is duly
licensed, registered and qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in which the ownership, leasing or
operation of its assets or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Schedule 3.3(a) sets
forth each state or other jurisdiction in which NextNet is licensed or qualified
to do business as a foreign corporation. Seller has made available to Purchaser
an accurate, correct and complete copy of NextNet's Certificate of Incorporation
and Bylaws.
(b) Except as set forth on Schedule 3.3(b), the minute books and stock
records of NextNet (i) contain accurate, correct and complete records of all
meetings held since March 16, 2004 (the "SELLER ACQUISITION DATE"), and to the
Knowledge of Seller, since the
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incorporation of NextNet, (ii) accurately reflect all other material corporate
action of its stockholder and NextNet's Board of Directors, and any committees
of the Board of Directors of NextNet since the Seller Acquisition Date, and to
the Knowledge of Seller, since the incorporation of NextNet, and (iii)
accurately reflect the ownership of NextNet.
3.4 SUBSIDIARIES.
(a) Schedule 3.4 sets forth a true and complete list of each
Subsidiary of NextNet, together with the jurisdiction of incorporation or
organization of such Subsidiary. Each Subsidiary of NextNet is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, and has full power and authority and all
requisite rights, licenses, permits and franchises to own, lease and operate its
assets and to carry on the Business. Each Subsidiary of NextNet is duly
licensed, registered and qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in which the ownership, leasing or
operation of its assets or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Schedule 3.4 sets forth
each state or other jurisdiction in which each Subsidiary of NextNet is licensed
or qualified to do business as a foreign corporation. Seller has made available
to Purchaser an accurate, correct and complete copy of the Certificate of
Incorporation and Bylaws of other organizational documents of each Subsidiary of
NextNet.
(b) Schedule 3.4 also sets forth a true and complete list, as of the
date hereof, of the authorized, issued and outstanding capital stock of each
Subsidiary of NextNet, and, if applicable, the custodian by whom the original
shares of such capital stock are held. All of the outstanding shares of capital
stock of each Subsidiary of NextNet are owned beneficially and of record by the
Person indicated on Schedule 3.4, and are validly issued, fully paid and
nonassessable and free of preemptive rights or any Encumbrance (other than
restrictions on transfer pursuant to applicable securities Laws) and constitute
all of the issued and outstanding shares of capital stock or other equity
interest of such Subsidiary of NextNet. None of the shares of capital stock of
any Subsidiary of NextNet were issued in violation of any preemptive rights or
rights of first refusal or first offer.
(c) Other than as set forth on Schedule 3.4(c), there are no
outstanding (i) shares of capital stock of any Subsidiary of NextNet, (ii)
securities convertible into, or exchangeable or exercisable for, shares of
capital stock or equity securities of such Subsidiary, (iii) options, warrants
to purchase or subscribe, or other rights (preemptive or otherwise) to acquire
from any such Subsidiary any shares of capital stock or equity securities or
securities convertible into or exchangeable or exercisable for shares of capital
stock or equity securities of such Subsidiary, or rights of first refusal or
first offer, or (iv) bonds, debentures, notes or other Indebtedness or
securities of any such Subsidiary having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Subsidiary may vote. There are (x) no contracts or
restrictions (other than as may be imposed by Law or by the charter or bylaws or
other organizational documents of such Subsidiary) relating to any shares of
capital stock of any such Subsidiary or any other securities of any such
Subsidiary, whether or not outstanding, (y) no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to any such
Subsidiary, and (z) no contracts
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affecting or relating to the voting, issuance, purchase, redemption,
registration, repurchase or transfer of any shares of capital stock or any other
securities of any such Subsidiary.
(d) Schedule 3.4(d) also contains a complete and accurate list of any
and all Persons not constituting Subsidiaries of which NextNet directly or
indirectly owns an equity or similar interest, or an interest convertible into
or exchangeable or exercisable for an equity or similar interest (collectively,
the "INVESTMENTS").
3.5 CAPITAL STRUCTURE; OWNERSHIP OF SHARES.
(a) The authorized capital stock of NextNet consists of 1,000 shares
of NextNet Common Stock, all of which are issued and outstanding. The Shares
represent the only issued and outstanding shares of capital stock of NextNet.
The Shares are duly authorized, validly issued, fully paid and non-assessable
and free of any preemptive rights. There are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Seller or NextNet is a party or by which they are bound obligating
NextNet to issue, deliver, sell or create, or cause to be issued, delivered,
sold or created, or evidencing any right to subscribe for, additional shares of
capital stock or other voting securities or Stock Equivalents of NextNet, or
obligating Seller or NextNet to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding stock appreciation rights, phantom stock
or other similar rights with respect to NextNet, the value of which is
determined in whole or in part by the value of any capital stock of NextNet
("STOCK EQUIVALENTS"). There are no outstanding bonds, debentures, notes or
other indebtedness of NextNet having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
stockholders may vote.
(b) Except as set forth on Schedule 3.5(b), Seller owns, beneficially
and of record, and has valid title to, all of the Shares, free and clear of all
Encumbrances. At the Closing, Purchaser will acquire good and marketable title
to the Shares, free and clear of all Encumbrances.
(c) Except as set forth on Schedule 3.5(c), there are no restrictions
to which Seller or NextNet is party affecting the transferability of the Shares
other than those arising under applicable Laws, including securities Laws.
(d) Except as set forth on Schedule 3.5(d), NextNet has not lent or
advanced any money to, or borrowed any money from, or guaranteed or otherwise
become liable for any Indebtedness or other obligations of, or acquired any
capital stock, obligations or securities of, Seller or any other Person.
3.6 TRANSACTIONS WITH AFFILIATES. Since December 31, 2005, there have not
been any dividends or other distributions of assets by NextNet to Seller which
have been declared but not paid or distributed. Except as set forth in Schedule
3.6, neither Seller nor any officer, director or employee of NextNet or Seller
or, to Seller's Knowledge, any Affiliate of NextNet or Seller:
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(a) owns, directly or indirectly, any debt, equity or other interest
or investment in any Person which is a competitor, lessor, lessee, customer,
supplier or advertiser of NextNet;
(b) has any cause of action or other claim whatsoever against (in the
case of employees of NextNet or Seller, to the Knowledge of Seller) or owes any
amount to, or is owed any amount by, NextNet or its Subsidiaries, other than
salary, expense reimbursements and bonuses payable to any employee of NextNet or
its Subsidiaries;
(c) has any interest in or owns any property or right used in the
conduct of the Business, other than the assets of Seller used in the
administration of general overhead operations undertaken by Seller on behalf of
NextNet;
(d) is a party to any contract, lease, license, agreement, arrangement
or commitment with NextNet or one of its Subsidiaries or, except for such
contracts, leases, licenses, agreements, arrangements or commitments of Seller
used in the administration of general overhead operations undertaken by Seller
on behalf of NextNet, used in the Business; or
(e) receives from or furnishes to NextNet or one of its Subsidiaries
any goods, services, technology or intellectual or proprietary rights, other
than, with respect to employees of NextNet, in the ordinary course of their
employment, and, with respect to Seller, the administration of general overhead
operations undertaken by Seller on behalf of NextNet.
3.7 FINANCIAL STATEMENTS.
(a) The consolidated audited financial statements of Seller for the
two fiscal years ended December 31, 2004 and December 31, 2005 (the "SELLER
STATEMENTS"), and the audited financial statements of NextNet for the fiscal
year ended December 31, 2003, the unaudited statement of income of NextNet for
the fiscal year ended December 31, 2005, and the unaudited balance sheet of
NextNet as of March 31, 2006 (the "MOST RECENT BALANCE SHEET") and the related
financial statements for the period ended March 31, 2006 attached hereto as
Schedule 3.7(a) (collectively, the "NEXTNET STATEMENTS", and together with the
Seller Statements, the "FINANCIAL STATEMENTS") (a) are correct and complete in
all material respects as of the dates and for the periods indicated therein, (b)
are in accordance with the books of account and records of NextNet and its
Subsidiaries with respect to the NextNet Statements, or Seller with respect to
the Seller Statements, (c) present fairly in all material respects the financial
condition and results of operations of NextNet with respect to the NextNet
Statements, or Seller with respect to the Seller Statements, as of the dates and
for the periods indicated therein, (d) with respect to the NextNet Statements,
reflect appropriate accruals for vacation days and bonuses that have been earned
by employees of NextNet, but not yet paid, and any Liabilities relating to the
NextNet Plans, in each case in accordance with GAAP, and (e) were prepared in
accordance with GAAP, except that the unaudited financial statements of NextNet
as of and for the period ended March 31, 2006 do not contain all of the
footnotes required by GAAP and are subject to year-end adjustments consistent
with past practice. The books of account and other records (financial and
otherwise) of NextNet and the Business are in all material respects complete and
correct and are maintained in accordance with good business practices and are
accurately reflected on the NextNet Statements.
8
(b) Schedule 3.7(b) sets forth a true, correct and complete list of
all Indebtedness of NextNet and its Subsidiaries (by creditor and dollar amount)
as of the date hereof. Neither NextNet nor any of its Subsidiaries has any
Indebtedness for Borrowed Money as of the date hereof.
3.8 INTERIM CHANGE. Except as set forth in Schedule 3.8 or as contemplated
by the terms of the Commercial Agreements or this Agreement, since December 31,
2005, NextNet and its Subsidiaries have operated the Business only in the
ordinary course, consistent with past practices, and there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities (fixed or contingent) or business affairs of NextNet and its
Subsidiaries or the Business;
(b) any material adverse change in NextNet and its Subsidiaries'
relationships with licensors, licensees, suppliers, vendors, customers, lessors
or employees (in each case, as a group or class);
(c) any damage, destruction or loss to or of any of the assets of
NextNet and its Subsidiaries, whether or not covered by insurance, in excess of
$50,000 individually, or $150,000 in the aggregate;
(d) any forgiveness, cancellation or waiver of any material rights of
NextNet or one of its Subsidiaries;
(e) any disposition of assets of NextNet and its Subsidiaries, other
than sales of inventory in the ordinary course of business and other than
dispositions of obsolete assets, worn-out assets or assets no longer used or
useful to NextNet and its Subsidiaries in an aggregate amount not to exceed
$100,000;
(f) any increase in the compensation or benefits payable or to become
payable by Seller or NextNet to their employees, consultants or independent
contractors engaged in the Business (other than for general increases applicable
to employees in an amount consistent with past practice or pursuant to the terms
of the agreements, policies or procedures in effect as of the date of the Most
Recent Balance Sheet);
(g) any declaration, authorization or payment of dividends or
distributions on or in respect of NextNet and its Subsidiaries Common Stock or
any redemption, retirement, purchase or other acquisition by NextNet and its
Subsidiaries of shares of NextNet and its Subsidiaries Common Stock;
(h) any change in the accounting methods, principles or practices
followed by NextNet and its Subsidiaries, whether for general financial or Tax
purposes, or any change in depreciation or amortization policies or rates
adopted therein, other than changes required by changes in GAAP;
(i) any issuance by NextNet and its Subsidiaries of any shares of its
capital stock;
9
(j) any grant by NextNet and its Subsidiaries of any option, warrant
or other right to purchase shares of its capital stock;
(k) any material change in credit practices as to customers of NextNet
and its Subsidiaries, individually or in the aggregate;
(l) any incurrence of any Encumbrance on any assets of NextNet or its
Subsidiaries, other than a purchase money security interest granted in
connection with the purchase of goods pursuant to the terms of a Material
Contract;
(m) any sale, assignment, transfer, license or other disposition of
any Patent Right, Trademark, Copyright, Propriety Information and Technology or
other intangible asset other than in the ordinary course of business, consistent
with past practices; or
(n) any agreement, commitment or understanding entered into by Seller,
NextNet or any of its Subsidiaries to do any of the foregoing described in
clauses (a) through (m) above.
3.9 ACCOUNTS RECEIVABLE AND BANK ACCOUNTS. Schedule 3.9 contains an
accurate, correct and complete aging of all outstanding accounts receivable of
NextNet and its Subsidiaries (the "ACCOUNTS RECEIVABLE") as of June 15, 2006.
All outstanding Accounts Receivable are and (if not collected prior to the
Closing Date) will be on the Closing Date: (a) due and valid claims against
account debtors for goods or services delivered or rendered and (b) to Seller's
Knowledge, subject to no defenses, offsets or counterclaims, each except as
reserved against on the Most Recent Balance Sheet. Neither Seller nor NextNet
has received any written notice that any Accounts Receivable is not collectible
in the ordinary course of business consistent with past practice. All Accounts
Receivable arose in the ordinary course of business. No Accounts Receivable are
subject to prior assignment or Encumbrance. To Seller's Knowledge, NextNet has
no liability for any refunds, liability allowances or returns in respect of
products manufactured, processed, distributed or sold by or for the account of
NextNet on or prior to the Closing Date that are not adequately reserved for on
the Financial Statements. Schedule 3.9 contains an accurate, correct and
complete list of the names and addresses of all banks and financial institutions
in which NextNet has an account, deposit, safe-deposit box, line of credit or
other loan facility, or lock box or other arrangement for the collection of
Accounts Receivable, with the names of all Persons authorized to draw or borrow
thereon or to obtain access thereto.
3.10 INSURANCE. NextNet is insured by insurers of recognized financial
responsibility against such risks, casualties and contingencies in such amounts
as Seller believes to be prudent for the conduct of the Business as currently
conducted. All such policies are in full force and effect. There are no pending
or asserted claims by NextNet and its Subsidiaries against any Insurance as to
which any insurer has denied liability or reserved rights, and there are no
claims under any Insurance that have been disallowed or improperly filed since
the Seller Acquisition Date. Schedule 3.10 sets forth the claims experience
since the Seller Acquisition Date and the interim period through the date hereof
with respect to NextNet and its Subsidiaries (both insured and self-insured). No
notice of cancellation or nonrenewal with respect to, or material increase of
premium for, any Insurance has been received by NextNet and its Subsidiaries
since the Seller Acquisition Date.
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3.11 TITLE TO ASSETS. Each of NextNet and its Subsidiaries is the sole and
exclusive legal and equitable owner of all right, title and interest in and has
good and marketable title to all of the assets it purports to own. Except as set
forth in Schedule 3.11 and other than Permitted Encumbrances, none of the assets
which NextNet or one of its Subsidiaries purports to own are subject to (a) any
title defect or objection; (b) any contract of lease, license or sale; (c) any
Encumbrance of any kind or character, direct or indirect, whether accrued,
absolute, contingent or otherwise, except those disclosed in the Financial
Statements; (d) any royalty or commission arrangement; or (e) any covenant or
restriction. Schedule 3.11 includes a complete and accurate list of all third
party tangible assets used by NextNet and its Subsidiaries in connection with
the Business. The tangible assets owned by NextNet and its Subsidiaries and
third party tangible assets set forth in Schedule 3.11 are in good operating
condition and repair (reasonable wear and tear excepted), are not obsolete, and
are suitable for the purposes for which they are presently being used, and are
adequate to meet all present requirements of the Business as presently
conducted. The assets owned by NextNet and its Subsidiaries and third party
assets set forth in Schedule 3.11 and Schedule 3.23(e)(i) represent all assets
used in and necessary to conduct the Business as currently conducted, other than
the assets of Seller used in the administration of general overhead operations
undertaken by Seller on behalf of NextNet.
3.12 REAL PROPERTY.
(a) NextNet has not owned and does not own any real property.
(b) Schedule 3.12 sets forth the address of each parcel of real
property leased by NextNet, and a true and complete list of all leases to which
NextNet or one of its Subsidiaries is a party for each such parcel of leased
real property (the "LEASES"). Seller has made available to Purchaser a true and
complete copy of each such Lease. With respect to each such Lease: (i) the Lease
is legal, valid, binding, enforceable in accordance with its terms, and in full
force and effect; (ii) neither NextNet or any Subsidiary, nor, to the Knowledge
of Seller, any other party, is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by
NextNet or any Subsidiary, or permit termination, modification, or acceleration,
under the Lease; (iii) NextNet has not, and has not received written notice that
any other party, has repudiated any provision of the Lease; and (iv) except as
set forth in Schedule 3.12, each such Lease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms immediately
following the Closing Date.
(c) The leased real property identified in Schedule 3.12 comprises all
of the real property occupied and used by NextNet and its Subsidiaries in the
conduct of the Business, and neither NextNet nor any of its Subsidiaries is a
party to any agreement or option to purchase any real property or any fee
interest therein.
(d) To the Knowledge of Seller, all buildings, structures, fixtures,
building systems and equipment, and all components thereof (including the roof,
foundation and structural elements), included in the leased real property (the
"IMPROVEMENTS") are in good condition and repair (normal wear and tear excepted)
and sufficient for the operation of the Business as currently conducted by
NextNet and its Subsidiaries. To Seller's Knowledge, there are no facts or
conditions affecting any of the Improvements which would, individually or in the
aggregate, interfere in any material respect with the use or occupancy of the
Improvements or any portion
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thereof in the operation of the Business as currently conducted by NextNet and
its Subsidiaries thereon.
(e) Subject to the respective terms and conditions in the Leases,
NextNet or one of its Subsidiaries has a valid leasehold interest in the leased
real property identified in Schedule 3.12, free and clear of all Encumbrances
other than Permitted Encumbrances. To the Knowledge of Seller, there are no
pending or threatened condemnation, eminent domain or similar proceedings, or
litigation or other proceedings affecting the leased real property identified in
Schedule 3.12 or any portion or portions thereof. To the Knowledge of Seller,
there are no pending or threatened requests, applications or proceedings to
alter or restrict any zoning or other use restrictions applicable to the leased
real property identified in Schedule 3.12 or the Improvements.
3.13 PERSONAL PROPERTY LEASES. Schedule 3.13 sets forth an accurate,
correct and complete list of all leases or bailments of tangible personal
property which (a) are used in the Business as currently conducted by NextNet
and its Subsidiaries and (b) provide for payments by NextNet or one of its
Subsidiaries in excess of $1,500 per month (the "PERSONAL PROPERTY LEASES").
NextNet or one of its Subsidiaries has been in peaceable possession of the
property covered by each Personal Property Lease since the commencement thereof.
Seller has made available to Purchaser an accurate, correct and complete copy of
each Personal Property Lease.
3.14 CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule 3.14, all
contracts or agreements with customers, licensors, licensees and suppliers of
NextNet and its Subsidiaries were entered into by or on behalf of NextNet or one
of its Subsidiaries in the ordinary course of business and on an arms-length
basis with the other party thereto. Schedule 3.14 sets forth an accurate,
correct and complete list of the 10 largest customers and 10 largest suppliers
of NextNet, determined on the basis of revenues from items sold or licensed
(with respect to customers) or costs of items purchased or licensed (with
respect to suppliers) for each of the two (2) fiscal years ended December 31,
2005. To the Knowledge of Seller, no customer, licensee, supplier or licensor
will cease to do business or materially reduce their business with NextNet after
or as a result of the consummation of the transactions contemplated hereby, and,
to the Knowledge of Seller, no customer, licensee, supplier or licensor is
threatened with bankruptcy or insolvency. To the Knowledge of Seller, no fact,
condition or event exists which would adversely affect NextNet's relationship
with any customer, licensee, supplier or licensor.
3.15 LICENSES AND PERMITS. Schedule 3.15 contains an accurate, correct and
complete list of each license, permit, certificate, approval, exemption,
franchise, registration, variance, accreditation or authorization currently
issued to NextNet or one of its Subsidiaries by a Governmental Authority or
that, to the Knowledge of Seller, are known by Seller to be required in the
future in order to conduct the Business as presently conducted by NextNet and
its Subsidiaries (collectively, the "LICENSES AND PERMITS"). The Licenses and
Permits are valid and in full force and effect and there are no pending or, to
the Knowledge of Seller, threatened proceedings which could result in the
termination, revocation, limitation or impairment of any License or Permit.
NextNet or one of its Subsidiaries has all Licenses and Permits as are necessary
in order to enable it to own and conduct the Business as it is presently
conducted and to occupy and lease its real property, and no Third Party has
asserted in writing that others are required. Since the Seller Acquisition Date,
neither Seller nor NextNet has received written
12
notice of any violations from any Governmental Authority in respect of any
Licenses and Permits.
3.16 MATERIAL CONTRACTS.
(a) Schedule 3.16(a) sets forth an accurate, correct and complete list
of all instruments, commitments, agreements, arrangements and understandings
(other than this Agreement or any of the Ancillary Agreements) to which NextNet
or one of its Subsidiaries is a party or bound, or by which any of NextNet's or
one of its Subsidiaries' assets are subject or bound, or pursuant to which
NextNet or one of its Subsidiaries is a specifically named third-party
beneficiary, meeting any of the descriptions set forth below:
(i) any contract with any current customer of NextNet and its
Subsidiaries with respect to which NextNet and its Subsidiaries recognized
cumulative revenue during the twelve-month period ended May 31, 2006 in excess
of $500,000 (each such customer, a "MAJOR CUSTOMER," and each contract
referenced in this Section 3.16(a)(i), a "MAJOR CUSTOMER CONTRACT");
(ii) any contract with any current customer of NextNet and its
Subsidiaries that contains any (A) penalties for late deliveries or breach of
other performance obligations, or (B) penalties associated with repairs, returns
or quality performance;
(iii) any contract with any (A) direct supplier of goods
(including software) and/or services with respect to which NextNet and its
Subsidiaries made cumulative expenditures during the twelve-month period ended
May 31, 2006 greater than $250,000, or (B) indirect supplier of goods (including
software) and/or services with respect to which NextNet and its Subsidiaries
made cumulative expenditures during the twelve-month period ended May 31, 2006
greater than $250,000 (each such supplier, a "MAJOR SUPPLIER");
(iv) (A) any contract with any sole source suppliers, or (B)
original equipment manufacturer ("OEM") contracts, electronic manufacturing
services ("EMS") contracts, original design and manufacturing supply ("ODM")
contracts, third party logistics ("TML") contracts, transportation contracts,
and contract manufacturing contracts, or any other contract that licenses or
otherwise authorizes any third party to design, manufacture, reproduce, develop
or modify the products, services or technology of NextNet and its Subsidiaries;
(v) contracts (A) that contain any "take or pay" or volume
commitment provisions, or (B) that contain provisions granting any exclusive
rights, most favored customer pricing, rights of first refusal, rights of first
negotiation or similar rights to any Person;
(vi) any contract limiting in any respect the right of NextNet or
any of its Subsidiaries to engage in any line of business, compete with any
Person in any line of business or to compete with any party or the manner or
locations in which any of them may engage, or that otherwise prohibits or limits
the right of NextNet or any of its Subsidiaries to make, sell or distribute any
products or services;
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(vii) any contract with any Affiliate of NextNet (other than its
Subsidiaries);
(viii) any purchase order, agreement or commitment obligating
NextNet or its Subsidiaries to sell, license or deliver any product, technology
or service at a price which does not cover the expected cost (including labor,
materials and production overhead) thereof to NextNet and its Subsidiaries;
(ix) any evidence of Indebtedness;
(x) any joint venture, partnership, cooperative arrangement or
any other agreement involving a sharing of profits or development costs;
(xi) any contract or arrangement pursuant to which NextNet or one
of its Subsidiaries sells or licenses any product outside of the United States;
(xii) any contract with respect to the discharge, storage or
removal of effluent, waste or pollutants;
(xiii) any distribution or royalty agreement;
(xiv) any power of attorney, proxy or similar instrument
currently in effect;
(xv) any contract for the purchase, sale or license of any assets
of NextNet (whether or not completed) other than in the ordinary course of
business or any contract granting an option or preferential rights to purchase,
sell or license any assets of NextNet other than in the ordinary course of
business;
(xvi) any contract whose primary purpose is to indemnify any
party or to share in or contribute to the liability of any party;
(xvii) any contract relating to the acquisition by NextNet or one
of its Subsidiaries of a business or the equity interests of any other Person
(whether or not completed);
(xviii) any other contract, commitment, agreement, arrangement or
understanding (other than those excluded by an express exception from the
descriptions set forth in the subsections above) which provides for future
payments or performance by either party thereto having an aggregate value of
$100,000 or more, or with respect to contracts for performance for more than one
year, $100,000 or more per year (unless terminable without payment or penalty on
thirty (30) days (or less) notice);
(xix) any contract with respect to information technology
services, including without limitation, hosting services, application service
provider, disaster recovery, storage and/or outsourcing arrangements;
14
(xx) other than any contract otherwise disclosed pursuant to this
Section 3.16(a), any other contract that is otherwise material to NextNet and
its Subsidiaries or the Business; and
(xxi) any contract currently being negotiated of a type that if
entered into would be a Material Contract.
The foregoing, together with the Leases, the agreements set forth in Schedule
3.23(e) and the Personal Property Leases are collectively referred to as the
"MATERIAL CONTRACTS."
(b) Accurate, correct and complete copies of each Material Contract
have been made available to Purchaser. Each Material Contract is in full force
and effect and is valid, binding and enforceable in accordance with its terms.
Each of NextNet and its Subsidiaries, and to the Knowledge of Seller, each of
the other parties thereto, has complied with all commitments and obligations on
its part to be performed or observed under each Material Contract to which it is
a party. Except as set forth in Schedule 3.16(b), no event has occurred which is
or, after the giving of notice or passage of time, or both, would constitute a
default under or a breach of any Material Contract by NextNet or one of its
Subsidiaries, or, to the Knowledge of Seller, by any other party. Neither Seller
nor NextNet has received or given notice of an intention to cancel or terminate
a Material Contract or to exercise or not exercise options or rights under a
Material Contract. Neither Seller nor NextNet has received any written notice of
a default, offset or counterclaim under any Material Contract, or any other
communication calling upon NextNet or one of its Subsidiaries to comply with any
provision of any Material Contract or ascertaining noncompliance. There is no
Encumbrance of any kind on NextNet's interest under any Material Contract.
(c) Neither NextNet nor any of its Subsidiaries is a party to: (A)
contracts with any Governmental Authority (the "DIRECT CONTRACTS"); (B)
contracts with a non-Governmental Authority in support of a contract with a
Governmental Authority (the "SUBCONTRACTS"); (C) Direct Contracts or
Subcontracts in which NextNet was subject to the requirements of the Truth in
Negotiations Act ("TINA"), 10 U.S.C. Section 2306(f), or claimed an exemption
from TINA based upon any reason other than adequate price competition; (D)
Direct Contracts or Subcontracts in which NextNet or one of its Subsidiaries
applied for payments based upon representations of cost incurred; or (E) Direct
Contracts or Subcontracts in which NextNet or one of its Subsidiaries agreed to
provide "most favored" or other preferential treatment with regard to prices.
(d) Except as set forth in Schedule 3.16(d), during the last twelve
(12) months, to the Knowledge of Seller, none of the Major Customers has
terminated or failed to renew any of its Major Customer Contracts and neither
NextNet nor any of its Subsidiaries has received any written notice of
termination from any of the Major Customers.
3.17 TAX MATTERS.
(a) Except as set forth in Schedule 3.17(a), (i) each of the Acquired
Companies and any Affiliated Group has complied in all material respects with
all laws relating to Taxes and filed or caused to be filed in a timely manner
(within any applicable extension
15
periods) for all years and all periods (and portions thereof) all Tax Returns or
estimates or extensions, all prepared in material compliance with applicable
Laws, required to be filed by the Code or by applicable state, local or
non-United States Tax Laws; (ii) all Taxes owed by any of the Acquired Companies
or (to the extent relevant to the Acquired Companies) any Affiliated Group
(whether or not shown on any Tax Return) have been timely paid in full; (iii)
all such Tax Returns are true, correct and complete in all material respects;
(iv) there are no proposed adjustments or Actions pending or, to the Knowledge
of Seller, threatened for the assessment or collection of Taxes against any of
the Acquired Companies; (v) to the Knowledge of Seller, none of the Acquired
Companies have been at any time a member of any partnership or joint venture or
other arrangement that could be classified as a partnership for federal income
Tax purposes for any period for which the statute of limitations for any Tax has
not expired; (vi) to the Knowledge of Seller, there are no proposed
reassessments by Tax authorities of any real property owned or leased by the
Acquired Companies that could reasonably be expected to increase any Tax to
which any Acquired Company would be subject; (vii) no Acquired Company is a
party to, bound by, or has any obligation under any Tax sharing or allocation
agreement or similar agreement; (viii) no Acquired Company has any liability for
the Taxes of any other Person under Regulations section 1.1502-6 (or any similar
provision of state, local or non-United States Law), as a transferee or
successor, under a contract or otherwise; and (ix) none of the Acquired
Companies has been a member of any consolidated, combined or unitary group for
federal, state, local or foreign Tax purposes (other than the group for which
NextNet was the parent prior to the Seller Acquisition Date and the group for
which Seller is the parent).
(b) Except as set forth in Schedule 3.17(b), (i) none of the Acquired
Companies has made any consent under former Section 341 of the Code and none of
the Acquired Companies is a corporation described in former Section 341(b) of
the Code; (ii) none of the Acquired Companies (A) is or was a "controlled
foreign corporation" or a "United States Shareholder" as defined in the Code,
(B) has an unrecaptured overall foreign loss within the meaning of Section
904(f) of the Code, (C) files, has filed or is required to file Tax Returns in
jurisdictions outside the United States and (D) currently has (or ever has had)
a permanent establishment in a jurisdiction outside of the United States; (iii)
the Acquired Companies do not have income reportable for a period ending after
the Closing Date that is attributable to an activity or a transaction (e.g., an
installment sale) occurring in, or a change in accounting method made for, a
period ending on or prior to the Closing Date that resulted in a deferred
reporting of income from such transaction or from such change in accounting
method; (iv) neither the Internal Revenue Service ("IRS") nor any other agency
has proposed any adjustment or change in accounting methods that affects any
taxable year ending after the Closing Date; and (v) the Acquired Companies do
not have any application pending with any Taxing authority requesting permission
for any changes in accounting methods that relate to the Business or their
operations.
(c) Seller and the Acquired Companies, as applicable, have (i)
withheld all required amounts from the employees, agents, and contractors of the
Acquired Companies and remitted such amounts to the proper agencies or other
Persons; (ii) paid when due all employer contributions and premiums; and (iii)
filed when due all federal, state, local and foreign returns and reports with
respect to employee income Tax withholding, social security Taxes, unemployment
Taxes and premiums, all in compliance with the Code as in effect for the
applicable year and other applicable Laws.
16
(d) Except as set forth in Schedule 3.17(d), the income Tax Returns
filed by the Acquired Companies or (to the extent relevant to the Acquired
Companies) any Affiliated Group have never been examined by the IRS or other
applicable taxing authority. No federal, state, local or non-United States Tax
audits or other administrative proceedings, discussions or court proceedings are
presently pending (or threatened) with regard to any Taxes or Tax Returns of the
Acquired Companies or (to the extent relevant to the Acquired Companies) any
Affiliated Group.
(e) None of the Acquired Companies has entered into any contract,
agreement, plan or arrangement covering any employee or former employee or
independent contractor that, individually or collectively, could give rise to
the payment by an Acquired Company of any amount that would not be deductible by
reason of Code section 280G or would give rise to a payment that could subject
the recipient to excise tax imposed by Code section 4999.
(f) No asset of any Acquired Company is tax exempt use property under
Code Section 168(h).
(g) No portion of the cost of any asset of any Acquired Company has
been financed directly or indirectly from the proceeds of any tax-exempt state
or local government obligation described in Code section 103(a).
(h) None of the assets of any Acquired Company is property that such
Acquired Company is required to treat as being owned by any other Person
pursuant to the safe harbor lease provision of former Code section 168(f)(8).
(i) None of the Acquired Companies has (i) been a party to a
transaction that is reported to qualify as a reorganization within the meaning
of Code section 368, (ii) distributed an interest in a corporation in a
transaction that is reported to qualify under Code section 355, or (iii) been
distributed in a transaction that is reported to qualify under Code section 355.
Each of the Acquired Companies are, and have at all times been, in compliance
with the provisions of Code sections 6011, 6111 and 6112 relating to tax shelter
disclosure, registration, list maintenance and record keeping requirements. None
of the Acquired Companies has participated in a transaction (x) the "significant
purpose of which is the avoidance or evasion of United States Federal income
tax" within the meaning of Code section 6662(d)(2) and the Regulations
promulgated thereunder; or (y) that constitutes a "reportable transaction"
within the meaning of Regulations section 1.6011-4.
(j) None of the Shares constitute a United States real property
interest within the meaning of Code section 897(c). There are no outstanding
agreements or waivers extending or having the effect of extending the statutory
period of limitation for assessment, reassessment or collection of Tax
applicable to any Tax Returns required to be filed by the Acquired Companies or
(to the extent relevant to the Acquired Companies) any Affiliated Group. Except
as set forth on Schedule 3.17(j), none of the Acquired Companies or (to the
extent relevant to the Acquired Companies) any Affiliated Group has requested
any extension of time within which to file any Tax Return, which return has not
yet been filed. No power of attorney granted by any Acquired Company with
respect to Taxes is currently in force.
17
(k) Seller has made available to Purchaser correct and complete copies
of all federal, state, local and foreign income and franchise Tax Returns of the
Acquired Companies for periods through December 31, 2004, IRS revenue agent
reports and similar reports issued by any state, local or non-United States Tax
authority for such Tax Return, and statements of Tax deficiencies assessed
against or agreed to by any Acquired Company.
(l) Except as set forth in Schedule 3.17(l), no claim has been made in
the last five (5) years that any Acquired Company has not properly paid Taxes or
filed Tax Returns in a jurisdiction in which such Acquired Company does not file
a Tax Return.
(m) No debt of any Acquired Company is "corporate acquisition
indebtedness" within the meaning of Code section 279 or a "applicable high yield
debt obligation" within the meaning of Code section 163(e)(5). No interest
accrued or paid by any Acquired Company (whether as stated interest, imputed
interest, or original issue discount) on any debt obligation of such Acquired
Company is not deductible for federal, state, or local income tax purposes).
(n) None of the Acquired Companies has any private letter ruling,
technical advice, application for a change of any method of accounting, or other
similar requests presently pending with any taxing authority.
(o) Except as set forth in Schedule 3.17(o), each of the Acquired
Company's "nonqualified deferred compensation plans" within the meaning of Code
section 409A (and associated Treasury Department guidance) comply with Code
section 409A (and associated Treasury Department guidance), each such
"nonqualified deferred compensation plan" has been operated in compliance with
Code section 409A (and associated Treasury Department guidance), and no such
"nonqualified deferred compensation plan" has been materially modified within
the meaning of Code section 409A (and associated Treasury Department guidance).
(p) None of the Acquired Companies is required to include an item of
income, or exclude an item of deduction, for any period after the Closing Date
as a result of (i) an installment sale transaction occurring on or before the
Closing governed by Code section 453 (or any similar provision of foreign,
state, or local law); (ii) a transaction occurring on or before the Closing
reported as an open transaction for federal income tax purposes (or any similar
doctrine for foreign, state or local tax purposes); (iii) prepaid amounts
received on or prior to the Closing Date; (iv) a change in method of accounting
requested or occurring on or prior to the Closing Date, or (v) an agreement
entered into with any Taxing authority on or prior to the Closing Date. None of
the Acquired Companies has used the cash method of accounting for income Tax
purposes at any time in the last five years.
(q) Except as set forth in Schedule 3.17(q), none of the Acquired
Companies has (i) any "excess loss accounts" with respect to any Subsidiary or
(ii) any items of income, gain, loss, expense, or deduction deferred under the
intercompany transaction rules of Treasury Regulation section 1.1502-13 (or
similar provision of foreign, state, or local laws).
3.18 PRODUCT WARRANTY. All products developed, licensed, distributed,
shipped or sold by NextNet and its Subsidiaries and any services rendered by
them since the Seller Acquisition Date, and to Seller's Knowledge with respect
to the period prior to the Seller
18
Acquisition Date, have been in conformity with all applicable contractual
commitments and all expressed warranties, except to the extent the failure to so
comply would not have a Material Adverse Effect. To the Knowledge of Seller, no
liability exists or will arise for repair, replacement or damage in connection
with such sales or deliveries, in excess of the reserve therefor reflected in
the Financial Statements. Schedule 3.18 sets forth an accurate, correct and
complete statement of all written and, to the Knowledge of Seller, oral,
warranties, warranty policies, service and maintenance agreements of NextNet and
its Subsidiaries covering any of the products or services sold, licensed or
provided since the Seller Acquisition Date. No products manufactured, licensed,
processed, distributed, sold, delivered or leased by NextNet or one of its
Subsidiaries are now subject to any guarantee, warranty, claim for product
liability, or patent or other indemnity, other than those set forth in Schedule
3.18. The product warranty and return experience for the period commencing on
the Seller Acquisition Date and ending on May 31, 2006 is set forth in Schedule
3.18. The product warranty reserves on the Financial Statements were prepared in
accordance with GAAP and are adequate in light of the circumstances of which
Seller is now aware with respect to the period commencing on the Seller
Acquisition Date.
3.19 PRODUCT LIABILITY. Schedule 3.19 sets forth an accurate and complete
list of all existing claims, duties, responsibilities, liabilities or
obligations arising from or alleged to arise from any injury to person or
property or economic damage as a result of the ownership, license, possession or
use of any product licensed, marketed, distributed, shipped or sold prior to the
date hereof for which NextNet or Seller has received written notice. To Seller's
Knowledge, all such claims are fully covered by product liability insurance or
otherwise provided for. Except as set forth in Schedule 3.19 and other than
claims adequately covered by Seller's or NextNet's product liability insurance,
to the Knowledge of Seller, neither NextNet nor any of its Subsidiaries will be
subject to any claim, expense, liability or obligation arising from any injury
to person or property or economic damage as a result of ownership, license,
possession or use of any product licensed, marketed, distributed, shipped or
sold prior to the Closing Date. There have been no recalls, and none are pending
or, to Seller's Knowledge, threatened and no report has been filed by NextNet or
is required to have been filed by NextNet with respect to any products of
NextNet and its Subsidiaries under any Law. Except as set forth on Schedule
3.19, there are no, and within the last 12 months prior to the date of this
Agreement there have not been any, product liability Actions filed or, to
Seller's Knowledge, threatened against or involving NextNet or any of their
Subsidiaries or any of their products, and no such Actions have been settled,
adjudicated or otherwise disposed by NextNet within the last 12 months prior to
the date of this Agreement.
3.20 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.20, neither
NextNet nor any of its Subsidiaries is engaged in or a party to or, to the
Knowledge of Seller, threatened with any Action. Neither NextNet nor any of its
Subsidiaries has received written notice of any investigation threatened or
contemplated by any Governmental Authority, including those involving the safety
of products, the working conditions of employees, the employment practices or
policies of NextNet and its Subsidiaries, or compliance with environmental
regulations, that has not been fully resolved or dismissed. Except as set forth
in Schedule 3.20, neither NextNet, its Subsidiaries nor any of its assets is
subject to any judgment, order, writ, injunction, stipulation or decree of any
court or any Governmental Authority or any arbitrator. There is no outstanding
order, writ, injunction, judgment or decree by any court or any Governmental
Authority or any Action pending or, to the Knowledge of Seller, threatened
against NextNet relating to the
19
transactions contemplated hereby or which seeks to prevent, restrict or delay
the consummation of the transactions contemplated hereby. To the Knowledge of
Seller, none of NextNet's current executive officers or directors has ever been
a defendant or other obligor under any judgment, injunction or other order or
ruling of or settlement approved by any Governmental Authority relating to
NextNet or the Business or any fraud, felony or similar offense.
3.21 ENVIRONMENTAL MATTERS.
(a) Since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, NextNet and its
Subsidiaries have materially complied with and are in material compliance with
all applicable Environmental Laws. NextNet and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of Seller, threatened proceedings
under any Environmental Laws, and no material expenditures are or will be
required by NextNet or its Subsidiaries in order to comply with any existing
Environmental Law.
(b) To Seller's Knowledge, NextNet and its Subsidiaries have never
sent, arranged for disposal or treatment, arranged with a transporter for
transport for disposal or treatment, transported, or accepted for transport any
Hazardous Substance, Hazardous Materials, Hazardous Waste, Solid Waste or
petroleum, including crude oil or any fraction thereof, to a facility, site or
location, which, pursuant to CERCLA or any similar state or local Law, (i) has
been placed, or is proposed to be placed, on the National Priorities List or its
state equivalent or (ii) is subject to a claim, administrative order or other
request to effect Removal or take Remedial Action.
(c) NextNet and its Subsidiaries do not store, generate or produce any
Hazardous Substance or Hazardous Waste in quantities or in a manner which
violates any Environmental Law.
(d) There are no environmental reports, investigations or audits
possessed or controlled by NextNet (whether conducted by or on behalf of NextNet
or a Third Party, and whether done at the initiative of NextNet or directed by a
Governmental Authority or other Third Party) relating to premises currently or
previously owned, leased or operated by NextNet since the Seller Acquisition
Date, and to Seller's Knowledge with respect to the period prior to the Seller
Acquisition Date.
(e) Except as set forth in Schedule 3.21, neither Seller nor NextNet
has received written notice regarding, nor, to Seller's Knowledge, has there
been, any contamination of groundwaters, surface waters, soils or sediments as a
result of the manufacture, storage, processing, loss, leak, escape, spillage,
disposal or other handling or disposition by or on behalf of NextNet of any
Hazardous Substance on or prior to the Closing Date in violation of
Environmental Laws. As used in this Agreement, each of the terms "Removal,"
"Remedial Action," "Hazardous Substance," "Hazardous Materials," "National
Priorities List," "Hazardous Waste" and "Solid Waste" has the same meaning as
such term is given in Environmental Laws.
(f) To the Knowledge of Seller, there are no facts or circumstances
which are reasonably expected to prevent or delay the ability of NextNet or any
of its Subsidiaries to place
20
in the EU market products that comply in all material respects with the
Restrictions on the Use of Certain Hazardous Substances in Electrical and
Electronic Equipment (2002/95/EC) Directive after June 30, 2006 and the Waste
Electrical and Electronic Equipment (2002/96/EC) Directive, if and to the extent
the legislation which is enacted and implemented by applicable European Union
member nations is not materially different from such Directives in any respect.
3.22 COMPLIANCE WITH LAW. Since the Seller Acquisition Date, and to
Seller's Knowledge with respect to the period prior to the Seller Acquisition
Date, NextNet and its Subsidiaries have complied and are in compliance with, in
all material respects, all applicable Laws applicable to the Business or
operations. No written notice from any Governmental Authority or other Person of
any violation of any Law has been received by NextNet, and neither Seller nor
NextNet knows of any reasonable basis therefor.
3.23 INTELLECTUAL PROPERTY.
(a) Schedule 3.23(a) contains a complete list and description of all
registered Owned IP or applications pending therefor as of the date hereof
(collectively the "REGISTERED INTELLECTUAL PROPERTY"). All necessary
registrations, maintenance or annuity, and renewal, maintenance or other fees in
connection with such Registered Intellectual Property have been made for each
item of Registered Intellectual Property; all necessary documents and
certificates in connection with such Registered Intellectual Property have been
filed with and all relevant fees have been paid to the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property; and all patent, trademark, service mark and
copyright applications set forth in Schedule 3.23(a) have been duly filed. All
payments due and payable in respect of such listed registrations, applications
and renewals have been paid as of the date hereof. There are no outstanding
deadlines of any patent, copyright or trademark office (or any analogous office
or registry anywhere in the world) in relation to such listed registrations or
applications that will expire within three months of the date hereof. No
settlements, consents, covenants not to sue or nonassertion assurances or
releases have been entered into by NextNet or one of its Subsidiaries or to
which NextNet or one of its Subsidiaries is bound that adversely affect their
right to own or use any Owned IP.
(b) Schedule 3.23(b) contains a list of Owned IP, other than
Registered Intellectual Property, that is significant to the conduct of the
Business as currently conducted by NextNet, consisting of: (i) disclosures on
inventions; and (ii) a description of trade secrets, documented know-how,
proprietary processes, and other documented proprietary information used in the
conduct of the Business as currently conducted by NextNet.
(c) NextNet or one of its Subsidiaries owns all right, title and
interest in all Owned IP free and clear of any Encumbrance except as set forth
on Schedule 3.23(c) and the Permitted Encumbrances, including ownership of
pending and accrued causes of action for patent, trademark, or copyright
infringement, misappropriation, and unfair business practices and has the sole
and exclusive right to bring actions for infringement and misappropriation of
such Owned IP.
21
(d) Each item of IP Assets owned or used by NextNet immediately prior
to the Closing will be owned or available for use, respectively, by NextNet
immediately subsequent to the Closing on identical terms and conditions as owned
or used by NextNet immediately prior to the Closing.
(e) Schedule 3.23(e) contains a list of all agreements to which the IP
Assets are bound and pursuant to which:
(i) NextNet is licensed, authorized or otherwise permitted to
use, distribute or otherwise exploit any Third Party Intellectual Property
Rights, including any agreement requiring royalties therefor (so called
"in-bound" licenses); or
(ii) NextNet has licensed, authorized or otherwise permitted any
Third Party to use, distribute or otherwise exploit Owned IP (so called
"out-bound" licenses).
(f) NextNet and its Subsidiaries have a policy requiring each employee
or contractor to execute confidentiality and invention assignment agreements.
Since the Seller Acquisition Date, and to the Knowledge of Seller with respect
to the period prior to the Seller Acquisition Date, all employees, agents,
consultants, contractors or other persons who have contributed to or
participated in the creation or development (on behalf of NextNet) of any Owned
IP included in the IP Assets have executed a confidentiality and invention
assignment agreement with NextNet and also either: (i) are a party to a
"work-for-hire" agreement under which NextNet is deemed to be the original
owner/author of the copyrights therein; (ii) are or were employees of NextNet
and created or developed such item within the scope of their employment, or
(iii) have executed an assignment or an agreement to assign in favor of NextNet
of all of their right, title and interest in their Intellectual Property Rights
in such item. To the Knowledge of Seller, no Acquired Employee has any
obligations to any prior employer that would violate or conflict with his or her
obligations to NextNet under such confidentiality and assignment agreements. To
Seller's Knowledge, no employee or contractor of NextNet or any of its
Subsidiaries has entered into any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that
restricts or limits in any way the scope of the Owned IP or requires the
employee to transfer, assign or disclose information concerning his work to
anyone other than NextNet.
(g) To the Knowledge of Seller, neither Seller nor NextNet has
disclosed to a Third Party any Proprietary Information and Technology which is
Owned IP except pursuant to binding agreements containing confidentiality
provisions reasonably protecting such Proprietary Information and Technology. To
the Knowledge of Seller, there are no violations of its trade secret rights with
respect to Proprietary Information and Technology included in Owned IP.
(h) NextNet is in actual and sole possession of the complete source
code of the NextNet Software. To the Knowledge of Seller, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, result in the disclosure or
delivery to any Third Party of the complete source code for any NextNet
Software. There are no escrow agreements with third party escrow agents or with
Third Parties that would release the source code to such Third Party under
certain circumstances or conditions.
22
(i) Except as set forth in Schedule 3.23(i), to the Knowledge of
Seller, the NextNet Software does not contain any "back door," "time bomb,"
"Trojan horse," "worm," "drop dead device," "virus" (as these terms are commonly
used in the computer software industry), or other software routines or hardware
components intentionally designed to permit unauthorized access, to disable or
erase software, hardware, or data, or to perform any other similar type of
unauthorized activities.
(j) To the Knowledge of Seller, there are no restrictions on the
ability of NextNet to use or otherwise exploit the NextNet Software as used or
exploited in the conduct of the Business as currently conducted by NextNet, and
such use or exploitation of the NextNet Software does not and will not obligate
NextNet to pay any royalty, fee, or other compensation to any Person; and
neither NextNet nor its Affiliates have received any notice or have any
Knowledge of any complaint, assertion, threat, or allegation inconsistent with
the preceding statements in this paragraph.
(k) NextNet has not incorporated into the NextNet Software any
software code licensed under the Gnu General Public License (GPL) or the Gnu
Lesser General Public License (LGPL) or any other such open code or freeware
type license in a manner that would require NextNet to make the NextNet Software
available to others in source code form.
(l) Except as set forth in Schedule 3.23(l), no claims of any kind
have been made by NextNet against any Third Party that, and Seller has no
Knowledge that, any Third Party infringes, or has previously infringed,
misappropriates, or has previously misappropriated, any Owned IP.
(m) Except as set forth in Schedule 3.23(m), no claims of any kind
have been made or asserted by any party against Seller or NextNet or against, or
to, the employees, agents or contractors, customers, vendors, suppliers, or
distributors claiming or alleging that NextNet or any of its products (including
products currently under development), services or methods of operation
infringe, have infringed, contribute to infringement or induce the infringement
of, or misappropriate the Intellectual Property Rights or other proprietary
rights of any Third Party, violate the right of any Person (including rights to
privacy or publicity) or constitute unfair competition, nor is Seller or NextNet
aware of or on notice of any such infringement, misappropriation or violation.
To Seller's Knowledge, NextNet has not infringed any Intellectual Property
Rights or other proprietary rights of any Third Party or breached any obligation
of confidentiality owed to a Third Party, and the continued operation of
NextNet's business consistent with past practices will not infringe any
Intellectual Property Rights or other proprietary rights of a Third Party.
(n) No government, university or other Third Party funding, personnel,
students, resources or facilities were used in the development of any Owned IP
in a manner that would give any Governmental Authority, university or Third
Party any interest, direct or indirect, in the Owned IP.
(o) Except as set forth on Schedule 3.23(o), no Owned IP or product or
service of NextNet and its Subsidiaries is subject to any outstanding decrees,
order, judgment, or stipulation restricting in any manner the use or licensing
thereof by NextNet and its Subsidiaries.
23
(p) Except as set forth in Schedule 3.23(p), there are no contracts,
licenses, software escrows, and other agreements between NextNet or one of its
Subsidiaries and any other Person with respect to the Owned IP with respect to
which NextNet or one of its Subsidiaries has received notice or is aware of any
dispute that could reasonably be considered to be a dispute regarding the scope
of such agreement, or performance under such agreement including with respect to
any payments to be made or received by NextNet or one of its Subsidiaries
thereunder.
3.24 LIABILITIES. NextNet and its Subsidiaries do not have any Liabilities
of any nature whether or not any such Liability would have been required by GAAP
to be set forth on a consolidated balance sheet of NextNet or in the notes
thereto, other than (a) Liabilities set forth on the audited balance sheet of
NextNet as of December 31, 2005 or Liabilities reflected in the Most Recent
Balance Sheet, included in the Financial Statements, (b) Liabilities
specifically required to be incurred by NextNet pursuant to this Agreement or
any Ancillary Agreement, (c) Liabilities incurred since the date of the Most
Recent Balance Sheet in the ordinary course of business (none of which is a
material Liability) consistent with past practice, or (d) Liabilities
specifically identified on Schedule 3.24. Nothing in this Section 3.24 shall
give rise to an indemnification obligation of Seller under Article XI to the
extent the subject matter of such Liability is covered by the representations
and warranties set forth in Section 3.23.
3.25 EMPLOYEES AND SUBCONTRACTORS.
(a) Schedule 3.25(a) contains a list of all employees of Seller,
NextNet or their Affiliates who are engaged in the Business, along with the
position, date of hire, annual rate of base compensation, and the estimated or
target annual incentive compensation of each such person and any applicable
leave of absence information as of the date hereof, and which shall be updated
as of the Closing Date. Schedule 3.25(a) lists any contract or agreement that,
to the Knowledge of Seller, contains a covenant that limits or purports to limit
the ability of any Acquired Employee to compete in any line of business or with
any Person or in an geographic area or during any period of time. To the
Knowledge of Seller, no Acquired Employee or group of Acquired Employees has any
plans to terminate employment with Seller, NextNet or their Affiliates.
(b) Schedule 3.25(b) sets forth (i) a list of all independent
contractors currently performing services or under contract to perform future
services for NextNet and its Subsidiaries, and (ii) the start date, type of
services to be provided, estimated completion date and hourly or per diem pay
rate of such contractors. To the extent such independent contractors were
contracted with since the Seller Acquisition Date, all such individuals have
acknowledged in writing that they are not employees of NextNet or one of its
Subsidiaries and are not entitled to any employee compensation or benefits.
(c) Since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, NextNet and its
Subsidiaries have complied and are currently in compliance in all material
respects with all applicable Laws respecting employment, immigration,
occupational health and safety, and wages and hours, in each case, with respect
to its current and former employees engaged in the Business. Since the Seller
Acquisition Date, there have been no union organizing, hand billing, picketing,
election
24
petitions, applications for certification, or corporate campaigns involving
NextNet or the Business and no such activities are pending or, to Seller's
Knowledge, threatened or reasonably anticipated. Since the Seller Acquisition
Date, there have been no group work stoppages, walk outs, labor strikes,
slowdowns or other concerted action against of affecting NextNet and no such
activities are pending, or to Seller's Knowledge, threatened or reasonably
anticipated. NextNet is not a party to or bound by any collective bargaining
agreement or other agreement with a union, and no such agreement is currently
being negotiated. Neither Seller nor NextNet has received written notice of any
charges, complaints, lawsuits, or other administrative or judicial proceedings
pending or threatened, involving any employee, former employee, consultant, or
independent contractor. To Seller's Knowledge, except as set forth in Schedule
3.25(c), there have been no workplace accidents, injuries, or exposures in the
last twelve (12) months involving any employee engaged in the Business which are
likely to result in, but have not yet resulted in, a claim for worker's
compensation payments or benefits. Seller, NextNet or one of their Affiliates,
as applicable, (i) since the Seller Acquisition Date, has withheld and reported
all amounts required by Law or by contract to be withheld and reported with
respect to wages, salaries and other payments to employees and former employees
engaged in the Business, (ii) is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing and (iii)
is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any Governmental Authority with respect to
unemployment compensation benefits or social security for employees or former
employees engaged in the Business. NextNet's balance sheet reflects appropriate
accruals for vacation days and bonuses that have been earned by employees but
not yet paid. To the extent applicable, NextNet and its Subsidiaries are in
material compliance with all rules and regulations of the OFCCP and similar
state and local agencies relating to affirmative action and equal employment
opportunity. Since the Seller Acquisition Date, Seller and NextNet have not
taken any action that would constitute a mass layoff, mass termination, or plant
closing within the meaning of the WARN Act or otherwise result in material
liability under any foreign, federal, state, or local plant closing or
collective dismissal Law.
(d) Schedule 3.25(d) lists the name and position or nature of services
provided by each employee at a manager level or higher, and each independent
contractor, whose service or engagement in the Business has terminated in the
past twenty-four (24) months, and the date of each termination.
(e) Schedule 3.25(e) lists the employees of Seller, NextNet and their
Affiliates engaged in the Business who will become Acquired Employees and who
are in nonimmigrant visa status or have applications for lawful permanent
residence pending with the relevant Governmental Authorities, in each case
designating whether such employee is sponsored by Seller, NextNet or their
Affiliates.
3.26 EMPLOYEE BENEFITS.
(a) Schedule 3.26(a) contains a complete and accurate list of all
NextNet Plans, as well as any Seller Plans in which the employees of Seller,
NextNet or their Affiliates who are engaged in the Business are eligible to
participate (collectively, the "PLANS"). Seller shall prepare and provide to
Purchaser an initial version of Schedule 3.26(a) on the date of this Agreement,
and an updated version thereof on the Closing Date. Complete and accurate copies
25
of each of the following documents have been delivered to Purchaser: (i) all
Plans that have been reduced to writing, (ii) written summaries of all unwritten
Plans, (iii) all related trust agreements, insurance contracts, third-party
administration contracts and summary plan descriptions, (iv) all annual reports
filed on IRS Form 5500 Series, with all schedules and attachments thereto, for
the last three plan years for each Plan, (v) all reports relating to compliance
with Sections 401(k), 401(m) and 410(b) of the Code for the last three plan
years, and (vi) all employee handbooks. Each Plan has been maintained and
administered at all times in all material respects in accordance with its terms
and with the currently applicable provisions of ERISA and the Code and other
applicable federal, state, local and foreign Laws and the regulations thereunder
(including, without limitation, Section 4980B of the Code, Subtitle K, Chapter
100 of the Code and Sections 601 through 608 and Section 701 et seq. of ERISA).
All filings and reports as to each Plan required to have been submitted to the
IRS or to the United States Department of Labor have been duly and timely
submitted. NextNet has made all required contributions and properly accrued all
liabilities relating to the NextNet Plans in accordance with GAAP.
(b) There are no inquiries or investigations by any Governmental
Authority, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Plans and proceedings with respect to
qualified domestic relations orders), suits or proceedings against or involving
any Plan or asserting any such claims under any Plan.
(c) Each Seller Plan that is intended to be qualified under Section
401(a) of the Code (i) has received a favorable determination letter from the
IRS to the effect that such Seller Plan is qualified under Section 401(a) of the
Code and the trust related thereto is exempt from federal income taxes under
Section 501(a) of the Code or (ii) is maintained under an IRS approved prototype
plan with respect to which Seller may reasonably rely on the opinion letter
issued to the prototype sponsor as to such Seller Plan's qualified status. No
such determination letter has been revoked and revocation has not been
threatened; and no such Seller Plan has been amended or operated since the date
of its most recent determination letter in any respect, and no act or omission
has occurred, that would adversely affect its qualification or increase its
cost. Each Seller Plan that is required to satisfy Section 401(k)(3) or Section
401(m)(2) of the Code has been tested for compliance with, and satisfies the
requirements of, Section 401(k)(3) and Section 401(m)(2) of the Code for each
plan year ending prior to the Closing Date. No NextNet Plan is intended to be
qualified under Section 401(a) of the Code.
(d) None of Seller, NextNet or any Affiliate thereof has ever
maintained a Plan subject to Section 412 of the Code or Title IV of ERISA.
(e) At no time has Seller, NextNet or any Affiliate thereof been
obligated to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) No Plan provides benefits (whether or not insured) after
retirement or other termination of employment to any employee of Seller, NextNet
of any of their Affiliates who are engaged in the Business (or to any
beneficiary of any such employee), including, without limitation, retiree health
coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code or any similar
state Law and insurance conversion privileges under state Law, and also
excluding any Plan that merely pays after retirement (or termination of
employment) those benefits (as
26
adjusted for earnings or losses, as applicable) that accrued prior to retirement
(or other termination of employment). The assets of each Plan that is funded are
reported at their fair market value on the books and records of such Plan.
(g) No act or omission has occurred and no condition exists with
respect to any Plan that would subject NextNet or its Affiliates to any (i)
fine, penalty, Tax or liability of any kind imposed under ERISA or the Code or
(ii) liability for any such penalty, Tax or liability under any contractual
indemnification or contribution obligation protecting any fiduciary, insurer or
service provider with respect to any Plan.
(h) No Plan is funded by, associated with, or related to a "voluntary
employee's beneficiary association" within the meaning of Section 501(c)(9) of
the Code.
(i) Each NextNet Plan and its related documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms expressly and adequately reserves the right to amend and
terminate such NextNet Plan, and each NextNet Plan may be terminated without
liability to NextNet or Purchaser, except for vested benefits accrued through
the date of termination and the administrative and professional costs incurred
in such transaction. No Plan includes in its assets any securities issued by
NextNet. No Plan has been subject to Tax under Section 511 of the Code.
(j) Schedule 3.26(j) discloses each: (i) agreement with any director
or officer of any Acquired Company (A) the amount or timing of benefits of which
are contingent, or the terms of which are altered, upon the occurrence of a
transaction involving NextNet of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such director or officer; (ii) agreement,
plan or arrangement under which any person may receive payments from any
Acquired Company that may be included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (iii) agreement or plan
binding any Acquired Company including, without limitation, any Plan, stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, or severance benefit plan, any of the benefits of which shall be
increased, or the vesting of the benefits of which shall be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which shall be calculated on the basis of any of
the transactions contemplated by this Agreement.
(k) Schedule 3.26(k) sets forth the policy of NextNet with respect to
accrued paid time off, accrued sick time and earned time-off, and the amount of
such liabilities as of the date of this Agreement.
(l) No third-party administration agreement or other agreement with
respect to any NextNet Plan shall terminate or otherwise be cancelled by either
party and no right shall accrue to the third party as a result of the
transactions contemplated herein. All such agreements are cancelable by NextNet
without cause and without penalty (including, without limitation, any penalties
related to the early termination or surrender of any investment contracts or
similar agreements under which any assets of NextNet Plans are held) on not more
than ninety (90) days advance notice.
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3.27 IMPORT AND EXPORT CONTROL LAWS. NextNet and each of its Subsidiaries
has at all times since the Seller Acquisition Date, and to Seller's Knowledge
with respect to the period prior to the Seller Acquisition Date, as to which the
applicable statute of limitations has not yet expired, conducted its import and
export transactions materially in accordance with (x) all applicable U.S.
import, export and re-export controls, including the United States Export
Administration Act and Regulations and Foreign Assets Control Regulations and
(y) all other applicable import/export controls in other countries in which
NextNet and its Subsidiaries conducts business. Without limiting the foregoing:
(a) NextNet and each of its Subsidiaries has obtained, and is in
material compliance with, all export licenses, license exceptions and other
consents, notices, waivers, approvals, orders, authorizations, registrations,
declarations, classifications and filings with any Governmental Authority
required for (i) the export and re-export of products, services, software and
technologies and (ii) releases of technologies and software to foreign nationals
located in the United States and abroad ("EXPORT APPROVALS");
(b) there are no pending or, to the Knowledge of Seller, threatened
claims against NextNet or any of its Subsidiaries with respect to such Export
Approvals;
(c) no Export Approvals for the transfer of export licenses to
Purchaser are required, or such Export Approvals can be obtained in a reasonably
timely manner without material cost;
(d) except as set forth in Schedule 3.27(d), none of NextNet, its
Subsidiaries or any of their respective Affiliates is a party to any contract or
bid with, or has conducted business with (directly or, to the Knowledge of
Seller, indirectly), a Third Party located in, or otherwise has any operations
in, or sales to, Cuba, Iran, Syria or Sudan;
(e) since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, neither NextNet nor
any of its Subsidiaries has received written notice to the effect that a
Governmental Authority claimed or alleged that NextNet or any of its
Subsidiaries was not in compliance in a material respect with any applicable
Laws relating to the export of goods and services to any foreign jurisdiction
against which the United States or the United Nations maintains sanctions or
export controls, including applicable regulations of the United States
Department of Commerce and the United States Department of State; and
(f) since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, none of NextNet, its
Subsidiaries or any of their respective Affiliates has made any voluntary
disclosures to, or has been subject to any fines, penalties or sanctions from,
any Governmental Authority regarding any past import or export control
violations.
3.28 FOREIGN CORRUPT PRACTICES ACT. Since the Seller Acquisition Date, and
to Seller's Knowledge with respect to the period prior to the Seller Acquisition
Date, neither NextNet nor any of its Subsidiaries (including any of their
officers, directors, agents, distributors, employees or other Person associated
with or acting on their behalf) has, directly or indirectly,
28
taken any action which would cause it to be in material violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any rules or regulations
thereunder or any similar anti-corruption or anti-bribery Laws applicable to
NextNet or any of its Subsidiaries in any jurisdiction other than the United
States (in each case, as in effect at the time of such action) (collectively,
the "FCPA"), or, to the Knowledge of Seller, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, made, offered or authorized any unlawful payment to
foreign or domestic government officials or employees, whether directly or
indirectly, or made, offered or authorized any unlawful bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment, whether directly
or indirectly, except for any of the foregoing which is no longer subject to
potential claims of violation as a result of the expiration of the applicable
statute of limitations. NextNet has established reasonable internal controls and
procedures intended to ensure compliance with the FCPA.
3.29 BROKERS AND CHANGE OF CONTROL PAYMENTS. Except as set forth in
Schedule 3.29, no broker, investment banker, financial advisor or other Person
is entitled, based on arrangements made by or on behalf of NextNet, to (a) any
broker's, finder's, financial advisor's or other similar fee or commission or
(b) any change of control, severance or similar payment, in each case in
connection with the transactions contemplated by this Agreement.
3.30 INVESTMENT COMPANY ACT. NextNet (i) is not an "investment company", or
a company "controlled" by, or an "affiliated company" with respect to, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "INVESTMENT COMPANY ACT"), or (ii) satisfies all conditions for
an exemption from the Investment Company Act, and, accordingly, NextNet is not
required to be registered under the Investment Company Act.
3.31 FINANCIAL CONTROLS. NextNet maintains accurate books and records
reflecting its assets and liabilities and is developing and testing proper and
adequate internal accounting controls to provide assurance that (a) transactions
are executed with management's authorization; (b) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of
Seller and to maintain accountability for NextNet's consolidated assets; (c)
access to NextNet's assets is permitted only in accordance with management's
authorization; (d) the reporting of NextNet's assets is compared with existing
assets at regular intervals; and (e) accounts, notes and other receivables and
inventory are recorded accurately, and proper and adequate procedures are
implemented to effect the collection thereof on a current and timely basis.
Seller, without any independent review of NextNet (other than by Seller's
independent outside auditors), has detected no material weaknesses specifically
at NextNet and therefor has issued no management comment letters on NextNet's
internal controls.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Seller that the statements made in
this Article IX are true, correct and complete as of the date of this Agreement
(except to the extent expressly made as of an earlier date, in which case as of
such date):
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4.1 AUTHORITY. Purchaser has full right, power and authority, without the
Consent of any other Person, to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. All acts or proceedings required to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement, the Ancillary Agreements to which it is a party and all transactions
contemplated hereby and thereby have been duly and properly taken.
4.2 VALIDITY. This Agreement and the Ancillary Agreements to which it is a
party have been (or, in the case of such agreements to be executed after the
date hereof and at or prior to Closing, will be), and the documents to be
delivered at Closing will be, duly executed and delivered and assuming the due
execution and delivery of the other Parties hereto and thereto, do constitute or
will constitute, as the case may be, valid and legally binding obligations of
Purchaser, enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The execution and delivery by Purchaser of
this Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby are not
prohibited by, do not violate or conflict with any provision of, and do not
constitute a default under or a breach of (a) the Certificate of Incorporation
or Bylaws of Purchaser, (b) any note, bond, indenture, contract, agreement,
permit, license or other instrument to which Purchaser is a party or by which
Purchaser or any of its assets is bound, (c) any order, writ, injunction, decree
or judgment of any Governmental Authority applicable to Purchaser, or (d) any
Law applicable to Purchaser. No Consent of any Person is required for the
execution and delivery by Purchaser of this Agreement, the Ancillary Agreements,
the documents to be delivered at Closing or the consummation by Purchaser of the
transactions contemplated hereby and thereby.
4.3 DUE ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
4.4 BROKERS. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Purchaser.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS. From the date of this Agreement until the earlier
of the Closing or the termination of this Agreement pursuant to Section 10.1 and
subject to this Section 5.1, NextNet shall, and Seller shall cause NextNet to,
in all material respects, carry on Business in the ordinary course and in
compliance with applicable Laws and use its commercially reasonable efforts to
keep available the service of the current officers, key employees and
consultants of NextNet and to preserve the current relationships of NextNet with
those customers, licensees, suppliers, licensors and other Persons with which
NextNet has significant business relations as is necessary in order to preserve
substantially intact its business
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organization. Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement and the Ancillary Agreements, during
such period, neither NextNet nor any of its Subsidiaries shall, without the
prior written consent of Purchaser:
(a) split, combine, subdivide or reclassify any shares of NextNet
Common Stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares of
NextNet Common Stock or otherwise make any payments to Seller in its capacity as
stockholder of NextNet; provided, however, nothing herein shall prohibit NextNet
from distributing to Seller immediately prior to the Closing the cash of
NextNet;
(b) issue, sell or dispose of, or agree to issue, sell or dispose of
(i) any additional shares of capital stock of any class (including shares of
NextNet Common Stock), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or (ii) any other
securities in respect of, in lieu of, or in substitution for, shares of NextNet
Common Stock outstanding on the date hereof;
(c) adopt any amendments to its Certificate of Incorporation or Bylaws
or alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of NextNet and its
Subsidiaries;
(d) acquire, or agree to acquire, in a single transaction or series of
related transactions, any business or assets having a value in excess of $50,000
individually or $100,000 in the aggregate, other than transactions that are in
the ordinary course of business;
(e) enter into any exclusive or sole licensing arrangement regarding
any Intellectual Property Rights of NextNet and its Subsidiaries or enter into
any non-exclusive licenses other than those non-exclusive use licenses for
NextNet's products and related Intellectual Property Rights of NextNet that are
entered into the ordinary course of business consistent with past practice;
(f) sell, pledge, dispose of, transfer, lease, license, guarantee,
subject to Encumbrance or otherwise dispose of or authorize the sale, pledge,
disposition, transfer, lease, license, guarantee or Encumbrance of any of its
assets, outside of the ordinary course of business;
(g) enter into any joint venture agreement, partnership agreement or
similar agreement;
(h) except as may be required as a result of a change in Law or GAAP,
make any material change in its method of accounting;
(i) make or change any election with respect to Taxes, change any Tax
accounting period, adopt or change any method of Tax accounting, file any
amended Tax return, enter into a closing agreement with any taxing authority,
surrender any right to claim a refund for
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Taxes, consent to an extension of the statute of limitations applicable to any
Tax claim or assessment, or take any other similar action (or omit to take any
action), if such election, change, amendment, agreement, settlement, surrender,
consent or action or omission could have the effect of increasing the Tax
liability of Purchaser or any Acquired Company after the Closing Date;
(j)(i) incur any Indebtedness, other than in the ordinary course of
business consistent with past practice, or guarantee any Indebtedness of another
Person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of NextNet, or guarantee any debt securities of another
Person, or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person other than the advancement of expenses to
employees and advancement of credit to customers in the ordinary course of
business consistent with past practice; provided, however, that no advancement
shall exceed $2,500 in the aggregate at any particular time with respect to any
employee;
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of NextNet, or redeem, purchase or otherwise acquire, directly or indirectly,
any of its outstanding shares of NextNet Common Stock;
(l) (i) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction of (A)
any liabilities or obligations in the ordinary course of business in accordance
with their terms, or (B) any claims and obligations on, or liabilities reflected
in or reserved against on the Most Recent Balance Sheet, (ii) waive any benefits
of, or agree to modify in any respect, any noncompetition or similar agreements
to which NextNet is a party or (iii) waive any attorney client privilege;
(m) modify or amend in any material respect or terminate any Material
Contract to which NextNet or any of its Subsidiaries is a party, or waive,
release or assign any material rights or material claims thereunder;
(n) enter into any contract or arrangement that, if it were effective
on the date of this Agreement, would constitute a Material Contract, except in
the ordinary course of business;
(o) except as required to comply with applicable Law, (i) adopt, enter
into, terminate or amend any NextNet Plans, (ii) increase in any manner the
compensation or fringe benefits of any director, officer, employee of Seller,
NextNet or any of their Affiliates who are engaged in the Business or consultant
to NextNet (except for normal increases to non-officers and non-directors in the
ordinary course of business and pursuant to the terms of agreements, policies or
programs in effect as of the date hereof), (iii) pay any benefit to any present
or former employees of Seller, NextNet or any of their Affiliates who are
engaged in the Business not provided for under any NextNet Plan in existence on
the date hereof, (iv) grant any equity-based awards under any NextNet Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the voluntary
removal of existing restrictions in any NextNet Plans or agreement or awards
made thereunder),
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(v) other than in the ordinary course of business, take any action to fund or in
any other way secure the payment of compensation or benefits under any NextNet
Plan or other employee plan, agreement, contract or arrangement, (vi) alter or
take any action to alter the composition of NextNet's Board of Directors or
change the title of, hire, terminate the employment of, modify the job
description or duties of, or waive any material right under any employment or
consulting agreement with, any member of senior management, consultant or
employee whose annual compensation rate exceeds $100,000, other than in the
ordinary course of business and consistent with past practice), (viii) award or
accrue any bonus for any director, officer, employee of Seller, NextNet or any
of their Affiliates who are engaged in the Business or consultant to NextNet or
one of its Subsidiaries, other than annual bonuses in the ordinary course of
business consistent with past practices and existing policies and programs or
(ix) alter or take any action to alter or waive any material right under any
employment or consulting agreement or NextNet Plan;
(p) consent to or take any action to allow any insurance policy naming
NextNet or one of its Subsidiaries as beneficiary or loss payee to be cancelled
or terminated, other than in the ordinary course, or cause or permit the
decrease in any current policy coverage limits;
(q) settle or compromise any pending or threatened litigation
involving NextNet or any NextNet Plan in an amount greater than $50,000;
(r) enter into any contract, agreement, arrangement or understanding
that materially limits or otherwise materially restricts NextNet or one of its
Subsidiaries from engaging in or competing in any line of business or in any
geographic area;
(s) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality or standstill
agreement to which NextNet or one of its Subsidiaries is a party;
(t) take any action to exempt or make not subject to any other state
takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares of any Person (other than
Purchaser or its Subsidiaries) or any action taken thereby, which Person or
action would have otherwise been subject to the restrictive provisions thereof
and not exempt therefrom; or
(u) enter into any contract, agreement, commitment or arrangement to
do any of the foregoing actions described in subsections (a) through (t).
5.2 EXCLUSIVITY. (a) From the date of this Agreement until the Closing or,
if earlier, the termination of this Agreement pursuant to Section 10.1 (i)
Seller and NextNet shall, and shall cause their respective Representatives to,
(1) immediately cease and terminate any existing solicitation, discussion or
negotiation with any Third Party with respect to any Acquisition Proposal and
(2) use its commercially reasonable efforts to recover or cause to be destroyed
all nonpublic information concerning NextNet and its Subsidiaries in the
possession of such Persons and their Representatives and advisors, and (ii)
Seller and NextNet shall not, nor shall they authorize or permit their
respective Representatives to, directly or indirectly, (1) solicit, encourage,
accept, entertain, facilitate, permit or initiate the submission of any
Acquisition
33
Proposal, (2) enter into any agreement requiring Seller to abandon or terminate
its participation in this Agreement, (3) participate in any discussions or
negotiations regarding, or furnish any nonpublic information relating to NextNet
to any Third Party with respect to, or take any other action to facilitate the
making of any proposal that constitutes or would reasonably be expected to lead
to any Acquisition Proposal, (4) grant any waiver or release under any
standstill or similar agreement with respect to any class of NextNet's equity
securities, or (5) enter into any letter of intent, agreement or similar
document relating to any Acquisition Proposal.
(b) Seller represents and warrants that it has the legal right to
terminate or suspend any such pending negotiations and Seller will indemnify the
Purchaser Indemnified Parties pursuant to Article XI from and against any Losses
arising from or caused by claims by any party to such negotiations based upon or
arising out of the discussion or any consummation of the transactions
contemplated in this Agreement.
(c) From the date of this Agreement until the Closing or, if earlier,
the termination of this Agreement pursuant to Section 10.1, Seller and NextNet
will promptly notify Purchaser of any inquiry received by it relating to an
Acquisition Proposal and the material terms of any proposal or inquiry,
including the identity of the Person and its Affiliates making the same, and
Seller will keep Purchaser fully informed on a prompt basis with respect to any
developments with respect to such proposal or inquiry.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 NOTICE OF DEVELOPMENTS. Prior to the Closing Date, Seller will give
prompt written notice to Purchaser of (a) any breach of any of Seller's
representations and warranties in Article III and (b) any failure of Seller or
NextNet to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder. No disclosure by Seller pursuant to
the preceding sentence, however, shall be deemed to amend or supplement the
schedules to this Agreement, or to prevent or cure any misrepresentation, breach
of warranty, or breach of covenant or to limit or otherwise affect the remedies
available hereunder to Purchaser.
6.2 ACCESS TO INFORMATION. Upon reasonable notice and subject to the terms
of the Non-Disclosure Agreement dated December 29, 2005 by and between Seller
and Purchaser (the "NDA"), Seller and NextNet shall afford to Purchaser and its
Representatives all reasonable access, during normal business hours during the
period prior to the earlier of the Closing and the termination of this Agreement
pursuant to Section 10.1, to all of the properties, books, contracts,
commitments and records of NextNet or any of its Subsidiaries as Purchaser may
reasonably request. During such period, Seller and NextNet shall make available
to Purchaser all other information concerning the Business and its properties
and personnel as Purchaser or its Representatives may reasonably request.
Without limiting the generality of the foregoing, Seller and NextNet shall use
commercially reasonable efforts to cooperate with Deloitte & Touche ("D&T")
prior to the Closing Date as reasonably requested to allow D&T to audit the
pricing terms with respect to Expedience, infrastructure, subscriber and all
related and ancillary products set forth in the Commercial Agreements.
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6.3 FURTHER ACTION. Each of the Parties hereto shall use commercially
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may reasonably be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated hereby, and to vest in Purchaser good
and valid title to the Shares.
6.4 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Section 1 of that certain Side
Agreement between Seller and Purchaser dated as of even date herewith shall be
incorporated herein by reference and this Agreement shall be deemed
"Confidential Information" pursuant thereto.
6.5 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) Each of the Parties to this Agreement shall use commercially
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement and to satisfy each condition to the obligations
of the other Party hereto as promptly as practicable, including approving and
executing any resolutions, documents and instruments reasonably requested by the
other party to effectuate the transaction contemplated hereby, (ii) obtain from
any Governmental Authorities any Consents or Licenses and Permits required to be
obtained or made by Purchaser or Seller, or to avoid any action or proceeding by
any Governmental Authority, in connection with the authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein, and (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement required under any
applicable Law, including the HSR Act and any foreign antitrust Laws; provided,
however, that Purchaser and Seller shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
non-proprietary documents to the non-filing Party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith and, provided, further, that nothing
in this Section 6.5(a) shall require Purchaser or any of its Affiliates to (1)
agree to sell, divest, license, dispose of or hold separate any assets or
businesses (including the Business), or otherwise take or commit to take any
action that could limit its freedom with respect to, or its ability to retain,
one or more of its businesses, product lines or assets (including the Business),
(2) agree to the requirement of expenditure of money by Purchaser or NextNet to
a Third Party in exchange for any Consent, or (3) except with respect to any
inquiries or requests for additional information from the United States Federal
Trade Commission and/or the United States Department of Justice or similar
requests from any other Governmental Authority with respect to any foreign
antitrust Laws, litigate, pursue or defend against any Action (including any
temporary restraining order or preliminary injunction) challenging the
transactions contemplated by this Agreement as violative of the HSR Act or any
applicable foreign antitrust Law. Seller and Purchaser shall promptly furnish to
each other all information required for any application or other filing to be
made by the other pursuant to the rules and regulations of any applicable Law in
connection with the transactions contemplated by this Agreement. Except as
specifically required by this Agreement, the Parties shall not take any action,
or refrain from taking any action, the effect of which would be to delay or
impede the ability of the Parties to consummate the transactions contemplated by
this Agreement.
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(b) Seller and Purchaser shall give any notices to Third Parties and
use all commercially reasonable efforts to obtain any Consents from the Third
Parties set forth in Schedule 6.5(b); provided, however, no party shall be
required to agree to the requirement of expenditure of money to a Third Party in
exchange for any Consent.
(c) From the date of this Agreement until the earlier of the Closing
Date or the termination of this Agreement pursuant to Section 10.1, Seller shall
promptly notify Purchaser in writing, or Purchaser shall notify Seller in
writing, as the case may be, of any pending or threatened action or suit,
arbitration or other proceeding or investigation by any Governmental Authority
or any other Person of which it becomes aware (i) challenging or seeking
material damages in connection with the transactions contemplated by this
Agreement or (ii) seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement or otherwise limit the right of
Purchaser to own or operate all or any portion of the intangible assets of
NextNet or all or a material portion of the Business or tangible assets of
NextNet and its Subsidiaries, which in either case would reasonably be expected
to have a Material Adverse Effect.
6.6 NON-COMPETITION; NO-SOLICITATION.
(a) Subject to the terms of the Commercial Agreements, from and after
the Closing Date until the earlier of three (3) years and the termination of the
Commercial Agreements, Seller will not, and Seller will cause its Subsidiaries
not to, directly or indirectly, engage in, conduct, manage or operate any
business that engages in the sale of modems, base stations and other equipment
that enable deployment of non-line-of-sight, wireless broadband connectivity
(such activities collectively, the "RESTRICTED BUSINESS"), or acquire or own any
capital stock or other equity interest of any Person that engages in the
Restricted Business, in each case anywhere in the world; provided, however, that
nothing in this Section 6.6 shall be deemed to prohibit the acquisition or
holding of not more than five percent (5%) of the outstanding equity securities
of a publicly traded entity involved in such business; provided further, that
nothing in this Section 6.6(a) shall be deemed to prohibit the sale of modems or
base stations by Seller or any of its Subsidiaries to Seller's subscribers,
wholesalers and direct sales representatives in the ordinary course of business
as part of providing Seller's wireless broadband services. The foregoing shall
not prohibit Seller or its Subsidiaries from acquiring any business, the
revenues of which are comprised of less than 25% of Restricted Business, so long
as within six (6) months after the consummation of such acquisition, Seller or
such Subsidiary has completely disposed of (or permanently ceased operating) the
acquired business or portion thereof engaged in the Restricted Business.
(b) For a period of eighteen (18) months after the Closing Date,
Seller will not, and will not permit any of its Subsidiaries to, solicit or
induce any individual who is an employee of any Acquired Company to terminate
his or her employment with any Acquired Company; provided in each case that (i)
this Section 6.6(b) shall not apply to any employee if such employee's
employment has been terminated for a period of at least three (3) months and
(ii) non-directed newspaper or internet help wanted advertisements shall not be
considered solicitations under this Section 6.6(b); provided, further, it is
understood by the Parties that, immediately prior to the Closing, Seller will
hire the Chief Executive Officer of NextNet as of the date of this Agreement,
provided that the Chief Executive Officer shall have executed a non-
36
competition, non-solicitation and confidentiality agreement with Purchaser in a
form and substance reasonably satisfactory to Purchaser (it being understood
that employment by Seller or any of its Affiliates shall not be prohibited by
the contemplated non-compete).
(c) It is expressly understood and agreed that, although Seller and
Purchaser consider the restrictions set forth in this Section 6.6 to be
reasonable, if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction set forth in
this Section 6.6 is an unreasonable or otherwise unenforceable restriction, the
Parties hereby authorize such court to revise and amend the provisions of this
Section 6.6 so as to produce legally enforceable restrictions, and, if the court
refuses to do so, the Parties hereto agree that the provisions of this Section
6.6, shall not be rendered void, but shall be deemed amended to apply as to such
maximum time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable.
(d) The Parties acknowledge and agree that the remedy at law for a
breach or threatened breach of any of the provisions of this Section 6.6 would
be inadequate and, in recognition of that fact, in the event of a breach or
threatened breach of any of the provisions of this Section 6.6, it is agreed
that, in addition to its remedies at law, equitable relief in the form of
specific performance, temporary restraining order, temporary, preliminary, or
permanent injunction, and any other equitable remedy which may then be available
will be appropriate remedies to enforce this Section 6.6. Each Party agrees not
to oppose the other Party's request for any of the above relief on the grounds
that such Party has not been irreparably injured or that such Party has an
adequate remedy at law. Nothing set forth in this Section 6.6 shall be construed
as prohibiting a Party from pursuing any other rights and remedies available to
it for such breach or threatened breach under this Agreement.
6.7 TRANSITION.
(a) Seller acknowledges that its intent is to deliver the Business to
Purchaser as a stand-alone operation that will be able to conduct its business
immediately following the Closing as the Business is conducted on the date
hereof. Seller hereby agrees to cooperate with Purchaser in good faith and to
use commercially reasonable efforts as reasonably necessary and as requested by
Purchaser in order to transition the Business and ownership of NextNet to
Purchaser in a manner that minimizes any disruption to the operation of the
Business following the Closing.
(b) Without limiting the generality of subsection (a) above, Seller
hereby agrees, as requested by Purchaser for a period not to exceed five (5)
months following the Closing, to make available to Purchaser and NextNet the
services of the Chief Executive Officer of NextNet as of the date of this
Agreement; provided, however, that Purchaser shall reimburse Seller for the pro
rata portion of such individual's salary and reasonable business expenses in
connection with such services provided.
(c) Seller shall use commercially reasonable efforts to effect the
assignment, prior to the Closing, of that certain Master Hardware Purchase and
Support Agreement dated November 1, 2005 among 3082241 Nova Scotia Company,
Eagle River Canada, Inc. and
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NextNet (the "INUKSHUK AGREEMENT") from Eagle River Canada, Inc. to Purchaser,
and to obtain all necessary third party consents in connection therewith.
ARTICLE VII
ACQUIRED EMPLOYEE MATTERS
7.1 ACQUIRED EMPLOYEES. Subject to the provisions of Sections 7.3 and 7.4
below, all Acquired Employees shall remain or become at-will employees (subject
to any existing employment agreements or agreements to be entered into as a
condition to Closing or post-Closing that alter the nature of the at-will
employment) of NextNet or one of its Affiliates immediately following the
Closing with no break in service.
7.2 COMPENSATION. Subject to Section 7.1, for at least the one-year period
beginning on the Closing Date (but only while employed by NextNet, Purchaser or
another Affiliate of Purchaser), each Acquired Employee will receive a total
monetary compensation package (including base wages, salary, commission,
incentive compensation and bonus) that shall not be less than that received by
similarly situated employees of Purchaser serving in comparable positions;
provided, however, that each Acquired Employee who is employed in the United
States will be provided (i) during the same one-year period, a base salary or
base wage, as applicable, that shall not be less than that provided to such
Acquired Employee by NextNet, Seller or another Affiliate of Seller, as
applicable, immediately prior to the Closing, and (ii) for calendar year 2006,
the opportunity to receive commission at a rate, and incentive and bonus
compensation at a target level, that shall not be less than that provided to
such Acquired Employee by NextNet, Seller or another Affiliate of Seller, as
applicable, immediately prior to the Closing.
7.3 SEVERANCE. The Acquired Employees will participate in the Motorola,
Inc. Involuntary Severance Plan (the "PURCHASER SEVERANCE PLAN") as in effect
from time to time on the same basis as similarly situated employees of Purchaser
serving in comparable positions, and will be eligible to receive severance
benefits to the extent provided in the Purchaser Severance Plan for applicable
terminations of employment, with such severance benefits determined under the
Purchaser Severance Plan, in accordance with Section 7.5 below.
7.4 PAID TIME OFF. On and after the Closing Date, each Acquired Employees
who is employed in the United States will continue to accrue paid time off at a
rate that shall not be less than the rate at which such Acquired Employee
accrued paid time off under the paid time off policy of NextNet in effect as of
the Closing that covered such Acquired Employee (the "NEXTNET PTO POLICY")
whether such accrual is in accordance with the NextNet PTO Policy or Purchaser's
own paid time off policy applicable to similarly situated employees of Purchaser
serving in comparable positions (the "PURCHASER PTO POLICY"). In addition, each
Acquired Employee will be allowed to use and be paid for paid time off that is
accrued and available under the NextNet PTO Policy, but unused as of the Closing
Date, in accordance with the NextNet PTO Policy until the date that Purchaser
determines that such accrued and unused paid time off shall be either used or
paid only in accordance with the Purchaser PTO Policy, which date may be as of
the Closing Date or at any time thereafter.
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7.5 SERVICE CREDIT. Purchaser shall, and shall cause its Affiliates to,
provide each Acquired Employee with full credit for eligibility and vesting
purposes under the Purchaser Plans (excluding the Motorola, Inc. Pension Plan,
the Motorola Post-Employment Health Benefits Plan, and any other defined benefit
pension plan or retiree health plan maintained by Purchaser or any of its
Affiliates, and provided that no Acquired Employees shall be eligible to
participate in the Motorola, Inc. Pension Plan or the Motorola Post-Employment
Health Benefits Plan), for pre-Closing (i) service with NextNet or one of its
Affiliates, and (ii) service credited under the comparable NextNet Plans as of
the Closing for employment other than with NextNet or one of its Subsidiaries.
In addition, Purchaser shall, and shall cause its Affiliates to, provide each
Acquired Employee with credit for such service for purposes of benefit accrual
solely with respect to any Purchaser paid time off and severance plans and
policies, including the Purchaser Severance Plan. Notwithstanding anything in
this Agreement to the contrary, any benefits payable to any Acquired Employee
under any Purchaser Plans shall be offset by any similar benefits payable under
comparable NextNet Plans to the extent such benefits under the Purchaser Plans
are attributable to service with NextNet or one of its Subsidiaries prior to the
Closing.
7.6 401(K) PLAN. The Acquired Employees who participate in the Clearwire
Corporation 401(k) Plan and Trust (the "SELLER 401(K) PLAN") will incur a
severance from employment under the Seller 401(k) Plan on the Closing Date and
will be entitled to receive a distribution of their benefits under the Seller
401(k) Plan. After the Closing Date, and in accordance with current
administrative procedures of the Seller 401(k) Plan, Seller shall cause to be
distributed to each such Acquired Employee such notices and forms that are
provided to a participant who incurs a severance from employment so that such
Acquired Employee may elect to receive a distribution of his or her benefits
under the Seller 401(k) Plan. Such Acquired Employee may elect to make a
rollover contribution to the Motorola 401(k) Plan (the "PURCHASER 401(K) PLAN"),
and Purchaser shall cause, in accordance with current administrative procedures
of the Purchaser 401(k) Plan, such rollover contribution to be accepted by the
Purchaser 401(k) Plan. With respect to any Acquired Employee who has an
outstanding loan under the Seller 401(k) Plan as of the Closing Date, Seller
shall take all actions necessary to provide that such loan shall not be in
default as a result of the transactions contemplated by this Agreement and that
such Acquired Employee shall be able to continue repayment of such loan under
current terms.
7.7 OTHER EMPLOYEE BENEFIT PLANS. Seller and Purchaser acknowledge that (i)
the Acquired Employees shall no longer be eligible to participate in the Seller
Plans as of the Closing Date, and (ii) NextNet shall continue to maintain the
NextNet Plans for the benefit of eligible Acquired Employees until such date
that Purchaser determines that such NextNet Plans shall be terminated, which
termination may be effective as of the Closing Date or at any time thereafter
(the "PLAN TERMINATION DATE"). As of the Closing Date or the applicable Plan
Termination Date, Purchaser shall cooperate to cause those Acquired Employees to
become eligible to participate in the corresponding Purchaser Plan under the
same terms applicable to similarly situated employees of Purchaser serving in
comparable positions, if one exists. With respect to a Purchaser Plan that is a
medical or dental plan, Purchaser shall waive any waiting period, pre-existing
condition, evidence of insurability, continuing-course-of-treatment, and
actively-at-work requirements for each Acquired Employee to the same extent that
such period, conditions and/or requirements were not applicable to or had been
satisfied by the Acquired Employee immediately before the Closing under any Plan
that is a medical or dental plan.
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7.8 EMPLOYEE COMMUNICATIONS. The parties shall cooperate with respect to
any employee communications regarding any matters provided for herein, provided
that Purchaser shall retain the sole and absolute discretion to approve of, in
advance, any written employee communications relating to any compensation or
benefits to be provided by it or by NextNet or any other Purchaser Affiliate
under this Agreement. The parties further agree to coordinate in advance any
formal meetings or presentations between Acquired Employees and Purchaser
representatives and any Purchaser written employee communications.
ARTICLE VIII
TAX MATTERS
8.1 ALLOCATION OF LIABILITY FOR TAXES.
(a) Seller's Responsibility for Taxes. Seller shall be liable for and
indemnify the Purchaser Indemnified Parties against all Losses for Taxes imposed
on, allocated to, or incurred by any of the Acquired Companies for any
Pre-Closing Period, including, but not limited to, Taxes of any other Person
that any Acquired Company is liable for as a result of joint and several
liability, transferee liability, successor liability or a contractual obligation
and any Taxes imposed by virtue of (i) the inclusion of any of the Acquired
Companies in any consolidated return (including any liability imposed pursuant
to Regulations section 1.1502-6(a)), (ii) any deferred income triggered into
income under Regulations sections 1.1502-13 and 1.1502-14, (iii) any excess loss
accounts taken into income under Regulations section 1.1502-19, (iv) any breach
by Seller of the representations and warranties contained in Section 3.17, and
(v) any breach by Seller of its obligations under this Agreement with respect to
Taxes.
(b) Proration of Taxes.
(i) Seller and Purchaser shall, to the extent permitted by
applicable Law and except as otherwise provided herein, elect with the relevant
Governmental Authority to close the taxable period of each of the Acquired
Companies at the end of the day on the Closing Date.
(ii) In the case of any Tax for any Straddle Period imposed upon
or measured by income or receipts (including sales, use, transfer or assignment
of property, wages or any other similar Taxes), Taxes shall be apportioned
between Pre-Closing Periods and Post-Closing Periods in accordance with the
principles of Regulations section 1.1502-76(b) as reasonably interpreted and
applied by the Parties. No election shall be made under Regulations section
1.1502-76(b)(2)(ii) (relating to ratable allocation of a year's items) or any
comparable provision of foreign Law, and, for the avoidance of doubt, no
allocation of Taxes shall be made that is consistent with the principles of such
election.
(iii) In the case of any Tax for any Straddle Period which is not
imposed upon or measured by income or receipts, the amount of such Tax which is
allocable to a Pre-Closing Period shall be the amount of such Tax for the entire
taxable period multiplied by a fraction, the numerator of which is the number of
days in the portion of such taxable period ending on and including the Closing
Date and the denominator of which is the number of days in
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the entire taxable period. The amount of Tax which is allocable to a
Post-Closing Period shall be the amount of such Tax for the entire taxable
period less the amount of Tax which is allocable to a Pre-Closing Period.
(iv) Seller and Purchaser shall prepare all Tax Returns
consistent with the proration of Taxes set forth in this Section 8.1(b).
8.2 TAX RETURN FILING AND PAYMENT OF TAXES.
(a) Purchaser's Responsibility. Except as set forth in Section 8.2(b),
Purchaser shall prepare and file all Tax Returns relating to any of the Acquired
Companies for Tax periods ending after the Closing Date. Purchaser shall make
all payments required with respect to any such Tax Return.
(b) Seller's Responsibility. Seller shall prepare and file all Tax
Returns relating to any of the Acquired Companies for Tax periods ending on or
prior to the Closing Date, and any Affiliated Group Tax Return for any Straddle
Period. Seller will include the income of the Acquired Companies that were
members of the Affiliated Group (including any deferred income triggered into
income by Regulations section 1.1502-13 and 1.1502-14 and any excess loss
accounts taken into income under Regulations section 1.1502-19) on Seller's
consolidated federal income Tax Returns for all periods through the Closing Date
and pay any federal income Taxes attributable to such income. Seller will allow
Purchaser an opportunity to review and make reasonable comments upon such Tax
Returns (including any amended returns) to the extent that they relate to the
Acquired Companies. Seller will file all such Tax Returns consistent with past
practice; provided, however, that if the treatment of any item on any such Tax
Return or report has not been provided by prior practice, Seller shall not,
without the consent of Purchaser (which consent shall not be unreasonably
withheld, conditioned or delayed), report such item in a manner that would
adversely affect the Acquired Companies after the Closing Date.
(c) Reimbursement. In the event that Seller or Purchaser is liable for
any Taxes paid by the other Party with respect to any Tax Return, reimbursement
shall be made promptly, but no later than the later of (i) thirty (30) days
following written notice to the Person liable for the Tax from the Person that
shall pay the Tax, or (ii) the date such Tax is required to be paid.
(d) Seller shall provide Purchaser with any information that Purchaser
reasonably requests to allow Purchaser to comply with Code section 6043A or any
other information reporting requirements under the Code or other applicable law.
8.3 TAX CONTESTS; AUDIT RESPONSIBILITIES.
(a) General Rule. Except as otherwise provided in this Section 8.3,
the Party responsible for the Taxes under Section 8.1 shall control and bear the
cost of the conduct of any Tax Contest, including determining actions taken to
pay, compromise or settle such Taxes.
(b) Seller's Tax Returns. In no event will Seller settle any such Tax
Contest in a manner which would be reasonably expected to adversely affect
Purchaser (or its Affiliates)
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or any of the Acquired Companies after the Closing Date without Purchaser's
prior written consent (which shall not be unreasonably withheld, conditioned or
delayed).
(c) Straddle Periods. In the case of any Straddle Period, the Party
responsible for preparing and filing the affected Tax Return under Section 8.2
shall control the conduct of such Tax Contest, and the other Party shall have
the right to participate in such Tax Contest to the extent the proceedings
relate to any matter which may give rise to an indemnification payment by such
other Party under this Article VIII, or (with respect to the participation right
of Purchaser) to the extent the proceedings may adversely affect any of the
Acquired Companies in the Post-Closing Period. The Party receiving the notice of
such Tax Contest will provide the other Party with notice in writing of such Tax
Contest involving the Acquired Companies within thirty (30) days of receiving
such notice from the Governmental Authority. If the non-notifying Party does not
respond within thirty (30) days of any such notice, they will be deemed to not
participate in such Tax Contest. Neither Party may settle any such Tax Contest
in a manner that would be reasonably expected to materially adversely affect the
other without prior written consent (which shall not be unreasonably withheld).
Seller shall indemnify Purchaser for any Losses that result to any of the
Acquired Companies from the settlement by Seller of any Tax Contest for which
Purchaser's written consent was not sought. Purchaser shall indemnify Seller for
any Losses that result to Seller from the settlement by Purchaser of any Tax
Contest for which Seller's written consent was not sought. In any Tax Contest
where the non-notifying Party elects to participate, each Party shall bear its
own costs for participating in such Tax Contest, and both Parties agree to
cooperate in good faith.
8.4 CODE SECTION 338 ELECTION. Seller and Purchaser shall join in making an
election under Code section 338(h)(10) (and any corresponding elections under
state, local, or foreign tax Law, including any available election to avoid
treatment consistent with an election under Code section 338(h)(10))
(collectively, a "SECTION 338(H)(10) ELECTION") with respect to the purchase and
sale of the stock of any Acquired Companies for which the election can be made.
Seller agrees to cooperate with Purchaser to take all actions necessary or
appropriate to effect and preserve a timely Section 338(h)(10) Election with
respect to Purchaser's acquisition of the stock, including, but not limited to,
participating in the timely filing of IRS Form 8023 and 8883 and related or
comparable forms for state, local, or foreign law purposes. Purchaser shall
prepare all forms it reasonably believes are necessary or appropriate (including
preparing the IRS Form 8883) to make the Section 338(h)(10) Election and shall
provide them to Seller. Purchaser will allow Seller an opportunity to review and
make reasonable comments upon such forms. Seller shall, following agreement by
Purchaser and Seller regarding the content of such forms, promptly execute all
of the forms Purchaser provides and return the appropriate executed copies to
Purchaser for timely filing by Purchaser with the appropriate taxing
authorities.
8.5 COOPERATION.
(a) Each of Seller and Purchaser shall:
(i) provide assistance to each other Party as reasonably
requested in preparing and filing Tax Returns and responding to Tax audits or
Tax authority disputes;
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(ii) make available to each other Party as reasonably requested
all relevant information, records, and documents relating to Taxes for any of
the Acquired Companies; and
(iii) retain any books and records that could reasonably be
expected to be necessary or useful in connection with any preparation by any
other Party of any Tax Return, or for any audit, examination, or proceeding
relating to Taxes.
(b) Seller shall contact Purchaser prior the disposition of any books
and records as described in Section 8.5(a) and allow Purchaser to obtain such
books and records within thirty (30) days of such notice.
8.6 OPTION EXERCISES AFTER CLOSING. With respect to any Seller Plan that
permits an Acquired Employee to exercise options to acquire stock of Seller
after Closing:
(a) Seller will itself or will cause others to timely deliver all
shares of Seller stock acquired pursuant to such exercises directly to the
Acquired Employee.
(b) Seller and Purchaser acknowledge and agree that (i) Seller shall
claim all federal and state income Tax deductions associated with the exercise
by the Acquired Employees of options to acquire stock of Seller after Closing,
and (ii) Purchaser shall not claim any such deduction on its federal or state
income Tax Returns; provided that nothing set forth herein shall be construed as
a representation or warranty by Purchaser or NextNet as to any particular Tax
treatment resulting from the exercise of such options. Notwithstanding anything
to the contrary in the preceding sentence, if Seller notifies Purchaser that the
Internal Revenue Service or a state taxing authority has successfully challenged
Seller's entitlement to deduct amounts included in the Acquired Employees'
income as a result of the exercise of options to acquire stock of Seller after
Closing, Purchaser will, to the extent permitted by applicable Law, promptly
take all steps requested by Seller and reasonably necessary to claim or cause to
be claimed such deduction on its (or its Affiliates') federal or state income
Tax Returns, as applicable, including through the filing of amended Tax Returns
or refund claims. Seller will promptly reimburse Purchaser for any fees, costs
and expenses reasonably incurred by Purchaser in complying with the preceding
sentence. Purchaser will promptly pay to Seller any net Tax refund (or amount
equal to any net reduction in Tax liability) resulting from the claiming of such
deductions, when such refund or reduction is realized by Purchaser or its
Affiliates. If Purchaser or any of its Affiliates claims any deduction in
accordance with this Section 8.6(b) and such deduction is subsequently reduced
or disallowed, Seller shall repay to Purchaser the amount previously paid to
Purchaser (to the extent of such reduction or disallowance) plus any interest,
penalties and additions to tax imposed on Purchaser or any of its Affiliates as
a result of such reduction or disallowance.
(c) Seller shall pay and be responsible (i) for withholding the
applicable amounts of employee Taxes with respect to income recognized by the
Acquired Employees upon the exercise of options to acquire Seller stock after
Closing (the "EMPLOYEE WITHHOLDING TAXES") and for remitting such Employee
Withholding Taxes and the applicable amounts of employer Taxes to the applicable
Governmental Authority, and (ii) to report to the applicable taxing authorities
the income recognized by the Acquired Employees upon exercise of options to
acquire Seller stock after Closing as compensation paid by Seller or its
Affiliates to the holders
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of such options. Notwithstanding any other provision in this Agreement, Seller
shall indemnify and hold harmless Purchaser and its Affiliates in respect of any
Employee Withholding Taxes or employer Taxes resulting from the exercise of such
options.
(d) Prior to Closing, Seller may modify certain stock options held by
Acquired Employees to obtain Seller's stock, which modifications will (depending
on the particular optionee) accelerate vesting and/or extend the period after
Closing during which the options remain exercisable, provided that the
modifications will not cause the options to become subject to Code section 409A,
based on a reasonable good faith interpretation of regulatory guidance currently
available for Code section 409A. Other than the modifications described in the
preceding sentence, neither Seller nor, prior to Closing, NextNet shall cause or
permit any amendment, extension or other modification to be made to the terms of
any option that may be exercised by an Acquired Employee to acquire stock of
Seller after Closing, or to the terms of any Seller Plan affecting such an
option, that could cause the option to become subject to Code section 409A.
8.7 TAXES NOT SUBJECT TO LIMITATIONS. The provisions of this Article VIII
shall not be governed by the limitations contained in Section 11.3 and to the
extent of any inconsistency between this Article VIII and Article XI, the
provisions of this Article VIII shall control.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO OBLIGATIONS OF SELLER AND PURCHASER. The respective
obligations of each of Seller and Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of the following conditions:
(a) No Injunction or Restraint. There shall not be in effect any
temporary or permanent restraining order, decree, ruling or injunction or other
order of a court or other Governmental Authority of competent jurisdiction
directing that the transactions contemplated herein not be consummated, or
making such consummation unlawful, or otherwise materially limiting or
restricting ownership of NextNet or operation of the Business; provided,
however, that each of the Parties shall have used their reasonable commercial
efforts to prevent the entry of any such temporary or permanent restraining
order, injunction or other order.
(b) Regulatory Approvals. The waiting period applicable to the
consummation of the transactions contemplated by this Agreement and the
Subscription Agreement under the HSR Act shall have expired or been terminated,
any filings required to be made under any other applicable Antitrust Laws shall
have been made, and any approvals required to be obtained under any other
applicable Antitrust Laws shall have been obtained.
(c) No Action. No action, suit, proceeding or investigation before any
Governmental Authority shall be pending or threatened that (i) seeks to
prohibit, restrain or obtain damages or other relief in connection with the
consummation of the transactions contemplated by this Agreement or (ii) could
impair the ability of Purchaser to own or control NextNet, or operate the
Business, following the Closing Date.
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(d) Consents. All Consents by Third Parties set forth on Schedule
6.5(b), shall have been obtained.
(e) Equity Subscription. The conditions to the consummation of the
transactions contemplated by that certain Subscription Agreement, dated as of
the date hereof (the "SUBSCRIPTION AGREEMENT"), by and between Seller and
Purchaser, other than the condition set forth in Section 5(m) of such
Subscription Agreement, shall have been satisfied or waived.
9.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Purchaser, at or prior to the Closing,
of the following conditions:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of Seller contained in Article III
shall be true, correct and complete as if made on and as of the Closing Date,
other than changes specifically contemplated by this Agreement and
representations and warranties that are expressly made only as of a specific
date (in which case such representations and warranties shall be true, correct
and complete as of such date). For purposes of determining whether the condition
in this Section 9.2(a) is satisfied (and not for purposes of Article XI), all
such representations and warranties (x) shall be read without regard to any
materiality or Material Adverse Effect qualifiers contained therein and (y)
after taking clause (x) into account, shall be deemed to be true, correct and
complete unless breaches or inaccuracies thereof, individually or in the
aggregate, result or would reasonably be expected to result in a Material
Adverse Effect. Seller and NextNet shall have performed all of the obligations
and complied with all of the covenants, agreements and conditions set forth in
this Agreement or any Ancillary Agreement and required to be performed or
complied with by them on or prior to the Closing. At Closing, Seller shall
provide to Purchaser a certificate of an officer of Seller as to the foregoing
in form and substance reasonably acceptable to Purchaser, and Purchaser shall be
able to rely on such certificate for purposes of Article XI.
(b) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred and be continuing any Material Adverse Effect, or
any fact, event, change, development or effect that is continuing that
individually or when taken together in combination with any other facts, events,
changes, developments or effects that are continuing, would reasonably be
expected to have a Material Adverse Effect.
(c) Employees.
(i) The employees listed on Schedule 9.2(c)(i) hereof (i) shall
have signed employment agreements, as applicable, with Purchaser in a form
satisfactory to Purchaser in its sole discretion (but in compliance with
Article VII hereof) (the "KEY EMPLOYEES") on or prior to the Closing Date
and such agreements shall be in full force and effect as of the Closing
Date and (ii) shall still be on the job and performing their usual and
customary duties for NextNet or one of its Subsidiaries immediately before
the Closing, subject to any leaves of absences required by Law to be
recognized by NextNet or any other leave of absence consented to by
Purchaser in its reasonable and good faith discretion.
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(ii) At least eighty percent (80%) of the employees of NextNet,
including Key Employees, who are engineers and who have been extended
offers of employment by Purchaser (x) shall have signed offer letters
accepting employment with Purchaser, on or prior to the Closing Date and
such offer letters shall be in full force and effect as of the Closing and
(y) shall still be on the job and performing their usual and customary
duties for NextNet or one of its Subsidiaries immediately before the
Closing.
(d) Ancillary Agreements. Each of the Ancillary Agreements will have
been executed and delivered by each of the other Parties thereto, and each such
Ancillary Agreement shall be in full force and effect.
(e) Required Deliveries. Seller shall have made each of the following
deliveries:
(i) an opinion of counsel to Seller in the form attached hereto
as Exhibit B;
(ii) a certificate executed by the Secretary or other appropriate
officer of Seller certifying as of the date of Closing (i) a true and correct
copy of the Certificate of Incorporation of NextNet, (ii) a true and correct
copy of the Bylaws of NextNet, (iii) a true and correct copy of the resolutions
of NextNet's Board of Directors and its sole stockholder, (iv) a true and
correct copy of the resolutions of Seller's Board of Directors and (v)
incumbency matters;
(iii) a certificate of the Secretary of State of Delaware or
other appropriate governmental official certifying the existence and/or good
standing of NextNet and each of its Subsidiaries in their jurisdictions of
organization;
(iv) a certificate of the Secretary of State of Delaware
certifying the good standing of Seller;
(v) physical possession of all original minute books, corporate
seals and stock or equity ownership records of NextNet and each of its
Subsidiaries;
(vi) resignations of each director and officer of NextNet and
each of its Subsidiaries as requested by Purchaser prior to Closing;
(vii) a release agreement in the form attached hereto as Exhibit
C;
(viii) the stock certificate(s) representing all of the Shares,
duly endorsed for transfer, or together with an assignment separate from
certificate executed by an authorized officer of Seller; and
(ix) payoff letters with respect to the Closing Indebtedness
Amount and all necessary UCC termination statements or other releases as may be
required to evidence the satisfaction of such Closing Indebtedness Amount.
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(f) Termination of Exclusive Arrangements.
(i) Except as set forth on Schedule 9.2(f)(i), all exclusive
rights granted by NextNet or one of its Subsidiaries to Seller or an
Affiliate of Seller shall have been terminated, and Seller shall have
provided to Purchaser evidence of such termination in a form and substance
reasonably satisfactory to Purchaser.
(ii) Without limiting the generality of subsection (i) above,
subject to subsection (iii) below, the Master Purchase Agreement, Support
Service Agreement and Escrow Agreement dated July 2003 between NextNet and
Eagle River Holdings (by assignment from Flux Fixed Wireless LLC) (the "ER
MASTER AGREEMENT") shall have been terminated in whole (including all
licenses and any manufacturing rights granted thereunder), and Seller shall
have provided to Purchaser evidence of such termination in a form and
substance reasonably satisfactory to Purchaser.
(iii) In the event the Inukshuk Agreement has not been assigned
by Eagle River Canada, Inc. to Purchaser as contemplated by Section 6.7(c),
(A) the ER Master Agreement shall not be terminated and (B) the ER Master
Agreement shall be amended such that all rights granted to Eagle River
Canada, Inc. thereunder, other than the right to buy product (but including
all rights to exclusivity and all licenses and any manufacturing rights
granted thereunder), shall have been terminated, and Seller shall have
provided to Purchaser evidence of such amendment in a form and substance
reasonably satisfactory to Purchaser.
(g) FIRPTA Certificates. Each Acquired Company and Seller shall have
delivered certificates, duly completed and executed by such person pursuant to
Section 1.1445- 2(b)(2) of the Regulations, certifying that such person is not a
"foreign person" within the meaning of Section 1445 of the Code.
(h) NextNet Guarantee Releases. Seller shall have provided to
Purchaser evidence, in form and substance reasonably satisfactory to Purchaser,
that NextNet and its Subsidiaries have been, or will be concurrent with the
Closing, released from any and all obligations (i) as a "Guarantor" under that
certain Indenture of Seller dated August 5, 2005 and (ii) as a guarantor under
any credit facility entered into by Seller, and shall have obtained releases of
all Encumbrances, including appropriate UCC termination statements, against the
property of NextNet and its Subsidiaries in connection therewith.
9.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Seller, at or prior to the Closing, of
the following conditions:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of Purchaser contained in Article
IV shall be true, correct and complete as if made on and as of the Closing Date,
other than changes specifically contemplated by this Agreement and
representations and warranties that are expressly made only as of a specific
date (in which case such representations and warranties shall be true, correct
and complete as of such date). For purposes of determining whether the
47
condition in this Section 9.3(a) is satisfied (and not for purposes of Article
XI), all such representations and warranties (x) shall be read without regard to
any materiality qualifiers contained therein and (y) after taking clause (x)
into account, shall be deemed to be true, correct and complete unless breaches
or inaccuracies thereof, individually or in the aggregate, result or would
reasonably be expected to result in a Material Adverse Effect. Purchaser shall
have performed all of the obligations and complied with all of the covenants,
agreements and conditions set forth in this Agreement and required to be
performed or complied with by it on or prior to the Closing. At Closing,
Purchaser shall provide to Seller a certificate of an officer of Purchaser as to
the foregoing in form and substance reasonably acceptable to Seller, and Seller
shall be able to rely on such certificate for purposes of Article XI.
(b) Ancillary Agreements. Each of the Ancillary Agreements will have
been executed and delivered by each of the other Parties thereto, and each such
Ancillary Agreement shall be in full force and effect.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller, if:
(i) the Closing shall not have occurred on or before December 31,
2006 (the "OUTSIDE DATE"), unless the failure of the Closing to occur on or
prior to such date is the result of a breach of this Agreement by the Party
seeking to terminate this Agreement;
(ii) if there shall be any Law that makes consummation of the
transactions contemplated by this Agreement illegal or otherwise prohibited or
if any judgment, injunction, order or decree enjoining Purchaser or Seller from
consummating the transactions contemplated by this Agreement is entered and such
judgment, injunction, order or decree shall become final and nonappealable; or
(iii) either the Commercial Agreements or the Subscription
Agreement is terminated.
(c) by Seller (provided that it is not then in material breach of any
of its representations, warranties, covenants or agreements under this
Agreement), if Purchaser shall have breached any of its representations,
warranties, covenants, obligations or other agreements under this Agreement;
provided, however, that (x) the breach of the covenant, obligation, agreement,
representation or warranty is incapable of being or has not been cured by
Purchaser on or prior to the date which is fifteen (15) Business Days
immediately following written notice by Seller to Purchaser of such breach or
failure to perform and (y) such uncured breach or failure
48
would result in a condition to the obligations of Seller set forth in Section
9.1 and Section 9.3 not being satisfied;
(d) by Purchaser (provided that it is not then in material breach of
any of its representations, warranties, covenants or agreements under this
Agreement), if Seller or NextNet, as applicable, shall have breached any of its
representations, warranties, covenants, obligations or other agreements under
this Agreement; provided, however, that (x) the breach of the covenant,
obligation, agreement, representation or warranty is incapable of being or has
not been cured by Seller on or prior to the date which is fifteen (15) Business
Days immediately following written notice by Purchaser to Seller of such breach
or failure to perform and (y) such uncured breach or failure would result in a
condition to the obligations of Purchaser set forth in Section 9.1 and Section
9.2 not being satisfied.
(e) The Party desiring to terminate this Agreement pursuant to
Sections 10.1(b) through 10.1(d) shall give written notice of such termination
to the other Parties in accordance with Section 12.1.
10.2 EFFECT OF TERMINATION. In the event of a termination of this Agreement
by either Seller or Purchaser as provided in Section 10.1, this Agreement shall
forthwith become void, and there shall be no liability or obligation on the part
of Purchaser, NextNet or Seller, except with respect to Section 3.29 (Brokers),
Section 4.4 (Brokers), Section 6.4 (Public Announcements), this Article X,
Article XI (Survival and Indemnification) in so far as it relates solely to the
other provisions of this Agreement set forth in this Section 10.2 and Article
XII (General Provisions); provided, however, that nothing herein shall relieve
any Party from liability for any breach, default or failure to fulfill any
representation, warranty, covenant or agreement hereunder or pursuant to any
Ancillary Agreement on or prior to the date of such termination.
10.3 AMENDMENT. This Agreement may not be amended except by a written
instrument signed by each of the Parties.
10.4 FEES AND EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, Purchaser shall pay the fees, expenses and disbursements
of Purchaser and its Representatives incurred in connection with the subject
matter of this Agreement and any Ancillary Agreement and any amendments hereto
or thereto and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by Purchaser under this Agreement
and any Ancillary Agreement. Whether or not the transactions herein contemplated
shall be consummated, Seller shall pay its own fees, expenses and disbursements
and those of NextNet and its Representatives incurred in connection with the
subject matter of this Agreement and any Ancillary Agreements and any amendments
hereto or thereto and all other costs and expenses related to or arising from
this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby and/or incurred in the performance and compliance with all
conditions to be performed by Seller and NextNet under this Agreement.
10.5 EXTENSION; WAIVER. At any time prior to the Closing, the Parties may,
to the extent permitted by applicable Law, (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive
49
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a Party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such Party.
The failure of any Party to this Agreement to assert any of its rights under
this Agreement or under any Ancillary Agreement shall not constitute a waiver of
those rights.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 SURVIVAL. All covenants and agreements contained in this Agreement, or
in any document delivered pursuant hereto, shall survive the Closing until fully
performed. All representations and warranties contained in this Agreement, or in
any document delivered pursuant hereto, shall survive the Closing and shall
continue to be fully effective and enforceable for a period of eighteen (18)
months from the Closing Date; provided, however, that the representations and
warranties contained in (a) Section 3.17, Section 3.21 and Section 3.24 shall
survive the Closing and shall continue to be fully effective and enforceable for
a period of the later to occur of eighteen (18) months from the Closing Date and
thirty (30) days after the expiration of the applicable statute of limitations;
and (b) Section 3.5 shall survive indefinitely. The foregoing sentence
notwithstanding, any liability which results from fraud on the part of the other
Party or liability for claims relating to the representations and warranties
contained in Section 3.5, for which indemnity would otherwise be available under
Section 11.2, may be asserted at any time following Closing. Notwithstanding the
foregoing, any claim for indemnification under this Article XI (a "CLAIM") that
is asserted by written notice within the applicable survival period shall
survive until resolved by the Parties or pursuant to a final non-appealable
judicial determination. The representations and warranties contained in this
Agreement and Ancillary Agreements shall not be affected by any investigation,
verification or examination by any Party hereto or by anyone on behalf of any
such Party.
11.2 INDEMNIFICATION.
(a) Subject to Section 11.3(a), in the event the Closing occurs,
Seller will indemnify and hold harmless Purchaser and its Affiliates, including
NextNet, and their respective Representatives, heirs, executors, successors and
assigns (collectively, the "PURCHASER INDEMNIFIED PARTIES") from and against,
and the Purchaser Indemnified Parties shall be paid or reimbursed for, any and
all losses, damages, costs, expenses (including court costs, amounts paid in
settlement, judgments, reasonable attorneys' fees or other expenses, including
costs and expenses for investigating, defending and enforcing its rights under
this Article XI if such party is the prevailing party in any such proceeding),
suits, actions, claims, liabilities or obligations (collectively, "LOSSES"),
arising from, related to or caused by:
(i) any inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any document delivered with
respect hereto and thereto (including the certificate of officer delivered by
Seller pursuant to Section 9.2(a));
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(ii) the nonfulfillment, nonperformance or other breach of any
covenant or agreement of Seller or NextNet set forth in this Agreement or in any
document delivered pursuant hereto or thereto;
(iii) any claim by any former stockholder of NextNet, or any
other Person, seeking to assert, or based upon (a) ownership or rights to
ownership of any shares of NextNet Common Stock or any other rights of
a holder of capital stock of NextNet, including any option, preemptive rights or
rights to notice or to vote, (b) any rights under NextNet's Certificate of
Incorporation or Bylaws, or (c) any claim that his, her or its shares of NextNet
Common Stock or other capital stock were wrongfully repurchased by NextNet or
issued or sold to such Person in violation of any securities Laws, whether or
not facts relating to any of the foregoing have been disclosed in the schedules
to this Agreement;
(iv) the failure to pay any Transaction Expenses prior to or at
the Closing; and
(v) the matter identified in paragraph 4 on Schedule 3.18.
The indemnity provided for in this Section 11.2(a) is not limited to matters
asserted by Third Parties against any Purchaser Indemnified Party, but includes
any Loss incurred or sustained by any Purchaser Indemnified Party in the absence
of Third Party Claims.
(b) Subject to Section 11.3(b), in the event the Closing occurs,
Purchaser will indemnify and hold harmless Seller, its Affiliates, each of their
respective Representatives, heirs, executors, successors and assigns
(collectively, the "SELLER INDEMNIFIED PARTIES") from and against, and the
Seller Indemnified Parties shall be paid or reimbursed for, any and all Losses
arising from, related to or caused by:
(i) any inaccuracy in or breach of any representation and
warranty made by Purchaser in this Agreement or in any document delivered with
respect hereto (including the certificate of officer delivered by Purchaser
pursuant to Section 9.3(a));
(ii) the nonfulfillment, nonperformance or other breach of any
covenant or agreement of Purchaser contained in this Agreement or in any
document delivered pursuant hereto or thereto.
The indemnity provided for in this Section 11.2(b) is not limited to matters
asserted by Third Parties against any Seller Indemnified Party, but includes any
Loss incurred or sustained by any Seller Indemnified Party in the absence of
Third Party Claims.
11.3 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding any other provision of this Article XI, Seller
shall not be liable under Section 11.2(a)(i) unless and until the aggregate
amount of all Losses pursuant to Section 5.2(b), Article VIII or Section 11.2(a)
exceeds $200,000 (the "THRESHOLD AMOUNT"); provided, however, the Threshold
Amount will not apply with respect to any Losses for which a Purchaser
Indemnified Party is entitled to indemnification pursuant to Section 11.2(a)(i)
arising from or caused by a breach of the representations or warranties set
forth in Section 3.5, Section
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3.7(b), Section 3.17 or Section 3.24. Upon reaching such amount, Seller shall be
liable to the Purchaser Indemnified Parties for all Losses under Section
11.2(a)(i) up to an aggregate amount equal to $13,000,000 (the "MAXIMUM
AMOUNT"); provided, however, the Maximum Amount will not apply with respect to
any Losses for which a Purchaser Indemnified Party is entitled to
indemnification pursuant to Section 11.2(a)(i) arising from or caused by a
breach of the representations or warranties set forth in Section 3.5, Section
3.7(b), Section 3.17 or Section 3.24, and none of such Losses shall count
towards satisfaction of the Maximum Amount; provided, further, in no event shall
Seller's liability under this Article XI exceed the Purchase Price.
(b) Notwithstanding any other provision of this Article XI, Purchaser
shall not be liable under Section 11.2(b)(i) unless and until the aggregate
amount of all Losses pursuant to Article VIII or Section 11.2(b) exceeds the
Threshold Amount. Upon reaching such amount, Seller shall be liable to the
Purchaser Indemnified Parties for all Losses under Section 11.2(b)(i) up to an
aggregate amount equal to the Maximum Amount; provided, however, in no event
shall Purchaser's liability under this Article XI exceed the Purchase Price.
(c) Liability of Seller for fraud or willful misrepresentation of
Seller or NextNet, and liability of Purchaser for fraud or willful
misrepresentation of Purchaser, shall not be limited by the provisions of
Section 11.1 or this Section 11.3.
11.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any Third Party shall notify either Purchaser or Seller (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which
may give rise to a claim for indemnification against the other Party (the
"INDEMNIFYING PARTY") under this Article XI, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is prejudiced thereby.
(b) Subject to Sections 11.4(d) and (e), the Indemnifying Party will
have the right to defend the Indemnified Party against the Third Party Claim
with counsel of its choice so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing, within ten (10) Business Days after the
Indemnified Party has given notice of the Third Party Claim, that the
Indemnifying Party will assume the defense of the Third Party Claim, (ii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, and (iii) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently. Notwithstanding the foregoing, if
the Indemnified Party reasonably determines that there may be a conflict between
the positions of the Indemnifying Party and the Indemnified Party in conducting
the defense of such action, suit, investigation, inquiry or proceeding or that
there may be legal defenses available to such Indemnified Party different from
or in addition to those available to the Indemnifying Party, then counsel for
the Indemnified Party shall be entitled to conduct the defense to the extent
reasonably determined by such counsel to be necessary to protect the interests
of the Indemnified Party, at the expense of the Indemnifying Party, provided
that (x) this Section 11.4(b) shall not apply to any Third Party IP Claim (as
52
hereinafter defined) and (y) the Indemnifying Party shall have no liability for
expenses for more than one outside counsel for all Indemnified Parties with
respect to a Third Party Claim.
(c) So long as the conditions set forth in Section 11.4(b) are
satisfied and the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with Section 11.4(b) above, (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
(but not control) the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably), and (iii) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (which will not be unreasonably withheld or
delayed); provided, however, that no consent of the Indemnified Party shall be
required for any judgment or settlement involving only money damages so long as
neither the Indemnified Party nor its Affiliates has any obligations,
restrictions or liabilities related to such judgment or settlement.
(d) In the event any of the conditions in Section 11.4(b) above is or
becomes unsatisfied, however, or in the event the Third Party Claim is a Third
Party IP Claim (i) the Indemnified Party shall have the right to control, defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain written
consent from, the Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses of one outside counsel), and (iii) the
Indemnifying Party will remain responsible for any Losses the Indemnified Party
may suffer resulting from, arising out of, relating to, or caused by the Third
Party Claim to the extent provided in this Article XI.
(e) Notwithstanding the foregoing, if, following the Closing, NextNet,
one of its Subsidiaries or Purchaser is named as a defendant or receives notice
of any Third Party Claim alleging that any of the IP Assets infringe any
Intellectual Property Rights of any Third Party (a "THIRD PARTY IP CLAIM"), then
Purchaser will give prompt written notice to Seller, even if such Third Party IP
Claim may not be the subject of a possible claim for indemnification under this
Agreement. Purchaser shall have the right to control the defense and settlement
of any such Third Party IP Claim in any manner it may reasonably deem
appropriate. In the event Purchaser does not assume control of the defense and
settlement of the Third Party IP Claim, Seller will not settle any such Third
Party IP Claim or pursue a defense strategy that is likely to establish a
precedential practice or position that is adverse to the continuing business
interests of Purchaser with respect to the IP Assets or Intellectual Property
Rights of NextNet or one of its Subsidiaries without first consulting with
Purchaser and giving Purchaser the opportunity, at Purchaser's election and
expense, to conduct any additional action or defense that is, in Purchaser's
opinion, necessary to protect Purchaser's on-going business interests.
(f) If an Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Third Party Claim, then such
Indemnified Party shall deliver a notice to such Indemnifying Party as promptly
as practicable after becoming aware of a claim
53
containing reasonable detail of the specific facts and circumstances pertaining
thereto; provided, however, that no delay on the part of such Indemnified Party
in notifying such Indemnifying Party will relieve such Indemnifying Party from
any obligation under this Article XI unless (and then solely to the extent) the
Indemnifying Party is prejudiced thereby.
(g) Authority to Settle or Pay Small Claims. Notwithstanding the other
provisions of this Section 11.4, if a Third Party asserts that a Purchaser
Indemnified Party is liable to such Third Party for a monetary or other
obligation which individually may constitute or result in Losses not to exceed
$50,000 for which such Purchaser Indemnified Party may be entitled to
indemnification pursuant to this Article XI, and such Purchaser Indemnified
Party reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Purchaser Indemnified Party will be entitled to
satisfy such obligation, without prior notice to or consent from the
Indemnifying Party, (ii) such Purchaser Indemnified Party may subsequently make
a claim for indemnification in accordance with the provisions of this Article
XI, and (iii) such Purchaser Indemnified Party will be reimbursed, in accordance
with the provisions of this Article XI, for any such Losses for which it is
entitled to indemnification pursuant to this Article XI, subject to the right of
the Indemnifying Party to dispute the Purchaser Indemnified Party's entitlement
to indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article XI. This Section 11.4(g) will not be applicable
to payments which aggregate more than $150,000.
(h) All indemnification payments under this Article XI shall be deemed
adjustments to the Purchase Price and the Parties shall treat such payments as
such for Tax purposes.
11.5 OTHER INDEMNIFICATION PROVISIONS. Following the Closing, the foregoing
indemnification provisions under this Article XI are (x) the exclusive remedy
for claims in respect of any breach of representations or warranties or claims
made based on facts alleged that, if true, would have constituted any such
misrepresentation or breach and (y) in addition to, and not in derogation of,
any statutory, equitable or common law remedy any Party may have for a breach of
any covenant.
11.6 NO CIRCULAR RECOVERY. Seller shall not be entitled to make any claim
for indemnification or contribution or against NextNet, Purchaser or any of
their Affiliates whether such claim is (a) pursuant to any statute, charter,
bylaw, contractual obligation or otherwise or (b) by reason of the fact that
Seller was a controlling Person of NextNet, in each case, with respect to any
matter relating to or arising out of a matter which is subject to the provisions
of Section 11.2.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, (ii) sent by
facsimile, with confirming copy
54
sent as set forth in clause (iii), or (iii) sent by Federal Express, DHL, UPS or
overnight courier (providing proof of delivery) to the Parties, in each case at
the following addresses:
if to Purchaser, or NextNet following the Closing, to:
Motorola, Inc.
1475 W. Shure Drive
Arlington Heights, Illinois 60004
Attention: Kevin J. Gilbert
Facsimile No: 847.632.3020
with copies to:
Motorola, Inc.
Law Department
1303 E. Algonquin Road
Schaumburg, Illinois 60196
Attention: General Counsel
Facsimile No: 847.576.3750
and
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60606
Attention: Oscar A. David
Facsimile: 312.558.5700
if to Seller, or NextNet prior to Closing, to:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, Washington 98033
Attn: Broady Hodder, General Counsel
Facsimile: 425-216-7900
with a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98121
Attn: Julie A. Weston, Esq.
Facsimile: 206-628-7699
Unless otherwise specified herein, such notices or other communications shall be
deemed effective, (a) on the date received, if personally delivered or sent by
facsimile during normal business hours, or (b) if delivered by overnight
courier, on the date delivered as established by
55
return receipt or courier service confirmation or the date on which the return
receipt or courier service confirms that acceptance of delivery was returned by
the addressee. Each of the Parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the other Parties
hereto.
12.2 INTERPRETATION. When a reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
12.3 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the Parties and
delivered to the other Parties, it being understood that all Parties need not
sign the same counterpart. Delivery of an executed counterpart by facsimile
shall be effective to the fullest extent permitted by applicable Law.
12.4 ENTIRE AGREEMENT, NO THIRD-PARTY BENEFICIARIES. This Agreement, the
NDA, the Ancillary Agreements and all exhibits and schedules hereto and thereto
and the documents delivered pursuant hereto or thereto, constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the Parties with respect to the subject matter hereof. This
Agreement, except as specifically set forth in the provisions of Article X
(Termination and Amendment), Article XI (Survival and Indemnification) and
Article XII (General Provisions), is not intended to confer upon any Person
other than the Parties any rights or remedies.
12.5 GOVERNING LAW. This Agreement, and any disputes arising out of or
relating thereto, shall be governed by, and construed in accordance with, the
Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of Laws thereof.
12.6 ASSIGNMENT. Neither this Agreement nor any rights, interests or
obligations hereunder shall be assigned in whole or in part by any Party
(whether by operation of Law or otherwise) without the prior written consent of
the other Parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective successors and permitted assigns.
12.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, then all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible. If the
56
Parties (after negotiation in good faith) are unable to so agree, then each
Party hereto intends that such term of other provisions will be construed by
modifying or limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable Law.
12.8 ENFORCEMENT OF THIS AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, such remedy being in addition to any
other remedy to which Purchaser is entitled at Law or in equity. Each of the
Parties hereby irrevocably waives to the fullest extent permitted by applicable
Law any requirement that the other Party post a bond or other security in any
action to enforce its rights with respect to this Agreement.
12.9 EXTENSION; WAIVER. At any time prior to the Closing, either Seller or
Purchaser may, to the extent permitted by applicable Law (a) extend the time for
the performance of any of the obligations or other acts of the other Party (b)
waive a breach of a representation or warranty of such other Party contained
herein or in any Ancillary Agreement hereto or (c) waive compliance by such
other Party hereto with any of the agreements or conditions contained herein or
in any Ancillary Agreement. Any such extension or waiver shall be valid if set
forth in a written instrument signed by such Party or Parties giving the
extension or waiver. No waiver of any of the provisions of this Agreement or any
Ancillary Agreement shall be deemed or shall constitute a waiver of any other
provision hereof or thereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. The failure
of any Party to this Agreement to assert any of its rights under this Agreement
or under any Ancillary Agreement shall not constitute a waiver of those rights.
12.10 DISPUTES.
(a) Purchaser and Seller agree to use reasonable efforts to resolve
between themselves any dispute they have with respect to the matters covered
hereby, pursuant to the Ancillary Agreements or any agreement or document
delivered pursuant hereto or thereto, including any amendments hereof and
thereof.
(b) (i) Except for disputes concerning Intellectual Property Rights of
NextNet and its Subsidiaries which must be submitted to a court of competent
jurisdiction, as determined pursuant to Section 12.11, to the extent that any
misunderstanding or dispute cannot be resolved agreeably in a friendly manner,
the dispute will be mediated by a mutually-acceptable mediator to be chosen by
Purchaser and Seller within forty-five (45) days after written notice by one of
the Parties is delivered to the other demanding mediation. Neither Party may
unreasonably withhold consent to the selection of a mediator; however, either
Party may request a postponement of the mediation until each Party has completed
specified but limited discovery with respect to a dispute. The Parties may also
agree to attempt to resolve their dispute by some other form of alternate
dispute resolution ("ADR") in lieu of mediation.
(ii) Any dispute, other than a dispute concerning Intellectual
Property Rights of NextNet and its Subsidiaries which must be submitted to a
court of competent
57
jurisdiction, as determined pursuant to Section 12.11, which the Parties cannot
resolve through negotiation, mediation or other form of ADR within three (3)
months of the date of the initial demand for it by one of the Parties may then
be submitted to a court of competent jurisdiction for resolution. The use of any
ADR procedures will not be construed under the doctrines of laches, waiver or
estoppel to affect adversely the rights of either Party. Nothing in this Section
12.10(b) will prevent either Party from resorting to judicial proceedings if (A)
good faith efforts to resolve the dispute under these procedures have been
unsuccessful or (B) interim relief from a court is necessary to prevent serious
and irreparable injury to one Party or to others.
Each of Purchaser and Seller shall bear its costs of mediation or ADR, but
Purchaser and Seller agree to share the costs of the mediation or ADR equally.
12.11 JURISDICTION. The Parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in Wilmington, Delaware over any dispute arising out of or
relating to this Agreement or any agreement or instrument contemplated hereby or
entered into in connection herewith or any of the transactions contemplated
hereby. Each Party hereby irrevocably agrees that all claims in respect of such
dispute or proceeding shall be heard and determined in such courts (and the
courts hearing appeals from such courts). The Parties hereby irrevocably waive,
to the fullest extent permitted by applicable Law, any objection which they may
now or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum in connection therewith. EACH OF THE
PARTIES HERETO WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING SEEKING ENFORCEMENT OF SUCH PARTY'S RIGHTS UNDER THIS
AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY OR ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.12 AUTHORSHIP. The Parties hereto agree that the terms and language of
this Agreement were the result of negotiations between the Parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against any of the Parties. Any controversy over construction
of this Agreement shall be decided without regard to events of authorship or
negotiation.
12.13 NO JOINT VENTURE. Nothing in this Agreement creates a joint venture
or partnership between the Parties. This Agreement does not authorize any Party
(a) to bind or commit, or to act as an agent, employee or legal representative
of, another Party, except as may be specifically set forth in other provisions
of this Agreement, or (b) to have the power to control the activities and
operations of another Party. The Parties are independent contractors with
respect to each other under this Agreement. Each Party agrees not to hold itself
out as having any authority or relationship contrary to this Section 12.13.
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ARTICLE XIII
DEFINITIONS
As used in this Agreement, the following terms have the meanings specified
or referred to in this Article XIII and shall be equally applicable to both the
singular and plural forms. Any agreement referred to below shall mean such
agreement as amended, supplemented or modified from time to time to the extent
permitted by the applicable provisions thereof and by this Agreement. Any
reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the statute,
as in effect at the relevant time.
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 3.9.
"ACQUIRED COMPANY" means NextNet or any of the Subsidiaries, and the
"ACQUIRED COMPANIES" means NextNet and all of the Subsidiaries.
"ACQUIRED EMPLOYEES" means those employees of Seller, NextNet or one of
their Affiliates immediately prior to the Closing who are identified as such on
Schedule 3.25(a) (which shall also identify any Acquired Employees who
immediately prior to the Closing are on a company-approved leave of absence, and
the type and duration of such approved leave applicable to each such Acquired
Employee). Seller shall prepare and provide to Purchaser an initial version of
Schedule 3.25(a) on the date of this Agreement, and an updated version thereof
on the Closing Date.
"ACQUISITION PROPOSAL" means any inquiry, offer, proposal or indication of
interest by a Third Party which relates to a transaction or series of
transactions (including any merger, consolidation, recapitalization,
liquidation, amalgamation or other direct or indirect business combination) to
acquire all or substantially all of the assets of NextNet, to exclusively
license all or substantially all of NextNet's Intellectual Property, or the
portion thereof necessary for the conduct of the Business, or the acquisition of
five percent (5%) or more of the outstanding shares of NextNet Common Stock or
any tender or exchange offer that, if consummated, would result in any Person,
together with all Affiliates thereof, becoming a "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act) of five percent (5%) or more of the
outstanding shares of NextNet Common Stock.
"ACTIONS" means any claim, action, suit, litigation, complaint, charge,
hearing, arbitration, mediation, inquiry, proceeding or investigation by or
before any Governmental Authority.
"ADR" has the meaning set forth in Section 12.10(b).
"AFFILIATE" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership
59
of voting securities, by contract, or otherwise. For purposes of Section 3.26,
"Affiliate" shall include any entity described in the definition of "Seller
Plans."
"AFFILIATED GROUP" means a group of corporations (consisting of Seller
and/or any of its Subsidiaries) with which NextNet filed consolidated, combined,
unitary or similar Tax Returns.
"AGREEMENT" has the meaning set forth in the introductory paragraph of this
Agreement.
"ALLOCATION SCHEDULE" has the meaning set forth in Section 1.3.
"ANCILLARY AGREEMENTS" means the Commercial Agreements and any documents
and agreements delivered in connection therewith.
"ANTITRUST LAWS" means any federal, state or foreign Law, regulation or
decree designed to prohibit, restrict or regulate actions for the purpose or
effect of monopolization or restraint of trade.
"BUSINESS" has the meaning set forth in the Recitals to this Agreement.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or one on which
banks are authorized to close in Chicago, Illinois.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act.
"CLAIM" has the meaning set forth in Section 11.1.
"CLOSING" has the meaning set forth in Section 1.4.
"CLOSING DATE" has the meaning set forth in Section 1.4.
"CLOSING INDEBTEDNESS AMOUNT" means the aggregate amount of the outstanding
balance of Indebtedness for Borrowed Money of NextNet and its Subsidiaries as of
the opening of business on the Closing Date; provided that for purposes of such
calculation, all interest, prepayment penalties, premiums, fees and expenses (if
any) which would be payable if such Indebtedness for Borrowed Money was paid in
full at the Closing shall be treated as part of the Closing Indebtedness Amount.
"CLOSING PAYMENT" has the meaning set forth in Section 1.2.
"CLOSING WORKING CAPITAL" means the Working Capital as of the Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL AGREEMENTS" means the Wireless Broadband System Services
Agreement, the Wireless Broadband System Infrastructure Agreement and the
Wireless Broadband CPE Supply Agreement, each dated as of the Closing Date by
and between Purchaser and Seller or one of its Affiliates in the form attached
hereto as Exhibit D.
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"CONSENTS" means, with respect to a Person, any consent, approval, waiver,
order or authorization of, or registration, declaration or other action or
filing with, or exemption by, such Person.
"COPYRIGHTS" means rights in: (a) all classes and types of copyrights, mask
work rights, the works covered thereby and any derivative works thereof
(including the exclusive right to use, make recordings of, reproduce, modify,
adapt, edit, enhance, maintain, support, market, sell, rent, sell for rental,
sublicense, distribute copies of, publicly and privately, display and publicly
and privately perform, exploit, and exhibit the copyrighted work and to prepare
derivative works); (b) copyright and mask work applications and registrations
including extensions and renewals thereof; and (c) foreign counterparts of any
of the foregoing anywhere in the world, and all rights therein and thereto.
"DIRECT CONTRACTS" has the meaning set forth in Section 3.16(c).
"DISPUTE NOTICE" has the meaning set forth in Section 2.3.
"EMPLOYEE BENEFIT PLAN" means:
(a) any plan, fund, agreement, arrangement or program, written or
oral, that provides health, medical, surgical, hospital or dental care or other
welfare benefits, or benefits in the event of sickness, accident or disability,
or death benefits, apprenticeship or other training programs, or day care
centers, scholarship funds, or prepaid legal services;
(b) any plan, fund, agreement, arrangement or program, written or
oral, that provides retirement income to employees or results in a deferral of
income by employees for periods extending to the termination of covered
employment or beyond;
(c) any plan, fund, agreement, arrangement or program, written or
oral, that provides severance, unemployment, paid time off or fringe benefits
(including dependent care and health care accounts);
(d) any incentive compensation plan, deferred compensation plan, stock
option, stock purchase or other stock-based incentive or compensation plan,
whether written or oral; or
(e) any other "employee pension benefit plan" (as defined in Section
3(2) of ERISA), any other "employee welfare benefit plan" (as defined in Section
3(1) of ERISA), and any other written or oral any plan, fund, agreement,
arrangement or program involving direct or indirect compensation including,
without limitation, insurance coverage, severance benefits, disability benefits,
fringe benefits, pension or retirement plans, profit sharing, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.
"EMPLOYEE WITHHOLDING TAXES" has the meaning set forth in Section 8.6(c).
"ENCUMBRANCE" means any claims, security interests, liens, pledges,
charges, escrows, options, proxies, rights of first refusal, preemptive rights,
mortgages, hypothecations, title
61
retention agreements, indentures, security agreements or any other similar
limitations, encumbrances or restrictions of any kind.
"ENVIRONMENTAL LAWS" means all federal, state and local Laws, regulations,
rules and ordinances relating to pollution or protection of the environment or
human health and safety, including Laws relating to releases or threatened
releases of Hazardous Substances into the indoor or outdoor environment
(including ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, release, transport or handling of Hazardous Substances; all
Laws and regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Substances; and all Laws relating to
endangered or threatened species of fish, wildlife and plants and the management
or use of natural resources.
"ER MASTER AGREEMENT" has the meaning set forth in Section 9.2(f)(ii).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPORT APPROVALS" has the meaning set forth in Section 3.27(a).
"FCPA" has the meaning set forth in Section 3.28.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.7(a).
"GAAP" means United States generally accepted accounting principles and
practices.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, tribal or foreign
government or authority, or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency.
"HAZARDOUS MATERIALS" has the same meaning as such term is given in
Environmental Laws.
"HAZARDOUS SUBSTANCE" has the same meaning as such term is given in
Environmental Laws.
"HAZARDOUS WASTE" has the same meaning as such term is given in
Environmental Laws.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning set forth in Section 3.12(d).
"INDEBTEDNESS" means, with respect to any Person, without duplication, (a)
obligations for borrowed money ("INDEBTEDNESS FOR BORROWED MONEY"), (b)
obligations evidenced by
62
bonds, debentures, notes or similar instruments, (c) letters of credit issued
for the account of such Person (excluding letters of credit issued for the
benefit of suppliers to support accounts payable to suppliers incurred in the
ordinary course of business), (d) capitalized lease obligations, and (e)
guarantees and arrangements having the economic effect of a guarantee of any
indebtedness of the type described in clauses (a) through (d) above of any other
Person.
"INDEMNIFIED PARTY" has the meaning set forth in Section 11.4(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 11.4(a).
"INDEPENDENT AUDITOR" has the meaning set forth in Section 2.3.
"INSURANCE" means binders, policies of insurance, self insurance programs
or fidelity bonds.
"INTELLECTUAL PROPERTY RIGHTS" means the following throughout the world,
whether registered or unregistered, as applicable: (i) Patent Rights; (ii)
Proprietary Rights; (iii) Copyrights; (iv) Trademarks; and (v) any similar
corresponding or equivalent intellectual property rights to any one of the
foregoing.
"INUKSHUK AGREEMENT" has the meaning set forth in Section 6.7(c).
"INVESTMENT COMPANY ACT" has the meaning set forth in Section 3.30.
"INVESTMENTS" has the meaning set forth in Section 3.4(d).
"IP ASSETS" means those Intellectual Property Rights and Proprietary
Information and Technology that are used in the conduct of the Business as
currently conducted by NextNet and its Subsidiaries.
"IRS" has the meaning set forth in Section 3.17(b).
"KEY EMPLOYEES" has the meaning set forth in Section 9.2(c)(i).
"KNOWLEDGE" means, with respect to Seller, the actual knowledge,
information and belief of the co-Chief Executive Officers, co-Presidents, Chief
Operating Officer and Chief Financial Officer of Seller and the Chief Executive
Officer, President, Chief Operating Officer and Chief Financial Officer of
NextNet, in each case after making reasonable inquiry of their respective direct
reports and other persons whom, by the nature of the normal duties of their
position, would reasonably be expected to know.
"LAW" means any law, rule, regulation, judgment, code, ruling, statute,
order, ordinance, decree or other requirement of, including the terms of any
license or permit issued by, any Governmental Authority.
"LEASES" has the meaning as set forth in Section 3.12(b).
63
"LIABILITIES" means any and all debts, liabilities, guarantees, commitments
and obligations, whether fixed, contingent or absolute, asserted or unasserted,
matured or unmatured, liquidated or unliquidated, accrued or not accrued, known
or unknown, due or to become due, whenever or however arising (including whether
arising out of any contract or any tort based on negligence or strict liability)
and whether or not the same would be required by GAAP to be stated in financial
statements or disclosed in the notes thereto.
"LICENSES AND PERMITS" has the meaning set forth in Section 3.15.
"LOSSES" has the meaning set forth in Section 11.2(a).
"MAJOR CUSTOMER" has the meaning set forth in Section 3.16(a)(i).
"MAJOR CUSTOMER CONTRACT" has the meaning set forth in Section 3.16(a)(i).
"MAJOR SUPPLIER" has the meaning set forth in Section 3.16(a)(iii).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, liabilities, condition (financial or otherwise), operations or
revenues of NextNet and its Subsidiaries, taken as a whole or (b) the ability of
Seller to perform its obligations pursuant to this Agreement and to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement; provided, however, that for purposes of clause (a) of this
definition neither of the following shall, in and of itself, constitute a
Material Adverse Effect: (i) any effect proximately caused by any action taken,
or failure to take action, by NextNet to which Purchaser has consented in
writing or (ii) any effect proximately caused by the compliance with the terms
contained herein or the performance of covenants provided herein.
"MATERIAL CONTRACTS" has the meaning set forth in Section 3.16(a).
"MAXIMUM AMOUNT" has the meaning set forth in Section 11.3(a).
"MOST RECENT BALANCE SHEET" has the meaning set forth in Section 3.7(a).
"NATIONAL PRIORITIES LIST" has the same meaning as such term is given in
Environmental Laws.
"NEXTNET" has the meaning set forth in the introductory paragraph of this
Agreement.
"NEXTNET COMMON STOCK" means the common stock, par value $0.0001 per share,
of NextNet.
"NEXTNET PLANS" means the Employee Benefit Plans that are or have been
maintained or contributed to by NextNet or under which NextNet has or may have
any liabilities.
"NEXTNET PTO POLICY" has the meaning set forth in Section 7.4.
"NEXTNET SOFTWARE" means the Software, regardless of the Software's stage
of development, and all enhancements, versions, releases and updates thereto and
derivatives
64
thereof existing as of the date hereof, in each case currently owned by NextNet
or any of its Subsidiaries.
"NEXTNET STATEMENTS" has the meaning set forth in Section 3.7(a)
"NDA" has the meaning set forth in Section 6.2.
"OFCCP" means the Office of Federal Contract Compliance Programs of the
U.S. Department of Labor's Employment Standards Administration.
"OUTSIDE DATE" has the meaning set forth in Section 10.l(b)(i).
"OWNED IP" means Intellectual Property Rights and Proprietary Information
and Technology that are currently owned by NextNet and its Subsidiaries.
"PARTY" means each of Seller, NextNet or Purchaser, individually, and
"PARTIES" means all of the foregoing collectively.
"PATENT RIGHTS" means right in all classes or types of patents and patent
applications, including utility models, provisional applications, petty patents,
design patents, registered industrial designs and all other similar protection
of inventions as recognized by applicable Law, in all countries of the world and
all continuations, continuations-in-part, divisions, or reissues.
"PERMITTED ENCUMBRANCES" means statutory liens for current Taxes, special
assessments or other governmental charges not yet due and payable.
"PERSON" means any individual, corporation, partnership, association,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity (including any Person as defined in Section
13(d)(3) of the Exchange Act) or Governmental Authority.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section 3.13.
"PLAN TERMINATION DATE" has the meaning set forth in Section 7.7
"POST-CLOSING BALANCE SHEET" has the meaning set forth in Section 2.2.
"POST-CLOSING PERIOD" means any taxable period or portion of a period that
begins after the Closing Date and the portion of any Straddle Period beginning
after the Closing Date.
"PRE-CLOSING BALANCE SHEET" has the meaning set forth in Section 2.1(a).
"PRE-CLOSING PERIOD" means any taxable period or portion of a period ending
on or before the Closing Date and the portion of the Straddle Period ending on
the Closing Date. The Closing Date is specifically included in any Pre-Closing
Period.
"PRELIMINARY WORKING CAPITAL" means the good faith estimate of the Working
Capital as of the Closing Date as determined in accordance with Section 2.1(a).
65
"PROPRIETARY INFORMATION AND TECHNOLOGY" means confidential ideas and
information, inventions (whether or not patentable), invention disclosures,
information maintained as trade secrets, know-how, concepts, processes,
formulae, patterns, molds, tooling, industrial models or designs, engineering
data, cost data, compilations of information, copyrightable material, reports,
databases and data collections, algorithms, Software, methods of manufacture,
methods of use, business methods, process flow sheets, customer lists, mailing
lists, plans and reports, or other similar confidential or proprietary data
and information.
"PROPRIETARY RIGHTS" means all trade secret rights and all other rights of
a proprietary nature (under the applicable Laws of applicable jurisdictions
anywhere in the world) relating to Proprietary Information and Technology.
"PURCHASE PRICE" has the meaning set forth in Section 1.2.
"PURCHASER" has the meaning set forth in the introductory paragraph of this
Agreement.
"PURCHASER 401(K) PLAN" has the meaning set forth in Section 7.6.
"PURCHASER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.2(a).
"PURCHASER PLANS" means those Employee Benefit Plans maintained or
contributed to by Purchaser and under which the Acquired Employees will be
eligible to participate after the Closing.
"PURCHASER PTO POLICY" has the meaning set forth in Section 7.4.
"PURCHASER SEVERANCE PLAN" has the meaning set forth in Section 7.3.
"REGISTERED INTELLECTUAL PROPERTY" has the meaning set forth in Section
3.23(a).
"REGULATIONS" means the final and temporary (but not proposed) income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REMEDIAL ACTION" has the same meaning as such term is given in
Environmental Laws.
"REMOVAL" has the same meaning as such term is given in Environmental Laws.
"REPRESENTATIVE" means, with respect to any Person, its officers,
directors, investment bankers, attorneys, accountants, consultants or other
agents, advisors or representatives.
"RESTRICTED BUSINESS" has the meaning set forth in Section 6.6(a).
"SECTION 338(H)(10) ELECTION" has the meaning set forth in Section 8.4.
"SELLER" has the meaning set forth in the introductory paragraph of this
Agreement.
"SELLER 401(K) PLAN" has the meaning set forth in Section 7.6.
66
"SELLER ACQUISITION DATE" has the meaning set forth in Section 3.3(b).
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 11.2(b).
"SELLER PLANS" means the Employee Benefit Plans that are or have been
maintained or contributed to by Seller or any other entity (other than NextNet)
that is aggregated with Seller under the provisions of Sections 414(b), (c), or
(m) of the Code or under which Seller (or any such entity) has or may have any
liabilities.
"SELLER STATEMENTS" has the meaning set forth in Section 3.7(a).
"SHARES" has the meaning set forth in the Recitals to this Agreement.
"SOFTWARE" means computer software programs, including software
compilations, software tool sets, compilers, higher level or "proprietary"
languages and all related programming and user documentation, whether in source
code, object code or human readable form, or any translation or modification
thereof that substantially preserves its original identity.
"SOLID WASTE" has the same meaning as such term is given in Environmental
Laws.
"STOCK EQUIVALENTS" has the meaning set forth in Section 3.5(a).
"STRADDLE PERIOD" means any taxable period that begins before and ends
after the Closing Date.
"SUBCONTRACTS" has the meaning set forth in Section 3.16(c).
"SUBSCRIPTION AGREEMENT" has the meaning set forth in Section 9.1(e).
"SUBSIDIARY" means, with respect to any Person, any other domestic or
foreign corporation, limited liability company, general or limited partnership,
unincorporated association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof.
"TAX" and "TAXES" means (i) any federal, state, local or non-United States
net or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or National Insurance Contribution or similar), unemployment, disability, real
property, personal property, sales, use, transfer, gains, capital gains,
registration, goods and services, value added, alternative or add-on minimum,
windfall profits, estimated or other tax, governmental fee or like assessment or
charge of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not, imposed by any Governmental
67
Authority or other Tax authority or arising under any Tax Law; (ii) any
liability of any Acquired Company for payment of the amounts described in clause
(i) arising as a result of being (or ceasing to be) a member of an Affiliated
Group or being included in any Tax Return of any Affiliated Group; or (iii) any
liability of any Acquired Company for the payment of amounts described in clause
(i) as a result of transferee, successor, or contractual liability. For purposes
of the definition of "Tax", any interest, penalties, additions to tax or
additional amounts that relate to taxes for any period, or a portion of any
period, ended on or before the Closing Date shall include any interest,
penalties, additions to tax, or additional amounts relating to taxes for such
periods, regardless of whether such items are incurred, accrued, assessed or
similarly charged on, before or after the Closing Date.
"TAX CONTEST" means any examination, investigation, audit, or other
proceeding in respect of any Tax Return or Taxes relating to any Acquired
Company.
"TAX RETURN" means any return, declaration, report, claim for refund, form,
information statement, or similar statement (including any related or supporting
information) including any schedule or attachment thereto relating to Taxes,
including any amended return or declaration of estimated Tax.
"THIRD PARTY" means any Person (or group of Persons) other than Purchaser
and its Affiliates and Seller and its Affiliates.
"THIRD PARTY CLAIM" has the meaning set forth in Section 11.4(a).
"THIRD PARTY IP CLAIM" has the meaning set forth in Section 11.4(e).
"THRESHOLD AMOUNT" has the meaning set forth in Section 11.3(a).
"TINA" has the meaning set forth in Section 3.16(c).
"TRADEMARKS" means rights in trademarks, service marks, logos, trade dress
and trade names, and web addresses and domain names, whether registered or
unregistered, and registrations and pending applications to register the
foregoing in the United States and its territories and in all other countries of
the world, and all goodwill associated with the foregoing.
"TRANSACTION EXPENSES" means all legal, accounting, tax, financial advisory
and other professional or transaction expenses incurred by NextNet and its
Subsidiaries in connection with this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby, and any change of control
obligations.
"WORKING CAPITAL" has the meaning set forth in Section 2.2.
[signature page follows]
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IN WITNESS WHEREOF, each of Seller, NextNet and Purchaser have caused this
Stock Purchase Agreement to be signed as of the date first written above.
CLEARWIRE CORPORATION
/s/ Benjamin G. Wolff
----------------------------------------
Name: Benjamin G. Wolff
Its: Co-Chief Executive Officer
NEXTNET WIRELESS, INC.
/s/ Benjamin G. Wolff
----------------------------------------
Name: Benjamin G. Wolff
Its: Executive Vice-President
MOTOROLA, INC.
/s/ Donald F. Mcclellan
----------------------------------------
Name: Donald F. Mcclellan
Its: Corporate Vice President
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
EXHIBIT A
SAMPLE WORKING CAPITAL CALCULATION AS OF APRIL 30, 2006
[Download Table]
Assets:
Accounts and other receivables, net $14,215,092
Inventories 5,634,625
Prepaid expenses and other current assets 222,774
-----------
$20,072,491
Liabilities:
Accounts Payable $ 7,535,234
Accrued Expenses 1,951,993
Accrued Warranty 320,082
Other customer deposits 688,405
Current portion of deferred revenue 2,222,215
-----------
$12,717,929
WORKING CAPITAL: $ 7,354,562
EXHIBIT B
FORM OF OPINION OF COUNSEL TO SELLER AND NEXTNET
Capitalized terms used herein and not defined herein shall have the meanings
ascribed thereto in the Stock Purchase Agreement.
1. Seller and NextNet are corporations duly incorporated and validly
existing and in good standing under the laws of the State of Delaware.
2. Each Subsidiary of NextNet is a corporation duly incorporated and
validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
3. NextNet is duly qualified to do business as a foreign corporation in
the jurisdictions identified on Schedule 3.3. Each Subsidiary of
NextNet is duly qualified to do business as a foreign corporation in
the jurisdictions identified on Schedule 3.4.
4. Seller and NextNet each have corporate power and authority to enter
into, and to perform their respective obligations under, the Agreement
and the other agreements to be delivered at the Closing to which
Seller or NextNet is a party (the "Transaction Agreements"). To our
knowledge, NextNet has all necessary power and authority to conduct
its business in the manner in which, and at the locations where, it is
presently conducted.
5. Each of Seller and NextNet has authorized, by all necessary corporate
action, the execution and delivery of each of the Transaction
Agreements and the performance of each of the Transaction Agreements
and the transactions contemplated by the Agreement, and Seller and
NextNet have executed and delivered each of the Transaction Agreements
to which it is a party.
6. The Agreement constitutes the legal, valid and binding obligation of
Seller and NextNet, enforceable against Seller and NextNet in
accordance with its terms.
7. The execution and delivery by Seller and NextNet of and the
performance of the transactions contemplated by the Agreement do not
(i) violate the certificate of incorporation or bylaws of Seller or
NextNet, (ii) violate or conflict with or constitute a default under,
or require any notice, consent or approval under, any of the
agreements or obligations specifically identified in the schedules to
this Agreement, except to the extent that any such violation or
contravention of which would not have a Material Adverse Effect, (iii)
violate the federal law of the United States of America or the law of
the states of Washington or New York or the General Corporation Law of
the State of Delaware, or (iv) result in the imposition of any
Encumbrance upon the Shares or any asset of NextNet.
8. Immediately prior to the Closing, the duly authorized capital stock of
NextNet consisted of 1,000 shares of common stock, par value $0.0001
per share. The Shares represent the only issued and outstanding shares
of capital stock of NextNet. All of the Shares have
been duly and validly authorized and issued and are fully paid and
nonassessable and free of all preemptive rights.
9. To our knowledge, there are no outstanding or authorized
subscriptions, options, rights, warrants, puts, calls or other
agreements or commitments of any type (a) obligating Seller or NextNet
to issue, sell or transfer any shares of NextNet's capital stock, any
securities convertible into shares of capital stock of NextNet, or any
other rights to acquire capital stock of NextNet, (b) obligating
Seller or NextNet to grant, offer or enter into any of the foregoing,
(c) relating to the voting or control of any shares of capital stock
of NextNet or (d) subjecting NextNet to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of
its capital stock.
10. To our knowledge, there are no actions, proceedings or governmental
investigations pending, or threatened in writing, against or affecting
NextNet or any of its assets, or against or affecting Seller or
NextNet which questions the validity of the Transaction Agreements or
the consummation of the transactions contemplated thereby, or the
right of Seller or NextNet to execute, deliver and perform the
Transaction Agreements.
EXHIBIT C
FORM OF RELEASE AGREEMENT
THIS RELEASE AGREEMENT (this "Release") is dated effective as of
[__________], 2006 by Clearwire Corporation, a Delaware corporation ("Seller"),
in its capacity as the sole shareholder NextNet Wireless, Inc., a Delaware
corporation ("NextNet"), and on behalf of itself and its Affiliates.
RECITALS
A. Seller has heretofore been the sole shareholder of NextNet.
B. Seller, NextNet and Motorola, Inc., a Delaware corporation
("Purchaser"), have entered into a Stock Purchase Agreement dated as of June 30,
2006 (the "Purchase Agreement"), pursuant to which Seller is selling to
Purchaser, and Purchaser is purchasing from Seller, all outstanding shares of
capital stock of NextNet.
C. Seller will derive substantial benefits from the consummation of the
transactions contemplated by the Purchase Agreement.
D. The execution, delivery and continued existence and enforceability of
this Release is a material inducement to the willingness of Purchaser to enter
into the Purchase Agreement.
E. Any capitalized terms or phrases used herein and not otherwise defined
herein shall have the meaning set forth in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be legally bound, Seller hereby agrees as follows:
1. Release. From and after the Closing Date:
(a) Seller and each of its Affiliates hereby releases and forever
discharges NextNet, Purchaser and all of their respective current and former
members, directors, officers, employees, agents and Affiliates (each, a
"Released Party") from any and all liability whatsoever (whether known or
unknown, asserted or unasserted, direct or indirect, absolute or contingent,
accrued or unaccrued and whether due or to become due) ("Liability") that the
Released Parties may have to Seller or one of its Affiliates in its capacity as
a shareholder of NextNet or otherwise, arising contemporaneously with or prior
to the date hereof, or on account of or arising out of any act, omission,
transaction, matter, cause or event occurring contemporaneously with or up to
and including the date of this Release. Nothing in this Release shall limit in
any manner any rights to (i) warranty claims or other contractual rights with
respect to the sale of products from NextNet to Seller or one of its Affiliates,
(ii) payment of consideration pursuant to the
terms of the Purchase Agreement, and (iii) indemnification the Seller
Indemnified Parties may be entitled to pursuant to Article XI of the Purchase
Agreement or any other rights of Seller under the Purchase Agreement.
(b) Seller, on behalf of itself and its Affiliates, expressly waives
the benefit of any statute or rule of law, which, if applied to this Release,
would otherwise exclude from its binding effect any claim not known by the
Released Parties on the date of execution of this Release to exist.
(c) Seller, on behalf of itself and its Affiliates, hereby irrevocably
covenants to refrain from, directly or indirectly through NextNet or otherwise,
asserting any claim or demand, or commencing, instituting or causing to be
commenced, any claim or legal proceeding of any kind against any Released Party
before any court, administrative agency or other forum by reason of any matters
released hereby or that might reasonably be expected to result in any Liability.
(d) Seller, on behalf of itself and its Affiliates, represents to the
Released Parties that they have not assigned or transferred or purported to
assign or transfer to any person or entity all or any part of, or any interest
in, any claim, contention, demand, cause of action (at law or in equity) or
Liability of any nature, character or description whatsoever, which is or which
purports to be released or discharged by this Release.
2. Scope of Release. Seller, on behalf of itself and its Affiliates, hereby
represents that it understands and acknowledges that it may hereafter discover
facts and legal theories concerning this Release and the subject matter hereof
in addition to or different from those of which it now believes to be true.
Seller understands and hereby agrees that this Release shall remain effective in
all respects notwithstanding those additional or different facts and legal
theories or the discovery of those additional or different facts or legal
theories. Seller assumes the risk of any mistake of fact or law with regard to
any potential claim or with regard to any of the facts which are now unknown to
it relating thereto. Notwithstanding the release set forth herein, this Release
and all obligations assumed hereunder shall remain binding on Seller.
3. Severability. In the event that any provision of this Release is held
invalid, unenforceable or void to any extent by a court of competent
jurisdiction, such provision shall be modified, if possible, by reducing its
duration and scope to allow enforcement of the maximum permissible duration and
scope. In any event, such declaration shall not affect the remaining provisions
of this Release, and this Release shall be enforced as modified, or if no
modification is enforceable, as if such invalid clause had not been included.
4. Successors and Assigns. This Release shall be binding upon and inure to
the benefit of each of the Released Parties and their respective heirs,
successors, assigns, representatives, Affiliates and agents.
5. Headings. The section headings of this Release are for convenience of
reference only and shall not be deemed to alter or affect any provisions of this
Release.
6. Governing Law. This Release shall be governed by and construed under the
internal laws of the State of Delaware without reference to such state's
principles of conflicts of law.
7. Termination. This Release shall automatically terminate upon the
termination of the Purchase Agreement in accordance with the provisions of
Article X thereof.
[signature page follows]
IN WITNESS WHEREOF, Seller has executed and delivered this Release as of
the date set forth above on behalf of itself and each of its Affiliates.
SELLER:
CLEARWIRE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
EXHIBIT D
COMMERCIAL AGREEMENTS
See attached.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 1/8/07 | | | | | | | None on these Dates |
| | 12/31/06 | | 52 |
| | 6/30/06 | | 1 | | 77 |
| | 6/15/06 | | 14 |
| | 5/31/06 | | 17 | | 23 |
| | 4/30/06 | | 7 | | 74 |
| | 3/31/06 | | 12 |
| | 12/31/05 | | 11 | | 28 |
| | 12/29/05 | | 38 |
| | 11/1/05 | | 41 |
| | 8/5/05 | | 51 |
| | 12/31/04 | | 12 | | 22 |
| | 3/16/04 | | 9 |
| | 12/31/03 | | 12 |
| List all Filings |
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