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 10.51
EXECUTION VERSION
INTEL/CLEARWIRE CONFIDENTIAL
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "AGREEMENT") is entered into as
of June 28, 2006 (the "EFFECTIVE DATE") by and among Clearwire Corporation, a
Delaware corporation (the "COMPANY"), and Intel Pacific, Inc., a Delaware
corporation ("PURCHASER").
RECITALS
WHEREAS, the Company desires to sell, and Purchaser desires to purchase,
shares of the Company's Class A Common Stock, $0.0001 par value per share (the
"CLASS A COMMON STOCK"), and Class B Common Stock, $0.0001 par value per share
(the "CLASS B COMMON STOCK" and, together with the Class A Common Stock, the
"COMMON STOCK") having the rights, preferences, privileges and restrictions set
forth in the Restated Certificate (as defined below);
WHEREAS, in order to induce Purchaser to enter into this Agreement,
concurrently with or prior to the issuance and sale of the Shares (as defined
below):
(i) the Company and Purchaser shall enter into that certain Investor
Rights Agreement, in substantially the form attached to this Agreement as
Exhibit A (the "INVESTOR RIGHTS AGREEMENT");
(ii) the Company, Purchaser and certain other stockholders of the
Company shall enter into a joinder agreement to that certain Amended and
Restated Stockholders Agreement, dated as of March 16, 2004 (the "STOCKHOLDERS
AGREEMENT"), in substantially the form attached to this Agreement as Exhibit B
(the "JOINDER AGREEMENT");
(iii) the Company, Purchaser and certain other stockholders of the
Company shall enter into a Voting Agreement in substantially the form attached
to this Agreement as Exhibit C (the "VOTING AGREEMENT"); and
(iv) the Company and certain members of the management of the Company
shall enter into non-compete agreements in substantially the form attached to
this Agreement as Exhibit D (the "EMPLOYEE NON-COMPETE AGREEMENT").
WHEREAS, in order to induce Purchaser to enter into this Agreement,
concurrently with or prior to either the execution of this Agreement:
(i) the Company, Purchaser and Intel Capital Corporation shall enter
into an amendment and restatement of that certain Side Letter Agreement dated
October 13, 2004, in substantially the form attached to this Agreement as
Exhibit E (the "SIDE LETTER AMENDMENT");
(ii) the Company and Purchaser (or one of its affiliates) shall enter
into that certain Collaboration Agreement (the "COLLABORATION AGREEMENT"), in
substantially the form attached to this Agreement as Exhibit F, which
Collaboration Agreement relates to the deployment of an 802.16e WiMAX network in
the United States and internationally; and
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(iii) the Company, Purchaser and Eagle River Holdings, LLC ("EAGLE
RIVER") shall enter into a Voting Agreement and Waiver of Preemptive Rights in
substantially the form attached to this Agreement as Exhibit G (the "EAGLE RIVER
VOTING AGREEMENT").
The Investor Rights Agreement, the Joinder Agreement, the Voting Agreement, the
Non-Compete Agreements, the Side Letter Amendment, the Collaboration Agreement,
and the Eagle River Voting Agreement are collectively referred to herein as the
"TRANSACTION AGREEMENTS."
AGREEMENT
NOW, THEREFORE, In consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK
1.1. Authorization. Prior to the Closing (as defined below), the
Company shall adopt and file with the Secretary of State of the State of
Delaware the amended and restated Certificate of Incorporation of the Company
attached to this Agreement as Exhibit H (the "RESTATED CERTIFICATE").
1.2. Agreement to Purchase and Sell Stock. Subject to the terms and
conditions hereof, on the date of the Closing, Purchaser agrees to purchase and
the Company agrees to issue and sell to Purchaser 70,282,803 shares of Class A
Common Stock and 29,717,197 shares of Class B Common Stock (collectively, the
"SHARES"), in each case, subject to adjustment as set forth in Section 1.3 and
Section 5.5 hereof, at a price of $6.00 per share for an aggregate purchase
price of $600,000,000.00 (the "AGGREGATE PURCHASE PRICE").
1.3. Adjustment in Number of Shares. The number of shares of Class A
Common Stock and shares of Class B Common Stock to be issued and sold to
Purchaser hereunder on the date of the Closing is based on the total voting
power of the Company's capital stock held, owned or controlled by Eagle River
and/or its affiliates, which total voting power shall be determined in
accordance with the provisions of Section 5.5(g) hereof. To the extent there is
any change in the a total voting power of the Company's capital stock held,
owned or controlled by Eagle River and/or its affiliates on or prior to the date
of the Closing, the number of shares of Class A Common Stock and shares of Class
B Common Stock to be issued and sold to Purchaser hereunder on the date of the
Closing will be adjusted such that the total voting power of the Company's
capital stock represented by the Shares equals 60% of the total voting power of
the Company's capital stock held by Eagle River and/or its affiliates; provided
that, except in the event of a Dilutive Issuance (as defined below), in no any
event will the aggregate number of Shares exceed 100,000,000.
2. CLOSING; DELIVERY
2.1. The Closing. The purchase and sale of the Shares hereunder shall
take place remotely via the exchange of documents and signature pages at 10:00
a.m. (Pacific time), on the date that is two business days following the
satisfaction of all of the conditions set forth in
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Sections 6 and 7 hereof, or at such other time and place as the Company and
Purchaser may mutually agree upon (the "CLOSING").
2.2. Delivery. At the Closing, the Company will deliver to Purchaser
stock certificates representing the number of Shares purchased by Purchaser
hereunder against payment of the full purchase price therefor by wire transfer
of immediately available funds to an account designated in written wire transfer
instructions delivered to Purchaser by the Company at least one (1) business day
prior to the Closing.
3. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to Purchaser that, except as set
forth in the Schedule of Exceptions ("SCHEDULE OF EXCEPTIONS") delivered to
Purchaser in connection with the Closing and attached to this Agreement as
Exhibit I (which Schedule of Exceptions shall be deemed to be part of the
representations and warranties made hereunder and which exceptions shall be
deemed to be an exception to or exclusion from only the particular
representation and warranty against which it is listed, unless it is readily
apparent on its face from a reasonable reading of the disclosure that such
disclosures is applicable to another representation and warranty, whether or not
the listed representation and warranty includes a reference to such section of
the Schedule of Exceptions), the statements in this Section 3 are all true and
correct, unless otherwise specified herein. For purposes of this Agreement, (i)
the term "MINOR SUBSIDIARIES" means, both individually and together, each entity
that is listed under the heading "Minor Subsidiary" on Schedule 3.4(a) to the
Schedule of Exceptions; (ii) the term "MAJOR SUBSIDIARIES" means, both
individually and together, each entity (A) in which the Company, directly or
indirectly, owns or holds more than 50% of the outstanding equity interests, (B)
which is consolidated in the Financial Statements (as defined below), or (C) of
which the Company, directly or indirectly, has the ability or power to elect a
majority of the directors (or individuals performing similar functions), other
than (1) the Minor Subsidiaries and (2) NextNet Wireless, Inc. (to the extent
that it is sold prior to the date of the Closing); and (iii) the term
"SUBSIDIARIES" means, both individually and together, the Minor Subsidiaries and
the Major Subsidiaries. For the purposes of this Agreement, the terms
"knowledge", "known", "believe", "aware" or any similar term when referring to
the Company and/or any of its Subsidiaries shall mean the knowledge, information
and/or belief, formed after making reasonable inquiry, of the Company's co-Chief
Executive Officers, co-Presidents, Chief Operating Officer, and Chief Financial
Officer.
3.1. Due Authorization. All corporate action on the part of the
Company its officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance of all obligations
of the Company under, this Agreement and the Transaction Agreements and
necessary for the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the authorization, issuance, reservation
for issuance and delivery of the Shares and Conversion Shares (as defined below)
being sold under this Agreement, has been taken or will be taken prior to the
Closing. The execution, delivery and performance by the Company of this
Agreement and the Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby will not conflict with, or
constitute or result in, with or without the passage of time or the giving of
notice or both, either a
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violation, breach or default by the Company or any Subsidiary of, (i) any Order
(as defined below) of any court or other tribunal or of any federal, state,
local or foreign governmental authority, regulatory authority, commission or
agency (a "GOVERNMENT AUTHORITY"), provided that with respect to a Minor
Subsidiary, except where such violation, breach or default would not have or
result, individually or in the aggregate, in a Material Adverse Effect (as
defined below), (ii) any agreement, mortgage, indebtedness, lease, license,
indenture, contract, instrument, arrangement, understanding, commitments or
other undertaking ("CONTRACT"), to which the Company or any Subsidiary is a
party or by which the Company or such Subsidiary or any of their respective
properties or assets may be bound, except for this clause (ii), where such
violation, breach or default would not have or result in, individually or in the
aggregate, a Material Adverse Effect, (iii) any provision of the Restated
Certificate, the Company's bylaws (the "BYLAWS"), the charter, bylaws and/or
other governing documents of each of the Subsidiaries, or the Stockholders
Agreement, each as amended to date, or (iv) the provisions of any laws, statute,
rule, regulation or requirement ("LAWS") of the United States (including,
without limitation, any federal, state or local Governmental Authority) and
jurisdictions outside the United States applicable to or binding upon the
Company or any Subsidiary or any of their respective properties or assets,
provided that with respect to a Minor Subsidiary, except where such violation,
breach or default would not have or result in, individually or in the aggregate,
a Material Adverse Effect. The signature of the Company on this Agreement and
each of the Transaction Agreements is genuine. This Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization and similar Laws affecting
creditors' rights generally and to general equitable principles. Each of the
Transaction Agreements, when executed and delivered by the Company, shall
constitute legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium, reorganization and similar
Laws affecting creditors' rights generally and to general equitable principles
and, with regard to the indemnification provisions contained in the Investor
Rights Agreement, to the extent such indemnification provisions may be limited
by applicable federal and state securities Laws and principles of public policy.
3.2. Organization, Good Standing, Corporate Power and Qualification.
The Company and each Major Subsidiary is duly incorporated or organized, as
applicable, and validly existing under the Laws of the jurisdiction of its
incorporation or formation, as applicable, and is in good standing under such
Laws. The Company and each Major Subsidiary is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to be
so qualified and/or be in good standing would have or result in, individually or
in the aggregate, a material adverse effect on the financial condition,
business, assets (including, without limitation, intangible assets), or
operations of the Company and the Subsidiaries, taken together (a "MATERIAL
ADVERSE EFFECT"). The Company and each Major Subsidiary has all requisite power
and authority to own and operate its respective properties and assets, to carry
on its business as presently conducted and as presently proposed to be conducted
and to enter into this Agreement and the Transaction Agreements and to perform
its obligations hereunder and thereunder, including, without limitation, the
issuance, sale and delivery of the Shares and the Conversion Shares.
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3.3. Minutes. Copies of all minute books of the Company and each Major
Subsidiary that include all meeting minutes and consent actions of the Board of
Directors (the "BOARD") and stockholders of the Company and each such Major
Subsidiary, as the case may be, have been made available to Purchaser. These
copies are true and complete copies of all resolutions evidencing actions taken
by the Board of the Company and stockholders of the Company and each such Major
Subsidiary since its respective date of incorporation.
3.4. Subsidiaries. Schedule 3.4(a) of the Schedule of Exceptions sets
forth the name and jurisdiction of each Major Subsidiary and each Minor
Subsidiary as of the Effective Date. Except as set forth on Schedule 3.4(b) of
the Schedule of Exceptions, each Subsidiary is wholly-owned, directly or
indirectly, by the Company. Other than the Subsidiaries, the Company does not
own or control, directly or indirectly, any interest in, or participate in, any
other corporation, partnership, trust, joint venture, limited liability company,
association or other entity or similar arrangement. The shares of the capital
stock or membership or other equity interests, as applicable, of each of the
Subsidiaries owned by the Company are duly authorized, validly issued, fully
paid, and non-assessable, and free and clear of all Liens (as defined below). As
of the Effective Date, the outstanding securities of each of the Subsidiaries
are owned by the stockholders, optionholders, warrantholders and other
securityholders and in the numbers and by the class, series and type of each
security specified in Schedule 3.4(c) of the Schedule of Exceptions.
3.5. Capitalization; Valid Issuance of Stock.
(a) The authorized capital stock of the Company and the shares of
capital stock of the Company issued and outstanding on the Effective Date are as
set forth on Schedule 3.5(a)(i) of the Schedule of Exceptions. All of the
outstanding shares of the capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, and free and clear of all Liens,
other than imposed by or through the holder of the securities. As of the
Effective Date, the outstanding securities of the Company are owned by the
stockholders, optionholders, warrantholders and other securityholders and in the
numbers and by the class, series and type of each security specified in Schedule
3.5(a)(ii) of the Schedule of Exceptions. In addition, Schedule 3.5(a)(iii) of
the Schedule of Exceptions sets forth a true and complete list, as of the
Effective Date, of all outstanding options and warrants issued by the Company,
including for each, the name of the grantee, number of shares subject to the
option or warrant granted, the exercise price per share, the vesting schedule,
if applicable, and the date of issuance. As of the Effective Date, Eagle River
and/or its affiliates hold, own or control, beneficially or of record, or have
the power to vote, the number of Voting Securities (as defined below) specified
in Schedule 3.5(a)(iv) of the Schedule of Exceptions.
(b) The Shares, when issued, sold and delivered in accordance
with the terms and for the consideration set forth in this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable, and free and
clear of all Liens, other than Liens created by or imposed by Purchaser.
Additionally, the Shares are free of restrictions on transfer, other than
restrictions on transfer under this Agreement and the Stockholders Agreement, as
amended to date, and under applicable state and federal securities Laws. The
Company has and/or at Closing will have reserved 29,717,197 shares of its Class
A Common Stock for issuance to Purchaser
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upon conversion of the Class B Common Stock to be issued to Purchaser hereunder
(the "CONVERSION SHARES"). The Conversion Shares have been and/or at the Closing
will have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be duly and validly
issued, fully paid and non assessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement and the Stockholders
Agreement, as amended to the date and the date of the Closing, and under
applicable state and federal securities Laws and free of any Liens, other than
Liens created by or imposed by Purchaser. Except as provided by the Stockholders
Agreement, which rights Eagle River and its affiliates have validly waived as of
the Effective Date, the sale and issuance of the Shares and the Conversion
Shares are not subject to any preemptive rights or rights of first refusal or
similar rights.
(c) As of the Effective Date, the Company has reserved 30,000,000
shares of its Class A Common Stock for issuance to officers, directors,
employees and consultants of the Company and the Subsidiaries under the
Company's 2003 Stock Option Plan, pursuant to which (i) no shares of Class A
Common Stock have been issued pursuant to stock purchase agreements, restricted
stock units or awards and the exercise of stock options, (ii) options to
purchase 27,589,599 shares of Class A Common Stock are outstanding, and (iii)
2,410,401 shares of Class A Common Stock remain available for the grant of
future options or other equity-based awards. Other than the Company's 2003 Stock
Option Plan and Stock Appreciation Rights Plan, and the individual stock bonus
arrangements entered into by the Company, each as listed on Schedule 3.5(c) of
the Schedule of Exceptions, neither the Company nor any Subsidiary has or is
bound by any stock plan, stock purchase, stock option or other similar benefit,
bonus or incentive plan or program. Other than as described in the first two
sentences of this Section 3.5(c), neither the Company nor any Subsidiary is
bound by, or has any obligation to grant or enter into, any outstanding
subscriptions, options, warrants, rights (including, without limitation,
conversion or pre-emptive rights), calls, commitments, or Contract of any
character calling for it to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares or any other equity securities or equity
securities convertible into, exchangeable for, or representing the right to
subscribe for, purchase, or otherwise acquire any shares or any other equity
securities in the capital of the Company or any Subsidiary. The Company has made
available to Purchaser true and complete copies of the forms of all stock
restriction agreements with respect to the securities of the Company and any
Subsidiary.
(d) Except as set forth on Schedule 3.5(a) of the Schedule of
Exceptions, all outstanding options issued under the Company's 2003 Stock Option
Plan vest as follows: twenty-five percent (25%) of the shares vest one (1) year
following the vesting commencement date, with another twenty-five percent (25%)
vesting on each subsequent anniversary so that the option fully vests over four
(4) years from the vesting commencement date. The Company has never adjusted or
amended the exercise price of any stock options previously awarded, whether
through amendment, cancellation, replacement grant, repricing, or any other
means, except as required to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the "CODE"), which instances are described on Schedule
3.5(d) of the Schedule of Exceptions. No stock plan, stock purchase, stock
option, option agreement or other similar benefit, bonus or incentive plan or
program or other Contract between the Company and any holder of any equity
securities or rights to purchase equity securities provides for
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acceleration or other changes in the vesting provisions, lapse of any Company
repurchase rights or other changes in the terms of such Contract as the result
of (i) termination of employment or consulting services (whether actual or
constructive) of any shareholder; (ii) any merger, consolidation, sale of stock
or assets, change in control or any other transaction(s) by the Company or any
Subsidiary; or (iii) the occurrence of any other event or combination of events.
(e) All Holders of outstanding shares of the Common Stock are
parties to and bound by the Stockholders Agreement. Similarly, with respect to
each person who, pursuant of any stock plan, stock purchase, stock option or
other similar benefit, bonus or incentive plan or program of the Company, holds
any currently outstanding shares of Common Stock or other securities of the
Company or any Subsidiary or any option, warrant or right to acquire such shares
or other securities, the Company has a right to require that each such person
enter into or otherwise be bound by a Contract granting the Company (i) a right
of first refusal in favor of the Company upon proposed transfer by such holder
of such Common Stock or other security; and (ii) a lock-up or market standoff
agreement of not less than 180 days following the Company's initial public
offering pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "1933 ACT"). Other than the
Stockholders Agreement, as amended to date, neither the Company nor any
Subsidiary is a party or subject to any Contract, and, to the Company's
knowledge, there is no Contract between any persons and/or entities, which
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company or any Subsidiary.
(f) Except as set forth in the Restated Certificate, neither the
Company nor any Subsidiary has any outstanding obligation, contractual,
contingent or otherwise, to repurchase, redeem, or otherwise acquire any shares
or other equity securities in the capital of the Company or any Subsidiary.
Except for rights granted under that certain Registration Rights Agreement of
the Company dated March 16, 2004, that certain Registration Rights Agreement of
the Company dated November 13, 2003, that certain Registration Rights Agreement
of the Company dated August 5, 2005, or to be granted to Purchaser under the
Investor Rights Agreement, neither the Company nor any Subsidiary is a party to
or bound by any Contract under which any person or entity has the right, nor has
the Company or any Subsidiary granted or agreed to grant to any person or entity
any right, including, without limitation, any piggyback or demand rights, to
require the Company or such Subsidiary to effect, or to include any securities
held by such person or entity in, any registration with the United States
Securities and Exchange Commission (the "SEC") or any other Government Authority
or to distribute any such securities to the public.
(g) All of the outstanding shares of capital stock, options,
warrants and other securities of the Company and the Subsidiaries were offered,
issued and sold in full compliance with the registration and prospectus delivery
requirements of the 1933 Act and the registration and qualification requirements
of all applicable state securities Laws, or in compliance with applicable
exemptions therefrom, and all other provisions of all applicable federal, state
and provincial securities Laws, including, without limitation, anti-fraud
provisions, except for such non-compliance as would not have or result in,
individually or in the aggregate, a Material Adverse Effect. Assuming the
accuracy of the representations of Purchaser set forth in
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Section 4 hereof, the offer, issuance and sale of the Shares pursuant to this
Agreement are exempt from the registration requirements of Section 5 of the 1933
Act by virtue of Regulation D thereunder, from the qualification requirements of
the California Corporate Securities Law of 1968, as amended, and from the
registration or qualification requirements of all other applicable state
securities Laws, and the issuance of the Conversion Shares in accordance with
the Restated Certificate will be exempt from such registration and qualification
requirements.
3.6. Government and Third Party Consents. Except (i) for the filing of
the Restated Certificate, which will have been filed as of the Closing, (ii) for
filings pursuant to Regulation D of the 1933 Act and Section 25102(f) of the
California Corporation Code, which may and will be timely filed after the
Closing, and (iii) for filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder ("HSR ACT"), no consent, waiver, approval, order, permit,
authorization, declaration, notification, filing, designation, qualification or
registration ("CONSENT") of or with any Governmental Authority or any other
person is required to be made or obtained by the Company or any Major Subsidiary
in connection with (A) the execution and delivery of this Agreement or any of
the Transaction Agreements; or (B) the performance by the Company of its
obligations under this Agreement or the Transaction Agreements or the
consummation of the transactions contemplated hereby and thereby, other than
Consents required with respect to the performance of the Collaboration Agreement
after the date of the Closing that may be obtained after the Closing and for
which the Company does not currently believe that it will be unable to obtain in
a timely manner.
3.7. Title to Properties and Assets; Absence of Liens. The Company and
the Major Subsidiaries have good and marketable title to and own their
respective property and assets, including, without limitation, the property and
assets reflected in the unaudited consolidated balance sheet of the Company
dated March 31, 2006, free and clear of all mortgages, pledges, liens, deeds of
trust, claims of any kind, licenses, restrictions, security interests and other
encumbrances ("LIENS"), except such Liens imposed by Law that arise in the
ordinary course of business and do not materially impair the Company's or any
such Major Subsidiary's ownership or use of such property or assets. With
respect to the property and assets it leases (excluding any Spectrum Leases (as
defined below), which are covered by Section 3.23 hereof), the Company and each
Major Subsidiary, as the case may be, is in compliance with the lease covering
such property and assets and the Company or such Major Subsidiary, as
applicable, holds a valid leasehold interest in such leased property and assets
free of any Liens (other than those of the lessors of such property or assets),
except with respect to leases of which the termination or loss of rights would
not have or result in, individually or in the aggregate, a Material Adverse
Effect.
3.8. Tax Matters. The Company and each Major Subsidiary has duly and
timely filed all returns, declarations, reports, and information statements
("RETURNS") required to be filed in respect of any and all Taxes (as defined
below). All Returns filed by the Company or any each Major Subsidiary are true,
correct, and complete in all material respects. The Company and each Major
Subsidiary, as applicable, has paid all Taxes due and payable on a timely basis,
whether or not shown on such Returns, except those Taxes contested by the
Company in good faith that are listed in Schedule 3.8 of the Schedule of
Exceptions. There are no federal, state,
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county or local Taxes of the United States (including, without limitation any
federal, state or local government agency) or Taxes of jurisdictions outside the
United States due and payable by the Company or any Subsidiary which have not
been timely paid, except where the failure to timely pay such Taxes would not
have or result in, individually or in the aggregate, a Material Adverse Effect.
The provision for Taxes as shown in the Financial Statements (as defined below)
is adequate for the payment of, and are at least equal to all unpaid Taxes of
the Company and the Subsidiaries, due or accrued, whether or not assessed or
disputed, as of the date of the Financial Statements. The Company has not
elected pursuant to the Code, to be treated as an "S" corporation pursuant to
Section 1362(a) of the Code or a collapsible corporation pursuant to Section
341(f) of the Code, and neither the Company nor any Major Subsidiary has made
any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation, or amortization) that would have
or result in, individually or in the aggregate, a Material Adverse Effect. None
of the Returns has ever been audited by any applicable Governmental Authority,
and there is no current audit, investigation, Action (as defined below) or
deficiency proposed or assessed against the Company or any Major Subsidiary with
respect to Taxes. Neither the Company nor any Major Subsidiary has executed any
waiver of any statute of limitations on the assessment or collection of any
Taxes. Since the date of the Financial Statements, neither the Company nor any
Major Subsidiary has incurred any Taxes other than in the ordinary course of
business, and the Company and each Major Subsidiary has made adequate provisions
on its books of account for all Taxes with respect to its business, properties
and operations for such period. There are no Liens for Taxes upon any of the
assets of the Company or any Major Subsidiary, except Liens for Taxes not yet
due and payable. The Company and each Major Subsidiary have withheld and
collected all Taxes required to be withheld or collected under the Code or other
applicable Law, and has paid such Taxes to the proper Governmental Authority,
all on a timely basis. Neither the Company nor any Major Subsidiary has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution described in Section 355 of the Code. Neither the Company nor any
Major Subsidiary has ever been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code (or any predecessor provision or
comparable provision of state, local or foreign Law), or a member of combined,
consolidated or unitary group for state, local or foreign Tax purposes, other
than the group of which the Company is the common parent. Neither the Company
nor any Major Subsidiary has any liability for Taxes of any person (other than
the Company or such Major Subsidiary) under Treasury Regulations Section
1.1502-6 (or any corresponding provision of state, local or foreign income Tax
Law), as transferee or successor, or pursuant to a contract. Neither the Company
nor any Major Subsidiary has engaged in a transaction that constitutes a
"reportable transaction", as such term is defined in Treasury Regulation Section
1.6011-4(b)(1), or a transaction that constitutes a "listed transaction", as
such term is defined in Treasury Regulation Section 1.6011-4(b)(2). For purposes
of this Agreement, the term "TAXES" means (i) all charges, fees, levies, or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise,
estimated, severance, stamp, occupation, property, or other taxes, together with
all interest and penalties on such taxes, (ii) any liability for payment of
amounts described in clause (i) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of Law, and (iii) any liability for the
payment of amounts described in clauses (i) or (ii) as a result of any tax
sharing,
9
tax indemnity or tax allocation Contract or any other express or implied
Contract to indemnify any other person..
3.9. Litigation. There is no litigation, arbitration, action, claim,
suit, proceeding or, to the Company's knowledge, investigation (whether
conducted by or before any judicial or regulatory body, Governmental Authority,
arbitrator, or other person) ("ACTION") pending or, to the knowledge of the
Company, threatened or contemplated, (i) against the Company or any Major
Subsidiary, or any or their respective activities, properties or assets, (ii) to
the Company's knowledge, against any officer, director or employee of the
Company or any Subsidiary in connection with such officer's, director's or
employee's relationship with, or actions taken on behalf of the Company, or
(iii) that questions the validity of this Agreement or the Transaction
Agreements or the right of the Company to enter into them, or to perform its
obligations hereunder and thereunder or to consummate any of the transactions
contemplated by this Agreement or the Transaction Agreements. Neither the
Company, nor any Major Subsidiary, nor, to the Company's knowledge, any of their
respective officers, directors or employees, is a party or subject to the
provisions of any order, writ, injunction, judgment, ruling or decree ("ORDER")
of any court or Governmental Authority or instrumentality (in the case of
officers, directors and employees, such as would affect the Company or any Major
Subsidiary). There is no Action by the Company or any Subsidiary currently
pending or that the Company or any Subsidiary currently intends to initiate.
3.10. Compliance with Other Instruments. Neither the Company nor any
Major Subsidiary is in, nor shall the conduct of its respective business as now
conducted and as presently proposed to be conducted result in, any violation,
breach or default of (i) any existing or, to the extent known to the Company,
currently proposed Order or Law of any court or other tribunal or of any
Governmental Authority, (ii) any Contract, to which the Company or any Major
Subsidiary is a party or by which the Company or any Major Subsidiary or any of
their respective properties may be bound, (iii) any provision of the Restated
Certificate, the Bylaws, the charter, bylaws and/or other governing documents of
each of the Subsidiaries, or the Stockholders Agreement, each as amended to the
date, or (iv) the provisions of any Laws of the United States (including,
without limitation any federal, state or local government agency) and
jurisdictions outside the United States applicable to or binding upon the
Company or any Major Subsidiary, except as would not have or result in,
individually or in the aggregate, a Material Adverse Effect.
3.11. Interested Party Transactions. There are no Contracts or
proposed transactions between the Company or any Major Subsidiary and any of
their respective officers, directors, stockholders, affiliates, or any affiliate
thereof. To the Company's knowledge, none of the Company's or any Major
Subsidiary's directors or any Key Employees (as defined below), or any members
of their immediate families, or any "AFFILIATE" (as defined in Rule 405
promulgated under the 1933 Act) of any such person has or has had, either
directly or indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to the Company or any Major
Subsidiary any goods, property, technology, intellectual or other property
rights or services; (b) any firm or corporation with which the Company or any
Major Subsidiary is affiliated or with which the Company or any Major Subsidiary
has a business relationship, or (c) any firm or corporation which competes with
the Company or any Major
10
Subsidiary, except that directors, officers or Key Employees or members of their
immediate families may own stock in (but not exceeding one percent (1%) of the
outstanding capital stock of) publicly traded companies. To the Company's
knowledge, none of the Company's or any Major Subsidiary's directors or any Key
Employees, or any members of their immediate families, or affiliates of any such
person has or has had, either directly or indirectly, a material interest in any
Contract to which the Company or any Major Subsidiary is a party or by which it
may be bound or affected (other than such Contracts as relate to any such
person's ownership of capital stock or other securities of the Company). None of
the Company's or any Major Subsidiary's directors or any Key Employees, or any
members of their immediate families, or affiliates of any such person has or has
had, either directly or indirectly, a material commercial, industrial, banking,
consulting, legal, accounting, charitable or familial relationship with any of
the Company's or any Major Subsidiary's customers, suppliers, service providers,
joint venture partners, licensees and competitors.
3.12. Agreements; Actions.
(a) As of the Effective Date, there are no Contacts (oral or
written) or proposed transactions to which the Company or any Major Subsidiary
is a party or by which any of them is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company or any Major Subsidiary
in excess of, $5,000,000, (ii) indemnification by the Company or any Major
Subsidiary of any person or entity with respect to infringement of Proprietary
Rights outside the ordinary course of the Company's or any Major Subsidiary's
business, (iii) the acquisition, lease, sublease, license, transfer or
assignment of BRS or EBS spectrum, (iv) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company or any Major
Subsidiary, other than standard end-user object code license agreements, or (v)
the granting of any rights or any provisions that, individually or in the
aggregate, materially restrict or adversely affect the development, manufacture,
production, assembly, licensing, marketing, distribution or sale of the
Company's or any Major Subsidiary's products or services (each a "MATERIAL
CONTRACT" and, collectively, the "MATERIAL CONTRACTS").
(b) Neither the Company nor any Major Subsidiary has (i) declared
or paid any dividends or authorized or made any distribution upon or with
respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities individually in excess
of $5,000,000 or, in the case of indebtedness and/or liabilities individually
less than $5,000,000, in excess of $10,000,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances for travel or
other out-of-pocket expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business. For the purposes of this Section 3.12(b), all
indebtedness, liabilities, Contracts or transactions subject to a binding
agreement or understanding involving the same person or entity (including,
without limitation, persons or entities the Company has reason to believe are
affiliated with each other) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of this Section 3.12(b).
(c) Each of the Material Contracts is a valid, binding and
enforceable obligation of the Company or such Major Subsidiary, as the case may
be, and, to the knowledge
11
of the Company, of the other party or parties thereto, in each case, enforceable
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization and similar Laws
affecting creditors' rights generally and to general equitable principles, and
is in full force and effect. Neither the Company, nor any Major Subsidiary is in
material default or breach of or in non-compliance with any term of any Material
Contract, nor, to the Company's knowledge, does any other party to a Material
Contract consider the Company or such Major Subsidiary to be in default or
breach of or in non-compliance with any term of such Material Contract, nor, to
the knowledge of the Company, is there any basis for any of the foregoing. To
the Company knowledge, no other party to a Material Contract is in default or
breach of or in non-compliance with any term of such Material Contract, except
as would not have or result in, individually or in the aggregate, a Material
Adverse Effect.
(d) No employee, officer, director, stockholder or equityholder
of the Company or any Major Subsidiary or any member of his or her immediate
family is indebted to the Company or any Major Subsidiary, nor is the Company or
any Major Subsidiary indebted (or committed to make loans or extend or guarantee
credit) to any of them, other than in connection with expenses or advances of
expenses incurred in the ordinary course of business or employee relocation
expenses.
3.13. Disclosure. The Company has fully provided Purchaser with all of
the information that Purchaser has requested for deciding whether to acquire the
Shares. None of this Agreement (including, without limitation and as qualified
by all exhibits and schedules hereto), the Transaction Agreements or any other
written statements or certificates made by or on behalf of the Company or any
Major Subsidiary in connection with this Agreement or any of the Transaction
Agreements or any of the transactions contemplated hereby or thereby, contains
any untrue statement of a material fact or omits to state a material fact
necessary to be stated therein or necessary in order to make the statements
herein or therein not misleading in light of the circumstances under which they
were made.
3.14. Intellectual Property.
(a) Proprietary Rights. The Company and the Major Subsidiaries
have good title and ownership of, or have exclusive, perpetual license to, all
patents, patent applications, trademarks, service marks, trade names,
copyrights, maskworks, trade secrets, information, proprietary rights, designs,
processes and similar intellectual property (collectively, the "PROPRIETARY
RIGHTS") necessary to enable them to carry on their respective business as now
conducted and as presently proposed to be conducted without any conflict with or
infringement of the rights of others. No third party has any ownership right,
title, interest, claim in, encumbrance or Lien on any of the Company's or any
Major Subsidiary's Proprietary Rights and the Company and each Major Subsidiary
has taken all steps reasonably necessary to preserve its legal rights in, and
the secrecy, confidentiality and value of, all its Proprietary Rights, except
for disclosure which is required for legitimate business or legal reasons.
Schedule 3.14(a) of the Schedule of Exceptions contains with respect to
Proprietary Rights of the Company and/or any Major Subsidiary, a true, correct
and complete list of (i) each patent and patent application, the patent number
or application serial number for each jurisdiction in which filed, the
jurisdiction, date filed or issued, and present status thereof; (ii) each
trademark, service mark and trade name,
12
whether registered, applied for and unregistered, and if registered or applied
for, the application serial number or registration number (if registered) for
each jurisdiction in which filed, the jurisdiction, date filed or issued,
present status thereof, and the class of goods covered or the nature of the
goods or services, (iii) for any URL or domain name, the registration date, any
renewal date and name of registry; and (iv) for each registered copyrighted
work, the number and date of registration for each country, province and state,
in which a copyright application has been registered. The Company and the Major
Subsidiary's own all of such Proprietary Rights free and clear of all Liens,
licenses and other encumbrances. No Company or any Major Subsidiary patent,
patent application, registered trademark, service mark and trade name nor
registered copyrighted work has been or is currently involved in any
interference, reissue, reexamination, opposition, cancellation or similar
proceeding and, to the Company's knowledge, no such action is or has been
threatened with respect to any of the foregoing.
(b) Licenses; Other Agreements. Neither the Company or any Major
Subsidiary has granted, and there are not outstanding, any options or Contracts
of any kind relating to any Proprietary Rights of the Company or any Major
Subsidiary, nor is the Company or any Major Subsidiary bound by or a party to
any option or Contract of any kind with respect to any of its respective
Proprietary Rights. Neither the Company or any Major Subsidiary is in violation
of, or by conducting its business as now conducted or as presently proposed to
be conducted, would violate, any licenses with respect to the Proprietary Rights
to which the Company or any Major Subsidiary is a party to, including, without
limitation, any software licenses or open source licenses.
(c) No Infringement. To the Company's knowledge, neither the
Company nor any Major Subsidiary (i) has violated or infringed, (ii) is
currently violating or infringing or (iii) by conducting its respective business
as presently proposed to be conducted, will violate or infringe, any of the
Proprietary Rights of any other person or entity. Neither the Company nor any
Major Subsidiary has received any written or, to the Company's knowledge, verbal
communications alleging that the Company or any Major Subsidiary (or any of its
employees or consultants) has violated or infringed or, by conducting its
business as now conducted or as presently proposed to be conducted, would
violate or infringe, any Proprietary Rights of any other person or entity nor,
to the Company's knowledge, is there any factual or legal basis therefor. To the
Company's knowledge, no person or entity has violated or infringed or is
currently violating or infringing any of the Company's or any Major Subsidiary's
Proprietary Rights.
(d) Licenses from Third Parties; Royalties; Open Source Software.
Other than with respect to commercially available software products under
standard end-user object code license agreements, neither the Company nor any
Major Subsidiary is bound by or a party to any options or Contracts of any kind
relating to the Proprietary Rights of any person or entity. Neither the Company
nor any Major Subsidiary is obligated to pay any royalties or other payments to
any person or entity with respect to the marketing, sale, distribution,
manufacture, license or use of any Proprietary Rights in connection with the
conduct of the Company's or any Major Subsidiary's business. Neither the Company
nor any Major Subsidiary has embedded any open source, copyleft or community
source code in any of its products generally available or in
13
development, including, but not limited to, any libraries or code licensed under
any General Public License, Lesser General Public License or similar license
arrangement.
(e) Employee NDAs. Each current and former officer, employee and
consultant of the Company or any Major Subsidiary, including, without
limitation, each Key Employee, has executed in the Company's favor a standard
agreement regarding confidentiality and proprietary information used by the
Company or any Major Subsidiary and assignment of intellectual property rights
in favor of the Company and/or any such Major Subsidiary substantially in the
form of the Employee Non-Compete Agreement attached to this Agreement as Exhibit
D, and all such agreements are in full force and effect. To the Company's
knowledge, none of its current or former employees, officers and consultants is
in violation thereof. No such person has excluded works or intellectual property
rights made prior to his or her employment or other contractual relationship
with the Company or any Major Subsidiary from his or her assignment of
inventions pursuant to such agreement. Subject to any limitations on such
vesting imposed by applicable Law, full title and ownership of all inventions
and proprietary rights, processes or methods developed or invented by any and
all employees and consultants of the Company or any Major Subsidiary during the
period of their employment and/or consultancy and resulting directly or
indirectly from their work for the Company or any Major Subsidiary vest in the
Company or such Major Subsidiary pursuant to each such agreement.
(f) No Breach by Employee. To the Company's knowledge, (i) none
of the Company's or any Major Subsidiary's employees or consultants are
obligated under any Contract of any nature or subject to any Order of any court
or Governmental Authority, or any other restriction that would interfere with
the use of his or her best efforts to carry out his or her duties for the
Company or any Major Subsidiary or to promote the interests of the Company or
any Major Subsidiary or that would conflict with the Company's or any Major
Subsidiary's business as now conducted and as presently proposed to be conducted
and (ii) none of the Company's or any Major Subsidiary's employees or
consultants is, by virtue of such employee's or consultant's activities in
connection with the Company's or any Major Subsidiary's business, infringing, or
misappropriating any Proprietary Rights of any former employer of such employee
or consultant. Neither the execution or delivery of this Agreement or the
Transaction Agreements, nor the carrying on of the Company's or any Major
Subsidiary's business by the employees and consultants of the Company or any
Major Subsidiary, nor the conduct of the Company's or any Major Subsidiary's
business will, to the Company's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
Contract, covenant or instrument under which any of such employees or
consultants or the Company or any Major Subsidiary is now obligated. It will not
be necessary for the Company or any Major Subsidiary to utilize any inventions
of any of the employees of the Company or any Major Subsidiary (or persons the
Company or any Major Subsidiary currently intends to hire) made prior to or
outside the scope of their employment by the Company or such Major Subsidiary to
enable the Company or any Major Subsidiary to carry on its respective business
as now conducted and as presently proposed to be conducted. To the Company's
knowledge, at no time during the conception of or reduction of any of the
Company's or any Major Subsidiary's Proprietary Rights to practice was any
developer, inventor or other contributor to the Company's or any Major
Subsidiary's patents operating under any grants from any governmental entity or
agency or private source, performing research sponsored by any governmental
entity or agency
14
or private source or subject to any employment agreement or invention assignment
or nondisclosure agreement or other obligation with any third party that could
adversely affect the Company's or any Major Subsidiary's rights in such
Proprietary Rights.
(g) Neither (A) the wireless broadband services offered by the
Company or any Major Subsidiary, nor (B) any systems or data bases of the
Company or any Major Subsidiary or any information contained thereon, have
experienced (i) any failures, including, without limitation, those related to
the continuous provision of service, (ii) any breaches of security or (iii) any
instances of hacking which would have or result in, individually or in the
aggregate, a Material Adverse Effect.
3.15. Financial Statements. The Company has delivered to Purchaser the
audited consolidated financial statements of the Company (balance sheet and
income statement, statement of shareholders' equity and statement of cash flows)
as of December 31, 2003, December 31, 2004 and December 31, 2005 and for the
fiscal years then ended and unaudited financial statements (balance sheet and
income statement) as of March 31, 2006 and for the three months then ended (the
"FINANCIAL STATEMENTS"). The Financial Statements (i) are in accordance with the
books and records of the Company and the Subsidiaries (which are true and
complete in all material respects), and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except that the unaudited Financial Statements
do not contain all footnotes and normal year-end audit adjustments that are not,
individually or in the aggregate, material. The Financial Statements fairly
present in all material respects the financial condition and operating results
of the Company and the Subsidiaries as of the dates, and for the periods,
indicated therein, subject to normal audit adjustments with respect to the March
31 2006 Financial Statements. Except as set forth in the Financial Statements,
neither the Company nor any Subsidiary has any debts, liabilities or obligations
of any nature, whether due or to become due, (including, without limitation,
absolute liabilities, accrued liabilities, and contingent liabilities) or with
respect to which the Company or any Subsidiary has otherwise become directly or
indirectly liable, other than (i) liabilities incurred in the ordinary course of
business subsequent to March 31, 2006, and (ii) liabilities and obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in all such cases, individually or in the
aggregate, would not have or result in a Material Adverse Effect.
3.16. Indebtedness; Guarantees. Schedule 3.16 of the Schedule of
Exceptions identifies, as of the Effective Date, all outstanding loans, debts,
notes, mortgages, indentures, security agreements, commitments and other
obligations of the Company or any Major Subsidiary individually in excess of
$5,000,000 or, in the case of such obligations individually less than
$5,000,000, in excess of in the aggregate $10,000,000 (collectively, the
"OBLIGATIONS"). Neither the Company nor any Major Subsidiary is in default under
(or has received any notice that it has breached or committed any default under)
any of the Obligations, and no event or condition has occurred which, with the
lapse of time or the giving of notice, or both, would constitute such a default.
Neither the Company nor any Subsidiary is a guarantor or indemnitor of any
indebtedness of any person or entity, including, without limitation, any
Subsidiary that is not wholly-owned.
15
3.17. Permits. The Company and the Major Subsidiaries have all
franchises, permits, Consents, licenses, leases and any similar authority
necessary for the conduct of its business as now being conducted, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as presently proposed to be conducted.
Neither the Company nor any Major Subsidiary is in default in any respect under
any of such franchises, permits, Consents, licenses, leases or other similar
authority.
3.18. Absence of Certain Events. Since March 31, 2006, there has not
been:
(i) any change in the assets, liabilities, financial condition or
operating results of the Company or any Subsidiary from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not had and would not have or result in, individually or in the aggregate,
a Material Adverse Effect;
(ii) any material damage, destruction or loss, whether or not
covered by insurance, that has had or would have or result in, individually or
in the aggregate, a Material Adverse Effect;
(iii) any waiver, compromise or default by the Company or any
Subsidiary of a valuable right or of an Obligation or other material debt or
obligation owed to it;
(iv) any satisfaction or discharge of any Lien or payment of any
obligation by the Company or any Subsidiary, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken together;
(v) any transfer of or granting of any security interest in any
material asset of the Company or any Subsidiary;
(vi) any change or amendment to a Material Contract or other
material arrangement by which the Company or any Major Subsidiary or any of
their respective assets or properties is bound or subject;
(vii) any change in any compensation arrangement or Contract with
any present or prospective Key Employee, officer or director of the Company or
any Subsidiary, other than changes in the ordinary course of business that do
not exceed $25,000 on an annual basis for any individual Key Employee, officer
or director;
(viii) any resignation or termination of the employment of any
Key Employee or director of the Company or any Major Subsidiary;
(ix) any Lien, created by the Company or any Major Subsidiary,
with respect to any of its properties or assets, except Liens for taxes not yet
due or payable and Liens that arise in the ordinary course of business and do
not materially impair the Company's or any Major Subsidiary ownership or use of
such property or assets;
16
(x) any loans or guarantees made by the Company or any Subsidiary
to or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(xi) any declaration, setting aside or payment or other
distribution in respect of any capital stock of the Company's or any Subsidiary
that is not wholly-owned by the Company, or any direct or indirect redemption,
purchase, or other acquisition of any of such stock by the Company or any such
Subsidiary;
(xii) any sale, assignment or transfer of any Company's or any
Major Subsidiary's Proprietary Rights;
(xiii) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company or any Major
Subsidiary;
(xiv) any other events or conditions of any character which would
have or result in, individually or in the aggregate, a Material Adverse Effect;
or
(xv) any Contract or commitment by the Company or any Subsidiary
to do any of the things described in this Section 3.18.
3.19. Environmental Matters. Neither the Company nor any Major
Subsidiary is in violation of any applicable Law relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing Law. During the period that
the Company or any Major Subsidiary has owned, licensed or leased its properties
and facilities, (a) there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) on, from or under such
properties or facilities, (b) neither the Company nor any Major Subsidiary nor,
to the Company's knowledge, any third party, has used, generated, manufactured
or stored on, under or about such properties or facilities or transported to or
from such properties or facilities any Hazardous Materials. To the Company's
knowledge, there have been no disposals, releases or threatened releases of, of
nor the presence of any, Hazardous Materials on, from or under any of such
properties or facilities, which may have occurred prior to the Company or any
Major Subsidiary having taken possession of any of such properties or
facilities. For the purposes of this Section 3.19, the terms "disposal,"
"release," and "threatened release" shall have the definitions assigned thereto
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of
this Section 3.19, "HAZARDOUS MATERIALS" shall mean any hazardous or toxic
substance, material or waste which is regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical," "hazardous
material," "toxic substance," or "hazardous chemical" under (i) CERCLA; (ii) the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; (iii) the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101,
et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
(v) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.; (vi) regulations promulgated under any of the above statutes; or (vii) any
applicable state or local statute,
17
ordinance, rule, or regulation that has a scope or purpose similar to those
statutes identified above.
3.20. Insurance. The Company and the Major Subsidiaries maintain
insurance issued by insurers of recognized financial responsibility of the types
and in the amounts that are adequate for its businesses and consistent with
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering directors and officers, errors
and omissions, commercial general liability, products liability and real and
personal property owned or leased by the Company or any Major Subsidiary against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect. The Company
and/or each Major Subsidiary is in compliance with the terms of all such
insurance policies, except to the extent that any such non-compliance could
result in the suspension or termination of such insurance policy, and has not
received notice of default under any such insurance policy or received notice of
any pending or threatened termination or cancellation, coverage limitation or
reduction or premium increase with respect to any such insurance policy, and the
Company has no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a material increase in cost or risk. Neither the Company nor any Major
Subsidiary has during the past three fiscal years been denied any insurance
coverage which it has sought or for which it has applied.
3.21. Certain Business Practices. Neither the Company nor any Major
Subsidiary nor any officer, director, agent or employee purporting to act on
behalf of the Company or any Major Subsidiary has at any time, directly or
indirectly, (i) made, provided or paid any unlawful contributions, gifts,
entertainment or other unlawful expenses to any candidate for political office,
or failed to disclose fully any such contributions in violation of Law, (ii)
made any payment to any local, state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable Law (including, without
limitation, the Foreign Corrupt Practices Act of 1977, as amended), (iii) made
any payment to any agent, employee, officer or director of any entity to which
the Company or any Major Subsidiary does business for the purpose of influencing
such agent, employee, officer or director to do business with the Company or
such Major Subsidiary, (iv) engaged in any transactions, maintained any bank
account or used any corporate funds, except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the Company and/or such Major Subsidiary, (v) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, or (vi) made any
payment in the nature of criminal bribery or any other unlawful payment.
3.22. Employee Matters.
(a) Agreements; "At will" Employment. As of the Effective Date,
the Company and the Major Subsidiaries employ that number of full-time employees
and that number of part-time employees and engage that number of consultants or
independent contractors as set forth on Schedule 3.22(a) to the Schedule of
Exceptions. All of the employees of the Company in the United States are
employed by the Company or Clearwire US LLC.
18
Other than (i) standard director and officer indemnification agreements approved
by the Board of the Company, (ii) with regard to the purchase of shares of the
Company's Class A Common Stock and the issuance of options to purchase shares of
the Company's Class A Common Stock, in each instance, approved by the Board of
the Company or a committee to which the Board of the Company has delegated the
responsibility, and (iii) agreements disclosed in Schedule 3.22(a)(iii) of the
Schedule of Exceptions, there are no Contracts or proposed transactions between
the Company or any Major Subsidiary and any of their respective its employees,
officers or directors. No employee of the Company or any Major Subsidiary has
been granted the right to continued employment and the employment of each
employee is terminable at the will of the Company or such Major Subsidiary and
the employee.
(b) Severance Agreements. No plan, policy, practice, program or
Contract between the Company or any Major Subsidiary and any employee provides
for the payment of compensation, severance benefits or continuation of benefits
(other than as required by COBRA) as the result of (i) termination of employment
or consulting services (whether actual or constructive); (ii) any merger,
consolidation, sale of stock or assets, change in control or any other
transaction(s) by the Company or any Major Subsidiary; or (iii) the occurrence
of any other event or combination of events.
(c) Compliance with Laws; Withholding Obligations. Neither the
Company nor any Major Subsidiary is delinquent in payments to any of its
employees, consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service performed for
it or amounts required to be reimbursed to such employees, consultants, or
independent contractors. To the Company's knowledge, the Company and the Major
Subsidiaries have complied with all applicable state and federal equal
employment opportunity Laws and with other Laws related to employment including,
but not limited to, those related to wages, hours, worker classification, and
collective bargaining, and the Company is not aware of any pending demand
letters, charge, claims or lawsuits alleging violations of such Laws. The
Company and the Major Subsidiaries have withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the Company or any
Major Subsidiary including, but, not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes required
to be withheld or collected therefrom, and is not liable for any arrears of
wages, taxes, penalties, or other sums for failure to comply with any of the
foregoing.
(d) Employee Departures. To the Company's knowledge, no officer
or Key Employee intends to terminate employment with the Company or any Major
Subsidiary or is otherwise likely to become unavailable to continue as an
officer or employee, nor does the Company or any Major Subsidiary have a present
intention to terminate the employment of any of the foregoing. Schedule 3.22(d)
of the Schedule of Exceptions lists those individuals who are agreed to be
"officers" and/or "key employees" of the Company and the Major Subsidiaries (the
"KEY EMPLOYEES") for the purposes of this Agreement.
(e) Equity Incentives. Neither the Company nor any Major
Subsidiary has made any representations regarding equity incentives to any
officer, employees, director or
19
consultant that are inconsistent with the share amounts and terms set forth in
the minutes and actions by written consent of Board of the Company.
(f) Termination of Employment; Release of Claims. Each former
officer or key employee whose employment was terminated by the Company or a
Major Subsidiary has entered into an agreement with the Company or such Major
Subsidiary providing for the full release of any claims against the Company,
Major Subsidiary and any related party arising out of such employment.
(g) Employee Benefit Plans. Section 3.22(g) of the Schedule of
Exceptions sets forth each employee benefit plan maintained, established or
sponsored by the Company or any Major Subsidiary, or which the Company or any
Major Subsidiary participates in, contributes to or is subject to and further
indicates which plans are subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The Company and each Major Subsidiary has made
all required contributions and has no liability to any such employee benefit
plan, other than contributions that are in the process of being completed on a
timely basis and liability for health plan continuation coverage described in
Part 6 of Title I(B) of ERISA, and has complied in all material respects with
all applicable Laws for any such employee benefit plan.
(h) Organized Labor. Neither the Company nor any Major Subsidiary
is bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company or any Major Subsidiary. There is no
strike or other labor dispute involving the Company or any Major Subsidiary
pending, or to the Company's or any Major Subsidiary's knowledge, threatened,
nor is the Company or any Major Subsidiary aware of any labor organization
activity involving its employees.
(i) Actions Against Officers and Directors. To the Company's
knowledge, none of the directors of the Company or any Major Subsidiary or the
Key Employees has been (i) subject to voluntary or involuntary petition under
the federal bankruptcy Laws or any state insolvency Law or the appointment of a
receiver, fiscal agent or similar officer by a court for his or her business or
property, or any partnership in which he or she was a general partner or any
corporation or business association of which he or she was an executive officer;
(ii) convicted in a criminal proceeding or named as a subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(iii) subject to any Order (not subsequently reversed, suspended, or vacated) of
any court of competent jurisdiction permanently or temporarily enjoining him
from engaging, or otherwise imposing limits or conditions on his engagement in
any securities, investment advisory, banking, insurance, or other type of
business or acting as an officer or director of a public company; or (iv) found
by a court of competent jurisdiction in a civil action or by the SEC or the
Commodity Futures Trading Commission to have violated any federal or state
securities, commodities, or unfair trade practices Law, which such judgment or
finding has not been subsequently reversed, suspended, or vacated.
20
3.23. FCC Matters.
(a) The Company and its direct or indirect Subsidiaries, Fixed
Wireless Holding, LLC, Clearwire Spectrum Holdings LLC, Winbeam Inc., Jonsson
Communications Corporation, Craig Wireless Honolulu, Unison Wireless, Inc.,
Clearwire Technologies, Inc., Clearwire Spectrum Corp. and Clearwire
Communications, Inc. (collectively, the "COMPANY FCC LICENSE HOLDERS") validly
hold the Federal Communications Commission ("FCC") licenses, permits and
authorizations set forth on Schedule 3.23(a) of the Schedule of Exceptions (the
"COMPANY FCC AUTHORIZATIONS"), true and correct copies of which have been made
available to Purchaser. Schedule 3.23(a) of the Schedule of Exceptions sets
forth all of the licenses, permits and authorizations issued by the FCC that are
currently held by the Company or any of the Subsidiaries.
(b) The Company FCC License Holders' wireless systems operating
in whole or in part on BRS spectrum or EBS spectrum (the "SYSTEMS") utilize
spectrum licensed by the FCC to third parties (each a "LESSOR") that is made
available for use by the Company FCC License Holders under certain spectrum
leases, subleases, capacity use agreements or other similar arrangements between
the Company FCC License Holders and the Lessors (each such arrangement, together
with all together with all amendments, waivers, notices, and ancillary
agreements related thereto (whether written or oral), a "SPECTRUM LEASE").
Schedule 3.23(b) of the Schedule of Exceptions sets forth for each Spectrum
Lease: (i) name of the Lessor and the Lessee, (ii) whether such lease is a De
Facto Transfer Lease entered into pursuant to Section 1.9010 of the FCC's Rules,
a Spectrum Manager Lease entered into pursuant to Section 1.9020 of the FCC's
Rules or a "grandfathered" lease pursuant to Section 27.1214 or Section 27.1215
of the FCC's Rules; (iii) the specific channel names and number of channels
covered by such Spectrum Lease; (iv) the call sign and geographic market for
each FCC license, permit and authorization that is covered by such Spectrum
Lease (collectively, the "LEASED FCC AUTHORIZATIONS"); and (v) the expiration
date of each Leased FCC Authorization. Schedule 3.23(b) sets forth all of the
Spectrum Leases that are currently held by the Company or any of the
Subsidiaries and each of the Leased FCC Authorizations thereunder. True and
correct copies of all Spectrum Leases and Leased FCC Authorizations have been
made available to Purchaser
(c) The Company FCC Authorizations and the Leased FCC
Authorizations (collectively, the "FCC AUTHORIZATIONS") have been granted to the
Company FCC License Holders or the applicable Lessor by Final Order, are in full
force and effect and have not been revoked, suspended, cancelled, rescinded, or
terminated. No FCC Authorization has expired (except for any FCC Authorization
that has expired but for which a timely-filed renewal application is currently
pending before the FCC). To the Company's knowledge, each FCC Authorization was
duly and validly issued by the FCC pursuant to procedures which comply with all
requirements of applicable Law, including, without limitation, the FCC's Rules.
There is not pending, or to the Company's knowledge threatened, anticipated or
reasonably likely if facts or circumstances known to the Company were brought to
the attention of the FCC, any action by or before the FCC that questions the
validity of any FCC Authorization or seeks (i) to revoke, suspend, cancel,
rescind or modify any of the FCC Authorizations, except for routine
modifications set forth on Schedule 3.23(c) of the Schedule of Exceptions or
(ii) to impair the ability of the Company FCC License Holders to utilize the
spectrum covered by the FCC
21
Authorizations (other than proceedings to amend FCC rules of general
applicability). There is not now issued or outstanding or pending or to the
Company's knowledge, threatened, anticipated or reasonably likely if facts or
circumstances known to the Company were brought to the attention of the FCC, by
or before the FCC, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against the Company FCC
License Holders, any Lessor, or relating to any FCC Authorization or any System,
except where the existence of such would not have or result in, or would not be
reasonably likely to have or result in, individually or in the aggregate, a
Material Adverse Effect. "FINAL ORDER" means an Action or decision of the FCC as
to which (A) no request for a stay or similar request is pending, no stay is in
effect, the Action or decision has not been vacated, reversed, set aside,
annulled or suspended and any deadline for filing such request that may be
designated by Law, has passed, (B) no petition for rehearing or reconsideration
or application for review is pending and the time for the filing of any such
petition or application has passed, (C) the FCC does not have the Action or
decision under reconsideration on its own motion and the time within which it
may effect such reconsideration has passed, and (D) no appeal is pending
including, without limitation, other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by Law
has passed.
(d) No applications are currently pending before the FCC related
to the FCC Authorizations or the Spectrum Leases. Each such application has been
timely filed with the FCC accompanied by payment of such fees as may be
required. No petition to deny or other objection has been filed with the FCC
against any such application, to the Company's knowledge no such petition or
other objection has been threatened, and no reasonable basis exists for the
filing of any such petition or other objection by any party or the FCC on its
own motion.
(e) All applications, notices, reports and filings required to be
filed by the Company FCC License Holders and, to the Company's knowledge, each
Lessor with the FCC have been timely filed. All applications, notices, reports
and filings by the Company FCC License Holders are true, accurate and complete.
To the Company's knowledge, all such reports and filings by each Lessor are
true, accurate and complete. To the Company's knowledge, all regulatory fees,
payments to the Universal Service Fund, if any, and other fees or payments
required to be paid by the Company FCC License Holders and each Lessor pursuant
to the FCC's Rules have been timely filed and paid, except where the failure to
make such timely payment would not have or result in, individually or in the
aggregate, a Material Adverse Effect
(f) Each Spectrum Lease is in full force and effect, is free from
any claims, liabilities or Liens and is unimpaired by any acts or omissions of
the Company FCC License Holders. The Company FCC License Holders have a valid
leasehold interest in each Spectrum Lease. With respect to each Spectrum Lease,
the Company FCC License Holders have complied in all material respects with all
of the terms and conditions of the Spectrum Lease since entering into or
assuming such Spectrum Lease, the Lessor has not provided the Company FCC
License Holders with any notice of default or otherwise notified the Company FCC
License Holders that it considers the Spectrum Lease to have been breached
(except for such breaches that would not have or result in, individually or in
the aggregate, a Material Adverse Effect), and the Company FCC License Holders
are entitled to exercise all of the rights to which the
22
Company FCC License Holders are entitled under the terms of the Spectrum Lease.
To the best of Company's knowledge, no facts or circumstances exist that would
permit the Lessor to terminate any Spectrum Lease upon the requisite notice to
the Company FCC License Holders. To the best of Company's knowledge, the Lessor
under each Spectrum Lease has complied in all material respects with all of the
terms and conditions of the Spectrum Lease, and the Company FCC License Holders
have not notified any Lessor that it considers the Spectrum Lease to have been
breached. Each Spectrum Lease permits the Company FCC License Holders to utilize
the spectrum covered by the Leased FCC Authorization(s) to provide two-way
broadband data services to subscribers, except for such Spectrum Leases that
afford the Company FCC License Holders use of spectrum that collectively
represents less than five percent (5%) of the FCC Authorizations, measured on
the basis of MHz/pops; provided, however, that no Spectrum Lease fails to permit
the Company FCC License Holders to utilize the spectrum covered by the Leased
FCC Authorization(s) to provide two-way broadband data services to subscribers
where such failure would materially restrict or adversely affect the
development, manufacture, production, assembly, licensing, marketing,
distribution or sale of the Company's or any Majority Subsidiary's products or
services within the geographic area subject to such Spectrum Lease. To the
Company's knowledge, no person or entity, other than the Company FCC License
Holders and the Lessor, has asserted any right to utilize any Leased FCC
Authorization or the spectrum licensed thereunder. Each Spectrum Lease complies
with all applicable Laws, including, without limitation, the FCC's Rules.
(g) Neither any Company FCC License Holder nor any Lessor is
bound by any Contracts or other understandings relating to the assignment,
transfer, conveyance or pledge of any FCC Authorization or any Spectrum Lease,
in whole or in part, or any interest therein.
(h) Neither any Company FCC License Holder nor, to the Company's
knowledge, any Lessor is subject to any Contract or other understanding
restricting its ability to deploy and operate facilities that would otherwise be
permitted pursuant to the FCC Authorizations and the FCC's Rules or to construct
and operate facilities utilizing any particular technical parameters; and (ii)
neither any Company FCC License Holder nor, to the Company's knowledge, any
Lessor is bound by any Contract or other understanding pursuant to which it is
obligated to accept electromagnetic interference to the facilities authorized
under any FCC Authorization (other than FCC rules of general applicability), to
restrict the manner in which facilities authorized under any FCC Authorization
are operated, or to otherwise mitigate or eliminate interference, except for
such Contracts that do not materially restrict or adversely affect the
development, manufacture, production, assembly, licensing, marketing,
distribution or sale of the Company's or any Majority Subsidiary's products or
services within the geographic area subject to such Contract.
(i) The Company FCC License Holders and, to the Company's
knowledge, all Lessors currently are in compliance in all material respects with
all applicable Laws governing operations under the FCC Authorizations
(including, without limitation, the FCC's Rules governing the construction and
operation of facilities and eligibility for and the leasing of Educational
Broadband Service authorizations) and have been at all times since the
applicable Company FCC License Holder acquired the Company FCC Authorization or
entered
23
into or assumed the Spectrum Lease, as the case may be. None of the Systems are
operating pursuant to special temporary authority, developmental authority or
experimental authority issued by the FCC.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
4.1. Authorization. All corporate action on the part of Purchaser, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of, and the performance of all obligations of Purchaser under this
Agreement and the Transaction Agreements and necessary for the consummation of
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and the Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby will not
conflict with or constitute or result in, with or without the passage of time or
the giving of notice or both, either a violation, breach or default by Purchaser
of (i) any Order of any Government Authority or (ii) any constituent documents
of Purchaser. This Agreement and the Transaction Agreements when executed and
delivered by Purchaser will constitute a valid and legally binding obligation of
Purchaser enforceable in accordance with its terms, subject, as to enforcement
of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization
and similar Laws affecting creditors' rights generally and to general equitable
principles and, with regard to the indemnification provisions contained in the
Investor Rights Agreement, to the extent such indemnification provisions may be
limited by applicable federal and state securities Laws and principles of public
policy.
4.2. Investigation; Economic Risk. Purchaser has had an opportunity to
discuss the Company's business, management, financial affairs and the terms and
conditions of the offering with the Company's management and has had an
opportunity to review the information provided by the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 3 of this Agreement or the right of Purchaser to rely
thereon. Purchaser acknowledges that it is able to fend for itself in the
transactions contemplated by this Agreement and has the ability to bear the
economic risks of its investment pursuant to this Agreement.
4.3. Purchase for Own Account. The Shares will be acquired for
investment for its own account, not as a nominee or agent, and not with a view
to or in connection with the sale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, Purchaser further
represents that it does not have any Contract with any person or entity to sell,
transfer or grant participations to such person or entity or to any third person
or entity, with respect to any of the Shares. The Purchaser has not been formed
for the specific purpose of acquiring any of the foregoing.
4.4. Exempt from Registration; Restricted Securities. Purchaser
understands that the Shares and the Conversion Shares have not been, and will
not be, registered under the 1933 Act, by reason of a specific exemption from
the registration provisions of the 1933 Act which depends upon, among other
things, the bona fide nature of the investment intent and the
24
accuracy of Purchaser's representations as expressed herein. Purchaser
understands that the Shares being purchased hereunder are "restricted
securities" within the meaning of Rule 144 under the 1933 Act; that the Shares
and the Conversion Shares are not registered and must be held indefinitely
unless they are subsequently registered or an exemption from such registration
is available.
4.5. Restrictive Legends. It is understood that each certificate
representing the Shares and the Conversion Shares and any other securities
issued in respect of the any of the foregoing upon any stock split, stock
dividend, recapitalization, merger or similar event shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
4.6 Removal of Restrictive Legend. The legend set forth above shall be
removed by the Company from any certificate evidencing Shares or the Conversion
Shares upon delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement under the 1933 Act is
at that time in effect with respect to the legended security or that such
security can be freely transferred in a public sale pursuant to Rule 144 without
such a registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Shares.
4.7. Accredited Investor. Purchaser is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
4.8. No General Solicitation. The Shares were not offered or sold to
Purchaser by any form of general solicitation or general advertising.
5. COVENANTS OF THE COMPANY
The Company covenants to Purchaser as follows:
5.1 Use of Proceeds. The Company agrees that not less than
$200,000,000 of the proceeds from the sale of the Shares will be used for
capital expenditures and operational
25
expenditures associated with the deployment and operation of a Mobile WiMAX
network in the United States, including, but not limited, to expenditures for
spectrum acquisitions, site acquisition, network construction, and WiMAX CPE and
WiMAX network infrastructure [***]. In order to confirm the expenditure of the
proceeds in the manner set forth above, Purchaser shall have the right to
exercise the audit rights provided to Purchaser in Section 5.6 of the
Collaboration Agreement.
5.2 Conduct of Business by the Company and the Major Subsidiaries
Pending the Closing. Except as expressly contemplated by this Agreement,
including, without limitation, the Schedule of Exceptions, or the Transaction
Agreements, during the period between the Effective Date and the date of the
Closing, the Company shall use commercially reasonable efforts to, and shall
cause the Major Subsidiaries to carry on its respective business in the ordinary
course of its business in substantially the same manner as currently conducted
and, to the extent consistent therewith, use all commercially reasonable efforts
to preserve intact its respective current business organizations, keep available
the services of its respective current directors, officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that its ongoing business shall be unimpaired at the
date of the Closing.
5.3 Issuances of Securities. Between the Effective Date and the
earlier of the Closing Date or the thirty first day following the Effective
Date, neither the Company nor any Subsidiary will sell or issue any shares of
Common Stock, or any securities exercisable or exchangeable for, or convertible
into, shares of Common Stock, without the consent of Purchaser, other than (i)
the issuance of shares of Class A Common Stock pursuant to obligations existing
as of the Effective Date, as set forth in Schedule 5.3 of the Schedule of
Exceptions, (ii) the issuance of shares of Class A Common Stock in connection
with future spectrum acquisitions, provided that the valuation of such shares is
not less than $6.00 per share and the total value of the shares issued does not
exceed $57 million in the aggregate (provided, further, that, with respect to
the period between the Effective Date and the date of the Closing, the total
value of shares issued in connection with future spectrum acquisitions shall not
exceed $57 million in the aggregate, unless the shares that are issued in excess
of the $57 million limitation are issued at a valuation of not less than $7.50
per share), (iii) the issuance of up to $300,000,000 in shares of Class A Common
Stock at not less than $6.00 per share, (iv) the issuance of shares of Class A
Common Stock pursuant to the exercise of any preemptive or similar rights
directly or indirectly arising out of this Agreement or the transactions
described in Section 5.3(iii), which rights Eagle River and its affiliates have
validly waived as of the Effective Date and the Company will use commercially
reasonable efforts to cause to be waived by the other holders of such rights,
(v) the issuance of shares of Class A Common Stock upon the exercise of any
options or warrants outstanding on the Effective Date, or (vi) the grant of
stock options under the Company's 2003 Stock Option Plan to employees of the
Company and its Subsidiaries at an exercise price of not less that $6.00 per
shares and subject to a maximum of 1,750,000 shares; provided that at no time
prior to the Closing shall the Company or any Subsidiary sell any shares
[* * * Confidential Treatment Requested]
26
of Class B Common Stock or any securities exercisable or exchangeable for, or
convertible into, shares of Class B Common Stock other than pursuant to the
exercise of any preemptive or similar rights directly or indirectly arising out
of this Agreement or the transactions described in Section 5.3(iii), which
rights Eagle River and its affiliates have validly waived as of the Effective
Date and the Company will use commercially reasonable efforts to cause to be
waived by the other holders of such rights.
5.4 Closing Capitalization Tables. At the Closing, the Company will
provide to Purchaser a true and correct (i) capitalization table of the Company
and each Subsidiary setting forth the authorized capital stock (or membership or
other equity interests, as applicable) of the Company or such Subsidiary, as the
case may be, and all shares of the capital stock (or membership or other equity
interests, as applicable), options and warrants (including, without limitation,
for each the name of the grantee, number of shares subject to the option or
warrant granted, the exercise price per share, the vesting schedule and the date
of issuance) and any other securities of the Company or such Subsidiary, as the
case may be, issued and outstanding, reserved and/or available for issuance, in
each case, as of the date of the Closing, and (ii) an updated Schedule
3.5(a)(iv) of the Schedule of Exceptions with respect to the number of Voting
Securities that Eagle River and its affiliates hold, own or control,
beneficially or of record, or have or control the power to vote as of the date
of the Closing, in each case, attached to a certificate of the Chief Financial
Officer of the Company certifying the capitalization tables and updated Schedule
3.5(a)(iii) as true and correct and that (a) all of the outstanding shares of
the capital stock of the Company or such Subsidiary, as the case may be, set
forth of such capitalization tables are duly authorized, validly issued, fully
paid and non-assessable, and free and clear of all Liens imposed by or through
the holder thereof, (b) that the outstanding securities of the Company or such
Subsidiary, as the case may be, are owned by the stockholders, optionholders and
securityholders and in the numbers and by the class and series of each security
specified on such capitalization table.
5.5 Antidilution.
(a) Any time after the Effective Date that the Company sells or
issues or agrees to sell or issue (or is deemed to do so under Section 5.5(e))
Dilutive Shares (as defined below) to any person or entity for no consideration
or consideration per share that is less than the Trigger Price (as defined
below) in effect immediately prior to such issuance or sale (each, a "DILUTIVE
ISSUANCE"), the Company shall concurrently issue to Purchaser for no
consideration a number of shares of Class A Common Stock equal to (i)
Purchaser's Adjusted Shares (as defined below) less (ii) Purchaser's Original
Shares (as defined below) (the "ANTIDILUTION SHARES"). No fractional shares of
Class A Common Stock shall be issued pursuant to this Section 5.5. The number of
shares of Class A Common Stock issued shall be rounded to the nearest integral
number of whole shares of Class A Common Stock. For the purposes of this Section
5.5, whenever Dilutive Shares are issued for a consideration other than cash,
either in whole or in part, the fair market value of the Dilutive Shares issued
shall be as established in good faith by resolution of the Company's Board.
27
(b) Definitions. For the purposes of this Section 5.5, for each
Dilutive Issuance, the following terms shall have the following meanings:
(i) "ADJUSTED SHARES" means the number of shares of Class A
Common Stock equal to the product of (x) the Purchaser's Original Shares,
multiplied by (y) the quotient of (1) the Trigger Price in effect immediately
prior to a Dilutive Issuance, divided by (2) the Trigger Price in effect
immediately after such Dilutive Issuance. Any Adjusted Shares issued under this
Agreement shall be deemed to be "Shares."
(ii) "COMMON SHARES" means shares of Class A Common Stock,
shares of Class B common stock or any other class of common stock of the
Company.
(iii) "CONVERTIBLE SECURITIES" means any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Shares, but excluding Options.
(iv) "DILUTIVE SHARES" means Common Shares, Options and
Convertible Securities issued or deemed issued after the Effective Date other
than:
(A) Common Shares issued pursuant to Article IV,
Section 2(d) of the Restated Certificate;
(B) (1) Common Shares outstanding on the Effective
Date, (2) Convertible Securities or Options outstanding on the Effective Date
(and the Common Shares issued upon conversion, exchange or exercise of such
Convertible Securities or Options), and (3) Common Shares (and/or Convertible
Securities and Options, and the Common Shares issuable upon conversion, exchange
or exercise of such Convertible Securities or Options) issued pursuant to
agreements in effect or other commitments or offers outstanding on the Effective
Date that (y) relate to the acquisition of spectrum rights or related assets by
the Company and/or the Subsidiaries, or (z) are otherwise set forth in Schedule
3.5(c) of the Schedule of Exceptions;
(C) Common Shares (and/or Convertible Securities and/or
Options, and the Common Shares issuable upon conversion, exchange or exercise of
such Convertible Securities or Options) issued to employees, consultants,
directors, vendors, lessors or others with whom the Company conducts business,
provided that such shares, options, warrants or other rights are issued pursuant
to a stock option plan or restricted stock plan approved by the Board of the
Company and solely for compensation purposes;
(D) Common Shares actually issued upon exercise of any
Options outstanding as of the Effective Date or conversion or exchange of any
Convertible Securities existing as of the Effective Date, or Options or
Convertible Securities issued after the Effective Date in accordance with this
clause (iv); and/or
(E) Common Shares (and/or Convertible Securities and
Options, and the Shares issuable upon conversion, exchange or exercise of such
Convertible Securities or Options) issued in connection with any stock split,
stock dividend, reverse stock split, recapitalization, reorganization or other
distribution of Shares (each, a "RECAPITALIZATION
28
EVENT") that does not affect the relative economic interests or rights of
holders of Common Shares.
(v) "OPTIONS" means rights, options or warrants to subscribe
for, purchase or otherwise acquire, directly or indirectly, Common Shares or
Convertible Securities.
(vi) "ORIGINAL SHARES" means (x) with respect to the first
Dilutive Issuance, the total number of shares of Class A Common Stock and Class
B Common Stock set forth in Section 1.2 hereof (as adjusted pursuant to Section
1.3 hereof), to be acquired by Purchaser pursuant to this Agreement (as adjusted
for any Recapitalization Event) and (y) with respect to each Dilutive Issuance
thereafter, the total number of Adjusted Shares immediately prior to such
Dilutive Issuance (as adjusted for any Recapitalization Event). For the
avoidance of doubt, any Common Shares acquired by Purchaser or an affiliate of
Purchaser from either the Company or any other stockholder of the Company under
any Contract other than this Agreement shall in no event be included in the
number of Original Shares under this Section 5.5 or any adjustment pursuant to
this Section 5.5.
(vii) "TRIGGER PRICE" shall initially mean $6.00 per share
(as subsequently adjusted for any Recapitalization Event, the "ORIGINAL ISSUE
PRICE"). In connection with each Dilutive Issuance, the Trigger Price shall be
adjusted downwards to equal the lowest price per Dilutive Share paid for the
Dilutive Shares issued or sold in such Dilutive Issuance. The Trigger Price
shall also be proportionately adjusted from time to time for any
Recapitalization Event pursuant to which securities of the Company are issued
with respect to the Original Shares and/or Adjusted Shares. Notwithstanding the
foregoing, in no event shall the Trigger Price be adjusted downwards to an
amount less than $5.00 per share (as adjusted for any Recapitalization Event).
(c) Covenant Regarding Antidilution Shares. The Company hereby
represents, warrants and covenants that (i) as a condition precedent to the
issuance or sale of any Dilutive Shares in a Dilutive Issuance, the Company
shall have reserved at the time of such Dilutive Issuance out of its authorized
but unissued capital stock sufficient shares of Class A Common Stock to enable
the Company to issue all of the applicable Antidilution Shares pursuant to this
Section 5.5, and (ii) all Antidilution Shares issued pursuant to this Section
5.5 shall, upon issuance for no additional consideration, be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens,
other than Liens created by or imposed by Purchaser.
(d) Termination of Antidilution Rights. The rights granted under
this Section 5.5 shall terminate immediately after the first to occur of the
following: (i) the date which is nine (9) months following the date of the
Closing or (ii) the closing of the Company's initial public offering, defined as
an underwritten public offering of equity securities in which the Company raises
an aggregate of not less than US$400,000,000 in cash.
(e) Deemed Issuances of Shares. In the case of any issuance
(whether on or after the Effective Date) by the Company of any Convertible
Securities or Options, the following provisions shall apply for all purposes of
this Section 5.5:
29
(i) For any Convertible Securities issued (other than
pursuant to the exercise of Options) after the Effective Date, the aggregate
maximum number of Common Shares deliverable upon conversion or exercise of or in
exchange for any such Convertible Securities shall be deemed to have been issued
at the time such Convertible Securities were issued and for a consideration
equal to the consideration, if any, received by the Company upon the issuance of
such Convertible Securities plus the minimum additional consideration, if any,
to be paid under the terms of such Convertible Security upon conversion,
exercise or exchange of such Convertible Securities into the Common Shares
covered thereby.
(ii) For any Options issued, the aggregate maximum number of
Common Shares deliverable upon exercise of the Options, or, in the case of
Options for Convertible Securities, the conversion, exercise or exchange of such
Convertible Securities, shall be deemed to have been issued at the time such
Options were issued for a consideration equal to the consideration, if any,
received by the Company for such Options, plus the minimum exercise price
provided in such Options for the Common Shares or Convertible Securities covered
thereby, and, in the case of Options for Convertible Securities, plus the amount
of additional consideration, if any, to be paid upon the conversion, exercise or
exchange of such Convertible Securities.
(f) Adjustment in Shares. In addition to any necessary adjustment
pursuant to Section 1.3 hereof, upon the issuance of any Antidilution Shares,
Purchaser agrees to convert such number of its shares of Class B Common Stock,
if any, as necessary so that the total voting power of the Company's capital
stock held by Purchaser that is represented by the Shares after such issuance of
the Antidilution Shares is equal to 60% of the total voting power of the
Company's capital stock held, owned or controlled by Eagle River and/or its
affiliates.
(g) Voting Power of Eagle River. The total voting power of the
Company's capital stock held, owned or controlled by Eagle River and/or its
affiliates shall be determined based on the total number of Common Shares,
Convertible Shares and other voting securities of the Company (collectively,
"VOTING SECURITIES") that Eagle River and/or its affiliates then hold, own or
control, beneficially or of record, or have or control the power to vote;
provided that if at any time after the Effective Date Eagle River or any of its
affiliates sells, transfers, assigns, converts, exchanges or otherwise disposes
of any Voting Securities, or the power to vote any such securities, then such
sold, transferred, assigned, converted, exchanged or otherwise disposed of
Voting Securities or rights shall continue to be deemed to be held, owned or
controlled by Eagle River and/or its affiliates (without giving effect to any
reduction in the voting power of such Voting Securities or rights as a result of
such sale, transfer, assignment, conversion, exchange or otherwise disposition)
for purposes of determining the total voting power of the Company held, owned or
controlled by Eagle River and its affiliates; and provided, further that, (i)
any Voting Securities or the power to vote any such securities acquired by Eagle
River and/or its affiliates from either the Company or any other stockholder of
the Company after the date of the Closing pursuant to any Contract that was
entered into after the date of the Closing shall in no event be included in the
calculation of the total voting power of the Company held, owned or controlled
by Eagle River and/or its affiliates under this Section 5.5; and (ii) for the
avoidance of doubt, any Voting Securities or the power to vote any such
securities acquired by Eagle River and/or its affiliates from either the Company
or any other stockholder of the
30
Company, whether before of after the date of the Closing, pursuant to any
Contract that was entered into on or prior to the date of the Closing shall be
included in the calculation of the total voting power of the Company held, owned
or controlled by Eagle River and/or its affiliates under this Section 5.5.
5.6. Closing Schedules. At least two (2) business days prior to the
Closing, the Company will provide to Purchaser a true and correct update of the
Schedule of Exceptions, but only with respect to any events, conditions,
circumstances or matters arising during the period from the Effective Date to
the date of the Closing, which if existing on the Effective Date would have been
included or described in the Schedule of Exception (the "CLOSING SCHEDULES"),
which items shall be factual and described in detail on the schedules and which
schedules shall identify the specific exception to the representations and
warranties that the item represents, and with respect to which items Purchaser
shall be entitled to request additional information from the Company. In advance
of the delivery of the Closing Schedules, from time to time during the period
between the Effective Date and the date of the Closing as any events,
conditions, circumstances or matters of the type set forth on Schedules 3.5(c),
3.5(e), 3.5(f), 3.9, 3.11, 3.12(a), 3.12(b), 3.12(c), 3.12(d), 3.18. or 3.23 of
the Schedule of Exceptions, or any other material events, conditions,
circumstances or matters on any other schedule, arise that will be, or are
reasonably expected to be, listed on the Closing Schedules, the Company shall
provide Purchaser with notice of the occurrence of any such events, conditions,
circumstances or matters and copies of or access to any agreements and/or other
documentation that relate to or document such events, conditions, circumstances
or matters, using commercially reasonable efforts to segregate or otherwise
clearly identify such agreements and/or other documentation in any data room;
provided, that any such notice need not be delivered more than once every two
(2) weeks regardless of the occurrence of any such events, conditions,
circumstances or matters; and provided, further, that any breach by the Company
of its obligations under this paragraph shall not be considered in determining
whether the Company has satisfied its obligations under Section 6.2 of this
Agreement.
6. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING
The obligation of Purchaser to purchase the Shares at the Closing is
subject to the fulfillment, to the satisfaction of Purchaser on or prior to the
Closing, of the following conditions, unless otherwise waived in writing:
6.1. Representations and Warranties.
(a) Except as set forth in the Schedule of Exceptions, the
representations and warranties of the Company in Section 3 hereof that are
qualified as to materiality shall have been true and correct in all respects,
and all other representations and warranties of the Company in Section 3 hereof
shall be true and correct in all material respects, as of the Effective Date,
other than representations and warranties that expressly refer to a specific
date (in which case, such representations and warranties will be true and
correct as of such date).
(b) Except as set forth in the Schedule of Exceptions or the
Closing Schedules, the representations and warranties of the Company in Section
3 hereof that are
31
qualified as to materiality shall be true and correct in all respects, and all
other representations and warranties of the Company in Section 3 hereof shall be
true and correct in all material respects, in each case, as if made on and as of
the Closing Date, other than representations and warranties that expressly refer
to a specific date (in which case such representations and warranties will be
true and correct as of such date).
6.2. Performance of Obligations. The Company and the Subsidiaries
shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement and the Transaction Agreements that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all Consents necessary to complete the purchase and sale
described herein and for consummation of the other transactions contemplated by
this Agreement and the Transaction Agreements that are required to be obtained
prior to the Closing.
6.3. Compliance Certificate. At the Closing, the Company on its behalf
and on behalf of the Subsidiaries shall deliver to Purchaser a certificate,
dated the date of Closing, signed by the Company's President certifying that the
conditions specified in Sections 6.1 and 6.2 have been fulfilled.
6.4. Secretary's Certificate. At the Closing, the Company shall
deliver to Purchaser certificates, dated as of the date of the Closing and in
form and substance reasonably acceptable to Purchaser, signed by the Secretary
of the Company and each of the Major Subsidiaries, as the case may be,
certifying that (i) the Restated Certificate (which shall be certified as filed
by the Secretary of State of the State of Delaware) and the Bylaws or the
charter, bylaws and/or other governing documents attached to the Secretary's
certificate are in full force and effect on the date of such Closing, and (ii)
the Board of the Company and shareholder resolutions approving the Restated
Certificate, this Agreement, the Transaction Agreements and the transactions
contemplated hereunder and thereunder, as applicable, are true, correct and
complete and have not been amended since the date of such resolutions.
6.5 Antitrust; Qualifications. Any waiting period (and any extension
thereof) under any United States or foreign antitrust or merger control Law
applicable to the transactions contemplated by this Agreement and the
Transaction Agreements, including, without limitation, the HSR Act, shall have
expired or shall have been terminated. All Consents, if any, of any Governmental
Authority or regulatory body within the United States and outside the United
States that are required for the consummation of the transactions contemplated
by this Agreement and the Transaction Agreements (other than Consents required
with respect to the performance of the Collaboration Agreement after the date of
the Closing that may be obtained after the Closing and for which the Company
does not currently believe that it will be unable to obtain in a timely manner),
including, without limitation, in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement, shall be obtained or filed and
effective as of the Closing.
6.6. Amendment to Restated Certificate. The filing of the Restated
Certificate shall have been accepted by the Secretary of State of the State of
Delaware. The Company shall deliver to Purchase (i) a good standing certificate
of the Company and each Major Subsidiary issued by the Secretary of State or
other applicable official of the jurisdiction of such entity's
32
formation and (ii) foreign qualification and good standing certificates of the
Company and each Major Subsidiary issued by the Secretary of State or other
applicable official of California, Delaware, Florida, Nevada and Washington.
6.7. Opinion of Company's Counsel. Purchaser shall have received from
counsel to the Company an opinion addressed to Purchaser, dated the date of the
Closing, in form and substance reasonably acceptable and substantially the form
attached hereto as Exhibit J.
6.8. Board of Directors. The Company's Board shall consist of nine (9)
directors and, concurrent with the Closing, shall include as directors two
individuals designated by Purchaser, the names of which will be provided by
Purchaser to the Company at least two (2) business days prior to the date of the
Closing.
6.9. Execution of Investor Rights Agreement. The Company shall have
executed and delivered to Purchaser the Investor Rights Agreement in
substantially the form attached hereto as Exhibit A.
6.11. Execution of Joinder Agreement. The Company and each of the
other shareholders of the Company named as parties thereto shall have executed
and delivered to Purchaser the Joinder Agreement in substantially the form
attached hereto as Exhibit B.
6.13. Execution of Voting Agreement. The Company and each of the other
shareholders of the Company named as parties thereto shall have executed and
delivered to Purchaser the Voting Agreement in substantially the form attached
hereto as Exhibit C.
6.14. Execution of Side Letter Amendment. The Company shall have
executed and delivered to Purchaser the Side Letter Amendment in substantially
the form attached hereto as Exhibit E and such agreement shall continue to be in
full force and effect on the date of the Closing.
6.15. Execution of Collaboration Agreement. The Company shall have
executed and delivered to Purchaser the Collaboration Agreement in substantially
the form attached hereto as Exhibit F and such agreement shall continue to be in
full force and effect on the date of the Closing.
6.16. Management Employee Non-Compete Agreements. Each of Benjamin G.
Wolff, R. Gerard Salemme, Nicholas Kauser and Perry Saterlee shall have executed
and delivered to the Company, with a true and correct copy provided to
Purchaser, a non-compete agreement in substantially the form attached hereto as
Exhibit D, each of which shall continue to be in full force and effect on the
date of the Closing.
6.17. Eagle River Voting Agreement. Eagle River and the Company shall
have executed and delivered to Purchaser the Eagle River Voting Agreement in
substantially the form attached hereto as Exhibit G, which shall continue to be
in full force and effect on the date of the Closing.
33
6.18. Preemptive Rights. The Company shall have fully satisfied
(including, without limitation, with respect to rights of timely notification)
or obtained enforceable waivers in respect of any preemptive or similar rights
directly or indirectly relating to, arising out of or affecting the Shares or
the Conversion Shares or their issuance and sale to Purchaser.
6.19. Sale of NextNet. Prior to the Closing, the Company shall have
sold or otherwise disposed of all of its interests in NextNet Wireless, Inc. or
substantially all of its assets.
6.20. Material Adverse Change. Between the Effective Date and the date
of the Closing, no events, conditions, circumstances or matters of any nature
(including, without limitation, any events, conditions, circumstances or matters
that are set forth in the Closing Schedules, but are not set forth on the
Schedule of Exceptions) shall have occurred, or be reasonably expected to occur,
which would have or result in, individually or in the aggregate, (i) a Material
Adverse Effect with respect to the business of the Company and the Subsidiaries,
taken as a whole, as currently conducted and as presently proposed to be
conducted, (ii) a materially adverse impact on the ability of any party to
perform its obligations under, or to consummate the transactions contemplated
by, this Agreement or any of the Transaction Agreements, provided that Purchaser
shall not have taken any action or actions for the intended purpose of causing
such a materially adverse impact with respect to Purchaser to occur; or (iii) a
materially adverse impact to the Company's ability to implement its business
plan or to compensate Purchaser as provided in the Collaboration Agreement.
7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement are subject to the
fulfillment, to the satisfaction of the Company on or prior to the Closing, of
the following conditions, unless otherwise waived in writing:
7.1. Representations and Warranties. The representations and
warranties of Purchaser in Section 4 hereof that are qualified as to materiality
shall be true and correct in all respects and all other representations and
warranties of Purchaser in Section 4 hereof shall be true and correct in all
material respects, in each case as if made on and as of the Closing Date, other
than representations and warranties that expressly refer to a specific date (in
which case such representations and warranties will be true and correct as of
such date).
7.2. Performance of Obligations. Purchaser shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement and the Transaction Agreements that are required to be performed or
complied with by it on or before the Closing and shall have obtained all
Consents necessary to complete the purchase and sale described herein and for
consummation of the other transactions contemplated by this Agreement and the
Transaction Agreements.
7.3. Payment of Purchase Price. Purchaser shall have delivered to the
Company the purchase price in accordance with the provisions of Section 2.2
hereof.
34
7.4. Amendment to Restated Certificate. The filing of the Restated
Certificate shall have been accepted by the Secretary of State of the State of
Delaware.
7.5. Antitrust; Qualifications. Any waiting period (and any extension
thereof) under any United States or foreign antitrust or merger control Law
applicable to the transactions contemplated by this Agreement and the
Transaction Agreements, including, without limitation, the HSR Act, shall have
expired or shall have been terminated. All Consents, if any, of any Governmental
Authority or regulatory body within the United States and outside the United
States that are required for the consummation of the transactions contemplated
by this Agreement and the Transaction Agreements (other than Consents required
with respect to the performance of the Collaboration Agreement after the date of
the Closing that may be obtained after the Closing and for which the Company
does not currently believe that it will be unable to obtain in a timely manner),
including, without limitation, in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement, shall be obtained or filed and
effective as of the Closing.
7.6. Securities Exemptions. The offer and sale of the Shares to
Purchaser pursuant to this Agreement shall be exempt from the registration
requirements of the 1933 Act, and the registration and/or qualification
requirements of all applicable state securities Laws.
7.7. Execution of Investor Rights Agreement. Purchaser shall have
executed and delivered to the Company the Investor Rights Agreement in
substantially the form attached hereto as Exhibit A.
7.8. Execution of Joinder Agreement. Purchaser shall have executed and
delivered to the Company the Joinder Agreement in substantially the form
attached hereto as Exhibit B.
7.9. Execution of Voting Agreement. Purchaser shall have executed and
delivered to the Company the Voting Agreement in substantially the form attached
hereto as Exhibit C.
7.10. Execution of Side Letter Amendment. Purchaser shall have
executed and delivered to the Company the Side Letter Amendment in substantially
the form attached hereto as Exhibit F.
7.11. Execution of Collaboration Agreement. Purchaser shall have
executed and delivered to the Company the Collaboration Agreement in
substantially the form attached hereto as Exhibit G.
8. TERMINATION
8.1 Events of Termination. This Agreement may be terminated at any
time prior to the Closing: (a) by mutual written consent of the Company and
Purchaser; (b) by either the Company or Purchaser if any Governmental Authority
of competent jurisdiction shall have issued a final and nonappealable Order
permanently enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement or the Transaction
35
Agreements; provided, that the party so requesting termination shall have
complied with Section 9.17; (c)(i) by the Company, if any of the conditions set
forth in Section 7 shall have become incapable of fulfillment on or prior to
June 30, 2007 (the "TERMINATION DATE"), or (ii) by Purchaser, if any of the
conditions set forth in Section 6 shall have become incapable of fulfillment
prior to the Termination Date; provided, that the right to terminate this
Agreement pursuant to this Section 8.1(c) shall not be available if the failure
of the party so requesting termination to fulfill any obligation under this
Agreement shall have been the cause of the failure of such condition to be
satisfied on or prior to such date. The party seeking to terminate this
Agreement pursuant to this Section 8.1 (other than Section 7.1(a)) shall give
written notice of such termination to the other party.
8.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability hereunder on the part of the Company or
Purchaser or any of their respective officers, directors or affiliates;
provided, however, that nothing contained in this Section 8.2 shall relieve any
party hereto from any liability for any willful breach of a representation,
warranty, or covenant contained in this Agreement prior to such termination.
9. MISCELLANEOUS
9.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal Laws of the State of Delaware,
without regard to principles of conflicts of Laws.
9.2. Survival. The parties agree that, regardless of any investigation
made by the parties, the representations, warranties, covenants and agreements
(in the case of covenants and agreements, to the extent of performance or
non-performance prior to the date of the Closing) of the parties contained in
this Agreement shall survive the execution and delivery of this Agreement for a
period beginning on the Effective Date and ending at 5:00 p.m., California time,
on the third (3rd) anniversary of the date on which the Closing occurs;
provided, however, that (i) the representations and warranties contained in
Section 3.8 (Tax Matters), Section 3.9 (Litigation Matters), Section 3.10
(Compliance with Laws), Section 3.14(c) (Intellectual Property - No
Infringement), Section 3.19 (Environmental Matters), Section 3.21 (Certain
Business Practices), and Section 3.22 (Employee Matters) shall survive until the
date which is sixty (60) days after the end of the statute of limitations
applicable to third party claims with respect to the subject matter of such
representations and warranties, and (ii) the representations and warranties
contained in Section 3.5 (Capitalization; Valid Issuance of Stock) shall survive
indefinitely.
9.3. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors, assigns, heirs, executors and administrators any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. This Agreement and the rights and
obligations herein may not be assigned by Purchaser without the written consent
of the Company, except to a parent corporation, a subsidiary or affiliate;
36
provided that if no such consent is obtained, Purchaser shall continue to be
liable for payment of the Aggregate Purchase Price. This Agreement and the
rights and obligations therein may not be assigned by the Company without the
written consent of Purchaser.
9.4. Entire Agreement. This Agreement and the schedules and exhibits
hereto, which are hereby expressly incorporated herein by this reference, the
Restated Certificate and the Transaction Agreements constitute the entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof; provided, however, that nothing in this Agreement shall be
deemed to terminate or supersede the provisions of any confidentiality and
nondisclosure agreements executed by the parties hereto prior to the Effective
Date, which agreements shall continue in full force and effect until terminated
in accordance with their respective terms.
9.5. Notices. All notices, requests, waivers and other communications
made pursuant to this Agreement shall be in writing and shall be conclusively
deemed to have been duly given (a) when hand delivered to the other party; (b)
when sent by facsimile if sent during normal business hours of the recipient
with confirmation of sending to the fax number set forth below or, if sent after
normal business hours with confirmation of sending, then notice shall be deemed
to have been duly given on the next business day; (c) three (3) business days
after deposit in the U.S. mail with registered or certified mail return receipt
requested first class postage prepaid and addressed to the other party as set
forth below; or (d) the next business day after deposit with a national
overnight delivery service, postage prepaid, addressed to the parties as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider. All notices, requests, waivers and other communications shall be sent
to the receiving party at its address as set forth below, or to such address or
facsimile number as subsequently modified by written notice given in accordance
with this Section 9.5.
(i) if to the Company, at:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Facsimile No: (425) 216-7900
Attn: Broady Hodder, General Counsel
With a copy to:
Davis Wright Tremaine, LLP
1501 Fourth Avenue
2600 Century Square
Seattle, WA 98121
Facsimile No: (206) 628-7699
Attn: Julie Weston, Esq.
37
(ii) if to Purchaser:
Intel Pacific, Inc.
c/o Intel Corporation
2200 Mission College Blvd., RN6-46
Santa Clara, CA 95054-1549
Attn: Intel Capital Portfolio Manager
Fax Number: (408) 765-6038
With copies to: portfolio.manager@intel.com
Each person making a communication hereunder by facsimile shall promptly confirm
by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto, but the absence of such
confirmation shall not affect the validity of any such communication.
9.6. Amendments and Waivers. Any term of this Agreement may be
amended, terminated or waived only with the written consent of the Company and
Purchaser. Any amendment, termination or waiver effected in accordance with this
Section 9.6 shall be binding upon each transferee of the Shares, each future
holder of all such securities, and the Company.
9.7. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to Purchaser, upon any breach or
default of any party hereto under this Agreement, shall impair any such right,
power or remedy of the Company, or Purchaser nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach of default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any Consent of any kind or character on the
part of the Company or Purchaser of any breach of default under this Agreement
or any waiver on the part of the Company or Purchaser of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by Law or otherwise afforded to the Company or Purchaser
shall be cumulative and not alternative.
9.8. Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
38
9.9. Legal Fees. The Company and Purchaser shall each pay their own
expense in connection with the transactions contemplated by this Agreement.
Furthermore, in the event of any action at law, suit in equity or arbitration
proceeding in relation to this Agreement or any Shares or other securities of
the Company issued or to be issued, the prevailing party shall be paid by the
other party a reasonable sum for attorney's fees and expenses for such
prevailing party in addition to any other relief to which such party may be
entitled. Notwithstanding the foregoing, each of the Company and Purchaser shall
pay one-half of the filing fees under the HSR Act relating to the transactions
contemplated by this Agreement and the Transaction Agreements.
9.10. Finder's Fees. Each party represents and warrants to the other
party hereto that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, provided, that, it is acknowledged
that the Company may have utilized the services of Merrill Lynch, Morgan Stanley
and JP Morgan in connection with its financing activities, including the
transactions contemplated by this Agreement and the Transaction Agreements. The
Company covenants and agrees that it will not pay any fee or compensation in
excess of $1,500,000 in the aggregate to Merrill Lynch, Morgan Stanley and JP
Morgan or any other finder or broker, in connection with, relating to or arising
from this Agreement, the Transaction Agreements and/or any of the transactions
contemplated hereby or thereby, without the prior written consent of Purchaser.
Notwithstanding anything to the contrary contained herein, each party hereby
agrees to indemnify and to hold harmless the other party hereto from and against
any liability for any commission or compensation in the nature of a finder's
fee, broker commission or banker's fee of any broker, investment banker or other
person or firm (including, without limitation, any fees or compensation that may
be payable by the Company to Merrill Lynch, Morgan Stanley and JP Morgan) and
the costs and expenses of defending against such liability or asserted
liability, for which the indemnifying party or any of its employees or
representatives are responsible.
9.11. Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
9.12. Counterparts; Facsimile. This Agreement may be executed and
delivered by facsimile signature in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
9.13. Severability. Should any provision of this Agreement be
determined to be illegal or unenforceable, such determination shall not affect
the validity or enforceability of any other provision of this Agreement.
9.14 Dispute Resolution. The parties agree to negotiate in good faith
to resolve any controversy or claim arising out of or relating to this
Agreement, or the interpretation or breach hereof. If the negotiations do not
resolve the dispute to the reasonable satisfaction of both parties, then each
party shall nominate one senior officer of the rank of Vice President or higher
as its representative. These representatives shall, within thirty (30) days of a
written request by either party to call such a meeting, meet and attempt in good
faith to resolve the dispute. If the disputes cannot be resolved by such senior
officers in the meeting, the parties agree that they
39
shall, if requested in writing by either party, meet within thirty (30) days
after such written notification for one day with a neutral mediator agreed upon
by the parties and consider dispute resolution alternatives other than
litigation. If an alternative method of dispute resolution is not agreed upon
within thirty (30) days after the one day mediation, either party may begin
litigation proceedings. This procedure shall be a prerequisite before taking any
additional action hereunder.
9.16. No Commitment for Additional Financing. The Company acknowledges
and agrees that Purchaser has not made any representation, undertaking,
commitment or agreement to provide or assist the Company or any Subsidiary in
obtaining any financing, investment or other assistance, other than the purchase
of the Shares as set forth herein and subject to the conditions set forth
herein. In addition, the Company acknowledges and agrees that (i) no statements,
whether written or oral, made by Purchaser or its representatives on or after
the Effective Date shall create an obligation, commitment or agreement to
provide or assist the Company or any Subsidiary in obtaining any financing or
investment, (ii) the Company shall not rely on any such statement by Purchaser
or its representatives and (iii) an obligation, commitment or agreement to
provide or assist the Company or any Subsidiary in obtaining any financing or
investment may only be created by a written agreement, signed by Purchaser and
the Company, setting forth the terms and conditions of such financing or
investment and stating that the parties intend for such writing to be a binding
obligation or agreement. Purchaser shall have the right, in it sole and absolute
discretion, to refuse or decline to participate in any other financing of or
investment in the Company or any Subsidiary, and shall have no obligation to
assist or cooperate with the Company or any Subsidiary in obtaining any
financing, investment or other assistance.
9.17 Required Filings; Cooperation. As promptly as reasonably
practicable, but in any event within 20 days from the Effective Date with
respect to the initial filings under the HSR Act, each of the Company and
Purchaser will make all filings required to be made by them in order to complete
the transactions contemplated under this Agreement and the Transaction
Agreements, including, without limitation, all filings under the HSR Act.
Between the Effective Date and the Closing, each party hereto will, subject to
such confidentiality restrictions as may be reasonable requested or are required
by applicable Law, (i) reasonably cooperate with the other party with respect to
all filings that such other party elects to make or is required by applicable
Laws to make in connection with the transactions contemplated under this
Agreement, and (ii) reasonably cooperate with the other party, including,
without limitation, taking all actions reasonably requested by such other party,
to cause early termination of any applicable waiting period under the HSR Act.
Each of the Company and Purchaser shall keep the other reasonably apprised of
the status of any such filing and any inquiries or requests for additional
information from the Federal Trade Commission ("FTC") and the Antitrust Division
of the Department of Justice ("DOJ"). The parties shall use commercially
reasonable efforts to comply with any such inquiry, request and/or conditions of
the FTC and DOJ. Nothing in this Agreement, however, shall require or be
construed to require any party hereto, in order to obtain the consent or
successful termination of any review of the FTC, DOJ or any other Governmental
Authority regarding the transactions contemplated by this Agreement and the
Transaction Agreements, to (i) sell or hold separate, or agree to sell or hold
separate, before or after the Closing, any assets, businesses or any interests
in any assets or businesses, of such party or any of its affiliates (or to
consent to any sale, or agreement to sell, any assets or businesses, or any
40
interests in any assets or businesses), or any change in or restriction on the
operation by such party of any assets or businesses, or (ii) enter into any
agreement or be bound by any obligation that, in such party's good faith
judgment, may have an adverse effect on the benefits to such party of the
transactions contemplated by this Agreement and the Transaction Agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the day and year herein above first written.
PURCHASER:
INTEL PACIFIC, INC.
/s/ Arvind Sodhani (STAMP)
-------------------------------------
Signature
Arvind Sodhani
-------------------------------------
Printed Name
President
-------------------------------------
Title
COMPANY:
CLEARWIRE CORPORATION
/s/ Benjamin G. Wolff
-------------------------------------
Signature
Benjamin G. Wolff
-------------------------------------
Printed Name
Co-Chief Executive Officer
-------------------------------------
Title
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT WITH CLEARWIRE CORPORATION]
41
EXHIBIT A
FORM OF INVESTOR RIGHTS AGREEMENT
EXHIBIT B
FORM OF JOINDER IN AND AMENDMENT TO STOCKHOLDERS AGREEMENT
EXHIBIT C
FORM OF VOTING AGREEMENT
EXHIBIT D
FORM OF EMPLOYEE NON-COMPETE AGREEMENT
EXHIBIT E
FORM OF SIDE LETTER AMENDMENT
EXHIBIT F
FORM OF COLLABORATION AGREEMENT
EXHIBIT G
FORM OF EAGLE RIVER VOTING AGREEMENT AND WAIVER OF PREEMPTIVE RIGHTS
EXHIBIT H
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT I
SCHEDULE OF EXCEPTIONS
EXHIBIT J
FORM OF DWT LEGAL OPINION
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 6/30/07 | | 36 | | | | | 10-Q |
| Filed on: | | 1/8/07 |
| | 6/28/06 | | 1 |
| | 3/31/06 | | 8 | | 16 |
| | 12/31/05 | | 15 |
| | 8/5/05 | | 7 |
| | 12/31/04 | | 15 |
| | 10/13/04 | | 1 |
| | 3/16/04 | | 1 | | 7 |
| | 12/31/03 | | 15 |
| | 11/13/03 | | 7 |
| List all Filings |
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