Exhibit 10.1
Execution Version
SKYTERRA COMMUNICATIONS, INC.
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
December 23, 2004, is by and among SKYTERRA COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and each of the investors listed on Schedule I
hereto (each of the persons or entities listed on Schedule I, individually, a
"Purchaser" and, collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, severally and not jointly, an
aggregate of 2,000,000 shares (the "Shares") of the authorized but unissued
shares of the Company's voting common stock, par value $0.01 per share
(including any securities into which or for which such shares may be exchanged
for, or converted into, pursuant to any stock dividend, stock split, stock
combination, recapitalization, reclassification or other similar event
occurring prior to the Closing, the "Common Stock"), at a price of $18.25 per
Share, all upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, simultaneously with entering into this Agreement, the Company and
the Purchasers are entering into that certain Registration Rights Agreement,
dated as of the date hereof (the "Registration Rights Agreement"), pursuant to
which the Company will assume obligations with respect to the registration of
the Shares and the Warrant Shares (as defined below) on the terms set forth
therein.
NOW THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:
1 Definitions; Certain Rules of Construction. As used in this Agreement,
the following terms shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and in all cases including, without
limitation, any Person that serves as a general partner and/or investment
adviser or in a similar capacity of a Person. For the purposes of this
Agreement, "control," when used with respect to any specified Person means the
power to direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the board of directors of the Company or any duly authorized
committee thereof.
"business day" (whether such term is capitalized or not) means any day
except Saturday, Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New York are authorized or
required by law or other governmental action to close.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986.
"Environmental Protection Laws" means any law, statute or regulation
enacted by any jurisdiction in connection with or relating to the protection or
regulation of the environment, including, without limitation, those laws,
statutes and regulations regulating the disposal, removal, production, storing,
refining, handling, transferring, processing or transporting of hazardous or
toxic substances, and any orders, decrees or judgments issued by any court of
competent jurisdiction in connection with any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any Person required to be aggregated with the
Company or any Subsidiary of the Company under Sections 414(b), (c), (m) or (o)
of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
all of the rules and regulations promulgated thereunder.
"Exchange Act Reports" means the Company's reports filed with the SEC
since January 1, 2003, pursuant to Section 13 of the Exchange Act.
"GAAP" means U.S. generally accepted accounting principles.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"HNS" means Xxxxxx Network Systems, LLC.
"Indebtedness" means, as applied to any Person, all indebtedness for
borrowed money, whether current or funded, or secured or unsecured.
"in writing" means any form of written communication or a communication by
means of facsimile transmission, in all events delivered in accordance with
Section 8.3.
"Information Package" is defined in Section 4A(b).
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
property or asset, whether or not filed, recorded or otherwise perfected under
applicable law, other than (a) those resulting from taxes which have not yet
become delinquent, (b) minor liens and encumbrances that do not materially
detract from the value of the property or materially impair the operations of
the Company or materially interfere with the use of such property or asset or
(c) those relating to Indebtedness incurred prior to the date hereof and any
replacement thereof.
"Majority Purchasers" means Purchasers holding, at any time, a majority of
the outstanding Shares purchased hereunder on such date.
"Material Adverse Effect" means a material adverse effect on the business,
assets, liabilities, properties, operations, prospects or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" (whether or not capitalized) means an individual, entity,
partnership, limited liability company, corporation, association, trust, joint
venture, unincorporated organization, and any Governmental Authority.
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"Plan" means any employee benefit plan, program or arrangement, whether
oral or written, maintained or contributed to by the Company, any Subsidiary of
the Company or any ERISA Affiliate, or with respect to which the Company, any
Subsidiary of the Company or any ERISA Affiliate may incur liability.
"Registration Statements" means the Company's registration statements
filed with the SEC since January 1, 2003, pursuant to the Securities Act.
"Rule 144" means Rule 144 promulgated under the Securities Act and any
successor or substitute rule, law or provision.
"SEC" means the United States Securities and Exchange Commission.
"SEC Reports" means the Exchange Act Reports and the Registration
Statements filed with the SEC prior to the date hereof.
"Securities Act" means the Securities Act of 1933, as amended, and all of
the rules and regulations promulgated thereunder.
"Significant Subsidiary" means with respect to any Person at any time, any
Subsidiary that is a "significant subsidiary" of such Person within the meaning
of Rule 1-02 under Regulation S-X under the Securities Act.
"Subsidiary" means with respect to any Person at any time, (a) any other
Person the accounts of which would be required by GAAP to be consolidated with
those of such first Person in its consolidated financial statements as of such
time, and (b) any other Person the capital securities of which having ordinary
voting power to elect a majority of the board of directors (or other persons
having similar functions), or other ownership interest of which ordinarily
constituting a majority voting interest, are at such time, directly or
indirectly, owned or controlled by such first Person or one or more of its
Subsidiaries or by such first Person and one or more of its Subsidiaries.
Unless otherwise expressly provided, all references herein to "Subsidiary"
means a Subsidiary of the Company.
"Transaction Documents" means, collectively, the Registration Rights
Agreement and the Warrants.
"Transfer Agent Instruction Letter" means the letter, dated as of the
Closing Date, from the Company to its transfer agent in the form attached
hereto as Exhibit F.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
the exercise of the Warrants.
The following table sets forth certain other defined terms and the section
of this Agreement in which the meaning of each such term appears:
Section(s)
----------
"8-K Filing" ........................................................ 6.3
"Aggregate Purchase Price ........................................... 2.1
"Agreement" ......................................................... Preamble
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Section(s)
----------
"Authorizations" .................................................... 3.18(a)
"Closing" ........................................................... 2.2
"Common Stock" ...................................................... Preamble
"Company" ........................................................... Preamble
"Company Indemnitees" ............................................... 7.2
"DGCL" .............................................................. 3.32
"Disclosure Schedules" .............................................. 3
"FCC" ............................................................... 3.18(a)
"Information" ....................................................... 4A(a)
"Intellectual Property" ............................................. 3.25
"Losses" ............................................................ 7.1
"Permits" ........................................................... 3.19
"Placement Agent" ................................................... 3.23
"Placement Agent's Letter" .......................................... 5.2(g)
"PUC" ............................................................... 3.18(a)
"Purchase Price Per Share" .......................................... 2.1
"Purchaser" ......................................................... Preamble
"Purchaser Indemnitee" .............................................. 7.1
"Registration Rights Agreement" ..................................... Preamble
"Securities Laws Exemption" ......................................... 3.30
"Shares" ............................................................ Preamble
"Warrant(s)" ........................................................ 2.3
2 Purchase and Sale of Shares.
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2.1 Purchase and Sale. Subject to and upon the terms and conditions
set forth in this Agreement, the Company agrees to issue and sell to each
Purchaser, and each Purchaser hereby agrees, severally and not jointly, to
purchase from the Company, at the Closing, the number of Shares set forth
opposite such Purchaser's name on Schedule I hereto, at a purchase price equal
to $18.25 per share (the "Purchase Price Per Share"). The aggregate purchase
price payable by the Purchasers to the Company for all of the Shares shall be
$36,500,000 (the "Aggregate Purchase Price").
2.2 Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at Four Times Square, New York, NY
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, on the Closing
Date, or on such other date and at such time as may be agreed upon between the
Purchasers, on the one hand, and the Company, on the other hand. At the
Closing, the Company shall deliver to each Purchaser a single stock
certificate, registered in the name of such Purchaser, representing the number
of Shares purchased by such Purchaser, against payment by such Purchaser of its
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respective aggregate Purchase Price Per Share by wire transfer of immediately
available funds to the account described on Exhibit G hereto, which stock
certificate shall bear the legend set forth in Section 6.2(a). The stock
certificates delivered to the Purchasers and representing the Shares will be
registered in the names and addresses of the Purchasers set forth on Schedule I
hereto.
2.3 Issuance of Common Stock Purchase Warrants at Closing. Subject
to and upon the terms and conditions set forth in this Agreement, the Company
agrees to issue to each Purchaser, at the Closing, a Common Stock Purchase
Warrant, substantially in the form attached as Exhibit A hereto (each
individually, a "Warrant" and, collectively with all Common Stock Purchase
Warrants issued pursuant to this Section 2.3 to the other Purchasers, the
"Warrants"), exercisable for the number of shares of Common Stock set forth
opposite the name of such Purchaser under the heading "Number of Warrant
Shares" on Schedule I hereto, at an exercise price per Warrant Share equal to
the Purchase Price Per Share. No additional consideration shall be payable by
any Purchaser in respect of the issuance by the Company of such Purchaser's
Warrant at the Closing.
3. Representations and Warranties of the Company. In order to induce the
Purchasers to enter into this Agreement and to purchase the Shares, except as
disclosed in the corresponding sections of the Disclosure Schedules delivered
concurrently herewith (the "Disclosure Schedules"), the Company hereby makes
the following representations and warranties as of the Closing Date, all of
which shall survive the execution and delivery of this Agreement and the
purchase of the Shares for a period of 24 months, as provided in Section 8.9:
3.1 Corporate Status. Each of the Company and its Subsidiaries (a)
has been duly organized, and is validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate or limited
liability company, as applicable, power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (b) has duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified and where
the failure to be so qualified would reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is currently in
violation of any of the provisions of its Certificate of Incorporation or
By-laws (or other charter document), each as amended to date.
3.2 Corporate Power and Authority. All corporate action on the part
of the Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
herein and therein has been taken. When executed and delivered by the Company,
this Agreement and each of the Transaction Documents shall constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles. The Company has all
requisite corporate power and authority to enter into this Agreement and the
Transaction Documents and to carry out and perform its obligations under the
terms hereof and thereof.
3.3 No Violation. Neither the execution, delivery and performance by
the Company of this Agreement and the Transaction Documents nor compliance with
the terms and provisions hereof and thereof (a) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or Governmental Authority, except as would not have a
Material Adverse Effect, (b) will conflict with or result in any breach of, any
of the material terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Company or
any Subsidiary pursuant to the terms of, any indenture, mortgage, deed of
trust, agreement or other instrument to which the Company or any of its
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Subsidiaries is a party or by which it or any of its or their property or
assets are bound or to which it may be subject or result in the acceleration of
any obligation of the Company, except as would not have a Material Adverse
Effect, or (c) will violate any provision of the Certificate of Incorporation
or By-laws of the Company, each as amended to date.
3.4 Capitalization. Section 3.4 of the Disclosure Schedules
discloses the number of authorized, issued and outstanding shares of capital
stock of the Company, and outstanding warrants and options to purchase capital
stock of the Company (a) as of the date hereof , (b) as of the date hereof pro
forma to give effect to the agreement to acquire a 50% interest in HNS and (c)
as of the date hereof pro forma to give effect to the sale of the Shares and
Warrants hereunder. As of the date hereof, 2,312,901 shares of Common Stock
were reserved for future issuance pursuant to outstanding options and warrants
issued by the Company. As of the date hereof, except as disclosed in Section
3.4 of the Disclosure Schedules, or for the exercise rights of the Warrants,
there are no other outstanding options, warrants, rights (including conversion
or preemptive rights) or any agreement for the purchase or acquisition from the
Company or any Subsidiary of any shares of the Company's capital stock or
voting agreements with respect to equity of the Company. All outstanding shares
of the capital stock of the Company have been duly authorized, validly issued,
fully paid and nonassessable. Except as disclosed in Section 3.4 of the
Disclosure Schedules, there are no obligations, contingent or otherwise, of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares
of Common Stock or other equity securities of the Company or to provide funds
to make any investment (in the form of a loan, capital contribution, guaranty
or otherwise) in any other entity for the purpose of acquiring any shares of
Common Stock or other equity securities of the Company. Except as disclosed in
Section 3.4 of the Disclosure Schedules, the sale of the Shares and the
issuance of the Warrants under this Agreement, and the issuance of any Warrant
Shares upon exercise of the Warrants in their current form, will not result in
the Company being obligated to issue, sell or purchase, pursuant to any
existing pre-emptive, anti-dilution, redemption or other right of third
parties, shares of Common Stock or other securities to or from any Person
(other than the Purchasers), and will not result in a right of any holder of
convertible or contingent securities issued by the Company to adjust the
exercise, conversion, exchange or reset price under such securities, including,
in any such case, pursuant to any "poison pill" or shareholders rights plan.
None of the outstanding shares of capital stock of the Company were issued in
violation of the Securities Act or any state securities laws.
3.5 Valid Issuance of the Shares. The Shares, the Warrants and the
Warrant Shares have been duly authorized, and the Shares and the Warrant
Shares, upon issuance pursuant to the terms hereof and the terms of the
Warrants, respectively, (a) will be validly issued, fully paid and
nonassessable, (b) will not be subject to any preemptive rights or any other
similar contractual rights of the stockholders of the Company or any other
Person, and (c) will be recorded in the Company's share register in the name of
and delivered to the applicable Purchaser (with respect to the Shares) and the
applicable Holder (as defined in the Warrant), as applicable, free and clear of
any Liens (defined for purposes hereof without regard to the exceptions set
forth in clauses (a) through (c) of the definition of Lien), claims, charges,
taxes, options or transfer restrictions of any kind which are imposed by the
Company, or arise as a result of the Company's action or omission, other than
in each case those transfer restrictions explicitly set forth in this Agreement
(including, without limitation, Sections 4.4, 6.1 and 6.2) and in the Warrants.
The Company has reserved from its duly authorized capital stock the number of
shares of Common Stock issuable upon exercise in full of the Warrants (assuming
the Warrants vest in full) and the issuance of the Shares hereunder.
3.6 Litigation. Except as disclosed in Section 3.6 of the Disclosure
Schedules or the SEC Reports, no actions, suits, claims, investigations or
proceedings are pending or, to the Company's knowledge, threatened that would
reasonably be expected to have, individually or in the aggregate, (a) a
Material Adverse Effect or (b) an adverse effect on the rights or remedies of
the Purchasers or on the ability of the Company or its Subsidiaries to perform
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when due to be performed their respective obligations under this Agreement or
the Transaction Documents. Except as disclosed in Section 3.6 of the Disclosure
Schedules, neither the Company nor any Significant Subsidiary is a party to or
named in or subject to any order, writ, injunction, judgment or decree of any
court or Governmental Authority.
3.7 Approvals. Assuming the accuracy of the Purchasers'
representations and warranties set forth in Sections 4 and 4A below, the
Investor Questionnaire executed and delivered by each Purchaser to the Company,
such Investor Questionnaire in the form attached hereto as Exhibit B, and the
representations and warranties of Placement Agent set forth in the Placement
Agent's Letter, except for (a) any required filings and recordings which have
been made and are in full force and effect, (b) the filing of a registration
statement with the SEC pursuant to the Registration Rights Agreement and (c)
applicable blue sky notice filings or a Form D to be timely filed with the SEC,
no order, consent, approval, license, authorization or validation of, or
filing, recording or registration with, or exemption by, any Person or
Governmental Authority, is required to authorize or is required for or as a
condition to (i) the execution, delivery and performance of this Agreement or
the Transaction Documents or (ii) the legality, validity, binding effect or
enforceability of this Agreement or the Transaction Documents. The execution
and delivery by the Company of this Agreement and the Transaction Documents,
the consummation of the transactions contemplated herein and therein, and the
issuance of the Shares and the Warrants and, upon exercise of the Warrants, the
Warrant Shares, do not require the consent or approval of the stockholders of
the Company or any other Person.
3.8 Contracts. All material agreements to which the Company or a
Subsidiary is a party or to which the property or assets of the Company or a
Subsidiary are subject are included as part of or specifically identified in
the SEC Reports to the extent required by the rules and regulations of the SEC
as in effect at the time of filing of such SEC Reports. All such material
agreements required to be filed as exhibits to the SEC Reports are legal, valid
and binding obligations of the Company or Subsidiary, as relevant, in
accordance with their respective terms and, to the knowledge of the Company,
the other parties thereto, except in any case as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. The Company and its Subsidiaries are not,
nor to their knowledge is any counterparty, in violation of or default under,
any agreement to which any of them in a party, except as would not reasonably
be expected to have a Material Adverse Effect.
3.9 Conformity to Securities Act and Exchange Act; No Misstatement
or Omission. Each of the SEC Reports as of the date it was filed with the SEC
in the case of the Exchange Act Reports or declared effective in the case of
the Registration Statements, complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as
applicable) and the respective rules and regulations of the SEC thereunder and
did not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading.
Since January 1, 2003, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act.
3.10 Financial Statements; Indebtedness.
----------------------------------
(a) Except as disclosed in Section 3.10(a) of the Disclosure
Schedules, the financial statements and supporting schedules included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, and
in the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2004 and in any Registration Statements or other SEC Reports, in each case
filed with the SEC, present fairly, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the dates
specified and the consolidated results of their operations and cash flows for
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the periods specified, in each case, in conformity with GAAP applied on a
consistent basis during the periods involved, except as indicated therein or in
the notes thereto.
(b) Except for intercompany Indebtedness or Indebtedness
disclosed in Section 3.10(b) of the Disclosure Schedules and in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003, and in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2004, the Company and its Subsidiaries have no Indebtedness outstanding at the
date hereof, and, other than as disclosed in the SEC Reports, since the date of
the balance sheet included in the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004, the Company and its Subsidiaries have
incurred no liabilities or obligations, whether known or unknown, asserted or
unasserted, fixed or contingent, accrued or unaccrued, matured or unmatured,
liquidated or unliquidated, or otherwise, except for liabilities or obligations
that, individually or in the aggregate, do not or would not have a Material
Adverse Effect and other than liabilities and obligations arising in the
ordinary course of business. None of the Company and its Subsidiaries is in
default with respect to any outstanding Indebtedness or any instrument relating
thereto, and no event has occurred, or facts and circumstances exist, which,
after passage of time, would result in such a default.
3.11 Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
3.12 Public Utility Holding Company Act. The Company is not a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935.
3.13 No Material Adverse Changes. Since September 30, 2004 or as
disclosed in the SEC Reports, (a) no event has occurred which has had, or would
reasonably be expected to have, a Material Adverse Effect; (b) except as
contemplated by this Agreement or as disclosed in Section 3.13(b) of the
Disclosure Schedules, there has been no transaction entered into by the Company
or any of its Subsidiaries other than transactions in the ordinary course of
business or transactions which would not, individually or in the aggregate, be
material to the Company; (c) there have not been any changes in the Company's
authorized capital or any increases in the Indebtedness of the Company and its
Subsidiaries taken as a whole, except as disclosed in Section 3.13(c) of the
Disclosure Schedules; (d) there has been no actual or, to the knowledge of the
Company, threatened revocation of, or default under, any contract to which the
Company or any of its Subsidiaries is a party, except as would not reasonably
be expected to have a Material Adverse Effect; (e) except as disclosed in
Section 3.13(e) of the Disclosure Schedules, there have not been any amendments
or changes in the charter documents or by-laws of the Company or the
Significant Subsidiaries; (f) except as disclosed in Section 3.13(f) of the
Disclosure Schedules, there has not been any entry into, amendment of,
relinquishment, termination or non-renewal by the Company or the Significant
Subsidiaries of any material contract, license, lease, transaction, commitment
or other right or obligation, other than in the ordinary course of business,
consistent with past practice; and (g) there has not been any transfer or grant
of a right with respect to the Intellectual Property owned or licensed by the
Company or the Significant Subsidiaries, except as among the Company and the
Significant Subsidiaries.
3.14 Tax Returns and Payments. Except as disclosed in Section 3.14 of
the Disclosure Schedules, each of the Company and each of its Significant
Subsidiaries has filed all federal income tax returns and all other domestic
and foreign tax returns and reports required to be filed by it and has paid all
taxes and assessments payable by it which have become due, except for those
contested in good faith and adequately reserved against (in the good faith
determination of the Company), all of which, to the extent outstanding on the
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Closing Date, have been disclosed by the Company in the SEC Reports. All such
returns and reports are true and correct in all material respects. Except as
disclosed in Section 3.14 of the Disclosure Schedules or the SEC Reports, each
of the Company and each of its Significant Subsidiaries has paid, or has
provided adequate reserves (in the good faith judgment of the Company) for the
payment of, all material federal, state and foreign taxes that are not yet due
and payable for all fiscal years, including the current fiscal year, to date.
Except as disclosed in Section 3.14 of the Disclosure Schedules or the SEC
Reports, no action, suit, proceeding, investigation, audit or claim is now
pending or, to the knowledge of the Company or its Subsidiaries, threatened by
any authority regarding any taxes relating to the Company or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect. As of the Closing Date, neither the Company nor any of its Significant
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to
the payment or collection of taxes of the Company or any of its Significant
Subsidiaries. Except as disclosed in Section 3.14 of the Disclosure Schedules
or the SEC Reports, no tax return of the Company or any of its Significant
Subsidiaries is or has been the subject of an audit or examination by any
taxing authority, other than any such audit or examination which has been
completed or closed. Except as disclosed in Section 3.14 of the the Disclosure
Schedules, each of the Company and its Significant Subsidiaries has withheld
from each payment made to any of its past or present employees, officers and
directors, and any other person, the amount of all material taxes and other
deductions required to be withheld therefrom and paid the same to the proper
taxing authority within the time required by law.
3.15 Significant Subsidiaries. As of the Closing Date, the Company
has no directly held Significant Subsidiary other than those disclosed in
Section 3.15 of the Disclosure Schedules or the SEC Reports. Each of the
Company and the Significant Subsidiaries has good title to all of the shares
(or other equity interests) it purports to own of the stock of each Significant
Subsidiary, free and clear in each case of any Lien (defined for purposes
hereof without regard to the exceptions contained in (a) to (c) of the
definition of Lien). All such shares have been duly authorized, validly issued
and are fully paid and nonassessable. As of the Closing Date, the Company is
not party to any joint venture or similar arrangement, except as disclosed in
the SEC Reports.
3.16 Properties. Except as disclosed in Section 3.16 of the
Disclosure Schedules, the Company and each of its Subsidiaries owns its
properties and assets, including all such properties reflected in their balance
sheets included in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004, free and clear of all Liens, other than as referred
to in such balance sheet or in the notes thereto. Except as disclosed in the
SEC Reports or Section 3.16 of the Disclosure Schedules, with respect to leased
property and assets, the Company and its Subsidiaries are in compliance with
such leases and hold a valid leasehold interest, free of any Liens, except as
would not reasonably be expected to have a Material Adverse Effect.
3.17 Labor Relations. The Company and its Significant Subsidiaries
are not engaged in any unfair labor practice. No unfair labor practice
complaint is pending against the Company or any of its Significant Subsidiaries
or, to the best of its knowledge, threatened against it or any of its
Significant Subsidiaries, before the National Labor Relations Board or similar
foreign labor relations authority, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Company or any of its Significant Subsidiaries, or, to the best of
its knowledge, threatened against it or any of its Significant Subsidiaries. No
strike, labor dispute, slowdown or stoppage is pending against the Company or
any of its Significant Subsidiaries or, to the best of its knowledge,
threatened against the Company or any of its Significant Subsidiaries. No union
representation question exists with respect to the employees of the Company or
any of its Significant Subsidiaries and no union organizing activities are
taking place. The Company and its Significant Subsidiaries have complied in all
material respects with all applicable state and federal equal opportunity and
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other laws related to employment. To the Company's knowledge, no employee of
the Company or any Significant Subsidiary is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with the Company or any Significant
Subsidiary, or any other party because of the nature of the business presently
conducted or presently proposed to be conducted by the Company and its
Significant Subsidiaries. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company or any Significant Subsidiary, nor does the Company
or any Significant Subsidiary have a present intention to terminate the
employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company and its Significant Subsidiaries is terminable at the will of
the Company or the applicable Significant Subsidiary, except as disclosed in
the SEC Reports.
3.18 Regulatory Matters.
------------------
(a) Authorizations. The Company holds all Federal
Communications Commission ("FCC"), state public utility commission ("PUC") and
foreign regulatory authority permits, licenses, certificates, registrations and
other similar authorizations necessary or appropriate for the conduct of its
business (collectively, the "Authorizations"), the lack of which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries have maintained and kept in
force and effect, and have applied in a timely manner for renewal of all such
Authorizations. Except as disclosed in Section 3.18(a) of the Disclosure
Schedules, the Company and its Subsidiaries are in compliance with all such
Authorizations and any terms and conditions thereto except such non-compliance
as would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as disclosed in Section 3.18(a) of the
Disclosure Schedules, each Authorization which is material to the business of
the Company is valid and in full force and effect, and the Company and its
Subsidiaries have not received notice from the FCC, any PUC, or any foreign
regulatory authority of its intention to revoke, suspend, condition or fail to
renew any such Authorization, which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as disclosed
in Section 3.18(a) of the Disclosure Schedules, no event has occurred or facts
and circumstances exist, which allows or would reasonably be expected to allow,
or which after notice or lapse of time would allow or would reasonably be
expected to allow, revocation, suspension, non-renewal or termination or result
in any other material impairment of the Company's or its Subsidiaries' rights
under any of its Authorizations to the extent that such revocation, termination
or impairment would have a Material Adverse Effect.
(b) Compliance with Law. Except as disclosed in Section 3.18(b)
of the Disclosure Schedules, the conduct of the Company's business complies
with all applicable U.S., state, local and foreign laws (including, without
limitation, the Communications Act of 1934, as amended, and the Communications
Assistance for Law Enforcement Act), ordinances, rules, regulations, and orders
(including, without limitation, those issued by the FCC, any PUC or any foreign
regulatory authority), except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.
3.19 Permits. The Company and its Subsidiaries have all franchises,
permits, licenses and any similar authority (the "Permits") necessary for the
conduct of their business as now being conducted by them, the lack of which
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. As of the date hereof, no suspension or cancellation
of any of the Permits is pending or, to the knowledge of the Company,
threatened which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 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. The Company and its Significant
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Subsidiaries are not in default under any of such franchises, permits, licenses
or other similar authorities.
3.20 ERISA. Neither the Company nor any Significant Subsidiary or
ERISA Affiliate maintains or contributes to any Plan other than those disclosed
in Section 3.20 of the Disclosure Schedules.
(a) Compliance with ERISA. The Company and each ERISA Affiliate
is in compliance with ERISA and no contributions required to be made by the
Company or any ERISA Affiliate to any pension plan are overdue.
(b) PBGC. No liability to the PBGC has been or is expected to
be incurred by the Company or any ERISA Affiliate with respect to any pension
plan that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect. No circumstance exists that constitutes grounds
under section 4042 of ERISA entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, any pension plan or trust
created thereunder, nor has the PBGC instituted any such proceeding.
(c) Multiemployer Plans. Neither the Company nor any ERISA
Affiliate has incurred or presently expects to incur any withdrawal liability
under Title IV of ERISA with respect to any multiemployer plan. There have been
no "reportable events" (as such term is defined in section 4043 of ERISA) with
respect to any multiemployer plan that could result in the termination of such
multiemployer plan and give rise to a liability of the Company or any ERISA
Affiliate in respect thereof. Neither the Company nor any Significant
Subsidiary has incurred or does it expect to incur liability under Sections 412
or 4971 of the Code; and each "pension plan" for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified and
nothing has occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
3.21 Insurance. The Company maintains insurance of the types and in
the amounts and covering such risks as is prudent and adequate for its business
as currently conducted and for the value of its properties as is customary for
companies engaged in similar lines of business in similar industries all of
which insurance is in full force and effect. Neither the Company nor any
Significant Subsidiary has (i) received notice from any insurer or agent of
such insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance or (ii) any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage at reasonable cost
from similar insurers as may be necessary to continue its business.
3.22 Accounts Receivable. The accounts and notes receivable of the
Company and its Subsidiaries reflected on the balance sheet included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, and
all accounts and notes receivable arising subsequent to December 31, 2003, in
each case subject to an allowance for doubtful accounts in accordance with
GAAP, (i) arose from bona fide sales transactions in the ordinary course of
business consistent with past practice and are payable on ordinary trade terms,
(ii) to the knowledge of the Company and each Significant Subsidiary, are
legal, valid and binding obligations of the respective debtors enforceable in
accordance with their respective terms, (iii) to the knowledge of the Company
and each Significant Subsidiary, are not subject to any valid set-off or
counterclaim, and (iv) are not the subject of any actions or proceedings
brought by or on behalf of the Company or any Significant Subsidiary.
3.23 Brokers. Except for Tejas Securities Group Inc. ("Placement
Agent"), neither the Company nor any Subsidiary has any liability to pay any
fees, commissions or other similar compensation to any broker, finder,
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investment banker, financial advisor or other similar Person in connection with
the transactions contemplated by this Agreement.
3.24 Leases. Each of the Company and the Significant Subsidiaries has
complied with all material obligations under all leases for real property to
which it is a party as a lessee. All leases relating to the leasehold estates
of each of the Company and the Significant Subsidiaries necessary for the
conduct of the business of such Person are, with respect to the Company, valid
and enforceable, and, to the knowledge of the Company, are, valid and
enforceable with respect to the lessor, and each of the Company and the
Significant Subsidiaries that is the lessee in respect thereof currently enjoys
peaceful and undisturbed possession of the premises subject thereto.
3.25 Intellectual Property. Except as disclosed in Section 3.25 of
the Disclosure Schedules, each of the Company and the Significant Subsidiaries
owns, possesses or has the right to use all of the patents, trademarks, service
marks, trade names, copyrights, franchises and licenses, and rights with
respect thereto (collectively, "Intellectual Property"), necessary for the
present conduct of its business and as such business is proposed to be
conducted, without any infringement of the rights of others. There are no
outstanding options, licenses, or agreements of any kind relating to the
Company's and/or its Significant Subsidiaries' Intellectual Property with the
exception of agreements for the sale or license of the Company's products or
services in the ordinary course of business. The Company has not received any
communications alleging that the Company or any Significant Subsidiary has
violated or, by conducting its business as presently proposed, would violate
any of the Intellectual Property of any other Person.
3.26 Environmental Compliance.
------------------------
(a) Compliance. The Company and each of the Significant
Subsidiaries is in compliance with all Environmental Protection Laws in effect
in each jurisdiction where it is currently doing business and no material
expenditures will be required in order to comply with any Environmental
Protection Law.
(b) Liability. Neither the Company nor any Subsidiary is
subject to any liability under any Environmental Protection Law that, in the
aggregate for all such liabilities, would reasonably be expected to have a
Material Adverse Effect.
(c) Notices. Neither the Company nor any Significant Subsidiary
has received any
(i) notice from any Governmental Authority by which any
of its currently or previously owned or leased properties has been identified
in any manner by any Governmental Authority as a hazardous substance disposal
or removal site, "Super Fund" clean-up site, or candidate for removal or
closure pursuant to any Environmental Protection Law,
(ii) notice of any Lien arising under or in connection
with any Environmental Protection Law that has attached to any revenues of, or
to, any of its currently or previously owned or leased properties, or
(iii) communication, written or oral, from any
Governmental Authority concerning any action or omission in connection with its
currently or previously owned or leased properties resulting in the release of
any hazardous substance resulting in any violation of any Environmental
Protection Law,
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in each case where the effect of which, in the aggregate for all such notices
and communications, would reasonably be expected to have a Material Adverse
Effect.
3.27 Registration Rights. Except as disclosed in Section 3.27 of the
Disclosure Schedules, the Company is not currently subject to any agreement
providing any Person any rights (including piggyback registration rights) to
have any securities of the Company registered with the SEC or registered or
qualified with any other Governmental Authority. Except as disclosed in Section
3.27 of the Disclosure Schedules, currently, no Person has, with respect to the
Company, and the Company will not grant to any Person any registration rights
(including demand and "piggyback" registration rights) inconsistent with or
superior to any of those contained in the Registration Rights Agreement, so
long as any of the registration rights under the Registration Rights Agreement
remain in effect.
3.28 Transactions with Affiliates and Employees. Except as disclosed
in the SEC Reports or Section 3.28 of the Disclosure Schedules, none of the
officers, directors or employees of the Company (or members of any such
Person's immediate family) is presently a party to any transaction or agreement
with the Company (other than for services as employees, officers and directors
entered into in the ordinary course of business consistent with past practices)
exceeding $60,000 in value, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner. Except in
connection with the Transaction Documents or as disclosed in the SEC Reports or
Section 3.28 of the Disclosure Schedules, there are no agreements,
understandings or proposed transactions between the Company or any Significant
Subsidiary, on the one hand, and any of its officers, affiliates or directors,
or any of their affiliates, on the other hand.
3.29 Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorizations, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and its Subsidiaries have established and maintained disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) and Rule
l5d-15(e) under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company and its
Subsidiaries is made known to the Company's principal executive officer and its
principal financial officer by others within those entities, and such
disclosure controls and procedures are effective to perform the functions for
which they were established; the Company's auditors and the audit committee of
the Board have been advised of: (i) any significant deficiencies in the design
or operation of internal controls which could adversely affect the Company's or
its Subsidiaries' ability to record, process, summarize, and report financial
data; and (ii) any fraud, whether or not material, that involves management or
other employees who have a role in the Company's or its Subsidiaries' internal
controls; any material weaknesses in internal controls have been identified for
the Company's auditors; since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses; the principal executive officer and
principal financial officer of the Company have made all certifications
required by the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") and any
related rules and regulations promulgated by the SEC, and the statements
contained in any such certification are complete and correct; and the Company
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and its Subsidiaries are otherwise in compliance with all applicable provisions
of the Xxxxxxxx-Xxxxx Act that are effective.
3.30 Securities Laws. Assuming the accuracy of the Purchasers'
representations and warranties set forth in Sections 4 and 4A below, the
Investor Questionnaire executed and delivered by each Purchaser to the Company,
such Investor Questionnaire in the form attached hereto as Exhibit B, and the
representations and warranties of Placement Agent set forth in the Placement
Agent's Letter, the offer, sale and issuance of the Shares and the Warrants,
and issuance of Warrant Shares, as provided in this Agreement and the Warrants,
is and is intended to be (a) exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Regulation D promulgated
thereunder, and (b) exempt from registration or qualification requirements of
applicable state securities laws (together, the "Securities Laws Exemptions").
Assuming the accuracy of representations and warranties of Placement Agent set
forth in the Placement Agent's Letter and the engagement letter executed by the
Company and Placement Agent on December 13, 2004, neither the Company nor
anyone acting on its behalf has taken any action that would cause the loss of
such exemptions.
3.31 No Integrated Offering. Assuming the accuracy of representations
and warranties of Placement Agent set forth in the Placement Agent's Letter and
the engagement letter executed by the Company and Placement Agent on December
13, 2004, neither the Company, nor any Affiliate of the Company, nor any Person
acting on its or their behalf has, directly or indirectly, engaged in any form
of general solicitation or general advertising with respect to any security or
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the offering or issuance of the
Shares, the Warrants or any Warrant Shares pursuant to this Agreement and the
Transaction Documents to be integrated with prior offerings by the Company for
purposes of the Securities Act which would cause the Securities Laws Exemptions
to be unavailable, or would cause any applicable state securities laws
exemptions or any applicable stockholder approval provisions exemptions,
including, without limitation, under the rules and regulations of any national
securities exchange or automated quotation system on which any of the
securities of the Company are listed or designated to be unavailable, nor will
the Company take any action or steps that would cause the offering or issuance
of the Shares, the Warrants or any Warrant Shares pursuant to this Agreement
and the Transaction Documents to be integrated with other offerings.
3.32 Section 203 of the DGCL. To the knowledge of the Company, no
Purchaser is an "interested stockholder" (as defined in Section 203 of Delaware
General Corporation Law (the "DGCL")) of the Company as of the Closing Date,
nor will a Purchaser be deemed an "interested stockholder" as a result of the
consummation of the transactions contemplated herein, and the restrictions on
"business combinations" (as defined in Section 203 of the DGCL) set forth in
Section 203 of the DGCL do not apply to the transactions contemplated hereby.
The Board has approved the issuance to each Purchaser of the Shares, the
Warrants and the Warrant Shares issuable upon exercise of the Warrants, and the
restrictions on "business combinations" set forth in Section 203 of the DGCL
will not apply to any exercise of the Warrants by a Purchaser.
3.33 Solvency. Based on the consolidated financial condition of the
Company and the Subsidiaries as of the date hereof, (i) the fair saleable value
of the Company's assets exceeds the amount that will be required to be paid on
or in respect of the Company's existing debts and other liabilities (including
known and contingent liabilities) as they mature; (ii) the Company's assets do
not constitute unreasonably small capital to carry on its business for the
current fiscal year as now conducted and as proposed to be conducted, including
its capital needs taking into account the particular capital requirements of
the business conducted by the Company, projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash,
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would be sufficient to pay all amounts on or in respect of its debts when such
amounts are required to be paid. The Company has no present intention to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
3.34 S-3 Eligibility. The Company is currently eligible under the
eligibility requirements of General Instruction I.B.3 to Registration Statement
on Form S-3 to register the resale of its Common Stock on a registration
statement on Form S-3 under the Securities Act. To the knowledge of the
Company, there exist no facts or circumstances that would reasonably be
expected to prohibit or delay the preparation and filing of a registration
statement on Form S-3 with respect to the Shares and the Warrant Shares in
accordance with the terms of this Agreement and the Registration Rights
Agreement.
4 Representations and Warranties of the Purchasers. In order to induce
the Company to enter into this Agreement and to sell the Shares and the
Warrants, each Purchaser hereby makes the following representations and
warranties severally (as to such Purchaser only) and not jointly, as of the
Closing Date, all of which shall survive the execution and delivery of this
Agreement and the purchase of the Shares for a period of 24 months, as provided
in Section 8.9:
4.1 Authorization. All corporate, partnership or limited liability
company action on the part of such Purchaser necessary for the authorization,
execution, delivery and performance of this Agreement and the Registration
Rights Agreement, and the consummation of the transactions contemplated herein
and therein, has been taken. When executed and delivered by such Purchaser,
each of this Agreement and the Registration Rights Agreement shall constitute
the legal, valid and binding obligation of such Purchaser, enforceable against
such Purchaser in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles. Such Purchaser has all
requisite corporate, partnership or limited liability company power and
authority to enter into each of this Agreement and the Registration Rights
Agreement and to carry out and perform its obligations under the terms hereof
and thereof.
4.2 Purchase Entirely for Own Account. Such Purchaser is acquiring
the Shares and the Warrants for its own account for investment and not for the
account of any other person or with a view to any resale, fractionalization,
division, or distribution thereof in a manner that would require registration
thereof or the transactions contemplated hereby under the Securities Act. Such
Purchaser has no contract, undertaking, agreement, understanding or arrangement
with any person to sell, transfer, or pledge to any person any part or all of
the Shares and the Warrants which such Purchaser is acquiring, or any interest
therein, and have no present plans to enter into the same. The Shares, the
Warrants and the Warrant Shares were offered or sold to such Purchaser by means
of a direct solicitation by the Company and Placement Agent.
4.3 Investor Status; Etc. Such Purchaser certifies and represents to
the Company that (i) it is an "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act
and was not organized for the purpose of acquiring any of the Shares or the
Warrants or is an individual with net worth in excess of $100 million and (ii)
such Purchaser's Investor Questionnaire is complete and correct. Such Purchaser
has adequate means of providing for his, her or its current needs and personal
contingencies, has no need now, and anticipates no need in the foreseeable
future, to sell the Shares and the Warrants, and currently has sufficient net
worth and financial liquidity to afford a complete loss of his, her or its
investment in the Company. Such Purchaser has such knowledge and experience in
financial and business matters so that such Purchaser is capable of evaluating
the merits and risks of an investment in the Company (including, without
limitation, the risks described in the Information Package) and has made such
evaluation. Such Purchaser fully understands that the Shares, the Warrants and
the Warrant Shares are speculative investments which involve a high degree of
risk of loss of such Purchaser's entire investment. No person or entity, other
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than the Company, Placement Agent or their authorized representatives, has
offered the Shares or the Warrants to such Purchaser. Such Purchaser is able to
bear the economic risk of an investment in the Shares and the Warrants.
4.4 Securities Not Registered. Such Purchaser understands that the
Shares, the Warrants and any Warrant Shares issued thereunder have not been
registered under the Securities Act, by reason of their issuance by the Company
in a transaction exempt from the registration requirements of the Securities
Act, and that the Shares, the Warrants and any Warrant Shares issued thereunder
must continue to be held by such Purchaser unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration. Such Purchaser understands that the exemptions from registration
afforded by Rule 144 (the provisions of which are known to it) promulgated
under the Securities Act depend on the satisfaction of various conditions, and
that, if applicable, Rule 144 may afford the basis for sales only in limited
amounts. Such Purchaser has had an opportunity to ask questions of and receive
answers from the management and authorized representatives of the Company, and
to review any other relevant documents and records concerning the business of
the Company and the terms and conditions of this investment, and that any such
questions have been answered to such Purchaser's full satisfaction. Such
Purchaser understands that no federal or state agency has passed upon or made
any recommendation or endorsement of an investment in the Shares or the
Warrants.
4.5 No Violation. Neither the execution, delivery and performance by
such Purchaser of this Agreement and the Registration Rights Agreement nor
compliance with the terms and provisions hereof and thereof by such Purchaser
(a) will contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or Governmental
Authority, except as would not have a material adverse effect on such
Purchaser's ability to consummate the transactions contemplated hereby; or (b)
will violate any provision of the organizational documents of such Purchaser,
except as would not have a material adverse effect on such Purchaser's ability
to consummate the transactions contemplated hereby.
4.6 Brokers. Such Purchaser has no liability to pay any fees,
commissions or other similar compensation to any broker, finder, investment
banker, financial advisor or other similar Person in connection with the
transactions contemplated by this Agreement.
4.7 Consents. All consents, approvals, orders and authorizations
required on the part of such Purchaser in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and are effective as of the
date hereof.
4A Additional Representations, Warranties and Acknowledgement of the
Purchasers. In order to induce the Company to enter into this Agreement and
to sell the Shares and the Warrants, each Purchaser hereby makes the following
representations and warranties severally (as to such Purchaser only) and not
jointly, as of the Closing Date, all of which shall survive the execution and
delivery of this Agreement and the purchase of the Shares for a period of 24
months, as provided in Section 8.9:
(a) Such Purchaser hereby acknowledges that the Company recently
announced its agreement to acquire a 50% interest in HNS, which is a newly
formed limited liability company that will acquire substantially all of the
assets and liabilities of Xxxxxx Network Systems, Inc., a wholly owned
subsidiary of The DirecTV Group, Inc. Further, such Purchaser acknowledges that
the Company possesses material, non-public information regarding HNS (the
"Information"). At such Purchaser's request, such Purchaser has not been
provided with any of the Information and such Purchaser acknowledges that the
Information might be material to its decision to enter into this Agreement or
otherwise materially adverse to its interests. Such Purchaser acknowledges and
agrees that it does not wish to receive any of the Information, notwithstanding
the Company's offer to disclose and discuss the same with such Purchaser.
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(b) Such Purchaser further represents that, notwithstanding not
receiving the Information, it believes it has adequate information concerning
the business and financial condition of the Company to make an informed
decision regarding entering into the transactions contemplated by this
Agreement. Such Purchaser has independently and without reliance upon the
Information or otherwise upon the Company (except to the extent expressly set
forth in this Agreement), Placement Agent or their agents, made its own
analysis and decision to enter into the transactions contemplated by this
Agreement. Without limiting the foregoing, (x) the Company shall not be deemed
to have made any representation or warranty (including in respect of the
Company's information package dated December 15, 2004 (the "Information
Package")) other than as expressly made by the Company in this Agreement and
(y) neither the Company nor Placement Agent shall be deemed to have made any
representation or warranty regarding the Information. Such Purchaser
understands the disadvantage to which it may be subject on account of its
express desire not to receive the Information.
(c) Such Purchaser is relying solely upon the advice of its own
financial, legal and tax advisors and its entering into the transactions
contemplated by this Agreement is the result of independent arm's length
negotiations between such Purchaser and the Company. Such Purchaser also
acknowledges that the Company and Placement Agent are relying on Sections 4 and
4A and would not consummate the transactions contemplated by this Agreement in
the absence of Sections 4 and 4A.
(d) Notwithstanding anything contained in this Agreement to the
contrary, such Purchaser hereby irrevocably and forever releases and discharges
the Company, Placement Agent and their respective affiliates, directors,
officers, employees, representatives, agents, advisors and controlling persons
and their respective successors and assigns from any and all Losses, including,
but not limited to, any and all liabilities, claims or demands (legal,
equitable or otherwise) alleging violations of federal or state securities
laws, common law fraud or deceit, breach or fiduciary duty, negligence, tort or
any other theory, based upon, arising from, relating to, or in connection with,
directly or indirectly, the non-disclosure of, in whole or in part, the
Information.
(e) Such Purchaser hereby acknowledges that it is familiar with its
responsibilities under federal and state securities laws relating to
restrictions on trading in securities of an issuer while in possession of
material, non-public information, and restrictions on sharing such information
with other persons who may engage in such trading. Such Purchaser represents
and warrants to, and agrees with, the Company that neither it nor any of its
directors, officers, employees, agents or representatives has violated, and
none of them will violate, any of such restrictions with respect to the Shares,
Warrants, Warrant Shares or any other securities of the Company.
5 Conditions Precedent.
--------------------
5.1 Conditions to the Obligation of the Purchasers to Consummate the
Closing. The obligation of each Purchaser to consummate the Closing and to
purchase and pay for the Shares and Warrants to be purchased by it is subject
to the satisfaction (or waiver by such Purchaser) of the following conditions
precedent:
(a) The representations and warranties of the Company contained
herein shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date. The Company
shall have performed all obligations and conditions herein required to be
performed or complied with by the Company on or prior to the Closing Date.
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(b) There shall have been no event or events which has occurred
since the date hereof that taken individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect.
(c) No proceeding challenging this Agreement or the Transaction
Documents, or the transactions contemplated hereby or thereby, or seeking to
prohibit, alter, prevent or materially delay the Closing, shall have been
instituted before any court, arbitrator or Governmental Authority or official
or shall be pending against or involving the Company or any Subsidiary.
(d) The sale of the Shares and the issuance of the Warrants and
Warrant Shares to the Purchasers shall not be prohibited by any law, rule,
governmental order or regulation. All necessary consents, approvals, licenses,
permits, orders and authorizations of, or registrations, declarations and
filings with, any Governmental Authority or of or with any other Person with
respect to any of the transactions contemplated hereby shall have been duly
obtained or made and shall be in full force and effect.
(e) The Purchasers shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, special counsel to the Company, an opinion addressed
to such Purchaser, dated the Closing Date and substantially in the form of
Exhibit C hereto.
(f) Placement Agent, shall have received a letter from KPMG LLP
independent certified public accountants for the Company, dated the Closing
Date, addressed to Placement Agent, in form and substance reasonably
satisfactory to Placement Agent.
(g) The Registration Rights Agreement shall have been executed
and delivered to the Purchasers by the Company.
(h) The Company shall have delivered to the Purchasers a
certificate substantially in the form of Exhibit D hereto dated the Closing
Date and signed by the secretary or another officer of the Company, certifying
(i) that the copies of the Certificate of Incorporation, the By-Laws and
resolutions of the Board approving this Agreement, the Transaction Documents
and the transactions contemplated hereby and thereby attached thereto, are all
true, complete and correct and remain in full force and effect as of such date,
and (ii) as to the incumbency and specimen signature of each officer of the
Company executing this Agreement, the Transaction Documents and any other
document delivered in connection herewith on behalf of the Company.
(i) The Company shall have delivered to the Purchasers a
certificate substantially in the form of Exhibit E hereto dated the Closing
Date and signed by the Company's senior vice president, certifying that (i) the
representations and warranties of the Company contained herein are true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date and (ii) the Company has performed all
obligations and conditions herein required to be performed or complied with by
the Company on or prior to the Closing Date.
(j) Such Purchaser shall have received from the Company an
original stock certificate evidencing the purchase of the Shares and an
original Warrant, in each case for the number of shares of Common Stock and the
number of Warrant Shares, respectively, set forth opposite such Purchaser's
name on Schedule I hereto, and bearing the legends required to be imprinted
thereon pursuant to Section 6.2(a) hereof.
(k) The Company shall have delivered to the Purchasers a
certificate of good standing for the Company from the Secretary of State of the
State of Delaware and a certificate of qualification for the Company to do
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business issued by the Secretary of State of the State of New York, in each
case dated within one week of the Closing.
(l) The Purchasers shall have received a copy of the duly
executed Transfer Agent Instruction Letter in the form of Exhibit F hereto.
(m) All instruments and corporate proceedings of the Company in
connection with the transactions contemplated by this Agreement and the
Transaction Documents shall be reasonably satisfactory in form and substance to
such Purchaser, and such Purchaser shall have received copies (executed or
certified, as may be appropriate) of all documents which any Purchaser may have
reasonably requested in connection with such transactions.
5.2 Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the Closing and to issue
and sell the Shares and Warrants to each Purchaser at the Closing is subject to
the satisfaction (or waiver by the Company) of the following conditions
precedent:
(a) The representations and warranties of such Purchaser
contained herein shall be true and correct on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date.
(b) The Registration Rights Agreement shall have been executed
and delivered to the Company by such Purchaser.
(c) Such Purchaser shall have performed all obligations and
conditions herein required to be performed or complied with by such Purchaser
on or prior to the Closing Date, including but not limited to tendering its
respective portion of the Aggregate Purchase Price.
(d) No proceeding challenging this Agreement or the Transaction
Documents, or the transactions contemplated hereby or thereby, or seeking to
prohibit, alter, prevent or materially delay the Closing, shall have been
instituted before any court, arbitrator or Governmental Authority or official
or shall be pending against or involving such Purchaser.
(e) The sale of the Shares and the issuance of the Warrants and
the Warrant Shares by the Company shall not be prohibited by any law, rule,
governmental order or regulation. All necessary consents, approvals, licenses,
permits, orders and authorizations of, or registrations, declarations and
filings with, any Governmental Authority or of or with any other Person with
respect to any of the transactions contemplated hereby shall have been duly
obtained or made and shall be in full force and effect.
(f) Such Purchaser shall have delivered to the Company each of
a Form W-9 or Form W-8, as applicable, and a completed Investor Questionnaire
in the form of Exhibit B hereto.
(g) Placement Agent shall have delivered to the Company a
customary private placement agent's letter ("Placement Agent's Letter") in the
form of Exhibit H hereto.
6 Certain Covenants and Agreements.
--------------------------------
6.1 Transfer of Securities. Each Purchaser agrees severally (as to
itself only) and not jointly that it shall not sell, assign, pledge, transfer
or otherwise dispose of or encumber any of the Shares, the Warrants or any
Warrant Shares, except: (i) pursuant to an effective registration statement
under the Securities Act; (ii) to an Affiliate of such Purchaser (so long as
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such Affiliate is an "accredited investor" as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D promulgated under the Securities Act and was not
organized for the purpose of acquiring any of the Shares or the Warrants or is
an individual with net worth in excess of $100 million, and agrees in a written
instrument in form and substance reasonably satisfactory to the Company to be
bound by the terms and provisions of this Agreement and the Registration Rights
Agreement to the fullest extent as such Purchaser) or, for no consideration, to
a limited number of partners or members in a pro rata distribution in
accordance with such Purchaser's existing governance documents (so long as such
distribution is not presently contemplated and such partner or member agrees in
a written instrument in form and substance reasonably satisfactory to the
Company to be bound by the terms and provisions of this Agreement and the
Registration Rights Agreement to the fullest extent as such Purchaser); or
(iii) pursuant to an available exemption from registration under the Securities
Act (including sales permitted pursuant to Rule 144) and applicable state
securities laws, so long as the transferee (other than in sales permitted
pursuant to Rule 144) agrees in a written instrument in form and substance
reasonably satisfactory to the Company to be bound by the terms and provisions
of this Agreement and the Registration Rights Agreement to the fullest extent
as such Purchaser). If the Company requests an opinion of counsel for such
transferor that the proposed transfer may be effected without registration of
such Shares, the Warrants or any Warrant Shares under the Securities Act
(including sales permitted pursuant to Rule 144), such transferor shall not be
entitled to effect such transfer unless and until the Company receives such an
opinion of counsel (which counsel and opinion shall each be reasonably
satisfactory to the Company). Any transfer or purported transfer of the Shares
in violation of this Section 6.1 or Section 6.2 shall be void. The Company
shall not register any transfer of the Shares in violation of this Section 6.1
or Section 6.2. The Company may, and may instruct any transfer agent for the
Company, to place such stop transfer orders as may be required on the transfer
books of the Company in order to ensure compliance with the provisions of this
Section 6.1 and Section 6.2.
6.2 Legends.
-------
(a) Each certificate or other document evidencing the Shares,
the Warrants and any Warrant Shares shall be endorsed with the legend
substantially as set forth below, and each Purchaser covenants that, except to
the extent such restrictions are waived by the Company, it shall not transfer
the shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed
on such certificate:
"THE SHARES [WARRANT, WARRANT SHARES] REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, REGISTRATION UNDER SAID ACT. IN ADDITION, THE TRANSFER HEREOF IS
SUBJECT TO VARIOUS CONDITIONS CONTAINED IN A SECURITIES PURCHASE AGREEMENT
DATED DECEMBER 23, 2004. A COPY OF SUCH CONDITIONS WILL BE PROVIDED TO THE
HOLDER UPON REQUEST."
(b) The legend set forth in Section 6.2(a) shall be removed
from the certificates evidencing the Shares, Warrants and any Warrant Shares,
(i) following any sale of such Shares, Warrants or Warrant Shares pursuant to
Rule 144 or any effective registration statement, or (ii) if such Shares,
Warrants or Warrant Shares are eligible for sale under Rule 144(k) (and the
holder of such Shares, Warrants or Warrant Shares has submitted a written
request for removal of the legend, along with a legal opinion, if reasonably
requested by the Company, to the effect that the holder has complied with the
applicable provisions of Rule 144), or (iii) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the SEC) (and the
-20-
holder of such Shares, Warrants, or Warrant Shares has submitted a written
request for removal of the legend, along with a legal opinion, if reasonably
requested by the Company, to the effect that the holder has complied with such
judicial interpretation or pronouncement). Subject to receipt of appropriate
certifications and opinions, the Company shall cause its transfer agent
promptly upon the occurrence of any of the events in clauses (i), (ii) or (iii)
above to effect the removal of the legend on certificates evidencing the Shares
or any Warrant Shares and shall also cause its counsel (including its general
counsel) to issue a "blanket" legal opinion to the Company's transfer agent
promptly after the effective date of any registration statement covering the
resale of the Shares or any Warrant Shares (provided that there is an effective
registration statement covering the resale of the Shares or any Warrant Shares,
as the case may be), if required by the Company's transfer agent, to allow
sales without restriction pursuant to an effective registration statement. The
Company agrees that at such time as such legend is no longer required under
this Section 6.2(b), it will, no later than three (3) business days following
the delivery by a Purchaser to the Company or the Company's transfer agent of a
certificate representing the Shares, Warrants or any Warrant Shares issued with
a restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Shares, Warrants or Warrant Shares that is free
from all restrictive and other legends; provided that in the case of removal of
the legend for reasons set forth in clause (ii) above, the holder of such
Shares, Warrants or Warrant Shares has submitted a written request for removal
of the legend indicating that the holder has complied with the applicable
provisions of Rule 144. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section 6.
6.3 Publicity. Except to the extent required by applicable laws,
rules, regulations or stock exchange requirements, the Company shall not,
without the prior written consent of the Purchaser, disclose or publish the
name of such Purchaser in any press release or public announcement. Except to
the extent required by applicable laws, rules, regulations or stock exchange
requirements, the Purchasers and their Affiliates shall not, without the
written consent of the Company make any public announcement or issue any press
release with respect to the transactions contemplated by this Agreement. The
parties agree that the Company shall issue a press release in the form of
Exhibit I hereto promptly following (and in no event more than one business day
after) the Closing and, on or before 9:30 a.m., New York time, on the first
trading day following the Closing Date, the Company shall file a Current Report
on Form 8-K describing the terms of the transactions contemplated by this
Agreement and the Transaction Documents in the form required by the Exchange
Act, and attaching the material transaction documents (including, without
limitation, this Agreement and the Registration Rights Agreement) as exhibits
to such filing (including all attachments, the "8-K Filing"). The Company
represents and warrants that, as of the filing of the 8-K Filing with the SEC,
no Purchaser will be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of their respective
officers, directors or employees, that is not disclosed in the 8-K Filing.
Notwithstanding the Company's offer to disclose and discuss material non-public
information with each Purchaser upon such Purchaser's entering into a mutually
satisfactory confidentiality agreement, at each Purchaser's request, the
Company shall not, and shall cause each of its Subsidiaries and its and each of
their respective officers, directors or employees not to, provide any Purchaser
with any material nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the express written consent of such Purchaser; except that (x) the Company
shall not be responsible for any information obtained by any Purchaser or any
Investor (as defined in the Registration Rights Agreement) as a result of such
Purchaser's exercise of its inspection rights under the Registration Rights
Agreement, or (y) the Company shall be permitted to give any Purchaser notice
of a Suspension Period (as defined in the Registration Rights Agreement) and
the other related certifications in accordance with the Registration Rights
Agreement without such prior written consent.
6.4 Use of Proceeds. The Company covenants and agrees, and the
Purchaser acknowledges, that the proceeds from the sale of the Shares and
Warrants shall be used by the Company for any lawful corporate purpose.
6.5 Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares or Warrants in a manner that would require the
registration under the Securities Act of the sale of the Shares or the issuance
of the Warrants or any Warrant Shares to the Purchasers.
6.6 Listing of Shares. The Company agrees that at any time, if and
when its shares of Common Stock are listed on NASDAQ or any other securities
exchange, that it will use commercially reasonable efforts to promptly list and
qualify the Shares and any Warrant Shares for trading on NASDAQ or such other
securities exchange.
6.7 Actions with respect to Securities Laws Exemptions. Neither the
Company nor anyone acting on its behalf shall take any action that would cause
the loss of any Securities Laws Exemptions.
6.8 Restrictions on Certain Stock Issuances or Registrations. The
Company agrees that prior to the effectiveness of the Mandatory Registration
Statement (as defined in the Registration Rights Agreement), the Company shall
not (i) issue any shares of Common Stock, or securities convertible into or
exercisable for shares of Common Stock or agree to do so, in an offering
registered under the Securities Act prior to the effectiveness of the Mandatory
Registration Statement (as defined in the Registration Rights Agreement), or
(ii) grant any registration rights after the date hereof to any other Person
that would entitle such Person to have the sale of securities held by such
Person registered under the Securities Act by the Company under a registration
statement that is declared effective prior to the effectiveness of the
Mandatory Registration Statement, provided, that this Section 6.8 shall not be
deemed to restrict the ability of the Company to (a) issue shares of Common
Stock upon the exercise or conversion of any options, warrants, convertible
debt instruments or other contingent securities outstanding on the date hereof,
(b) issue shares, options or warrants in connection with the agreement to
acquire a 50% interest in HNS or to employees, directors or consultants of the
Company or (c) perform its obligations in connection with the agreement to
acquire a 50% interest in HNS.
7 Indemnification.
---------------
7.1 By the Company. The Company agrees to indemnify, defend and hold
harmless each Purchaser and its Affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members, investment
advisers and controlling persons (collectively, the "Purchaser Indemnitees") to
the fullest extent permitted by law from and against any and all claims,
losses, liabilities, damages, deficiencies, judgments, assessments, fines,
settlements, costs or expenses (including interest, penalties and reasonable
fees, disbursements and other charges of counsel) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any breach by the Company
of any representation, warranty, covenant or agreement of the Company contained
in this Agreement; provided that nothing contained herein shall contradict,
modify or limit Section 4A.
7.2 By each Purchaser. Each Purchaser severally (as to such
Purchaser only) and not jointly, agrees to indemnify, defend and hold harmless
the Company and its Affiliates and their respective officers, directors,
agents, employees, subsidiaries, partners, members, investment advisers and
controlling persons (collectively, the "Company Indemnitees") to the fullest
extent permitted by law from and against any and all Losses based upon, arising
out of or otherwise in respect of any breach by such Purchaser of any
-21-
representation, warranty, covenant or agreement of such Purchaser contained in
this Agreement.
7.3 Applicability. Notwithstanding any term to the contrary in this
Section 7, the indemnification and contribution provisions of the Registration
Rights Agreement shall govern any claim made with respect to registration
statements filed pursuant thereto or sales made thereunder.
8 Miscellaneous Provisions.
------------------------
8.1 Rights Cumulative. Each and all of the various rights, powers
and remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
8.2 Pronouns. All pronouns or any variation thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
8.3 Notices.
-------
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail (sent certified or
registered), overnight courier or facsimile transmission, or delivered by hand
to the party to whom such correspondence is required or permitted to be given
hereunder. The date of giving any notice shall be the date of its actual
receipt.
(b) All correspondence to the Company shall be addressed as
follows:
SkyTerra Communications, Inc.
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Chief Executive Officer
with copies (which shall not constitute notice) to:
SkyTerra Communications, Inc.
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: General Counsel
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxxx Xxxxxxxxx
(c) All correspondence to the Purchasers shall be addressed
pursuant to the contact information set forth on Schedule I attached hereto.
-22-
(d) Any party may change the address to which correspondence to
it is to be addressed by notification as provided for herein.
8.4 Captions. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
8.5 Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of
any jurisdiction, the invalid or unenforceable part or provisions shall be
replaced with a provision which accomplishes, to the extent possible, the
original business purpose of such part or provision in a valid and enforceable
manner, and the remainder of this Agreement shall remain binding upon the
parties hereto.
8.6 Governing Law; Exclusive Jurisdiction and Venue; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
internal and substantive laws of the State of New York without regard to any
conflicts of laws concepts which would apply the substantive law of some other
jurisdiction. Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
may only be brought in any federal or state court located in the County and
State of New York, and each party hereby consents to the exclusive jurisdiction
of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. THE PARTIES HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT.
8.7 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
8.8 Assignment. The rights and obligations of any party hereto shall
inure to the benefit of and shall be binding upon the authorized successors and
permitted assigns of such party. The Company may not assign this Agreement or
any rights or obligations hereunder without the prior written consent of each
Purchaser. Each Purchaser may assign or transfer any or all of its rights under
this Agreement to any Person, provided, that such assignee or transferee
complies with and agrees in writing to be bound, with respect to the
transferred Shares and Warrant Shares, by Sections 6.1 and 6.2 hereof,
whereupon such assignee or transferee shall be deemed to be a "Purchaser" for
all purposes of this Agreement.
8.9 Survival. The respective representations and warranties given by
the parties hereto shall survive the Closing Date and the consummation of the
transactions contemplated herein and shall expire twenty-four (24) months after
the Closing Date. Accordingly, no claim relating to any representation or
warranty given by the parties hereto may be made following such expiration. If
a claim relating to any representation or warranty given by the parties hereto
is made to the indemnifying party on or prior to the expiration thereof, then,
notwithstanding anything to the contrary contained in this Section 8.9, such
representation or warranty shall not so expire, but rather shall remain in full
force and effect until such time as such claim which is has been fully and
finally resolved, either by means of a written settlement agreement executed on
behalf of the parties or by means of a final, non-appealable judgment issued by
a court of competent jurisdiction. The respective covenants and agreements
agreed to by a party hereto shall survive the Closing Date and the consummation
-23-
of the transactions contemplated herein in accordance with their respective
terms and conditions.
8.10 Entire Agreement. This Agreement and the Transaction Documents
constitute the entire agreement between the parties hereto respecting the
subject matter hereof and supersede all prior agreements, negotiations,
understandings, representations and statements respecting the subject matter
hereof, whether written or oral, including but not limited to the various Term
Sheets dated December 2004 between the Company and the Purchasers. The Company
agrees that in the event it enters into any agreement or understanding with any
Purchaser pursuant to which the Company grants such Purchaser any rights or
other terms relating to the purchase, registration, holding or disposition of
Shares, Warrant Shares or Warrants that are more favorable than those set forth
herein or in the Transaction Documents, the Company shall also grant each other
Purchaser such more favorable rights or other terms.
8.11 Amendments. Any amendment, supplement or modification of or to
any provision of this Agreement and any waiver of any provisions of this
Agreement shall be effective only if made or given in writing and signed by the
Company and the Majority Purchasers, provided, that any amendment, supplement,
modification or waiver that is materially and disproportionately adverse to any
Purchaser(s), when compared to all other Purchasers similarly situated, shall
require the consent of such Purchaser(s).
8.12 No Third Party Rights. This Agreement is intended solely for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not intended to confer any benefits upon, or create any rights
in favor of, any Person (including, without limitation, any stockholder or debt
holder of the Company) other than the parties hereto, provided, that each of
the Purchaser Indemnitees that are not Purchasers and the Company Indemnitees
are entitled to all rights and benefits as third party beneficiaries of Section
7 of this Agreement; provided, further, that Placement Agent is intended to be
a beneficiary of the representations and warranties set forth in Section 4.3
and the representations, warranties and acknowledgements set forth in Section
4A of this Agreement.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document. The parties hereto confirm
that any facsimile copy of another party's executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.
8.14 Exculpation Among Purchasers. Each Purchaser agrees that no
other Purchaser nor the respective controlling persons, officers, directors,
partners, agents or employees of any other Purchaser, nor Placement Agent,
shall be liable to such Purchaser for any losses incurred by such Purchaser in
connection with its investment in the Company.
8.15 Expenses. At the Closing, the Company shall reimburse the
Purchasers for all fees and expenses incurred by them in connection with the
negotiation of this Agreement and the Transaction Documents up to a maximum
aggregate amount of $70,000, provided that the Company shall not be required to
pay any legal expenses of the Purchasers other than the fees and disbursements
of Xxxxx, Xxxxxxxx & Flexner LLP, counsel to certain of the Purchasers. The
Company shall also pay all stamp and other taxes and duties levied in
connection with the issuance of the Shares and the Warrants and, upon exercise
thereof, the Warrant Shares.
[Signature pages follow.]
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Each of the parties hereto has caused a counterpart of this Agreement to be
duly executed and delivered as of the date first written above.
THE COMPANY:
SKYTERRA COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
THE PURCHASERS:
Entities:
--------
LC CAPITAL MASTER FUND, LTD
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
YORK CAPITAL MANAGEMENT, L.P.
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO
YORK INVESTMENT LIMITED
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO of its investment
manager
YORK CREDIT OPPORTUNITIES FUND, L.P.
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO
YORK SELECT, L.P.
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO
YORK SELECT UNIT TRUST
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO of its investment
manager
YORK GLOBAL VALUE PARTNERS, L.P.
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO
YORK/GREEN CAPITAL PARTNERS, L.P.
By: /s/ Xxxx X Xxxxxx
---------------------------------
Name: Xxxx X Xxxxxx
Title: CFO
THE TUDOR BVI GLOBAL PORTFOLIO LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
TUDOR PROPRIETARY TRADING, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
WITCHES ROCK PORTFOLIO LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
FLEET MARITIME, INC.
By: Oz Management, LLC, its
investment manager
By: /s/ Xxxxxx X. Och
---------------------------------
Name: Xxxxxx X. Och
Title: Senior Managing Member
OZ MASTER FUND, LTD.
By: Oz Management, LLC, its
investment manager
By: /s/ Xxxxxx X. Och
---------------------------------
Name: Xxxxxx X. Och
Title: Senior Managing Member
XXXXXXX DISTRESSED INVESTMENT MASTER
FUND, LTD.
By: Xxxxxxx Distressed Investment
Offshore Manager, LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
GREYWOLF CAPITAL OVERSEAS FUND
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Operating Officer
GREYWOLF CAPITAL PARTNERS II LP
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Operating Officer
MILLENNIUM PARTNERS, L.P.
By: Millenium Management, L.L.C.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Operating Officer
SECOND XXXX & XXXXX XXXXXX
CHILDREN'S TRUST
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Trustee
ORE HILL HUB FUND LTD.
By: Ore Hill Partners, LLC, its
investment advisor
By: /s/ Xxxxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxxx X. Xxxx
Title: Managing Member
XERION PARTNERS I LLC
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Paloma GP LLC
Manager
ALPHA US SUB FUND VI, LLC
By: The Harbinger Group, Inc.*
By: /s/ Xxxx X. Pinnsick
---------------------------------
Name: Xxxx X. Pinnsick
Title: Vice President
* Pursuant to the Investment
Advisory Agreement dated
April 29, 2003
Individuals:
-----------
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Signature: Xxxxxx X. Xxxxxxx
for XXX
LIST OF EXHIBITS
----------------
Exhibit A: Form of Warrant
Exhibit B: Form of Investor Questionnaire
Exhibit C: Form of Legal Opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP
Exhibit D: Form of Secretary's Certificate
Exhibit E: Form of Officer's Certificate
Exhibit F: Form of Transfer Agent Instructions
Exhibit G: Wire transfer instructions for the Company
Exhibit H: Form of Placement Agent's Letter
Exhibit I: Form of Company Press Release
SCHEDULE I
LIST OF PURCHASERS
Investor Number of Shares Number of Warrant Shares
-------- ---------------- ------------------------
LC Capital Master Fund, Ltd 120,000 36,000
C/o Xxxxx, Xxxxxx & Co LLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
York Capital Management, L.P. 34,800 10,440
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
York Investment Limited 131,100 39,330
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: Not available
York Select, L.P. 32,100 9,630
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
York Credit Opportunities Fund, L.P. 49,400 14,820
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
York Select Unit Trust 27,400 8,220
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID:N/A
York Global Value Partners, L.P. 36,500 10,950
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
York/Green Capital Partners, L.P. 8,700 2,610
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax ID:00-0000000
Xxxxxx X. Xxxxxxx 80,000 24,000
00 Xxxxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Tax ID: Not available
The Tudor BVI Global Portfolio Ltd. 41,422 12,427
C/o Tudor Investments Corporation
00 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Tax ID: 00-0000000
Tudor Proprietary Trading, L.L.C. 22,304 6,691
00 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Tax ID: 00-0000000
Witches Rock Portfolio Ltd. 256,274 76,882
C/o Tudor Investments Corporation
00 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Tax ID: 00-0000000
Fleet Maritime, Inc. 7,296 2,189
C/o OZ Management, L.L.C.
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Tax ID: Not available
OZ Master Fund, Ltd. 312,704 93,811
C/o OZ Management, L.L.C.
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Tax ID: Not available
Xxxxxxx Distressed Investment Master Fund, Ltd. 312,800 93,840
X/x 000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-0000000
Greywolf Capital Overseas Fund 96,000 28,800
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Tax ID: Not available
Greywolf Capital Partners II LP 24,000 7,200
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Tax ID: Not available
Millennium Partners, L.P. 120,000 36,000
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX, 00000
Tax ID: 00-0000000
Second Xxxx & Xxxxx Xxxxxx Children's Trust 80,000 24,000
C/o Romulus Holdings, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Tax ID: 00-0000000
Ore Hill Hub Fund Ltd. 120,000 36,000
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Tax ID: Not available
Xerion Partners I LLC 80,000 24,000
X/x Xxxxx Xxxxxxx
0 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Tax ID: 00-0000000
Alpha US Sub Fund VI, LLC 7,200 2,160
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Tax ID: 00-000 0000
