Exhibit 10.1
EXECUTION COPY
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NEXTLINK COMMUNICATIONS, INC.
WNP COMMUNICATIONS, INC.
and
PCO ACQUISITION CORP.
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AGREEMENT AND PLAN OF MERGER
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Dated as of January 14, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I.
THE MERGER
1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4. Certificate of Incorporation; By-Laws; Directors and Officers.. . . . 4
1.5. Merger Consideration; Conversion of Securities; Purchaser's
Election; Purchase Price Adjustment. . . . . . . . . . . . . . . . 5
1.6. Stockholders' Election. . . . . . . . . . . . . . . . . . . . . . . . 7
1.7. Additional Actions. . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8. Options; Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing. . . . . . . . . . . . . . . . . . . . 8
2.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Ownership; Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . 9
2.4. Authorization; Binding Agreement. . . . . . . . . . . . . . . . . . . 9
2.5. Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . . . 9
2.6. No Violations; Consents.. . . . . . . . . . . . . . . . . . . . . . .10
2.7. Company Financial Statements. . . . . . . . . . . . . . . . . . . . .10
2.8. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . .10
2.9. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . .11
2.10. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.12. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.12. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.13. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . .12
2.14. Taxes and Returns . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.16. Intellectual Property.. . . . . . . . . . . . . . . . . . . . . . . .12
2.16. Finders and Investment Bankers. . . . . . . . . . . . . . . . . . . .13
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1. Organization and Good Standing. . . . . . . . . . . . . . . . . . . .13
3.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.3. Authorization; Binding Agreement. . . . . . . . . . . . . . . . . . .14
3.4. Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . . .14
3.5. No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.6. Securities Filings. . . . . . . . . . . . . . . . . . . . . . . . . .15
3.7. Purchaser Financial Statements. . . . . . . . . . . . . . . . . . . .15
3.8. Registration Statement. . . . . . . . . . . . . . . . . . . . . . . .16
3.9. Valid Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.10. Finders and Investment Bankers. . . . . . . . . . . . . . . . . . . .16
3.11. Existing Registration Rights. . . . . . . . . . . . . . . . . . . . .16
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ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. Conduct of Business of the Company . . . . . . . . . . . . . . . . . .17
4.2. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE V.
ADDITIONAL COVENANTS
5.1. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . .19
5.2. Reasonable Business Efforts; Intended Tax Treatment. . . . . . . . . .19
5.3. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . .21
5.4. Affiliate Letters. . . . . . . . . . . . . . . . . . . . . . . . . . .21
5.5. Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE VI.
MERGER CONDITIONS
6.1. Conditions to Each Party's Obligations . . . . . . . . . . . . . . . .21
(a) No Injunction or Action. . . . . . . . . . . . . . . . . . . . . .22
(b) Registration Rights Agreement. . . . . . . . . . . . . . . . . . .22
(c) H-S-R Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(d) FCC Approval . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(e) Registration Statement Effective . . . . . . . . . . . . . . . . .22
6.2. Conditions to Obligations of the Company . . . . . . . . . . . . . . .22
(a) No Material Adverse Change . . . . . . . . . . . . . . . . . . . .23
(b) Performance by Purchaser . . . . . . . . . . . . . . . . . . . . .23
(c) Certificates, Legal Opinions and Other Deliveries. . . . . . . . .23
(d) Accuracy of Representations and Warranties . . . . . . . . . . . .23
(e) Eagle River Waiver of Piggyback Rights. . . . . . . . . . . . . . .24
6.3. Conditions to Obligations of Parent and the Merger Sub . . . . . . . .24
(a) No Material Adverse Change . . . . . . . . . . . . . . . . . . . .24
(b) Performance by s and the Company . . . . . . . . . . . . . . . . .24
(c) Certificates and Other Deliveries. . . . . . . . . . . . . . . . .24
(d) Accuracy of Representations and Warranties . . . . . . . . . . . .25
ARTICLE VII.
7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.2. Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . .26
7.3. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE VIII.
INDEMNIFICATION AND REIMBURSEMENT
8.1. Indemnification by the Stockholders. . . . . . . . . . . . . . . . . .27
8.2. Claims for Reimbursement . . . . . . . . . . . . . . . . . . . . . . .28
8.3. Reimbursement from Escrowed Merger Consideration . . . . . . . . . . .29
8.4. Defense of Third-Party Claims. . . . . . . . . . . . . . . . . . . . .30
8.5. Resolution of Disputes . . . . . . . . . . . . . . . . . . . . . . . .30
8.6. Indemnifying Parties' Decisions. . . . . . . . . . . . . . . . . . . .31
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ARTICLE IX.
MISCELLANEOUS
9.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . .31
9.2. Amendment and Modification. . . . . . . . . . . . . . . . . . . . . .31
9.3. Waiver of Compliance; Consents. . . . . . . . . . . . . . . . . . . .31
9.4. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.6. Binding Effect; Assignment. . . . . . . . . . . . . . . . . . . . . .33
9.7. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.9. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.10. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.11. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.12. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . .34
9.13. Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.14. Access to Books and Records.. . . . . . . . . . . . . . . . . . . . .34
ANNEXES:
Annex A - Capital Expenditure Budget
Annex B - Company Financial Statements
EXHIBITS:
Exhibit A - Form of Consent and Indemnity Agreement of Stockholders
Exhibit B - Form of Consent and Indemnity Agreement of Preferred Stockholders
Exhibit C - Form of Certificate of Merger
Exhibit D - Form of Escrow Agreement
Exhibit E - Form of Registration Rights Agreement
Exhibit F - Form of Opinion of Purchaser's counsel
Exhibit G - Form of Opinion of Company's counsel
SCHEDULES
Company Disclosure Schedule
Schedule 3.9 - Existing Registration Rights
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made
and entered into as of January 14, 1999 by and among WNP Communications, Inc., a
Delaware corporation (the "COMPANY"), NEXTLINK Communications, Inc., a Delaware
corporation ("PURCHASER") and PCO Acquisition Corp., a Delaware corporation and
wholly-owned direct subsidiary of Purchaser ("MERGER SUB").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Purchaser and Merger Sub have approved the merger (the "MERGER") of the Company
with and into Merger Sub in accordance with the laws of the State of Delaware
and the provisions of this Agreement;
WHEREAS, Purchaser, as the holder of all of the issued and
outstanding shares of Merger Sub's Common Stock, $.01 per share par value
("MERGER SUB COMMON STOCK") has approved the Merger; and
WHEREAS, the holders of a majority of the issued and
outstanding shares of the Company's Voting Common Stock, $.01 per share par
value ("COMPANY VOTING STOCK") and the holders of a majority of its Nonvoting
Common Stock, $.01 par value per share ("COMPANY NONVOTING STOCK" and, together
with the Company Voting Stock, "COMPANY COMMON STOCK") have each consented in
writing to the Merger pursuant to Section 228 of the Delaware General
Corporation Law (the "DGCL") through their respective execution and delivery of
a Consent and Indemnity Agreement of Stockholders in the form attached hereto as
EXHIBIT A; and
WHEREAS, the holders of 66-2/3% of the outstanding shares of
the Company's Series A Preferred Stock ("COMPANY PREFERRED STOCK"), have each
consented in writing to the Merger through their respective execution and
delivery of a Consent and Indemnity Agreement of Preferred Stockholders in the
form attached hereto as EXHIBIT B; and
WHEREAS, the Consent and Indemnity Agreement of Stockholders
and the Consent and Indemnity Agreement of Preferred Stockholders each
constitute (i) an agreement to indemnify the Indemnified Parties pursuant to
Article VIII of this Agreement and (ii) an irrevocable power of attorney
designating Thomas H. Jones as the Stockholders' Representative hereunder, with
full power and authority (and exculpated from personal liability for all actions
taken in good faith) to take certain actions hereunder from and after the
Closing on behalf of such stockholders, including, without limitation, the
authority to execute the Registration Rights Agreement in the name and on behalf
of such stockholders and take other ministerial actions
contemplated by this Agreement and the Registration Rights Agreement on their
behalf; and
WHEREAS, the Merger Consideration will consist of cash, and,
as Purchaser shall determine (the "PURCHASER SHARE ELECTION"), as provided
below, of shares of Purchaser's Class A Common Stock, $.02 par value ("PURCHASER
COMMON STOCK"), it being the intention of the parties, in the event that
Purchaser Common Stock forms part of the Merger Consideration, that the Merger
qualify for federal income tax purposes as a reorganization under the provisions
of Section 368(a)(2)(D) of the United States Internal Revenue Code of 1986 (the
"CODE"); and
WHEREAS, substantially all of the Company's assets consist of
cash and licenses granted by the United States Federal Communications Commission
(the "FCC") to use electromagnetic spectrum in the 28-31 GHz range ("LOCAL
MULTIPOINT DISTRIBUTION SERVICE" or "LMDS") purchased at a spectrum auction (the
"LMDS AUCTION") conducted by the FCC pursuant to its Second Report and Order
dated March 13, 1997 and its Orders on Reconsideration released on May 6, 1997,
September 12, 1997 and February 11, 1998 (such orders, together with other
applicable FCC rules, orders and policies, the "LMDS RULES"); and
WHEREAS, the Company, Purchaser and Merger Sub desire to make
certain agreements in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.1. THE MERGER. (a) At the Effective Time (as defined in
SECTION 1.2) and subject to and upon the terms and conditions of this Agreement
and the DGCL, the Company shall be merged with and into Merger Sub (the
"MERGER"), the separate corporate existence of the Company shall cease, and
Merger Sub shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
(a)(b) The parties to the Merger shall file with the Secretary
of State of Delaware a certificate of merger substantially in the form attached
hereto as EXHIBIT C (the "CERTIFICATE OF MERGER") in order to comply in all
respects with the requirements of the DGCL and with the provisions of this
Agreement.
1.2. EFFECTIVE TIME. The Merger shall become effective at the
time of the filing of the Certificate of Merger
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with the Secretary of State of Delaware in accordance with the applicable
provisions of the DGCL. As soon as practicable after all of the conditions
set forth in ARTICLE VI of this Agreement have been satisfied or waived by
the party or parties entitled to the benefit of the same, the parties hereto
shall cause the Merger to simultaneously become effective by making such
filings at the closing of the Merger to be held at the offices of Purchaser's
counsel in New York, New York (the "CLOSING"). Unless delayed by a Purchaser
Blackout pursuant to Section 5.2(c), the Closing will occur on a date no
later than the fifth Business Day following the date on which all the
conditions contained in Sections 6.1 (a), (c) and (d) shall have been
satisfied and Purchaser shall have been notified that the condition contained
in Section 6.1(e) will be satisfied upon its written acceleration request
(the "SCHEDULED CLOSING DATE"). The time when the Merger shall become
effective is herein referred to as the "EFFECTIVE TIME", and the date on
which the Effective Time occurs is herein referred to as the "CLOSING DATE."
1.3. EFFECT OF THE MERGER; CONVERSION OF SECURITIES. (a) At
the Effective Time, the effect of the Merger shall be as provided in the
Certificate of Merger and the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time (i) all the property, tangible and intangible, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation and (ii) all debts, liabilities and duties of the Company and Merger
Sub (including, without limitation, the FCC Liability, as hereinafter defined)
shall become the debts, liabilities and duties of the Surviving Corporation.
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of securities:
(i) each share of Company Preferred Stock shall be
converted in accordance with its terms into the right to
receive a portion of the Merger Consideration (defined below)
equal to its Preferred Liquidation Preference, PROVIDED that,
in the event of a Purchaser Share Election, subject to the
Stockholders' Election contemplated by Section 1.6, if the
amount of the aggregate Liquidation Preference exceeds the
aggregate cash portion of the Merger Consideration, such
excess shall be payable in shares of Purchaser Common Stock,
valued as provided below;
(ii) each share of Company Common Stock (other than
shares as to which appraisal rights shall have been perfected
under Section 262 of the DGCL ("Dissenting Shares")) shall be
converted into the right to receive (subject, in the event of
a Purchaser Share Election, to the Stockholders' Election
contemplated by Section 1.6) a pro rata portion of the
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Merger Consideration (other than the portion thereof
attributed to the Preferred Stock, as provided in clause
(i) above and other than the Escrowed Merger Consideration
defined below), share for share, without any distinction
between the two classes thereof; PROVIDED, HOWEVER, that
(A) the Merger Consideration attributable to the Company
Common Stock or Company Preferred Stock of any stockholder
of the Company who does not execute and deliver the Consent
and Indemnity Agreement of Stockholders and/or the Consent
and Indemnity Agreement of Preferred Stockholders shall be
placed into escrow (the "ESCROWED MERGER CONSIDERATION")
pursuant to an Escrow Agreement in the form attached hereto
as EXHIBIT D and (B) an amount in cash representing the
amount of Merger Consideration into which the Dissenting
Shares would have been converted had they not been
Dissenting Shares shall be placed into the Dissenting
Stockholder Escrow Account.
(iii) each share of Merger Sub Common Stock shall
thereafter remain outstanding as one validly issued, fully
paid and nonassessable share of common stock, $.0l par value,
of the Surviving Corporation;
(iv) each holder of a certificate representing any
shares of Company Common Stock or Company Preferred Stock
shall thereupon cease to have any rights with respect thereto,
except the right to receive Merger Consideration (whether upon
consummation of the Merger or upon release of the Escrowed
Merger Consideration); and
(v) the stock transfer books of the Company shall be
closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter
on the records of the Company.
1.4. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS. (a) Unless otherwise determined by Purchaser before the Effective
Time, at the Effective Time the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
(a)(b) The By-Laws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by law, the Certificate of Incorporation of
the Surviving Corporation and such By-Laws.
(c) The directors of Merger Sub immediately prior to the
Effective Time will be the initial directors of the Surviving
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Corporation, and the officers of Merger Sub immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. If,
at the Effective Time, a vacancy shall exist on the Board of Directors or in
any office of the Surviving Corporation, such vacancy may thereafter be
filled in any manner provided by law.
1.5. MERGER CONSIDERATION. (a) The merger consideration (the
"MERGER CONSIDERATION") will be equal to the excess of the sum of (w)
$695,000,000 and (x) any Positive Adjustments (as defined below) over the sum of
(y) the FCC Liability and (z) any Negative Adjustments (as defined below). The
cash portion of the Merger Consideration will be no less than $186,868,132
(inclusive of the amount of cash placed in the Dissenting Stockholders Escrow
Account pursuant to Section 5.5(b)), as adjusted by the net amount of the
Positive Adjustments and Negative Adjustments hereinafter defined. The Purchaser
may elect in its sole discretion, to pay all or any part of the remainder of the
Merger Consideration in shares of Purchaser Common Stock(a "PURCHASER SHARE
ELECTION") or in cash or, PROVIDED that Purchaser shall not make a Purchaser
Share Election unless (i) the value of shares of Purchaser Common Stock received
as Merger Consideration will constitute no less than 50% of the total value of
the Merger Consideration at the Effective Time and (ii) the Merger will
thereafter qualify for federal income tax purposes as a reorganization under the
provisions of Section 368(a)(2)(D) of the Code. For purposes of determining the
number of shares of Purchaser Common Stock to be issued in the Merger, each
share of Purchaser Common Stock will be deemed to have a value equal to its
Volume-Weighted Average Trading Price (as defined below) for the twenty trading
days preceding (but not including) (i) the Closing Date (the "CLOSING DATE
AVERAGE PRICE") or (ii) in the event of a Purchaser Blackout (as defined in
Section 5.2(c)), the Scheduled Closing Date (with appropriate adjustments for
any stock splits, stock dividends or the like that may occur during such
period). "Volume-Weighted Average Trading Price" means, for any period, (i) the
average of the daily prices for each trading day during such period, with each
daily price computed as the product of (x) the sale price times (y) the number
of Purchaser Shares sold at such price, divided by (ii) the total number of
Purchaser shares so traded during such trading day, all as reported by
Bloomberg, L.P.
(b) The "FCC LIABILITY" will be equal to the sum of (x)
$152,892,129 (representing the amount of the bidding credits claimed and
utilized by the Company in the LMDS Auction) plus (y) interest thereon owed to
the U.S. Government through and including the Closing Date or the date on which
the FCC Liability is paid, whichever is earlier, at the rate of interest
specified in the LMDS Rules.
(c)(i) The "POSITIVE ADJUSTMENTS" shall be the amount of cash,
accounts receivable and current assets shown on the
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Final Closing Balance Sheet (as defined below) plus the amount of the
Company's capital expenditures made through (but not including) the Closing
Date to the extent contemplated by the Capital Expenditure Budget attached
hereto as ANNEX A or otherwise approved in writing by Purchaser.
(ii) The "NEGATIVE ADJUSTMENTS" shall be the sum, without
duplication, of (w) the amount of total liabilities (other than the FCC
Liability) of the Company as of the Closing Date, whether matured, unmatured,
contingent or otherwise, with all contractual liabilities of the Company
determined as though all such contracts were terminated immediately prior to the
Closing, with all costs or expenses that would be incurred in connection with
any such termination were treated as liabilities of the Company as of the
Closing Date, PROVIDED that any unmatured or contingent liability shall be
valued net of the value of any current asset, not otherwise accounted for as a
Positive Adjustment, that would become an asset of the Company upon the
maturation of such liability or the occurrence of such contingency, as the case
may be, (x) the amount required to retire all of the Company's outstanding stock
options pursuant to Section 1.8, and (y) any Loss occurring prior to the Closing
to the extent indemnified pursuant to Article VIII.
(iii) Commencing promptly after the date hereof, and updated
at regular intervals thereafter (and on a daily basis during the week prior to
the anticipated Closing Date), the Company shall prepare and deliver to
Purchaser a detailed estimated balance sheet of the Company as of the Closing
Date immediately prior to the Effective Time prepared in accordance with
generally accepted accounting principles (the "INITIAL CLOSING BALANCE SHEET")
and including, in addition, as footnotes, any additional liabilities of the
Company as of the Closing Date determined in accordance with clause (ii)(w)
above. Upon Purchaser's request, the Company shall make available to Purchaser
and its accountants and other representatives the work papers and back-up
materials used in preparing the Initial Closing Balance Sheet and such other
documents as Purchaser may reasonably request in connection with its review of
the Initial Closing Balance Sheet. In the event Purchaser states any objections
to the Initial Closing Balance Sheet or asserts any Loss indemnified pursuant to
Article VIII, Purchaser and the Company shall cooperate fully with each other in
making such adjustments to the Initial Closing Balance Sheet as the parties may
agree, and the Initial Closing Balance Sheet, as so adjusted shall be the "FINAL
CLOSING BALANCE SHEET," which shall be determinative of all Positive Adjustments
and Negative Adjustments for purposes of proceeding with the Closing. Any
objections or Claims that remain unresolved on the Closing Date will be resolved
following the Closing in accordance with Section 8.5 as if the dispute were a
claim for reimbursement under Article VIII.
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(d) At any time prior to the Closing, Purchaser will inform
the Company as to whether and to what extent it will make a Purchaser Share
Election. At the Closing (i) Purchaser will deliver to the Stockholders'
Representative or as the Stockholders' Representative shall direct an amount of
cash and/or shares of Purchaser Common Stock having a value equal to the Merger
Consideration and (ii) the Stockholders' Representative will deliver, on behalf
of the Company's stockholders, certificates, representing all outstanding shares
of Company Common Stock and Company Preferred Stock together with duly executed
letters of transmittal or affidavits of loss with full indemnification from a
financially responsible entity (to the extent such items have been received by
the Stockholders' Representative).
1.6. STOCKHOLDERS' ELECTION. The Company will use reasonable
efforts to ascertain the preferences, if any, of the holders of Company Common
Stock and Company Preferred Stock to receive Merger Consideration in the form of
cash or stock in the event Purchaser makes a Purchaser Share Election. On the
Closing Date, the Stockholder's Representative (with the consent of those
holders of Company Common Stock and Company Preferred Stock entitled to receive
a majority of the Merger Consideration) will allocate the cash and stock
portions of the Merger Consideration among the holders of Company Common Stock
and Company Preferred Stock, accommodating their expressed preferences to the
greatest practicable extent (and subject to the right of the holders of Company
Preferred Stock to receive cash to the maximum extent available), such
allocation to be without liability to the Stockholders' Representative and,
absent manifest error, conclusive.
1.7. ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Merger Sub or the Company or otherwise to carry
out this Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of Merger
Sub or the Company, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of Merger Sub or the Company, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement, provided that no such additional actions shall create or increase
recourse of any kind to former officers, directors or stockholders of the
Company, except as otherwise provided in this Agreement.
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1.8. OPTIONS; STOCK PLANS. Each option to acquire shares held
by an employee of the Company that is outstanding immediately prior to the
Merger, whether or not then vested or exercisable, shall, simultaneously with
the Merger, be canceled in exchange for a prompt payment of a single lump sum
cash payment equal to the product of (1) the number of Shares subject to such
Company Stock Option and (2) the excess, if any, of the Merger Consideration per
share over the exercise price per share of such Company Stock Option. The
Company will use its reasonable best efforts to obtain any agreement of
optionholders necessary to effectuate the foregoing, it being understood and
agreed that the cost to liquidate any such agreements with nonconsenting
optionholders will be accounted for as a Negative Adjustment.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser and Merger
Sub as follows, subject in each case to the exceptions and qualifications set
forth on the Company Disclosure Schedule delivered herewith (the "Disclosure
Schedule"):
2.1. ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary except where the failure to be so
qualified or licensed would not be reasonably likely to have a Company Material
Adverse Effect. The Company has heretofore made available to Purchaser accurate
and complete copies of its Certificate of Incorporation and Bylaws, as currently
in effect. In this Agreement, any adverse effect on the business, assets,
condition (financial or other), results of operations or prospects of the
Company is referred to as a "COMPANY ADVERSE EFFECT", and a Company Adverse
Effect that is material to the business, assets, condition (financial or other),
results of operations or prospects of the Company and its subsidiaries (if any)
taken as a whole is referred to as a "Company Material Adverse Effect."
2.2. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) 2,000 shares of Voting Common
Stock, of which 1,000.308 shares are issued and outstanding, (ii) 2,000,000
shares of Non-Voting Common Stock, of which 1,022,805.962 shares are issued and
outstanding and (iii) 1,000,000 shares of preferred stock, of which 300,000 are
designated Series A Preferred Stock, and of
-8-
which 192,020.997 shares are issued and outstanding (collectively, the
"SHARES"), and as of the Closing Date, the Company will have outstanding no
shares of capital stock of any class other than the classes to which the
Shares belong. As of the date hereof, no other capital stock of the Company
is authorized or issued, including without limitation any treasury shares.
All issued and outstanding Shares are duly authorized, validly issued, fully
paid and non-assessable. As of the date hereof, except set forth in Section
2.2 of the Disclosure Schedule, there are no outstanding rights,
subscriptions, warrants, puts, calls, preemptive rights, options or other
agreements of any similar kind relating to any of the outstanding, authorized
but unissued, unauthorized or treasury shares of the Company or any other
security of the Company, and there is no authorized or outstanding security
of any kind convertible into or exchangeable for any such stock or other
security.
2.3. STOCKHOLDERS; NO SUBSIDIARIES; LIMITED BUSINESS. (a)
Section 2.3 of the Disclosure Schedule lists all of the issued and
outstanding Shares of the Company's capital stock and the record ownership
thereof as of the date hereof. To the knowledge of the Company, except as
set forth on such Schedule, no other Person has any right to or interest of
record in any of such shares.
(a)(b) The Company has no Subsidiaries or ownership interests
of any kind in any Person (other than short-term investment vehicles).
(c) From the date of its formation through the date hereof,
the Company has engaged in no business other than bidding for and obtaining its
LMDS licenses, obtaining the requisite financing therefor, engaging in RF design
and evaluation of equipment (through equipment trials and otherwise), engaging
in strategic discussions regarding business relationships, marketing studies and
similar development stage activities and implementing its business plan for LMDS
and related telecommunications services.
2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, including, but not limited to, the Merger, have been duly and validly
authorized by the Board of Directors of the Company and have been approved and
adopted by the stockholders of the Company in accordance with the DGCL. No other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and
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constitutes the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies ("ENFORCEABILITY EXCEPTIONS").
2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, or notice to or declaration or filing with ("CONSENT"), any
government, any political subdivision, any governmental or regulatory authority,
agency, department, board, commission, administration or instrumentality or any
court, tribunal, arbitrator or self-regulatory organization ("GOVERNMENTAL
AUTHORITY") on the part of the Company is required in connection with the
execution or delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby other than (i) the filing of
the Certificate of Merger with the Secretary of State of Delaware in accordance
with the DGCL, (ii) FCC approval of the LMDS license assignment application
contemplated hereby and (iii) expiration or early termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"H-S-R ACT").
2.6. NO VIOLATIONS; CONSENTS. The execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby and
compliance by each of the Company and the stockholders of the Company with the
provisions hereof do not and will not (i) conflict with or result in any breach
of any provision of the Certificate of Incorporation or Bylaws of the Company,
(ii) require any consent, approval or action of, or notice to be given to, any
corporation, person or firm, or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any contract or agreement to which the
Company is a party, (iii) result in the creation or imposition of any lien or
encumbrance of any kind upon any of the assets of the Company or (iv) subject to
obtaining the Consents referred to in Section 2.5, contravene any applicable
provision of any statute, law, rule or regulation or any order, decision,
injunction, judgment, award or decree ("LAW") to which the Company or its assets
or properties are subject.
2.7. COMPANY FINANCIAL STATEMENTS. The unaudited financial
statements of the Company (the "COMPANY FINANCIAL STATEMENTS"), as of November
30, 1998 (the "BALANCE SHEET DATE") in the form attached hereto as ANNEX B, have
been prepared in good faith from, and are consistent with, the books and records
of the Company. The Company has not yet finalized its accounting principles, and
believes that certain adjustments to the Company Financial Statements will be
required to bring them into accord with generally accepted accounting
principles. Such adjustments
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may include, without limitation, adjustments to reflect capitalization and
depreciation policies, provisions for income taxes and normal recurring
accrual adjustments, but such adjustments will not, in the aggregate, be
material.
2.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance
Sheet Date through the date of this Agreement, there has not been (i) any event
that has had or would reasonably be expected to have a Company Material Adverse
Effect (ii) any declaration, payment or setting aside for payment of any
dividend or other distribution or any redemption or other acquisition by the
Company of any shares of capital stock or securities of the Company, other than
accrual of dividends pursuant to the terms of the Company Preferred Stock and
other than redemption of incentive stock options outstanding on the date hereof,
or (iii) any damage or loss to any asset or property, whether or not covered by
insurance.
2.9. COMPLIANCE WITH LAWS; NO LIABILITIES. The business of the
Company has been operated in compliance with all Laws applicable thereto. As of
the date hereof, the Company has no liabilities, contingent or otherwise, except
as set forth (i) on the Company Financial Statements, (ii) under the Company
Contracts (as defined hereinafter) and (iii) liabilities incurred in the
ordinary course of business since the Balance Sheet Date.
2.10. LMDS LICENSES AND OTHER PERMITS. The Company's LMDS
licenses (the "LMDS Licenses") are listed on Schedule 2.10. All such licenses
were duly obtained and are validly issued and in full force and effect, and not
subject to appeal or reconsideration, or any outstanding adverse comments or
petitions. The Company otherwise has all permits, certificates, licenses,
approvals and other authorizations required in connection with the operation of
its businesses as they are presently being, and have formerly been, operated
(collectively "COMPANY PERMITS"). The Company is the sole legal and beneficial
owner and holder of the LMDS Licenses, and subject to obtaining the FCC Order
(as defined below) has the right under applicable law and FCC regulations to
effect the transactions contemplated hereby. No person or entity other than the
Company has or will have the right to use all or any portion of the LMDS
Licenses. The Company is in compliance in all respects with the Communications
Act of 1934, as amended, and the rules, regulations and policies of the FCC.
There are no pending complaints, challenges, petitions, or appeals pending or,
to the best of the Company's knowledge, threatened, against the Company.
2.11. LITIGATION. There is no suit, action or proceeding
("LITIGATION") pending or, to the Company's knowledge, threatened against the
Company, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority outstanding against the Company.
-11
2.12. CONTRACTS. As of the date hereof, the Company is not a
party to or subject to any written note, bond, mortgage, indenture, contract,
purchase order, lease, license, agreement or instrument that is not described in
SCHEDULE 2.12 hereto ("COMPANY CONTRACTS"). All Company Contracts are valid and
binding against the Company and are in full force and effect and enforceable
against the Company in accordance with their respective terms and, to the best
of the Company's knowledge, are valid and binding against the other party or
parties thereto, in each case subject to the Enforceability Exceptions. The
Company is not in violation or breach of or default under any Company Contract.
2.13. EMPLOYEE BENEFIT PLANS. Except as set forth in Section
2.13 of the Disclosure Schedule, the Company does not maintain or contribute to,
nor has it ever maintained or contributed to, any pension, profit-sharing, stock
bonus, deferred or supplemental compensation, retirement, thrift, stock purchase
or stock option plan or any other compensation, welfare, fringe benefit or
retirement plan, program, policy or arrangement providing for benefits for or
the welfare of any or all of the current or former employees of the Company or
any of their beneficiaries or dependents.
2.14. TAXES AND RETURNS . (a) The Company has timely filed, or
caused to be timely filed, all Tax Returns (as hereinafter defined) required to
be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all amounts of Taxes (as hereinafter defined) required to
be paid, collected or withheld. There are no claims or assessments pending
against the Company for any alleged deficiency in any Tax, and the Company has
not been notified of any proposed Tax claims or assessments against the Company.
The Company does not have any waivers or extensions of any applicable statute of
limitations to assess any amount of Taxes. There are no outstanding requests by
the Company for any extension of time within which to file any Tax Return or
within which to pay any amounts of Taxes shown to be due on any return. There
are no liens for amounts of Taxes on the assets of the Company except for
statutory liens for current Taxes not yet due and payable.
(a)(b) For purposes of this Agreement, the term "TAX" shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority other than the FCC. The term "TAX RETURN" shall mean a
report, return, extension or other information (including any attached schedules
or any amendments to such report, return, extension or other information)
required to be supplied to or filed with a Governmental Authority other
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than the FCC with respect to any Tax (including any estimated tax), including
an information return, claim for refund or an amended return.
2.15. INTELLECTUAL PROPERTY. The Company has not received any
notice, and its officers have no actual knowledge, of any infringement of or
conflict with asserted rights of others with respect to any of the patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, domain names and tangible or intangible proprietary information,
equipment or materials that are used in the business of the Company conducted.
2.16. FINDERS AND INVESTMENT BANKERS. Neither the Company nor any of its
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that:
3.1. ORGANIZATION AND GOOD STANDING. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Each of Purchaser and Merger Sub
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the character of the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure so to be duly qualified or
licensed and in good standing would not be reasonably likely to have a material
adverse effect on the business, assets, condition (financial or other),
prospects or results of operations of Purchaser and its subsidiaries taken as a
whole (a "PURCHASER MATERIAL ADVERSE EFFECT"). Purchaser has heretofore made
available to the Stockholders and the Company accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of
Purchaser and Merger Sub.
-13-
3.2. CAPITALIZATION. As of the date hereof, the authorized
capital stock of Purchaser consists of 110,334,000 shares of Purchaser Common
Stock, 44,133,600 shares of Class B Common Stock, par value $.02 per share and
25,000,000 shares of preferred stock, par value $.01 per share ("PURCHASER
PREFERRED STOCK"). As of December 31, 1998, (a) 24,154,938 shares of Purchaser
Common Stock were issued and outstanding, (b) 30,523,242 shares of Class B
Common Stock were issued and outstanding, (c) 11,254,623 shares of Purchaser
Preferred Stock were issued and outstanding and (d) no shares of Purchaser
Common Stock were issued and held in the treasury of Purchaser. As of the date
hereof, no other capital stock of Purchaser is authorized or issued. All issued
and outstanding shares of Purchaser Common Stock are duly authorized, validly
issued, fully paid and non-assessable. As of the date hereof, Purchaser is, and
as of the Effective Time, will be, the record and beneficial owner of 100% of
the issued and outstanding capital stock of Merger Sub.
3.3. AUTHORIZATION; BINDING AGREEMENT. Each of Purchaser and
Merger Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
including, without limitation, the due authorization and approval for issuance
of the Purchaser Common Stock issuable in the Merger. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, the Merger, have been duly and validly authorized
by each of the respective Boards of Directors of Purchaser and Merger Sub, as
appropriate, and no other corporate proceedings on the part of Purchaser or
Merger Sub are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Purchaser and Merger
Sub and constitutes the legal, valid and binding agreements of each of Purchaser
and Merger Sub, enforceable against each of Purchaser and Merger Sub in
accordance with its terms, subject to the Enforceability Exceptions.
3.4. GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of either Purchaser or Merger Sub is required
in connection with the execution or delivery by either Purchaser or Merger Sub
of this Agreement or the consummation by either Purchaser or Merger Sub of the
transactions contemplated hereby other than (i) filings with the Securities and
Exchange Commission (the "SEC"), state securities laws administrators and the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL, (iii) such filings as may be required in
any jurisdiction where Merger Sub is qualified or authorized to do business as a
foreign corporation in order to maintain such qualification or authorization,
(iv) FCC approval of the LMDS
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license assignment applications contemplated hereby, (v) expiration or early
termination of the waiting period under the H-S-R Act, and (vi) those
Consents that, if they were not obtained or made, would not be reasonably
likely to prevent or delay the consummation of the transactions contemplated
hereby. Purchaser holds a 50% interest in a limited liability company that
holds LMDS licenses, and has no reason to believe that Purchaser is not
qualified to hold such licenses. Purchaser (i) is not a foreign person or
under the control of a foreign person, (ii) is not, is not controlled by and
does not control any incumbent local exchange carrier, and (iii) is not, is
not controlled by and does not control any CATV system (as all such terms are
used in the Communications Act of 1996 and the LMDS Rules) and as of the date
here of is not aware of any reason why it and Merger Sub are not qualified to
hold the LMDS Licenses under the LMDS Rules.
3.5. NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Purchaser and Merger Sub with any of the provisions hereof will
not (i) conflict with or result in any breach of any provision of the
Certificate or Articles of Incorporation or Bylaws or other governing
instruments of Purchaser or Merger Sub, (ii) require any Consent under or result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
Purchaser Material Contract (as hereinafter defined), (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Purchaser or Merger Sub or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in SECTION 3.4 hereof, contravene any Law
to which Purchaser or Merger Sub or its or any of their respective assets or
properties are subject, except, in the case of clauses (ii), (iii) and (iv)
above, for any deviations from the foregoing which would not be reasonably
likely to have a Purchaser Material Adverse Effect.
3.6. SECURITIES FILINGS. Purchaser has made available to the
Company true and complete copies of (i) its Annual Report on Form 10-K for the
year ended December 30, 1997, as filed with the SEC, (ii) its proxy statement
relating to the meeting of its stockholders held on May 20, 1998, as filed with
the SEC, and (iii) all other reports, statements and registration statements and
amendments thereto (including, without limitation, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as amended) filed by Purchaser with the
SEC since January 1, 1997. The reports and statements specified in clauses (i)
through (iii) above are referred to collectively herein as the "PURCHASER
SECURITIES FILINGS." As of their respective dates, or as of the date of the last
amendment thereof, if amended after filing, none of the Purchaser Securities
Filings contained any untrue statement of a material fact
-15-
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.7. PURCHASER FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of Purchaser
included in the Purchaser Securities Filings (the "PURCHASER FINANCIAL
STATEMENTS") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and present fairly, in all material respects, the
financial position of Purchaser and its subsidiaries as at the dates thereof and
the results of their operations and cash flows for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
3.8. REGISTRATION STATEMENT. The information supplied by
Purchaser for inclusion in the Registration Statement (as defined in Section
5.2(c) shall not at the time the Registration Statement is filed with the SEC
and at the time it becomes effective under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time, any
event relating to Purchaser or any of its affiliates, officers or directors
should be discovered by Purchaser which is required to be set forth in an
amendment to the Registration Statement or a supplement to the Prospectus,
Purchaser shall promptly so inform the Company and shall promptly so amend the
Registration Statement or supplement the Prospectus. Notwithstanding the
foregoing, Purchaser makes no representation or warranty with respect to any
information supplied by the Company which is contained in the Registration
Statement.
3.9. VALID ISSUANCE. Purchaser Common Stock to be issued in
the Merger, when issued in accordance with the provisions of this Agreement: (a)
will be validly issued, fully paid and nonassessable and (b) will not be subject
to any restrictions on resale under the Securities Act other than restrictions
imposed by Rule 145 promulgated under the Securities Act.
3.10. FINDERS AND INVESTMENT BANKERS . None of Purchaser,
Merger Sub or any subsidiary of Purchaser or any of their respective officers or
directors has employed any broker or finder or otherwise incurred any liability
for any brokerage fees, commissions or finders' fees in connection with the
-16-
transactions contemplated hereby to which the Company or any of its stockholders
would be liable.
3.11. EXISTING REGISTRATION RIGHTS . Schedule 3.11 attached
hereto sets forth a list of all agreements in effect on the date hereof pursuant
to which the Purchaser has granted registration rights with respect to any of
its equity securities, together with a designation of the number and type of
securities covered thereby. Purchaser has delivered to the Company true and
correct copies of all provisions of such agreements relating to such rights.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. CONDUCT OF BUSINESS OF THE COMPANY. (a) Nothing contained
in this Agreement shall be construed as conferring upon Purchaser or Merger Sub
the right to oversee, interfere with or control the Company in any way that
would constitute de facto control of the Company prior to issuance of the FCC
Order. During the period from the date of this Agreement to the Effective Time,
the Company will use its reasonable best efforts to preserve its LMDS Licenses
intact, free and clear of all restrictions and encumbrances, except as permitted
under subparagraph (C) below. In addition, during the period from the date of
this Agreement to the Effective Time, the Company will not take any action that
would interfere with the transactions contemplated hereby. Neither the Company
nor any of its subsidiaries will enter into or otherwise voluntarily become
subject to, any agreement, arrangement or other obligation which remains binding
on the Company, the Purchaser, or any of their Affiliates or assets after the
Closing, except for any of the foregoing (i) which terminate by their terms at
or after the Closing at the option of the Surviving Corporation without
condition except for the payment of money, or (ii) pursuant to which the only
obligations remaining in effect after the Closing are the payment of money, and
in the case of each of clauses (i) and (ii), the full amount of which payments
are treated as Negative Adjustments. Consistent with the foregoing, the Company
will not take any of the following actions without the written consent of
Purchaser:
(A) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, pension,
retirement, employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or employee of
the Company or any of its subsidiaries or increase in any manner the
compensation or fringe benefits of any director, officer or employee of the
Company or any of its subsidiaries or pay any benefit not required by any
existing agreement or place any
-17-
assets in any trust for the benefit of any director, officer or employee of
the Company or any of its subsidiaries (except for any of the foregoing that
by their terms (together with all options, warrants and agreements with
respect thereto issued thereunder) terminate in full on or before the Closing
Date);
(B) sell, dispose of or surrender or disaggregate any LMDS
License or any portion thereof or take any other action with respect to the LMDS
Licenses inconsistent with Section 2.10;
(C) sell, lease, license, mortgage or otherwise encumber or
subject to any lien any of its LMDS Licenses in a manner that is not terminable
at will from and after the Closing;
(D) acquire or dispose of (including, without limitation, by
merger, consolidation, or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization or any
division thereof;
(E) make any tax election or settle or compromise any federal,
state, local or foreign income tax that would reasonably be likely to adversely
affect the tax position of Purchaser or any member of its consolidated return
group;
(F) settle or compromise any stockholder derivative suits
arising out of the transactions contemplated hereby or any other litigation
(whether or not commenced prior to the date of this Agreement) or settle, pay or
compromise any claims not required to be paid, individually in an amount in
excess of $50,000, or in the aggregate in excess of $250,000, other than in
consultation and cooperation with Purchaser, and, with respect to any such
settlement, with the prior written consent of Purchaser;
(G) take any action that would result in any of the conditions
to the merger set forth in Article VI not being satisfied; or
(H) authorize or enter into any agreement to take any actions
contemplated by Section 4.1(a)(ii)(A) through (G).
(b) (a)The Company shall use reasonable best efforts to comply
in all respects with all Laws applicable to it or any of its properties, assets
or business and maintain in full force and effect the LMDS Licenses and all
other Company Permits necessary for such business.
-18-
4.2. NO SOLICITATION. (a) The Company shall, and the Company
shall direct and shall cause the officers, directors, employees,
representatives, agents and affiliates of the Company to, immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
any proposed transaction inconsistent with the consummation of the transactions
contemplated hereby (a "Transaction Proposal"). The Company shall not, nor shall
it authorize or permit any of its officers, directors, or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it to, directly or indirectly:
(i) solicit, initiate or encourage (including by way of
furnishing information or assistance) any inquiries or the making of
any proposal which constitutes, or may be reasonably expected to lead
to, any Transaction Proposal; or
(ii) enter into or participate in any discussions or
negotiations regarding any Transaction Proposal.
(b) To the extent permitted by law and consistent with their
fiduciary duties, the Board of Directors of the Company shall not (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to the
Purchaser, the recommendation by such Board of Directors of the Merger or this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Transaction Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Transaction Proposal inconsistent with this Agreement.
ARTICLE V.
ADDITIONAL COVENANTS
5.1. NOTIFICATION OF CERTAIN MATTERS. Each party shall give
prompt notice to the other if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, provided
that such Consent would have been required to have been disclosed in this
Agreement; (ii) receipt of any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement; or (iii) the commencement of any Litigation involving or affecting
the notifying party or any of its subsidiaries, or any of its properties or
assets, or, to its knowledge, any employee, agent, director or officer, in his
or her capacity as such, of such notifying party or any of its
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subsidiaries which, if pending on the date hereof, would have been required
to have been disclosed in this Agreement or which relates to the consummation
of the Merger. In addition, Purchaser shall give prompt written notice to the
Company of the occurrence of any event which would be reasonably likely to
have a Purchaser Material Adverse Effect and the Company shall give prompt
written notice to Purchaser of the occurrence of any event which would be
reasonably likely to have a Company Material Adverse Effect.
5.2. REASONABLE BEST EFFORTS; INTENDED TAX TREATMENT. Subject
to the terms and conditions herein provided, Purchaser and the Company agree to
use all reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including, but not limited to:
(a) making all necessary applications and/or filings with the
FCC as soon as practicable but in no event later than 7 days from the date
hereof, and thereafter obtaining FCC approval of the license assignment
contemplated hereby and any other Consents from Governmental Authorities and
other third parties required for the consummation of the Merger and the
transactions contemplated thereby;
(b) making all necessary filings under the H-S-R Act within
30 days of the date hereof;
(c) Purchaser will comply with the terms of the Registration
Rights Agreement, and as promptly as practicable after the execution of this
Agreement, will also prepare, and file with the SEC, a Registration Statement on
Form S-4 (or any similar successor form thereto) (the "Registration Statement")
and each of Purchaser and the Company will respond to any comments of the SEC
and will use its respective reasonable best efforts to have the Registration
Statement cleared by the SEC staff as promptly as practicable after such filing
so that it may be made effective on the Scheduled Closing Date, PROVIDED,
HOWEVER, that the Purchaser shall have the right to delay the effectiveness of
the Registration Statement for up to 30 days following the Scheduled Closing
Date if such registration or sale, as applicable, would, in the judgment of the
Purchaser as reflected in an officer's certificate delivered to the Company,
require disclosures that would not be in the Purchaser's best interest to make
at such time (a "Purchaser Blackout"); and
(d) in the event of a Purchaser Share Election, causing the
Merger to qualify as a reorganization under the provisions of Section
368(a)(2)(D) of the Code.
Upon the terms and subject to the conditions hereof, Purchaser and the Company
agree to use its reasonable best efforts to take,
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or cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein,
PROVIDED that nothing contained in this Agreement shall be construed to
require Purchaser to accept any term or condition or restriction required or
imposed by any Government Authority in connection with the governmental
approvals being sought for the transactions contemplated hereby (other than
the FCC Liability), except for any terms, conditions or restrictions that are
of an administrative or ministerial nature or otherwise fully compensated by
the adjustment mechanisms contemplated by Sections 1.5 and 7.1(e). In
addition, each of Purchaser and the Company will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Registration
Statement or any other regulatory filing or for additional information and
will promptly supply the other with copies of all correspondence between such
party or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to
the Registration Statement or any other regulatory filing. Purchaser will not
take any action that would cause the last sentence of Section 3.4 to be
untrue at any time prior to the Closing, unless such action would not (i)
result in an adverse effect on Purchaser's qualifications to be a holder of
the LMDS Licenses or (ii) otherwise adversely affect the consummation of the
transactions contemplated hereby. Without limitation, Purchaser will promptly
notify the Company upon its receipt of Purchaser any notification from the
SEC that the condition contained in Section 6.1(e) will be satisfied upon its
written acceleration request.
5.3. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, the Company shall not issue or cause the publication of any press
release or of any other announcement with respect to the Merger or the
transactions contemplated in this Agreement without the consent of Purchaser
except when such release or announcement is required by applicable law. In any
event, each party will use its best efforts to consult with the other party
prior to making any such release or announcement.
5.4. AFFILIATE LETTERS. Prior to the Closing Date, the Company
shall deliver to Purchaser and Merger Sub a letter identifying all persons who
are, as of the date of this Agreement, "affiliates" of the Company for purposes
of Rule 145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each such person who receives Purchaser Stock to deliver to
Purchaser on or prior to the Closing Date a Consent and Indemnity Agreement of
Stockholders.E.
5.6. APPRAISAL RIGHTS. (a) As promptly as practicable and in
no event later than the date required by applicable law, the Company shall mail
the required notice to its
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stockholders pursuant to Section 262(d)(2) of the DGCL, and shall thereafter
notify Purchaser of any stockholders exercising appraisal rights pursuant to
Section 262 of the DGCL (each a "DISSENTING STOCKHOLDER").
(b) In the event that there are Dissenting Stockholders,
Purchaser agrees to create an escrow account on terms reasonably satisfactory to
the Company to be funded on the Closing Date with the value of the Merger
Consideration attributable to any Dissenting Stockholders (the "DISSENTING
STOCKHOLDERS ESCROW ACCOUNT"). The Company agrees to release funds from such
escrow account to satisfy any amounts owed to Dissenting Stockholders pursuant
to the DGCL. Upon final adjudication and satisfaction of all claims of
Dissenting Stockholders under Section 262 of the DGCL, all amounts remaining in
the Dissenting Stockholders Escrow Account shall be released to the
Stockholders' Representative for distribution to former holders of Company
Common Stock.
ARTICLE VI.
MERGER CONDITIONS
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger, or to cause the Merger to be
effected, shall be subject to the fulfillment or waiver at or prior to the
Effective Time of the following conditions:
(a) NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
which prohibits or prevents the consummation of the Merger which has not been
vacated, dismissed or withdrawn. Purchaser and the Company shall use their
reasonable best efforts to have any of the foregoing vacated, dismissed or
withdrawn by the Effective Time.
(b) REGISTRATION RIGHTS AGREEMENT. If Purchaser shall have
made a Purchaser Share Election, the Registration Rights Agreement in the form
attached hereto as EXHIBIT D shall have been executed and delivered and shall be
in full force and effect.
(c) H-S-R ACT. Any waiting period (and any extension thereof)
under the H-S-R Act applicable to the Merger and the transactions contemplated
hereunder shall have expired or been terminated.
(d) FCC APPROVAL. The FCC shall have granted its consent to
the assignment of the LMDS licenses contemplated hereby (the "FCC Order")
approving the transfer of control of the
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LMDS Licenses contemplated hereby, such approval shall be in full force and
effect and shall have become Final (as hereinafter defined). The FCC Order
shall have become Final when it has been issued by the FCC, when the time for
filing any protest, request for stay, petition or request for
reconsideration, petition for rehearing or appeal or review thereof (or of
any subsequent decision by any court or governmental entity) by or to the FCC
or any court or governmental entity having jurisdiction thereof or the over
the premises, or for the FCC to review or reconsider such Order on its own
motion, shall have expired, and when no protest, request for stay, petition
or request for reconsideration, petition for rehearing or appeal or review of
such Order is pending.
(e) REGISTRATION STATEMENT EFFECTIVE. The SEC shall have
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued, and no proceeding for that purpose shall have been initiated or
threatened in writing by the SEC.
6.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following additional conditions, any one or
more of which may be waived by the Company:
(a) NO MATERIAL ADVERSE CHANGE. If Purchaser shall have made a
Purchaser Share Election, no event shall have occurred on any date during the
period beginning at the commencement of the twenty trading day period referred
to in Section 1.5(a) and ending on the day before the Closing Date (whether or
not a Purchaser Blackout has occurred) that has had a Purchaser Material Adverse
Effect.
(b) PERFORMANCE BY PURCHASER. Purchaser and Merger Sub shall
have performed and complied with all the covenants and agreements in all
material respects and satisfied in all material respects all the conditions
required by this Agreement, the Registration Rights Agreement and the other
agreements contemplated hereby to be performed or complied with or satisfied by
Purchaser and Merger Sub at or prior to the Effective Time, except for such
failures to perform as have not had or would not, individually or in the
aggregate, have a material adverse effect on the Purchaser and Merger Sub or
materially adversely effect the ability of the Purchaser and Merger Sub to
consummate the transactions contemplated hereby.
(c) CERTIFICATES, LEGAL OPINIONS AND OTHER DELIVERIES.
Purchaser shall have delivered, or caused to be delivered, to the Company (i) a
certificate executed on its behalf by its Chief Executive Officer, its
President, its Chief Operating Officer or Chief Financial Officer to the effect
that the conditions set
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forth in SECTIONS 6.2(a), if applicable, and (b) hereof have been satisfied;
(ii) duly adopted resolutions of the Board of Directors of Purchaser and the
Board of Directors and the stockholder of the Merger Sub approving the
execution, delivery and performance of this Agreement and the instruments
contemplated hereby, each certified by its respective Secretary and (iii) an
opinion of counsel to the Purchaser, dated the Closing Date, substantially in
the form of EXHIBIT F.
(d) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser and Merger Sub contained in Sections
3.1 through 3.5 and in Section 3.10 and, if, but only if, Purchaser shall have
made a Purchaser Share Election, in the remaining Sections of Article III
(without giving effect to any materiality or knowledge qualifications contained
therein) shall be true and correct when made and shall be true and correct as of
the Closing Date as though made on and as of the Closing Date (except to the
extent that any such representation and warranty had by its terms been made as
of the date hereof or another specific date, in which case such representation
and warranty shall have been true and correct as of the date hereof or such
specific date, as the case may be, except, in all instances other than Section
3.9, where the failure to be so true and correct shall not result, individually
or in the aggregate, in a Purchaser Material Adverse Effect; and the Company
shall have received a certificate signed on behalf of Purchaser by the chief
executive officer and the chief financial officers of Purchaser to such effect.
(e) EAGLE RIVER WAIVER OF PIGGYBACK RIGHTS. Eagle River
Investments L.L.C.'s waiver of its piggyback registration rights and holdback
agreement in connection with the Initial Offering (as such term is defined in
the Registration Rights Agreement) shall remain in full force and effect.
(f) NO CONDITIONS. No Governmental Authority having
jurisdiction over the approval of the transactions contemplated hereby shall
have imposed or required any condition to such approval that materially and
adversely affects the Stockholders or the value of the Merger Consideration,
except for any conditions that are of an administrative or ministerial nature or
are fully compensated by either by the adjustment mechanism contemplated by
Section 7.1(e) or another assumption of cost by Purchaser that leaves the Merger
Consideration unaffected, and except for conditions resulting from any action
taken by the Company or any of its stockholders.
6.3. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB.
The obligations of Purchaser and the Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions, any one or more of which may be waived by Purchaser:
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(a) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
after the date hereof and on or prior to the Closing Date (or, in the event of a
Purchaser Blackout, on or prior to the Scheduled Closing Date) any event that
would be reasonably likely to have a Company Material Adverse Effect, PROVIDED
that in the event that the Company shall have given a notice as contemplated by
section 7.1(g), in determining whether a Company Material Adverse Effect shall
have occurred, Purchaser shall not be entitled to rely on any fact which both
(i) was described in detail in such notice and (ii) had already occurred as of
the date of such notice.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed and complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the conditions required by
this Agreement to be performed or complied with or satisfied by it at or prior
to the Effective Time.
(c) CERTIFICATES, LEGAL OPINION AND OTHER DELIVERIES. The
Company shall have delivered to Purchaser (i) certificates executed by the
Company by its Chief Executive Officer, President or Chief Financial Officer to
the effect that the conditions set forth in SECTIONS 6.3(A) and (B) hereof have
been satisfied; (ii) duly adopted resolutions of the Board of Directors of the
Company and the consents of its stockholders, in each case approving the
execution, delivery and performance of this Agreement and the instruments
contemplated hereby, (iii) a legal opinion of counsel to the Company, dated the
Closing Date, substantially in the form attached hereto as EXHIBIT G.
(d) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained herein shall be true and
correct when made and shall be true and correct as of the Closing Date as though
made on and as of the Closing Date (or, in the case of the representation
contained in Section 2.8(i), on and as of the Scheduled Closing Date if a
Purchaser Blackout has occurred and provided, that in the event that the Company
shall have given a notice as contemplated by Section 7.1(g), such representation
shall not be deemed breached as a result of any fact which both (i) was
described in detail in such notice and (ii) had already occurred as of the date
of such notice) except to the extent that any such representation and warranty
had by its terms been made as of the date hereof or another specific date, in
which case such representation and warranty shall have been true and correct as
of the date hereof or such specific date, as the case may be), except, in all
instances, where the failure to be so true and correct shall not result,
individually or in the aggregate, in a Company Material Adverse Effect; and
Purchaser shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief financial officer of the Company to
that effect.
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(e) NO CONDITIONS. No Governmental Authority having
jurisdiction over the approval of the transactions contemplated hereby shall
have imposed or required any condition to such approval, except for any
conditions that are of an administrative or ministerial nature or otherwise
fully compensated by the adjustment mechanisms contemplated by Sections 1.5 or
7.1(e), and except for conditions resulting from any action taken by Purchaser
or Eagle River Investments L.L.C.
ARTICLE VII.
TERMINATION
7.1. TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by the mutual written consent of Purchaser and the Company, by action
of their respective Boards of Directors; or
(b) by Purchaser or the Company if on the Scheduled Closing
Date (or within 30 days thereafter, in the event of a Purchaser Blackout) any
condition to the Merger has not been satisfied or waived by the party or parties
entitled to the benefit of the same; PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this Section 7.1(b) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement results in the failure of any such other condition to be satisfied; or
(c) by Purchaser or the Company if the Closing shall not have
occurred on or before January 14, 2000; PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this Section 7.1(c) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement results in the failure of the Closing to occur by such date; or
(d) by Purchaser or the Company if any court of competent
jurisdiction or other Governmental Authority has issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action shall have become
final and nonappealable; or
(e) by Purchaser or the Company if the FCC shall have imposed
any payment in excess of the FCC Liability in connection with the transactions
contemplated hereby, unless the party to this Agreement not seeking termination
pursuant to this Section 7.1(e) agrees in writing to bear such excess expense,
in which
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event the adjustment provisions of Section 1.5 shall be construed to so
provide; or
(f) by either Purchaser or the Company upon written notice to
the other if the terminating party is not in material breach of its obligations
under this Agreement and if the other party or its subsidiary shall have
materially breached this Agreement and such breach shall not have been cured in
all material respects or waived prior to the earlier to occur of the Closing
Date or thirty (30) days following the date the terminating party shall have
given the other party written notice of such breach setting forth the nature
thereof in reasonable detail; or
(g) by Purchaser, within 20 days of its receipt of written
notice from the Company acknowledging the occurrence of an event that would be
reasonably likely to have a Company Material Adverse Effect and describing in
detail the facts giving rise to such occurrence.
7.2. EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party or its directors, officers or stockholders, except for the
provisions of this Section 7.2 and Section 7.3, which shall survive any such
termination. Nothing contained in this Section 7.2 shall relieve any party
from liability for any breach of this Agreement.
7.3. FEES AND EXPENSES. (a) The parties to this Agreement
shall, except as otherwise specifically provided herein, bear their respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereby, whether or not the
Merger is consummated, including, without limitation, all fees and expenses of
their respective agents.
(b) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
ARTICLE VIII.
INDEMNIFICATION AND REIMBURSEMENT
8.1. INDEMNIFICATION BY STOCKHOLDERS. (a) In order to induce
Purchaser to enter into this Agreement and to consummate the transactions
contemplated hereby, each holder of Company Common Stock and/or Company
Preferred Stock, by virtue of its execution of the Consent and Indemnity
Agreement of Stockholders and/or the Consent and Indemnity Agreement of
Preferred
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Stockholders (an "INDEMNIFYING PARTY"), agrees, subject to the further
provisions of this Article VIII, severally to indemnify Purchaser and,
without duplication, its stockholders, directors, officers and employees
(collectively, the "INDEMNIFIED PARTIES") and shall hold the Indemnified
Parties harmless against and with respect to any "Loss" which for purposes of
this Agreement shall include any and all actual liabilities, costs, losses,
damages and expenses (whether or not arising out of third party claims),
including without limitation reasonable attorneys' fees (after giving effect
to any offsetting benefit actually received or receivable), incurred by the
Indemnified Parties and arising out of or resulting from:
(i) any misrepresentation or breach of warranty by the
Company of any of its representations or warranties set forth in this
Agreement or any Annex, Schedule or Exhibit hereto;
(ii) any breach or nonfulfillment by the Company of any of
its covenants, agreements or other obligations set forth in this
Agreement or any Annex, Schedule or Exhibit hereto; and
(iii) any amounts owed to Dissenting Stockholders in excess of
the amount of cash held in the Dissenting Stockholders Escrow Account.
(b) Entitlement to indemnification pursuant to this Section
8.1 shall be conditioned upon claims in respect thereof being submitted in
writing with detailed specification showing the basis of such claim,
including the provision of this Agreement breached, and a reasonably detailed
calculation of the amount of such claim, if at all, by Purchaser to the
Indemnifying Parties no later than twelve (12) months after the Effective
Time.
(c) Notwithstanding anything to the contrary in this
Section 8.1, the right to indemnity in respect of matters provided for in
paragraphs (a)(i) and (ii) of this Section 8.1 shall not be barred on the
basis that the amount of the claim has not been ascertained, liquidated or
reduced to final judgment on or before the expiration of the aforesaid
period, provided that such claim is identified in writing with detailed
specification showing the basis of such claim, including the provision of
this Agreement breached, and a reasonable estimate of the amount of such
claim.
(d) Notwithstanding anything in this Agreement to the
contrary, with respect to any amounts payable under this Agreement, (i) no
Indemnifying Party shall be liable for more than its Pro Rata Share of any Loss
and (ii) the maximum amount of liability of any Indemnifying Party shall in no
event exceed the amount of the Merger Consideration received by such
Indemnifying Party. For purposes of this Agreement, "PRO RATA
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SHARE" shall mean a fraction the numerator of which is the amount of the
Merger Consideration received by such Indemnifying Party and the denominator
of which is the aggregate Merger Consideration. The remedies provided in this
Article VIII and in Section 9.12 shall be Purchaser's sole remedies hereunder
for breach of this Agreement, except in the case of fraud.
8.2. CLAIMS FOR REIMBURSEMENT. In the event that any
Indemnified Party suffers any Loss (as hereinabove defined) with respect to any
liability or claim to which the foregoing indemnities relate, such Person shall
give the Indemnifying Parties prompt written notice of the nature and amount of
such Loss and the Indemnified Party's claim for reimbursement therefor and if
such Loss is with respect to a third party claim, accompanied by a copy of the
written notice from the third party claimant. The Indemnifying Parties shall
have 30 days from the date of said notice to investigate and dispute the nature,
validity or amount of any such claim. During said 30-day period, representatives
of one law firm and one accounting firm designated by a majority in interest (as
measured by aggregate potential liability) of the Indemnifying Parties shall
have reasonable access, during normal business hours, to the books and records
of the Indemnified Party for the purpose of such investigation. In the event
that any Indemnifying Party disputes the nature, validity or amount of said
claim, such Indemnifying Party shall give the Indemnified Party written notice
of such dispute within said 30-day period, and the parties shall attempt in good
faith to resolve such dispute. If such dispute is not resolved within 10 days
following receipt of said notice of dispute by the Indemnified Party, the
provisions of Section 8.5 hereof shall apply to such dispute.
In the absence of a dispute, each Indemnifying Party shall
promptly (but not later than the expiration of said 30-day period) reimburse the
Indemnified Party for its Pro Rata Share of any such Loss. In the event that the
Stockholders' Representative disputes only the amount of the claim, each
Indemnifying Party shall, concurrently with the delivery of the Stockholders'
Representative's notice of dispute, pay to the Indemnified Party its Pro Rata
Share of the undisputed portion of such claim and the provisions of Section 8.5
hereof shall apply to the disputed portion of such claim.
All payments by an Indemnifying Party hereunder shall be in
cash to the extent of the cash received (on an after-tax basis) by such
Indemnifying Party as Merger Consideration or upon sale of shares of Purchaser
Common Stock received as Merger Consideration. Any additional payments required
of an Indemnifying Party may be paid in cash, if the Indemnifying Party so
elects, and may, under the circumstances described below, be paid in shares of
Purchaser Common Stock. Any Indemnifying Party wishing to satisfy an
acknowledged liability hereunder in shares of Purchaser Common Stock shall so
notify Purchaser at the time
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such payment is due, such notice to be accompanied by such Indemnifying
Party's agreement to permit Purchaser to elect whether to accept such payment
directly (with the shares valued at their Volume-Weighted Average Trading
Price for the twenty trading day period ending on the date prior to the
delivery of such shares to Purchaser) or to arrange for an underwritten
offering of such shares and other shares of Purchaser Common Stock, in which
case the shares will be valued at the net proceeds received therefor in such
offering. The terms of the Registration Rights Agreement applicable to
incidental registrations will apply, mutatis mutandis, to any such offering.
8.3. REIMBURSEMENT FROM ESCROWED MERGER CONSIDERATION. In the
event that one or more holders of Company Common Stock and/or Company Preferred
Stock does not become an Indemnifying Party, and there is, therefore, Escrowed
Merger Consideration, then in the event that the Indemnifying Parties are
required to make an indemnification payment pursuant to Section 8.2, the Escrow
Agent shall promptly release Escrowed Merger Consideration to the Indemnified
Party in an amount equal to the product of (a) any such Loss (or undisputed
portion thereof) multiplied by (b) a fraction the numerator of which is the
amount of the Escrowed Merger Consideration and the denominator of which is the
aggregate Merger Consideration (an "ESCROW LOSS Reimbursement"). Escrow Loss
Reimbursements shall be made only in cash, provided that in the event that the
cash portion of the Escrowed Merger Consideration is less than the amount of the
Escrow Loss Reimbursement, the Escrow Agent shall sell, to the extent permitted
by applicable law, an amount of Purchaser Common Stock in brokers transactions
on the Nasdaq National Market equal in value to such cash deficiency. In the
event that the Escrow Agent is not permitted by applicable to sell shares of
Purchaser Common Stock, such cash deficiency shall be satisfied with shares of
Purchaser Common Stock valued at their Volume-Weighted Average Trading Price for
the twenty trading day period prior to the date on which the Indemnifying
Parties are required to make an indemnification payment pursuant to Section 8.2.
8.4. DEFENSE OF THIRD-PARTY CLAIMS. If any lawsuit or
enforcement action is filed, or claim asserted against an Indemnified Party by a
third party and the Indemnified Party is entitled to indemnification pursuant to
this Agreement, written notice thereof shall be given to the Indemnifying Party
as promptly as practicable (and in any event no later than 30 days after the
service of the citation or summons or receipt of other written notice of such
claim); the failure of any Indemnified Party to give timely notice shall limit
the rights to indemnification hereunder only if and to the extent that (i) such
failure to give timely notice materially affects the ability or right of the
Indemnifying Party to participate in the defense of such lawsuit or enforcement
action or claim, (ii) actual notice is not given to the Indemnifying Party
within a reasonable time, or (iii) to the extent that such failure to give
timely notice
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causes the Indemnifying Party to incur additional expense with respect to
such lawsuit or enforcement action, the Indemnified Party fails to promptly
reimburse the Indemnifying Party for such additional expense.
The Indemnifying Party shall be entitled, if it so elects, to
take control of the defense and investigation of such lawsuit, action or claim,
and to employ and engage attorneys of its own choice to handle and defend the
same, at the Indemnifying Party's cost, risk and expense; and such Indemnified
Party shall cooperate in all reasonable respects, at its cost, risk and expense,
with the Indemnifying Party and such attorneys in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom; PROVIDED,
HOWEVER, that the Indemnified Party may, at its own cost, participate in (but
not control) such investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom.
If the Indemnifying Party does not elect to take control of
the defense and investigation of said lawsuit or action, then the Indemnified
Party shall remain in control thereof in such manner as it deems appropriate.
Neither party shall enter into any settlement, adjustment or
compromise of any lawsuit or action without the prior written consent of the
other party which consent will not be unreasonably withheld.
8.5. RESOLUTION OF DISPUTES. (a) In the event of any dispute
between Purchaser and the Indemnifying Parties over any claim for reimbursement
with respect to any matter to which the foregoing indemnities relate, such
dispute will be finally determined by the Accounting Firm (as defined below) in
the manner set forth in Section 8.5(b), and any Loss so determined will be
promptly reimbursed to Purchaser by the Indemnifying Parties.
(b) Any dispute pursuant to Section 8.5(a) will be resolved
by a member of the Washington, D.C. office of PricewaterhouseCoopers LLP (the
"ACCOUNTING FIRM"). The Accounting Firm shall be instructed to use all
reasonable efforts to resolve such disputes within thirty (30) days. The
resolution of disputes by the Accounting Firm so selected will be set forth in
writing and will be conclusive and binding upon all parties to such dispute and
the amount of the reimbursement payable as so resolved will become final and
binding upon the date of such resolution. The fees and expenses of the
Accounting Firm shall be paid by the unsuccessful party, if all the disputes are
resolved against such party, and in other cases shall be pro rated among the
parties as the Accounting Firm sees fit based on the relative success of the
parties in indicating their respective positions.
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8.6. INDEMNIFYING PARTIES' DECISIONS Any decision with respect
to any matter under this Article VIII (including, without limitation, the
settlement, resolution or defense of claims) shall be binding upon all
Indemnifying Parties if consented to by the Indemnifying Parties who received a
majority of the aggregate Merger Consideration (a "Majority of Indemnifying
Parties").
ARTICLE IX.
MISCELLANEOUS
9.1. CONFIDENTIALITY. In the event the transactions
contemplated by this Agreement are not consummated, each party shall return
to the other any documents furnished by the other and all copies thereof any
of them may have made and will hold in absolute confidence any information
obtained from the other party except to the extent (i) such party is required
to disclose such information by Law or such disclosure is necessary or
desirable in connection with the pursuit or defense of a claim, (ii) such
information was known by such party prior to such disclosure or was
thereafter developed or obtained by such party independent of such disclosure
or (iii) such information becomes generally available to the public other
than by breach of this SECTION 9.1.
9.2. AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by a written agreement among each of
the parties hereto or, following the Closing, by agreement of Purchaser and a
Majority of Indemnifying Parties.
9.3. WAIVER; CONSENTS. Any failure of the Stockholders or the
Company on the one hand, or Purchaser or the Merger Sub on the other hand, to
comply with any obligation, covenant, agreement or condition herein may be
waived by Purchaser, on the one hand, or the Company (or, following the Closing,
by a Majority of Indemnifying Parties), on the other hand, only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this SECTION 9.3. The Closing shall not be deemed to be a waiver of any claim
in respect of any Loss, known or unknown, occurring prior to the Closing Date,
resulting from breach, whether material or not, of any representation, warranty
of covenant contained in this Agreement.
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9.4. SURVIVAL. No representations, warranties, covenants and
agreements of the parties hereto contained herein or in any schedule or exhibit
hereto shall survive the execution and delivery of this Agreement and the
consummation of the transactions provided for herein except to the extent
provided in Article VIII hereof.
9.5. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Purchaser or Merger Sub, to:
NEXTLINK Communications, Inc.
155 108th Avenue, Suite 810
Bellevue, Washington 98004
Attention: General Counsel
Fax: 425-519-8997
and
NEXTLINK Communications, Inc.
1730 Rhode Island Avenue, N.W.
Washington, D.C. 20036
Attention: Corporate Counsel
Fax: 202-721-0995
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Bruce R. Kraus, Esq.
Fax: (212) 728-8111
and
(ii) if to the Stockholders' Representative or the Company, to:
Thomas H. Jones
WNP Communications, Inc.
400 Balbion Drive
Earlysville, Virginia 22936-9680
Fax: 804-964-1021
with a copy to:
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Edwards & Angell, LLP
101 Federal Street
Boston, Massachusetts 02110
Attention: Stephen Meredith, Esq.
Fax: (617) 439-4170
9.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other parties hereto.
9.7. EXPENSES. All costs and expenses incurred in connection
with this Agreement, the Merger, and all of the transactions contemplated hereby
shall be paid by the party incurring such costs or expenses, except as otherwise
provided herein, provided that all stamp, documentary, registration or other
similar taxes incurred specifically in connection with any issuance of the
Purchaser Common Stock shall be paid by Purchaser when due, and Purchaser or the
Company shall, at its own expense, file all necessary tax returns and other
documentation with respect to all such taxes and fees.
9.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
9.9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10. INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement. As used in this Agreement, (i)
the term "PERSON" shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
association, an unincorporated organization, a Governmental Authority and any
other entity, (ii) unless otherwise specified herein, the term "AFFILIATE,"
with respect to any person, shall mean and include any person controlling,
controlled by or under common control with such person and (iii) the term
"SUBSIDIARY" of any specified person shall mean any corporation 50 percent or
more of the outstanding voting power of which, or any partnership, joint
venture, limited liability company or other entity 50 percent or more of the
total equity interest of which, is directly or indirectly owned by such
specified person.
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9.11. ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es),
Schedules and Exhibits attached hereto, which Annex(es) are incorporated herein
by reference, embody the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein, provided that the
forms of agreements attached hereto as Exhibits shall be superseded by the
agreements executed and delivered by the respective parties thereto, the
execution and delivery of such documents by the parties thereto to be conclusive
evidence of such parties' approval of any change or modification therein. There
are no restrictions, promises, representations, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and the understandings between the
parties with respect to such subject matter.
9.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
9.13. THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party, except to the extent
that the Stockholders become third party beneficiaries hereof through their
execution and delivery of the ancillary agreements contemplated hereby.
9.14. STOCKHOLDERS' REPRESENTATIVE. (a) Following the
Closing, the Stockholders' Representative shall have the right of reasonable
access to the Company's and Merger Sub's books and records to the extent
reasonably requested for purposes of tax matters, claims and any other proper
purpose.
(b) The Stockholders' Representative agrees to act as such in
accordance with the terms and provisions of this Agreement, but may resign from
such duties at any time by written notice to the Company and each of the
Stockholders. A Majority of Indemnifying Parties (as such term is defined in
Section 8.6) may relieve the Stockholders' Representative of such duties at any
time by written notice to the Stockholders' Representative and the Company. Any
successor Stockholders' Representative
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shall execute and deliver an instrument accepting such appointment and he
shall, without further acts, be vested with all the rights, powers and duties
of the predecessor Stockholders' Representative as if originally named as
Stockholders' Representative. The Stockholders' Representative will have no
liability for any action taken in good faith or with the consent of a
Majority of Indemnifying Parties. The Stockholders' Representative may
consult with, and obtain advice from, legal counsel in the event of any
question as to any of the provisions hereof or the duties hereunder, and he
shall incur no liability and shall be fully protected in acting in good faith
in accordance with the opinion and instructions of such counsel. Each of the
Stockholders, by virtue of its execution and delivery of the Consent and
Indemnity Agreement of Stockholders, or the Consent and Indemnity Agreement
of Preferred Stockholders, as the case may be, will be deemed to have agreed,
severally and not jointly, to indemnify and hold the Stockholders'
Representative harmless from and against such Stockholder's Pro Rata Share of
any Loss incurred in connection with his duties as such, except with respect
to actions not taken in good faith. Purchaser and the Company agree that the
Stockholders' Representative does not assume any responsibility for the
failure of any other party to perform in accordance with the Merger Agreement
or this Agreement. The acceptance by the Stockholders' Representative of his
responsibilities hereunder is subject to the following terms and conditions,
which the other parties hereto agree shall govern and control with respect to
the Stockholders' Representative's rights, duties, liabilities and immunities:
The Stockholders' Representative may conclusively rely, and
shall be protected in acting or refraining from acting upon, any written notice,
certification, request, waiver, consent, receipt or other paper or document
furnished to him not only as to its due execution and validity and effectiveness
of its provisions but also as to the truth and accuracy of any information
therein contained which the Stockholders' Representative reasonably believes to
be genuine and to have been signed and presented by the proper party or parties.
Should it be necessary for the Stockholders' Representative to act upon any
instructions, directions, documents or instruments issued or signed by or on
behalf of any corporation, fiduciary, or individual acting on behalf of another
party hereto, it shall not be necessary for the Stockholders' Representative to
inquire into such corporation's, fiduciary's or individual's authority,
capacity, existence or identity. The Stockholders' Representative is also
relieved from the necessity of satisfying himself as to the authority of the
persons executing this Agreement in a representative capacity.
The Stockholders' Representative shall have no duties except
those which are expressly set forth in this Agreement and in the Registration
Rights Agreement.
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Upon termination of all indemnification obligations under this
Agreement and all registration obligations under the Registration Rights
Agreement, the Stockholders' Representative shall thereafter be discharged from
any further obligations hereunder. The Stockholders' Representative is hereby
authorized, in any and all events, to comply with and obey any and all final
judgments, orders and decrees (not subject to appeal) of any court of competent
jurisdiction which may be filed, entered or issued, and, if it shall so comply
or obey, it shall not be liable to any other person by reason of such compliance
or obedience.
The Stockholders' Representative shall not have any
responsibility or liability for the completeness, correctness or accuracy of any
transactions between Purchaser, on the one hand, and the Company or its
stockholders, on the other hand.
In the event that the Stockholders' Representative shall be
uncertain as to his duties or rights hereunder or shall receive instructions
with respect to such duties which, in his sole opinion, are in conflict with
either other instructions received by him or any provision of this Agreement, he
shall without liability of any kind, be entitled to take no action pending the
resolution of such uncertainty to the Stockholders' Representative's sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise.
-37-
IN WITNESS WHEREOF, Purchaser, the Merger Sub and Company have
caused this Merger Agreement to be signed and delivered by their respective duly
authorized officers, as applicable, as of the date first above written.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Margaret Marino
--------------------------------
Name: Margaret Marino
Title: Vice President
PCO ACQUISITION CORP.
By: /s/ Margaret Marino
--------------------------------
Name: Margaret Marino
Title: Vice President
WNP COMMUNICATIONS, INC.
By: /s/ Thomas H. Jones
--------------------------------
Name: Thomas H. Jones
Title: President
-38-
ANNEX A
CAPITAL EXPENDITURE BUDGET
Capital expenditures approved in advance in writing by the Chief Executive
Officer of Purchaser.
ANNEX B
[Not provided]
Exhibit A to Merger Agreement
CONSENT AND INDEMNITY AGREEMENT OF STOCKHOLDERS
This Consent and Indemnity Agreement of Stockholders (this
"AGREEMENT") is made and entered into as of January 14, 1999, by and among
NEXTLINK Communications, Inc., a Delaware corporation ("NEXTLINK"), WNP
Communications, Inc., a Delaware corporation (the "COMPANY"), and the holders
(each a "HOLDER" and together the "HOLDERS") of the Company's Voting Common
Stock, par value $.01 per share ("COMPANY VOTING STOCK"), and Nonvoting Common
Stock, par value $.01 per share ("COMPANY NONVOTING STOCK" and, together with
the Company Voting Stock, "COMPANY COMMON STOCK") whose signatures appear below.
Capitalized terms used herein without definition as used as defined in the
Merger Agreement (as defined below).
W I T N E S S E T H
WHEREAS, pursuant to an Agreement and Plan of Merger in the
form attached hereto as Exhibit A (the "MERGER AGREEMENT"), to be executed by
the Company, NEXTLINK and PCO Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of NEXTLINK ("MERGER SUB"), the Company will merge (the
"MERGER") with and into Merger Sub; and
WHEREAS, pursuant to the Merger Agreement, a portion of the
Merger Consideration may be comprised of shares of Class A Common Stock, par
value $.02 per share ("PURCHASER COMMON STOCK"), of NEXTLINK; and
WHEREAS, each Holder is the record holder of such number of
shares of Company Voting Stock or Company Nonvoting Stock as is indicated next
to its signature below; and
WHEREAS, pursuant to that certain Securities Purchase
Agreement (the "Securities Purchase Agreement"), dated as of January 29, 1998,
among the Company and the several purchasers named therein (individually a "WNP
Stock Purchaser" and collectively the "WNP Stock Purchasers"), certain WNP Stock
Purchasers have the right (the "Put Right") under certain circumstances to sell
to the Company, and the Company has the obligation to buy, any and all Company
Common Stock or Company Preferred Stock then held by such WNP Stock Purchaser.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
-2-
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF HOLDER
Each Holder hereby represents, warrants and covenants to
NEXTLINK with respect to itself only:
1.1. BENEFICIAL OWNERSHIP. Holder is the beneficial owner
of the number of shares of Company Common Stock indicated next to its signature
below.
1.2. AUTHORIZATION; BINDING AGREEMENT. Holder is (i) an
individual with full legal capacity to execute and deliver this Agreement or
(ii) has all requisite corporate or partnership power and authority to execute
and deliver this Agreement. The execution and delivery of this Agreement has
been duly and validly authorized by the Board of Directors or other governing
body of Holder, if applicable. No other corporate or partnership proceedings on
the part of the Holder are necessary to authorize the execution and delivery of
this Agreement. This Agreement has been duly and validly executed and delivered
by Holder and constitutes the legal, valid and binding agreement of Holder,
enforceable against Holder and in accordance with its terms.
ARTICLE II.
IRREVOCABLE CONSENT, POWER OF ATTORNEY AND WAIVER OF PUT RIGHT
2.1. CONSENT TO MERGER. Each Holder, pursuant to Section
228 of the Delaware General Corporation Law, hereby irrevocably consents,
without a meeting, to and votes in favor of the Merger, the execution of the
Merger Agreement by the Company and all transactions contemplated by the Merger
Agreement. Any Holder who executes this Agreement after the date hereof shall
not be deemed to have consented to and voted in favor of the Merger, nor the
execution of the Merger Agreement by the Company, nor the transactions
contemplated by the Merger Agreement.
2.2. POWER OF ATTORNEY. Each Holder hereby irrevocably
appoints Thomas H. Jones (the "STOCKHOLDERS' REPRESENTATIVE") as
attorney-in-fact and agent for and on behalf of such Holder, with full power and
authority (and exculpated from all actions taken in good faith):
(a) to execute that certain Registration Rights Agreement
between NEXTLINK and the Stockholders' Representative (the "REGISTRATION RIGHTS
AGREEMENT"), in the form attached hereto as Exhibit B; and
(b) to take certain actions, including, without
limitation, to execute agreements, and to take any and all actions required or
permitted to be taken by Stockholders' Representative on behalf of such Holder
pursuant to the Merger Agreement, and all as more fully described in the Merger
-3-
Agreement, and to take other ministerial actions on such Holder's behalf
incidental to the transactions contemplated by the Merger Agreement and the
Registration Rights Agreement.
(c) Holder and Stockholders' Representative agree that
the terms of this appointment are as set forth in this Agreement, the
Registration Rights Agreement and the Merger Agreement, including, without
limitation, Section 9.14 of the Merger Agreement.
2.3. WAIVER OF PUT RIGHT. Each Holder who has the benefit
of the Put Right granted to certain WNP Stock Purchasers pursuant to the
Securities Purchase Agreement hereby waives such Put Right until the Merger
Agreement, including the indemnification provisions thereunder, is no longer in
effect.
ARTICLE III.
AGREEMENT TO INDEMNIFY
3.1. INDEMNITY. Each Holder agrees to severally indemnify
and hold harmless NEXTLINK and its shareholders, directors, officers and
employees (collectively, the "INDEMNIFIED PARTIES") by, without limitation,
becoming an Indemnifying Party as defined in the Merger Agreement and by
indemnifying the Indemnified Parties for its Pro Rata Share (as defined in
the Merger Agreement) of any Loss incurred by the Indemnified Parties arising
out of or resulting from (i) any misrepresentation or breach of warranty by
the Company of any of its representations or warranties set forth in the
Merger Agreement or any Annex, Schedule or Exhibit thereto, (ii) any breach
or nonfulfillment by the Company of any of its covenants, agreements or other
obligations set forth in the Merger Agreement or any Annex, Schedule or
Exhibit thereto, or (iii) any amounts owed to Dissenting Stockholders in
excess of the amount of cash held in the Dissenting Stockholders Escrow
Account, all as more fully described, and subject to the limitations
contained in, the Merger Agreement.
ARTICLE IV.
TRANSFER RESTRICTIONS
4.1. NO VIOLATION OF SECURITIES ACT. If Holder is an
"affiliate" of the Company within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), Holder agrees to make no sale or transfer or
other disposition of Purchaser Common Stock in violation of the Securities Act
or Rule 145 of the rules and regulations of the Securities Act.
4.2. STOP TRANSFER INSTRUCTIONS; LEGEND.
(a) Each Holder understands and agrees that stop transfer
instructions may be given to NEXTLINK's transfer agent
-4-
with respect to certificates evidencing Purchaser Common Stock to enforce
compliance with any transfer restrictions on Purchaser Common Stock held by
such Holder pursuant to the Merger Agreement or any agreement or transaction
contemplated thereby.
(b) If a Holder is an "affiliate" of the Company, as such
term is defined in Rule 405 of the Securities Act of 1933, as amended, such
Holder agrees and understands that there will be placed on the certificate
evidencing Purchaser Common Stock legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS CONTAINED IN
THAT CERTAIN REGISTRATION RIGHTS AGREEMENT, DATED AS OF
JANUARY 14, 1999, BY AND AMONG NEXTLINK COMMUNICATIONS,
INC. AND STOCKHOLDERS' REPRESENTATIVE."
(c) If a Holder is not an "affiliate" of the Company,
such Holder agrees and understands that there will be placed on the certificate
evidencing Purchaser Common Stock legends stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS CONTAINED IN
THAT CERTAIN REGISTRATION RIGHTS AGREEMENT, DATED AS OF
JANUARY 14, 1999, BY AND AMONG NEXTLINK COMMUNICATIONS,
INC. AND STOCKHOLDERS' REPRESENTATIVE."
ARTICLE V.
MISCELLANEOUS
5.1. ADDITIONAL DOCUMENTS. Each Holder hereby covenants
and agrees to execute and deliver any additional documents necessary or
desirable, in the reasonable opinion of NEXTLINK, to carry out the purpose and
intent of this Agreement.
5.2. CONSENT AND WAIVER. Each Holder hereby gives any
consents or waivers that are reasonably required for the consummation of the
Merger under the terms of any agreement to
-5-
which Holder is a party or pursuant to any rights such Holder may have.
5.3. TERMINATION. This Agreement shall terminate and shall
have no further force or effect with respect to any Holder on the date such
Holder no longer owns any shares of Purchaser Common Stock received by it in the
Merger.
5.4. AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived only with the written consent of each party hereto.
Each Holder further agrees that the consent granted by it pursuant to Section
2.1 and the waiver granted by it of the Put Right pursuant to Section 2.3 are
irrevocable and may not be withdrawn or amended without the written consent of
NEXTLINK. Any amendment or waiver effected in accordance with this Section 5.4
shall be binding upon the parties and their respective successors and assigns.
5.5. GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
5.6. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
5.7. TITLES AND SUBTITLES. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.8. NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by courier, overnight delivery service or confirmed
facsimile, or forty-eight (48) hours after being deposited in the regular mail
as certified or registered mail (airmail if sent internationally) with postage
prepaid, if such notice is addressed to the party to be notified at such party's
address or facsimile number as set forth on the final page of this Agreement, or
as subsequently modified by written notice.
5.9. SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith, in order to maintain the economic
position enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this
-6-
Agreement, (ii) the balance of this Agreement shall be interpreted as if such
provision were so excluded and (iii) the balance of this Agreement shall be
enforceable in accordance with its terms.
5.10. ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party will be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including without limitation, costs,
expenses and fees on any appeal). The prevailing party will be entitled to
recover its costs of suit proceeds to final judgment.
5.11. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties
hereto acknowledge and agree that NEXTLINK will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the covenants
or agreements of Holder set forth herein. Therefore, the parties acknowledge and
agree that, in addition to any other remedies that may be available to NEXTLINK
upon any such violation, NEXTLINK shall have the right to enforce such covenants
and agreements by specific performance, injunctive relief or by any other means
available to NEXTLINK at law or in equity.
-7-
IN WITNESS WHEREOF, the parties have caused this Consent and
Indemnity Agreement of Stockholders to be duly executed on the date first
above written.
NEXTLINK COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
Address: 155 108th Avenue, NE Suite 810
Bellevue, WA 98004
Attention: General Counsel
Facsimile: (425) 519-8997
and
Address: 1730 Rhode Island Ave., N.W.
Washington, D.C. 20036
Attention: Corporate Counsel
Facsimile: (202) 721-0995
WNP COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
Address:_________________________
_________________________
Facsimile: _______________________
[HOLDERS]
- ---------------------------,
as holder of _____ shares of Company Common Stock
By:
-------------------------------
Name:
Title:
----------------------------
Address:
-------------------------
-------------------------
Facsimile: ______________________
Accepted and Agreed:
Thomas H. Jones, as Stockholders' Representative
By:
-------------------------------
Name:
Title:
Address for Notice:
- --------------------------------
- --------------------------------
-2-
Exihibit B to Merger Agreement
CONSENT AND INDEMNITY AGREEMENT OF PREFERRED STOCKHOLDERS
This Consent and Indemnity Agreement of Preferred Stockholders
(this "AGREEMENT") is made and entered into as of January 14, 1999, by and among
NEXTLINK Communications, Inc., a Delaware corporation ("NEXTLINK"), WNP
Communications, Inc., a Delaware corporation (the "COMPANY"), and the holders
(each a "HOLDER" and together the "HOLDERS") of the Company's Preferred Stock,
par value $.01 per share ("COMPANY PREFERRED Stock") whose signatures appear
below. Capitalized terms used herein without definition are used as defined in
the Merger Agreement (as defined below).
W I T N E S S E T H
WHEREAS, pursuant to an Agreement and Plan of Merger in the
form attached hereto as Exhibit A (the "MERGER AGREEMENT"), to be executed by
the Company, NEXTLINK and PCO Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of NEXTLINK ("MERGER SUB"), the Company will merge (the
"MERGER") with and into Merger Sub; and
WHEREAS, pursuant to the Merger Agreement, a portion of the
Merger Consideration may be comprised of shares of Class A Common Stock, par
value $.02 per share ("PURCHASER COMMON STOCK"), of NEXTLINK; and
WHEREAS, each Holder is the record owner of such number of
shares of Company Preferred Stock as is indicated next to its signature below;
and
WHEREAS, pursuant to that certain Securities Purchase
Agreement (the "Securities Purchase Agreement"), dated as of January 29, 1998,
among the Company and the several purchasers named therein (individually, a "WNP
Stock Purchaser" and collectively, the "WNP Stock Purchasers"), certain WNP
Stock Purchasers have the right (the "Put Right") under certain circumstances to
sell to the Company, and the Company has the obligation to buy, any and all
Company Common Stock or Company Preferred Stock then held by such WNP Stock
Purchaser.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF HOLDER
-3-
Each Holder hereby represents, warrants and covenants to
NEXTLINK with respect to itself only:
1.1. BENEFICIAL OWNERSHIP. Holder is the record and
beneficial owner of the number of shares of Company Preferred Stock indicated
next to its signature below.
1.2. AUTHORIZATION; BINDING AGREEMENT. Holder is (i) an
individual with full legal capacity to execute and deliver this Agreement or
(ii) has all requisite corporate or partnership power and authority to execute
and deliver this Agreement. The execution and delivery of this Agreement has
been duly and validly authorized by the Board of Directors or other governing
body of Holder, if applicable. No other corporate or partnership proceedings on
the part of the Holder are necessary to authorize the execution and delivery of
this Agreement. This Agreement has been duly and validly executed and delivered
by Holder and constitutes the legal, valid and binding agreement of Holder,
enforceable against Holder and in accordance with its terms.
ARTICLE II.
IRREVOCABLE CONSENT, WAIVER OF LIQUIDATION PREFERENCE, POWER OF
ATTORNEY AND WAIVER OF PUT RIGHT
2.1. CONSENT TO MERGER; WAIVER OF LIQUIDATION PREFERENCE.
Each Holder, pursuant to Section 3(b) of the Restated Certificate of
Incorporation of WNP Communications, Inc. (the "CERTIFICATE"), hereby (i)
irrevocably consents to and votes in favor of the Merger, the execution of the
Merger Agreement by the Company and all transactions contemplated by the Merger
Agreement, including the payment in connection with the Merger of the
liquidation preference to which it would otherwise be entitled pursuant to
section 3(a) of the Certificate (the "Liquidation Preference") in part in the
form of Company Common Stock, as provided in the Merger Agreement. Any Holder
who executes this Agreement after the date hereof shall not be deemed to have
consented to and voted in favor of the Merger, nor the execution of the Merger
Agreement by the Company, nor the transactions contemplated by the Merger
Agreement.
2.2. EFFECT OF CONSENT. Upon execution and delivery of
this Agreement by holders of a two-thirds of Company Preferred Stock
outstanding, the terms thereof shall be deemed to be amended to the extent
necessary to effectuate the foregoing, and such amendment shall, if required by
applicable law, be evidenced by the filing with the Secretary of State of the
State of Delaware of an amendment to the Certificate.
2.3. POWER OF ATTORNEY. Each Holder hereby irrevocably
appoints Thomas H. Jones (the "STOCKHOLDERS' REPRESENTATIVE") as
attorney-in-fact and agent for and on behalf of such Holder, with
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full power and authority (and exculpated from all actions taken in good
faith):
(a) to execute that certain Registration Rights
Agreement, between NEXTLINK and the Stockholders' Representative (the
"REGISTRATION RIGHTS AGREEMENT"), in the form attached hereto as Exhibit B; and
(b) to take certain actions, including, without
limitation, to execute agreements, and to take any and all actions required or
permitted to be taken by Stockholders' Representative on behalf of such Holder
pursuant to the Merger Agreement, and all as more fully described in the Merger
Agreement, and to take other ministerial actions on such Holder's behalf
incidental to the transactions contemplated by the Merger Agreement and the
Registration Rights Agreement.
(c) Holder and Stockholders' Representative agree that
the terms of this appointment are as set forth in this Agreement, the
Registration Rights Agreement and the Merger Agreement, including, without
limitation, Section 9.14 of the Merger Agreement.
2.4 WAIVER OF PUT RIGHT. Each Holder who has the benefit
of the Put Right granted to certain WNP Stock Purchasers pursuant to the
Securities Purchase Agreement hereby waives such Put Right until the Merger
Agreement, including the indemnification provisions thereunder, is no longer in
effect.
ARTICLE III.
AGREEMENT TO INDEMNIFY
3.1. INDEMNITY. Each Holder agrees to severally indemnify and hold
harmless NEXTLINK and its shareholders, directors, officers and employees
(collectively, the "INDEMNIFIED PARTIES") by, without limitation, becoming an
Indemnifying Party as defined in the Merger Agreement and by indemnifying the
Indemnified Parties for its Pro Rata Share (as defined in the Merger Agreement)
of any Loss incurred by the Indemnified Parties arising out of or resulting from
(i) any misrepresentation or breach of warranty by the Company of any of its
representations or warranties set forth in the Merger Agreement or any Annex,
Schedule or Exhibit thereto, (ii) any breach or nonfulfillment by the Company of
any of its covenants, agreements or other obligations set forth in the Merger
Agreement or any Annex, Schedule or Exhibit thereto, or (iii) any amounts owed
to Dissenting Stockholders in excess of the amount of cash held in the
Dissenting Stockholders Escrow Account all as more fully described, and subject
to the limitations contained in, the Merger Agreement.
-5-
ARTICLE IV.
TRANSFER RESTRICTIONS
4.1. NO VIOLATION OF SECURITIES ACT. If Holder is an
"affiliate" of the Company within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), Holder agrees to make no sale or transfer or
other disposition of Purchaser Common Stock in violation of the Securities Act
or Rule 145 of the rules and regulations of the Securities Act.
4.2. STOP TRANSFER INSTRUCTIONS; LEGEND.
(a) Each Holder understands and agrees that stop transfer
instructions may be given to NEXTLINK's transfer agent with respect to
certificates evidencing Purchaser Common Stock to enforce compliance with any
transfer restrictions on Purchaser Common Stock held by such Holder pursuant to
the Merger Agreement or any agreement or transaction contemplated thereby.
(b) If a Holder is an "affiliate" of the Company, as such
term is defined in Rule 405 of the Securities Act of 1933, as amended, such
Holder agrees and understands that there will be placed on the certificate
evidencing Purchaser Common Stock legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS CONTAINED IN
THAT CERTAIN REGISTRATION RIGHTS AGREEMENT, DATED AS
OF JANUARY 13, 1999, BY AND AMONG NEXTLINK
COMMUNICATIONS, INC. AND STOCKHOLDERS' REPRESENTATIVE."
(c) If a Holder is not an "affiliate" of the Company,
such Holder agrees and understands that there will be placed on the certificate
evidencing Purchaser Common Stock legends stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS CONTAINED IN
THAT CERTAIN REGISTRATION RIGHTS AGREEMENT, DATED AS
OF JANUARY 13, 1999, BY AND AMONG NEXTLINK
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COMMUNICATIONS, INC. AND STOCKHOLDERS' REPRESENTATIVE."
ARTICLE V.
MISCELLANEOUS
5.1. ADDITIONAL DOCUMENTS. Each Holder hereby covenants
and agrees to execute and deliver any additional documents necessary or
desirable, in the reasonable opinion of NEXTLINK, to carry out the purpose and
intent of this Agreement.
5.2. CONSENT AND WAIVER. Each Holder hereby gives any
consents or waivers that are reasonably required for the consummation of the
Merger under the terms of any agreement to which such Holder is a party or
pursuant to any rights such Holder may have.
5.3. TERMINATION. This Agreement shall terminate and shall
have no further force or effect with respect to any Holder on the date such
Holder no longer owns any shares of Purchaser Common Stock received by it in the
Merger.
5.4. AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived only with the written consent of each party hereto.
Each Holder further agrees that the consent granted by it pursuant to Section
2.1 and the waiver granted by it of the Put Right pursuant to Section 2.3 are
irrevocable and may not be withdrawn or amended without the written consent of
NEXTLINK. Any amendment or waiver effected in accordance with this Section 5.4
shall be binding upon the parties and their respective successors and assigns.
5.5. GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
5.6. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
5.7. TITLES AND SUBTITLES. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.8. NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by courier, overnight delivery service or confirmed
facsimile, or forty-eight (48) hours after being deposited in the regular mail
as certified or
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registered mail (airmail if sent internationally) with postage prepaid, if
such notice is addressed to the party to be notified at such party's address
or facsimile number as set forth on the final page of this Agreement, or as
subsequently modified by written notice.
5.9. SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith, in order to maintain the
economic position enjoyed by each party as close as possible to that under
the provision rendered unenforceable. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision,
then (i) such provision shall be excluded from this Agreement, (ii) the
balance of this Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of this Agreement shall be enforceable in
accordance with its terms.
5.10. ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party will be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including without limitation, costs,
expenses and fees on any appeal). The prevailing party will be entitled to
recover its costs of suit proceeds to final judgment.
5.11. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties
hereto acknowledge and agree that NEXTLINK will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the covenants
or agreements of Holder set forth herein. Therefore, the parties acknowledge and
agree that, in addition to any other remedies that may be available to NEXTLINK
upon any such violation, NEXTLINK shall have the right to enforce such covenants
and agreements by specific performance, injunctive relief or by any other means
available to NEXTLINK at law or in equity.
-8-
IN WITNESS WHEREOF, the parties have caused this Consent and Indemnity
Agreement of Preferred Stockholders to be duly executed on the date first above
written.
NEXTLINK COMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
Address: 155 108th Avenue, NE Suite 810
Bellevue, WA 98004
Attention: General Counsel
Facsimile: (425) 519-8997
Address: 1730 Rhode Island Ave., N.W.
Washington, D.C. 20036
Attention: Corporate Counsel
Facsimile: (202) 721-0995
WNP COMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
Address:
----------------------------
----------------------------
Facsimile:
--------------------------
[HOLDERS]
- --------------------------,
as holder of _____ shares of Company Preferred Stock
By:
--------------------------------
Name:
Title:
-----------------------------
Address:
---------------------------
---------------------------
Facsimile:
------------------------
Accepted and Agreed:
___________________, as Stockholders' Representative
By:
--------------------------------
Name:
Title:
Address for Notice:
- -----------------------------------
- -----------------------------------
Exhibit C to Merger Agreement
CERTIFICATE OF MERGER
OF
WNP COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
INTO
PCO ACQUISITION CORP.
(A DELAWARE CORPORATION)
The undersigned corporation, organized and existing under and
by virtue of the General Corporation Law of Delaware, DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of
the constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
WNP Communications, Inc. Delaware
PCO Acquisition Corp. Delaware
(each a "Constituent Corporation" and collectively the "Constituent
Corporations").
SECOND: That an Agreement and Plan of Merger between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the Constituent Corporations in accordance with the
requirements of Section 251 of the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the
merger is PCO Acquisition Corp. (the "Surviving Corporation") and following
the merger its name [shall remain PCO Acquisition Corp.]
FOURTH: No amendments or changes to the certificate of
incorporation of the Surviving Corporation are to be effected by the merger. The
certificate of incorporation of the Surviving Corporation as it exists on the
effective date of this merger shall be and remain the certificate of
incorporation of the Surviving Corporation until the same shall be altered,
amended or replaced as therein provided
FIFTH: That the executed Agreement and Plan of Merger is on
file at the principal place of business of the Surviving Corporation, the
address of which is 155 108th Avenue, NE, Suite 810, Bellevue, Washington 98004.
SIXTH: That a copy of the Agreement of Merger will be
furnished by the Surviving Corporation, on request and without cost, to any
stockholder of any Constituent Corporation.
Dated: January __, 1999
PCO ACQUISITION CORP.
By:
-----------------------------
Name:
Title:
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Exhibit D to Merger Agreement
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ________ __, 1999, among
NEXTLINK Communications, Inc., a Delaware corporation ("Purchaser"), and
________, (the "ESCROW AGENT"). Capitalized terms used herein without definition
are used as defined in the Merger Agreement (as defined below).
R E C I T A L S
WHEREAS, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of January 14, 1999, by and between WNP
Communications, Inc., a Delaware corporation (the "Company"), Purchaser and PCO
Acquisition Corp., a Delaware corporation and wholly-owned direct subsidiary of
Purchaser ("Merger Sub"), the Company will merge (the "Merger") with and into
Merger Sub, or, at the election of Purchaser, Merger Sub will merge with and
into the Company; and
WHEREAS, pursuant to a Consent and Indemnity Agreement of
Stockholders (the "Consent and Indemnity Agreement of Stockholders"), dated as
of January 14, 1999, by and among Purchaser, the Company and the holders
(collectively, "Common Stock Holders" and individually, a "Common Stock Holder")
of the Company's Voting Common Stock and Nonvoting Common Stock listed therein,
certain Common Stock Holders have agreed, among other things, to approve the
Merger and to become Indemnifying Parties under the Merger Agreement; and
WHEREAS, pursuant to a Consent and Indemnity Agreement of
Preferred Stockholders (the "Consent and Indemnity Agreement of Preferred
Stockholders"), dated as of January 13, 1999, by and among Purchaser, the
Company and the holders (collectively, "Preferred Stock Holders" and
individually, a "Preferred Stock Holder") of the Company's Preferred Stock
listed therein, certain Preferred Stock Holders have agreed, among other things,
to approve the Merger and to become Indemnifying Parties under the Merger
Agreement (Common Stock Holders and Preferred Stock Holders being referred to
collectively herein as "Holders" and individual Common Stock Holders and
Preferred Stock Holders being referred to herein each as a "Holder"); and
WHEREAS, the holders of Company's Voting Common Stock and
Nonvoting Common Stock that have not executed the Consent and Indemnity
Agreement of Stockholders are listed on Schedule I hereto (the "Nonconsenting
Common Stock Holders"); and
WHEREAS, the holders of Company's Preferred Stock that have
not executed the Consent and Indemnity Agreement of Preferred Stockholders are
listed on Schedule II hereto (the "Nonconsenting Preferred Stock Holders" and,
together with the
Nonconsenting Common Stock Holders, the "Nonconsenting Holders"); and
WHEREAS, pursuant to the Merger Agreement, the Merger
Consideration attributable to such Nonconsenting Holders is to be placed in
escrow.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. APPOINTMENT OF ESCROW AGENT; ESCROW DEPOSIT.
(a) Purchaser hereby appoints the Escrow Agent as the
escrow agent under this Agreement, and the Escrow Agent accepts such appointment
according to the terms and conditions set forth herein. On the Closing Date,
Purchaser will deposit with the Escrow Agent pursuant to Section 1.3(b) of the
Merger Agreement (i) an amount in cash (the "Cash Escrow Deposit") equal to
$____ and (ii) ____ shares (the "Stock Escrow Deposit") of Purchaser Class A
common stock ("Purchaser Common Stock"). All of such Cash Escrow Deposit and
Stock Escrow Deposit, inclusive of any interest earned on the Cash Escrow
Deposit and any adjustments made to either the Cash Escrow Deposit or the Stock
Escrow Deposit pursuant to any Escrow Loss Reimbursement as described in Section
3(a) of this Agreement, is referred to collectively as the "Escrow Deposit."
(b) The Escrow Agent shall hold, invest, reinvest,
manage, administer, distribute and dispose of the Cash Escrow Deposit in
accordance with the terms and conditions of this Agreement. The Escrow Agent
shall not transfer, sell, pledge or otherwise dispose of or encumber the Stock
Escrow Deposit.
2. INVESTMENT OF CASH ESCROW DEPOSIT. Until the termination of this
Agreement, the Cash Escrow Deposit, together with any interest earned thereon,
shall be invested (as directed in written instructions to the Escrow Agent from
time to time by Purchaser) solely in one or more of the investments referred to
below:
(a) interest bearing time deposits with maturity dates of
30 days or less of any bank located within the United States of America;
PROVIDED that any amount held on deposit in any bank not having unsecured,
non-subordinated indebtedness outstanding that is rated as "investment grade" by
a nationally recognized rating agency shall be so invested only if such amount
is fully insured by the Federal Deposit Insurance Corporation ("FDIC");
(b) certificates of deposit with maturity dates of 30
days or less issued by the commercial banking department of any bank located in
the United States of America, PROVIDED, HOWEVER,
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that either (A) any such bank shall have unsecured, non-subordinated
indebtedness outstanding that is rated as "investment grade" by a nationally
recognized rating agency, or (B) the full amount of each and every
certificate of deposit issued by any such bank to the Escrow Agent hereunder
shall be fully insured by the FDIC;
(c) direct obligations of, or obligations guaranteed as
to all principal and interest by, the United States of America, in each case
with maturity dates of 30 days or less;
(d) repurchase agreements with maturity dates of 30 days
or less that are fully secured as to payment of principal and interest by
collateral consisting of obligations described in Sections 2(a) through (c)
above;
(e) commercial paper with maturity dates of 30 days or
less that is rated A-1 by Standard & Poor's Corporation or Prime-1 by Moody's
Investors Service, Inc., or better; or
(f) investments in institutional money market funds
investing principally in obligations permitted by Sections 2(a) through (e)
above.
In the absence of any written instructions from Purchaser to the contrary, the
Escrow Agent is hereby authorized and directed to invest and reinvest the Cash
Escrow Deposit in interest bearing time deposits.
The parties acknowledge that the Escrow Agent shall not be responsible
for any diminution in the Cash Escrow Deposit due to losses resulting from
investments made pursuant to this Agreement. The parties further acknowledge
that the Nonconsenting Holders shall not suffer any loss resulting from
investments made pursuant to this Agreement.
3. PAYMENTS FROM ESCROW; TERMINATION. The Escrow Agent shall
hold the Escrow Deposit in escrow in accordance with this Agreement and shall
make payments from the Escrow Deposit only as follows:
(a) In the event that the Indemnifying Parties are
required to make any payments in respect of any Loss pursuant to Section 8.2 of
the Merger Agreement, the Escrow Agent shall promptly release Escrowed Merger
Consideration to the Indemnified Party in an amount equal to the product of (a)
any such Loss (or undisputed portion thereof) multiplied by (b) a fraction, the
numerator of which is the amount of the Escrowed Merger Consideration, and the
denominator of which is the aggregate Merger Consideration (an "ESCROW LOSS
REIMBURSEMENT"). Escrow Loss Reimbursements shall be made only in cash, PROVIDED
that in the event that the cash portion of the Escrow Deposit is less than the
amount of the Escrow Loss Reimbursement, the Escrow Agent shall sell, to the
extent permitted by law, an amount of
-3-
Purchaser Common Stock in brokers transactions on the Nasdaq National Market
equal in value to such cash deficiency. In the event the Escrow Agent is not
permitted by applicable law to sell shares of Purchaser Common Stock, such
cash deficiency shall be satisfied with shares of Purchaser Common Stock
valued at their Volume-Weighted Average Trading Price for the twenty trading
day period prior to the date on which the Indemnifying Parties are required
to make an indemnification payment pursuant to Section 8.2 of the Merger
Agreement.
(b) (i) In the event any Nonconsenting Holder executes
either the Consent and Indemnity Agreement of Stockholders or the Consent and
Indemnity Agreement of Preferred Stockholders, as the case may be, and delivers
a copy thereof to the Escrow Agent and Purchaser and at such time there is no
disputed or unsatisfied Loss, Purchaser shall instruct the Escrow Agent to
release to such Nonconsenting Holder its Pro Rata Share (as set forth opposite
the name of such Nonconsenting Holder on Schedule I or Schedule II hereto) of
the Escrow Deposit, less the amount of any payments from the Escrow Deposit
theretofore made on such holder's behalf pursuant to this Agreement.
(ii) In the event any Nonconsenting Holder executes
either the Consent and Indemnity Agreement of Stockholders or the Consent and
Indemnity Agreement of Preferred Stockholders, as the case may be, and delivers
a copy thereof to the Escrow Agent and Purchaser and at such time there is a
disputed or unsatisfied Loss, Purchaser shall instruct the Escrow Agent to
release to such Nonconsenting Holder its Pro Rata Share (as set forth opposite
the name of such Nonconsenting Holder on Schedule I or Schedule II hereto) of
the Escrow Deposit, less (A) the amount of any payments from the Escrow Deposit
theretofore made on such holder's behalf pursuant to this Agreement and (B) its
Pro Rata share of the disputed or unsatisfied portion of such Loss.
(iii) Should any Nonconsenting Holder execute and
deliver to Purchaser either the Consent and Indemnity Agreement of Stockholders
or the Consent and Indemnity Agreement of Preferred Stockholders, as the case
may be, at a time when there is no disputed or unsatisfied Loss, it shall cease
to be a Nonconsenting Holder.
(c) If the Escrow Deposit shall not be fully drawn
pursuant to subsection (a) and (b) of this Section 3 by the later of (i) the
first anniversary of the Closing and (ii) the date on which any and all disputes
with respect to claimed Losses that are pending on that date have been resolved
and satisfied, the Escrow Agent shall release to each Nonconsenting Holder its
Pro Rata Share of the Cash Escrow Deposit and the Stock Escrow Deposit, PROVIDED
that amounts in the Cash Escrow Deposit shall be used FIRST to pay each
Nonconsenting Preferred Stockholder all of its Pro Rata Share of the Escrow
Deposit in cash, and SECOND,
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to the extent any amounts remain in such Cash Escrow Deposit, to
Nonconsenting Common Stockholders.
4. CONDITIONS TO ESCROW. The Escrow Agent agrees to hold the Escrow
Deposit and to perform in accordance with the terms and provisions of this
Agreement. Purchaser agrees that the Escrow Agent does not assume any
responsibility for the failure of Purchaser to perform in accordance with the
Merger Agreement or this Agreement. The acceptance by the Escrow Agent of its
responsibilities hereunder is subject to the following terms and conditions,
which the parties hereto agree shall govern and control with respect to the
Escrow Agent's rights, duties, liabilities and immunities:
(a) The Escrow Agent may conclusively rely, and shall be
protected in acting or refraining from acting upon, any written notice,
certification, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and validity and effectiveness
of its provisions but also as to the truth and accuracy of any information
therein contained which the Escrow Agent reasonably believes to be genuine and
to have been signed and presented by the proper party or parties. Should it be
necessary for the Escrow Agent to act upon any instructions, directions,
documents or instruments issued or signed by or on behalf of any corporation,
fiduciary, or individual acting on behalf of another party hereto, it shall not
be necessary for the Escrow Agent to inquire into such corporation's,
fiduciary's or individual's authority, capacity, existence or identity. The
Escrow Agent is also relieved from the necessity of satisfying itself as to the
authority of the persons executing this Agreement in a representative capacity.
(b) The Escrow Agent may consult with, and obtain advice
from, legal counsel in the event of any question as to any of the provisions
hereof or the duties hereunder, and it shall incur no liability and shall be
fully protected in acting in good faith in accordance with the opinion and
instructions of such counsel.
(c) The Escrow Agent shall have no duties except those
which are expressly set forth herein and it shall not be bound by (i) the Merger
Agreement or any agreement of the other parties hereto (whether or not it has
any knowledge thereof) or by any notice of a claim, or demand with respect
thereto, or (ii) any waiver, modification, amendment, termination or rescission
of this Agreement unless the Escrow Agent agrees thereto in writing.
(d) The Escrow Agent may resign and be discharged from
its duties and obligations hereunder by giving notice in writing of such
resignation specifying a date (no earlier than 30 days following the date of
such notice) when such resignation will take effect, PROVIDED, HOWEVER, that
until a successor escrow agent is appointed by Purchaser, the Escrow Agent shall
continue to hold the Escrow Deposit and otherwise comply with the terms of
-5-
this Agreement; PROVIDED further that if no such successor escrow agent shall
be appointed within 30 days of the Escrow Agent providing its notice, the
Escrow Agent may, at the expense of Purchaser, (i) appoint a successor escrow
agent which shall be a national or state-chartered banking, trust or savings
association, (ii) petition any court of competent jurisdiction for the
appointment of a successor escrow agent or (iii) may deposit the Escrow
Deposit with the Clerk of the United States District Court for the Southern
District of New York, or with the office of the clerk of registry of any
other court of competent jurisdiction, at which time the Escrow Agent's
duties hereunder shall terminate. Any successor escrow agent shall execute
and deliver an instrument accepting such appointment and it shall, without
further acts, be vested with all the estates, properties, rights, powers and
duties of the predecessor escrow agent as if originally named as escrow
agent. The resigning Escrow Agent shall thereupon be discharged from any
further obligations under this Escrow Agreement.
(e) Upon delivery of all of the entire Escrow Deposit
then remaining pursuant to the terms of Section 3 above or to a successor escrow
agent, the Escrow Agent shall thereafter be discharged from any further
obligations hereunder. The Escrow Agent is hereby authorized, in any and all
events, to comply with and obey any and all final judgments, orders and decrees
(not subject to appeal) of any court of competent jurisdiction which may be
filed, entered or issued, and, if it shall so comply or obey, it shall not be
liable to any other person by reason of such compliance or obedience.
(f) The Escrow Agent shall not have any responsibility or
liability for the completeness, correctness or accuracy of any transactions
between Purchaser, on the one hand, and Sellers, on the other hand.
(g) In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions with respect
to the Escrow Deposit which, in its sole opinion, are in conflict with either
other instructions received by it or any provision of this Agreement, it shall
without liability of any kind, be entitled to hold the Escrow Deposit pending
the resolution of such uncertainty to the Escrow Agent's sole satisfaction, by
final judgment of a court or courts of competent jurisdiction or otherwise, or
the Escrow Agent, at its option, may, in final satisfaction of its duties
hereunder, deposit the Escrow Deposit with the Clerk of the United States
District Court for the Southern District of New York or with the office of the
clerk of registry of any other court of competent jurisdiction.
5. LOSS, LIABILITY OR EXPENSES OF ESCROW AGENT. Any loss, liability or
expense (including, without limitation, all expenses reasonably incurred in its
investigation and defense and costs and expenses reasonably incurred in
enforcing this right of
-6-
indemnification) incurred by the Escrow Agent without gross negligence or
willful misconduct on the part of the Escrow Agent arising out of or in
connection with this Agreement shall be satisfied from the Escrow Deposit.
6. BANKING DAYS. If any date on which the Escrow Agent is required
to make an investment or a delivery pursuant to the provisions hereof is not
a banking day, then the Escrow Agent shall make such investment or delivery
on the next succeeding banking day.
7. ESCROW COSTS; NO RIGHT OF SET-OFF. Any fees charged by the
Escrow Agent in the performance of Escrow Agent's services hereunder shall be
satisfied from the Escrow Deposit.
The Escrow Agent acknowledges and agrees that it is holding the
Escrow Deposit in its capacity as escrow agent and that it has no right to
apply amounts in the Escrow Deposit against any obligations of (a) Purchaser,
(b) the Nonconsenting Holders, or (c) the Company owed to the Escrow Agent
that were not incurred in connection with the transactions contemplated by
this Agreement.
8. NOTICES.
(a) All communications under this Agreement shall be in
writing and shall be delivered by hand or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(i) If to Purchaser: NEXTLINK Communications, Inc.
155 108th Avenue, NE Suite 810
Bellevue, WA 98004
Attention: General Counsel
Facsimile: (425) 519-8997
1730 Rhode Island Ave., N.W.
Washington, D.C. 20036
Attention: Corporate Counsel
Facsimile: (202) 721-0995
(ii) If to Escrow Agent:
----------------------
----------------------
Attention:
Facsimile:
(iii) If to any Nonconsenting Holder, at its address set forth opposite
its name on Schedule I or Schedule II hereto.
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Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
9. ENTIRE AGREEMENT. This Agreement, together with the Merger
Agreement and related exhibits and schedules and the Consent and Indemnity
Agreement, contains the entire understanding of the parties hereto with
respect to the transactions contemplated hereby and may be amended, modified,
supplemented or altered only by a writing duly executed by the Escrow Agent
(with respect to this Agreement only) and Purchaser, and any prior agreements
or understandings, whether oral or written, are entirely superseded hereby.
10. ASSIGNS AND ASSIGNMENT. This Agreement shall extend to, shall
inure to the benefit of and shall be binding upon all of the parties hereto
and upon all of their respective successors and permitted assigns.
11. NO OTHER THIRD PARTY BENEFICIARIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person other than the
parties hereto, any rights or remedies under or by reason of this Agreement.
12. NO WAIVER. No failure or delay by an party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof,
and no single or partial exercise thereof shall preclude any right of further
exercise or the exercise of any other right, power or privilege.
13. SEVERABILITY. If any covenant, agreement, provision or term of
this Agreement is held to be invalid for any reason whatsoever, then such
covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of any other provision
of this Agreement.
14. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict provision or rule that would cause
the laws of any jurisdiction other than the State of New York to be applied.
15. COUNTERPARTS. This Agreement may be executed by the parties
hereto individually or in any combination, in one or more counterparts, each
of which shall be an original and all of which shall together constitute one
and the same agreement.
-8-
IN WITNESS WHEREOF, the parties hereto have executed this
Escrow Agreement on the date first written above.
NEXTLINK COMMUNICATIONS, INC.
By:
--------------------------------
Name:
Title:
-------------------------,
as Escrow Agent
By:
--------------------------------
Name:
Title:
-9-
Exhibit E to Merger Agreement
See Exhibit 10.2
Exhibit F to Merger Agreement
[Form of Opinion of Purchaser's counsel]
The following opinions are to be provided by counsel for
Purchaser, subject to customary assumptions, limitations and qualifications.
All capitalized terms used herein without definition shall have the meanings
set forth in the Merger Agreement.
1. Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted.
2. The shares of Purchaser Common Stock to be issued in the Merger
are duly authorized, and, when issued and delivered in accordance with the
provisions of the Merger Agreement (a) will be validly issued, fully paid and
nonassessable and free of liens, encumbrances or preemptive or similar rights
and (b) will not be subject to any restrictions on resale under the
Securities Act other than restrictions imposed by Rule 145 promulgated under
the Securities Act.
3. The authorized capital stock of Purchaser as of the date hereof
consists of _______ shares of Purchaser Common Stock, _______ shares of Class
B Common Stock, par value $.02 per share and _______ shares of Purchaser
Preferred Stock. As of the date hereof, (a) _______ shares of Purchaser
Common Stock were issued and outstanding, (b) _______ shares of Class B
Common Stock were issued and outstanding, (c) _______ shares of Purchaser
Preferred Stock were issued and outstanding and (d) no shares of Purchaser
Common Stock were issued and held in the treasury of Purchaser. No other
capital stock of Purchaser is authorized or issued. All issued and
outstanding shares of Purchaser Common Stock are duly authorized, validly
issued, fully paid and non-assessable. Purchaser is the record and beneficial
owner of 100% of the issued and outstanding capital stock of Merger Sub.
4. Each of Purchaser and Merger Sub has all requisite corporate
power and authority to execute and deliver the Merger Agreement, the
Registration Rights Agreement and the Escrow Agreement (each a "Transaction
Document") and to consummate the transactions contemplated thereby,
including, without limitation, the due authorization and approval for
issuance of the Purchaser Common Stock issuable in the Merger. The execution
and delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby, including, but not limited to, the Merger,
have been duly and validly authorized by each of the respective Boards of
Directors of Purchaser and Merger Sub, as appropriate, and no other corporate
proceedings on the part of Purchaser or Merger Sub are necessary to authorize
the execution and delivery of the Transaction Documents or to consummate the
transactions contemplated thereby. Each Transaction Document has been duly
and validly executed and delivered by each of Purchaser and Merger Sub and
constitutes the legal, valid and binding agreements of each of Purchaser and
Merger Sub, enforceable against each of Purchaser and Merger Sub in
accordance with its terms, subject to the Enforceability Exceptions.
5. To the best of our knowledge, no Consent from or with any
Governmental Authority on the part of either Purchaser or Merger Sub is
required in connection with the execution or delivery by either Purchaser or
Merger Sub of the Transaction Documents or the consummation by either
Purchaser or Merger Sub of the transactions contemplated thereby other than
(i) filings with the SEC, state securities laws administrators and the
National Association of Securities Dealers, Inc., (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL, (iii) such filings as may be required in any
jurisdiction where Merger Sub is qualified or authorized to do business as a
foreign corporation in order to maintain such qualification or authorization,
(iv) such other Consents as have been obtained and (v) those Consents that,
if they were not obtained or made, would not be reasonably likely to have a
Purchaser Material Adverse Effect.
6. The execution and delivery of the Transaction Documents, the
consummation of the transactions contemplated thereby and compliance by
Purchaser and Merger Sub with any of the provisions thereof (i) will not
conflict with or result in any breach of any provision of the Certificate or
Articles of Incorporation or Bylaws of Purchaser or Merger Sub or (ii) to
such counsel's knowledge, contravene any Law to which Purchaser or Merger Sub
or any of their respective assets or properties are subject except where such
contravention would not be reasonably likely to have a Purchaser Material
Adverse Effect.
7. To our knowledge, the Registration Statement and all
post-effective amendments, if any, filed by Purchaser with the SEC have
become effective under the Act and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
and, to our knowledge, no proceedings for that purpose have been instituted
or are pending or are threatened by the SEC.
-2-
Exhibit G to Merger Agreement
[Form of Opinion of the Company's counsel]
The following opinions are to be provided by counsel for the
Company (allocated between corporate counsel and FCC counsel as appropriate),
subject to customary assumptions, limitations and qualifications. All
capitalized terms used herein without definition shall have the meanings set
forth in the Merger Agreement.
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
2. The authorized capital stock of the Company as of the date hereof
consists of (i) ______ shares of Voting Common Stock, of which ______ shares are
issued and outstanding, (ii) _______ shares of Non-Voting Common Stock, of which
_______ shares are issued and outstanding and (iii) _______ shares of preferred
stock, of which _______ are designated Series A Preferred Stock, and of which
______ shares are issued and outstanding. No other capital stock of the Company
is authorized or issued, including without limitation any treasury shares. All
issued and outstanding Shares are duly authorized, validly issued, and, assuming
that the Company has received the consideration it agreed to accept therefor,
are fully paid and non-assessable. Except set forth in Section 2.2 of the
Disclosure Schedule, there are no outstanding rights, subscriptions, warrants,
puts, calls, preemptive rights, options or other agreements of any similar kind
relating to any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the Company or any other security of the Company, and there
is no authorized or outstanding security of any kind convertible into or
exchangeable for any such stock or other security.
3. Section 2.3 of the Disclosure Schedule lists all of the issued and
outstanding Shares of the Company's capital stock and the record ownership
thereof as of the date thereof. To the knowledge of such counsel, except as set
forth on such Schedule, no other Person has any right to or interest in any of
such Shares. The Company has no Subsidiaries or ownership interests of any kind
in any Person.
4. The Company has all requisite corporate power and authority to
execute and deliver the Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Board of
Directors of the Company and have been approved and adopted by the stockholders
of the Company in accordance with the DGCL. No other corporate proceedings on
the part of the Company are necessary to authorize the execution and delivery of
the Merger Agreement or the consummation of the transactions contemplated
thereby. The Merger Agreement has been duly and validly executed and delivered
by the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company and in accordance with its terms, ,
subject to the Enforceability Exceptions.
5. To the best of such counsel's knowledge, no Consent of any
Governmental Authority is required to be obtained by the Company in connection
with the execution or delivery by the Company of the Merger Agreement or the
consummation by the Company of the transactions contemplated thereby other than
(i) the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the DGCL, (ii) such other Consents as have been
obtained and (iii) those Consents that, if they were not obtained and made,
would not be reasonably likely to have a Company Material Adverse Effect.
6. The execution and delivery of the Merger Agreement, the consummation
of the transactions contemplated thereby and compliance by each of the Company
and the stockholders of the Company with the provisions thereof (i) will not
conflict with or result in any breach of any provision of the Certificate or
Articles of Incorporation or Bylaws of the Company or (ii) to such counsel's
knowledge, contravene any Law to which the Company or any of its respective
assets or properties are subject, except where such contravention would not be
reasonably likely to have a Company Material Adverse Effect.
7. The Company's LMDS licenses (the "LMDS LICENSES") as of the date
hereof are listed on Schedule 2.10. The grant of the LMDS Licenses has become
effective, no stay of effectiveness of the grant of the LMDS Licenses has been
issued by the FCC, and the LMDS Licenses have not been invalidated by any
subsequent published FCC action. To such counsel's knowledge, no petition for
reconsideration or review of the grant of the LMDS Licenses has been filed with
the FCC. The time provided by Law within which a party in interest may seek
administrative reconsideration or review of the grant of the LMDS Licenses or
for the FCC to give public notice of review of such grant on its own motion has
expired. To such counsel's knowledge, and except for those affecting the
industry generally, as of the date hereof, there are no proceedings pending or
threatened in writing under applicable law against the Company by or before the
FCC which seek the revocation, non-renewal, or material adverse modification of
any of the LMDS Licenses. The Company otherwise has all permits, certificates,
licenses, approvals and other authorizations required in connection with the
operation of its businesses as they are presently being, and have formerly been,
-2-
operated, except those the absence of which will not be reasonably likely to
have a Company Material Adverse Effect.
The FCC's approval of the assignment to Purchaser of the LMDS
Licenses became final on _____, 1999, 40 calendar days following the FCC's
initial public notice of _________, 1999 notifying the public of the FCC's
approval of the assignment to Purchaser of the LMDS Licenses.
10. To the our knowledge, there is no suit, action or proceeding pending or, to
the Company's knowledge, threatened against the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority
outstanding against the Company.
-3-
COMPANY DISCLOSURE SCHEDULES
This is the Disclosure Schedule to the Agreement and Plan of Merger between
NEXTLINK Communications, Inc., WNP Communications, Inc. (the "COMPANY") and PCO
Acquisition Corp. dated as of the date hereof (the "MERGER Agreement"). Unless
otherwise defined herein, all capitalized items used herein shall have the same
meanings given to them in the Merger Agreement. Any inclusion of a particular
item in this Disclosure Schedule shall not be deemed to be an admission by the
Company that such item is material or is otherwise required to be disclosed
pursuant to the terms of the Merger Agreement.
SECTION 2.2
OUTSTANDING RIGHTS, SUBSCRIPTIONS, WARRANTS, PUTS, CALLS,
PREEMPTIVE RIGHTS, OPTIONS OR OTHER AGREEMENTS
RELATING TO THE SECURITIES OF THE COMPANY
1. The WNP Communications, Inc. 1998 Stock Option Plan (the "PLAN"). The
Company has entered into the following incentive stock options agreements
pursuant to the Plan:
A. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Raymond D. Keneipp, Jr.
B. Incentive Stock Option Agreement dated November 13,
1998 between the Company and J. Barclay Jones.
C. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Mark J. Emery.
D. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Patricia F. Travis.
E. Incentive Stock Option Agreement dated November 16,
1998 between the Company and Brian H. Silvestri.
2. (i) The Stockholders' Agreement dated as of January 29, 1998, as amended
by the First Amendment to Stockholders' Agreement dated April 6, 1998, the
Second Amendment to Stockholders' Agreement dated October 20, 1998 and the
Third Amendment to Stockholders' Agreement dated November 6, 1998, by and
among the Company and the "Stockholders" named therein, (ii) the Securities
Purchase Agreement dated as of January 29, 1998, as amended by the First
Amendment to Securities Purchase Agreement dated October 20, 1998 by and
between the Company and the "Purchasers" named therein, (iii) the
Registration Rights Agreement dated as of January 29, 1998 by and among the
Company and the "Holders" named therein, and (iv) the Company's
Restated Certificate of Incorporation dated January 28, 1998 contain various
rights and obligations of the Company's shareholders specified therein.
3. See Schedules 2.3, 2.12 and 2.13.
-6-
SECTION 2.3
OWNERSHIP OF ISSUED AND OUTSTANDING SHARES OF THE COMPANY'S
CAPITAL STOCK
Provided Upon Request
SECTION 2.10
LMDS LICENSES
CALL SIGN MARKET NUMBER CHANNEL BLOCK MARKET NAME
- --------- ------------- ------------- -----------
WPOH942 BTA321 A New York, NY
WPOH943 BTA184 A Hartford, CT
WPOH944 BTA007 A Albany-Schenectady, NY
WPOH945 BTA318 A New Haven-Waterbury-Meriden, CT
WPOH946 BTA438 A Syracuse, NY
WPOH947 BTA262 B Los Angeles, CA
WPOH948 BTA078 A Chicago, IL
WPOH949 BTA112 A Detroit, MI
WPOH950 BTA074 A Charlotte-Gastonia, NC
WPOH951 BTA368 A Raleigh-Durham, NC
WPOH952 BTA177 A Greenville-Spartanburg, SC
WPOH953 BTA101 A Dallas-Ft. Worth, TX
WPOH954 BTA027 A Austin, TX
WPOH955 BTA051 A Boston, MA
WPOH956 BTA364 A Providence-Pawtucket, RI
WPOH957 BTA480 A Worcester-Fitchburg-Leominster, MA
WPOH958 BTA427 A Springfield-Holyoke, MA
WPOH959 BTA274 A Manchester-Nashua-Concord, NH
WPOH960 BTA346 A Philadelphia, PA-Wilmington, DE
WPOH961 BTA461 A Washington, DC
WPOH962 BTA029 A Baltimore, MD
WPOH963 BTA024 A Atlanta, GA
WPOH964 BTA298 A Minneapolis-St. Paul, MN
WPOH965 BTA440 A Tampa-St. Petersburg-Clearwater, FL
WPOH966 BTA196 A Houston, TX
WPOH967 BTA293 A Miami-Ft. Lauderdale, FL
WPOH968 BTA469 A West Palm Beach-Boca Raton, FL
WPOH969 BTA394 A St. Louis, MO
WPOH970 BTA297 A Milwaukee, WI
WPOH971 BTA350 A Pittsburgh, PA
WPOH972 BTA374 A Richmond-Petersburg, VA
WPOH973 BTA290 A Memphis, TN
WPOH974 BTA204 A Indianapolis, IN
WPOH975 BTA111 A Des Moines, IA
WPOH976 BTA401 A San Antonio, TX
WPOH977 BTA060 A Buffalo-Niagara Falls, NY
WPOH978 BTA379 A Rochester, NY
WPOH979 BTA212 A Jacksonville, FL
WPOH980 BTA314 A Nashville, TN
WPOH981 BTA232 A Knoxville, TN
SCHEDULE 2.12
CONTRACTS
1. Securities Purchase Agreement dated as of January 29, 1998 by and between
the Company and the "Purchasers" named therein, as amended by the First
Amendment to the Securities Purchase Agreement dated October 20, 1998.
2. Stockholders' Agreement among the Company and the "Stockholders" named
therein, as amended by the First Amendment to the Stockholders' Agreement
dated as of April 6, 1998, the Second Amendment to the Stockholders'
Agreement dated as of October 20, 1998 and the Third Amendment to the
Stockholders' Agreement dated as of November 6, 1998.
3. Registration Rights Agreement dated as of January 29, 1998 between the
Company and the "Holders" named therein.
4. Agreement dated as of December 23, 1998 between the Company and CEA
Capital Partners, USA, L.P. and CEA Capital Partners USA CI, L.P.
5. Management Services Agreement dated as of January 29, 1998 by and among
the Company, New Venture Directions, Inc., and Thomas H. Jones.
6. Consulting Agreement dated as of April 20, 1998 by and among the
Company, JBJ Communications, Inc. and J. Barclay Jones.
7. Consulting Agreement dated as of June 1, 1998 between the Company and
Mark Emery d/b/a Emery Consulting.
8. Consulting Agreement dated as of September 16, 1998 by and between the
Company, The Almeida Group and Network Strategy Partners, LLC.
9. Incentive Stock Option Agreement dated November 13, 1998 between the
Company and Raymond D. Keneipp, Jr.
10. Incentive Stock Option Agreement dated November 13, 1998 between the
Company and J. Barclay Jones.
11. Incentive Stock Option Agreement dated November 13, 1998 between the
Company and Mark J. Emery.
12. Incentive Stock Option Agreement dated November 13, 1998 between the
Company and Patricia F. Travis.
13. Incentive Stock Option Agreement dated November 16, 1998 between the
Company and Brian H. Silvestri.
14. Trial Agreement dated as of November 17, 1998 between the Company and
Northern Telecom, Inc.
15. Trial Agreement dated as of November 17, 1998 between the Company and
Bosch Telecom, Inc.
16. Letter Agreement dated November 6, 1998 between the Company and Bosch.
17. Letter Agreement dated October 23, 1998 between the Company and Nortel.
18. Letter Agreement dated December 14, 1998 between the Company and
Ericcson Inc. Network Solutions Division.
-11-
19. Letter Agreement dated August 31, 1998 between the Company and Pat Travis
20. Letter Agreement dated November 2, 1998 between the Company and the Mark
Emery.
21. Letter Agreement dated October 10, 1998 between the Company and Raymond
D. Keniepp.
22. Letter Agreement dated October 10, 1998 between the Company and the Mr.
J. Barclay Jones.
23. Letter Agreement dated October 22, 1998 between the Company and Mr.
Brian H. Silvestri.
24. National Union Fire Insurance Company of Pittsburgh, PA. Directors and
Officers Insurance and Company Reimbursement Policy issued
September 28, 1998.
25. Fireman's Fund property and liability insurance binders issued on
November 11, 1998 and December 21, 1998.
26. Signed Proposal dated October 31, 1998 between the Company and Current
Analysis.
27. Master Service Agreement dated September 9, 1998 between the Company and
Net 2000 Communications.
28. Lease Agreement between the Company and Xerox.
29. Rental Agreement dated October 16, 1998 between the Company and Aaron
Rents, Inc.
-12-
30. Rental Agreement dated September 16, 1998 between the Company and Aaron
Rents, Inc.
31. Letter Agreement dated October 2, 1998 between the Company and Norcom
Networks Corporation ("NORCOM") regarding the Company's acceptance of Rider
to Installation and Service Agreement between Honeywell Inc. and Norcom.
32. Letter Agreement dated October 2, 1998 between the Company and Norcom
regarding the Company's acceptance of Tricom International Cabling
Corporation's Estimate #10029803.
33. Sublease Agreement dated July 24, 1998 by and between the Company and
Norcom.
34. Agreement dated August 7, 1998 between the Company and Digex.
35. Letter Agreement dated September 3, 1998 between the Company and Whalen
& Company, Inc.
36. Mutual Nondisclosure and Confidentiality Agreement dated as of November 20,
1998 by and between the Company and Deloitte Consulting LLC.
37. Mutual Nondisclosure and Confidentiality Agreement dated as of November 6,
1998 by and between the Company and Objective Systems Integrators, Inc.
38. Mutual Nondisclosure and Confidentiality Agreement dated as of November 3,
1998 by and between the Company and MCI Worldcom Inc.
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39. Mutual Nondisclosure and Confidentiality Agreement dated as of September 1,
1998 by and between the Company and Andersen Consulting LLP.
40. Mutual Nondisclosure and Confidentiality Agreement dated as of November 18,
1998 by and between the Company and Wisor Telecom Corporation.
41. Proprietary Information Nondisclosure Agreement dated as of August 5, 1998
by and between the Company and Bosch Telecom, Inc.
42. Nondisclosure and Confidentiality Agreement dated as of July 27, 1998 by
and between the Company and TRG.
43. Nondisclosure and Confidentiality Agreement dated as of July 27, 1998 by
and between the Company and Hardin & Associates, Inc.
44. Nondisclosure and Confidentiality Agreement dated as of August 17, 1998
by and between the Company and Michael Kennedy.
45. Nondisclosure and Confidentiality Agreement dated as of August 14, 1998
by and between the Company and Susan Almeida.
46. Mutual Nondisclosure and Confidentiality Agreement dated as of August
25, 1998 by and between the Company and Ericsson Inc.
47. Nondisclosure and Confidentiality Agreement dated as of August 3, 1998 by
and between the Company and Cambridge Strategic Management Group.
-14-
48. Mutual Nondisclosure and Confidentiality Agreement dated as of September 8,
1998 by and between the Company and Hughes Network Systems, a Hughes
Electronics Company.
49. Nondisclosure and Confidentiality Agreement dated as of August 17, 1998
by and between the Company and Rendall & Associates.
50. Nondisclosure and Confidentiality Agreement dated as of August 5, 1998
by and between the Company and Telechoice, Inc.
51. Reciprocal Confidentiality Agreement dated as of October 13, 1998 by and
between the Company and Alta Wireless, Inc.
52. Mutual Nondisclosure and Confidentiality Agreement dated as of September
22, 1998 by and between the Company and GLA International, Inc.
53. Mutual Nondisclosure and Confidentiality Agreement dated as of September
22, 1998 by and between the Company and TMNG, Inc.
54. Nondisclosure and Confidentiality Agreement dated as of September 17,
1998 by and between the Company and Renaissance Worldwide.
55. Confidentiality and Non-Disclosure Agreement dated as of September 30, 1998
by and between the Company and Cap Gemini America, Inc.
56. Nondisclosure and Confidentiality Agreement dated as of September 21,
1998 by and between the Company and Telegen Group, Inc.
57. General Nondisclosure Agreement dated October 20, 1998 between the
Company and Nextband, LLC.
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58. General Nondisclosure Agreement dated December 23, 1998 between the
Company and NEXTLINK Communications, Inc.
59. Mutual Nondisclosure and Confidentiality Agreement dated December 2,
1998 between the Company and Concentric Networks.
60. Non-Disclosure Agreement dated November 23, 1998 between the Company
and Level 3 Communications, LLC.
61. Letter Agreement dated as of June 10, 1998 between the Company and
Wasserstein Perella & Co., Inc. (as financial advisor to, and as
representative of Cellularvision USA, Inc.).
62. Non-Disclosure Agreement dated as of April 3, 1998 between the Company
and Lucent Technologies Inc.
63. Mutual Nondisclosure and Confidentiality Agreement dated as of November
2, 1998 between the Company and Fujitsu Business Communication Systems.
64. Mutual Nondisclosure and Confidentiality Agreement dated as of September
21, 1998 between the Company and Science Applications International
Coporation.
65. Mutual Nondisclosure and Confidentiality Agreement dated as of September
21, 1998 between the Company and International Network Services.
66. See Schedules 2.2 and 2.13.
-16-
SECTION 2.13
EMPLOYEE BENEFIT PLANS
1. The WNP Communications, Inc. 1998 Stock Option Plan (the "PLAN"). The
Company has entered into the following incentive stock options agreements
pursuant to the Plan:
A. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Raymond D. Keneipp, Jr.
B. Incentive Stock Option Agreement dated November 13,
1998 between the Company and J. Barclay Jones.
C. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Mark J. Emery.
D. Incentive Stock Option Agreement dated November 13,
1998 between the Company and Patricia F. Travis.
E. Incentive Stock Option Agreement dated November 16,
1998 between the Company and Brian H. Silvestri.
2. Letter Agreement dated August 31, 1998 between the Company and Pat Travis.
3. Letter Agreement dated November 2, 1998 between the Company and the
Mark Emery.
4. Letter Agreement dated October 10, 1998 between the Company and
Raymond D. Keniepp.
5. Letter Agreement dated October 10, 1998 between the Company and the Mr.
J. Barclay Jones.
6. Letter Agreement dated October 22, 1998 between the Company and Mr. Brian
H. Silvestri.
7. Management Services Agreement dated as of January 29, 1998 by and among
the Company, New Venture Directions, Inc., and Thomas H. Jones.
8. (i) The Stockholders' Agreement dated as of January 29, 1998, as amended
by the First Amendment to Stockholders' Agreement dated April 6, 1998, the
Second Amendment to Stockholders' Agreement dated October 20, 1998 and the
Third Amendment to Stockholders' Agreement dated November 6, 1998, by and
among the Company and the "Stockholders" named therein, (ii) the Securities
Purchase Agreement dated as of January 29, 1998, as amended by the First
Amendment to Securities Purchase Agreement dated October 20, 1998 by and
between the Company and the "Purchasers" named therein, (iii) the
Registration Rights Agreement dated as of January 29, 1998 by and among the
Company and the "Holders" named therein, and (iv) the Company's Restated
Certificate of Incorporation dated January 28, 1998 contain various rights
and obligations of the Company's shareholders specified therein.
9. See Schedules 2.2 and 2.12.
-2-
Schedule 3.9
EXISTING REGISTRATION RIGHTS
The following is a list of all agreements in effect on the date hereof
pursuant to which Purchaser has granted registration rights with respect to any
of its equity securities, together with a designation of the number and type of
securities covered thereby (share amounts (i) are on a post-stock split basis,
and (ii) represent shares originally issued, which, in a number of cases, have
been converted to Class A Common Stock and/or sold pursuant to Rule 144; rights
with respect to shares of Class B Common Stock also include rights with respect
to shares of Class A Common Stock in which such shares are converted):
1. Exchange Agreement dated May 26, 1998, between NEXTLINK
Communications, Inc. and Questar Inforcomm, Inc. (with respect to
189,312 shares of NEXTLINK Class B Common Stock);
2. Stock Purchase Agreement dated December 1, 1996, between
G. Andrew Barfuss, J. Merrill Bean and Joan Bean and NEXTLINK
Communications, L.L.C. (predecessor to NEXTLINK Communications,
Inc.)(with respect to 519,950 shares of Class B Common Stock);
3. Registration Rights Agreement dated January 15, 1997,
between NEXTLINK Communications, Inc. and the signatories that
are holders of Class B Common Stock of the Company(with respect
to 36,685,209 shares of Class B Common Stock, and includes
9,722,649 shares of Class B Common Stock now held by Gregory J.
Parker, Trustee of the Ampersand Telecom Trust);
4. Stock Purchase Agreement dated June 6, 1997, between
NEXTLINK Communications, Inc. and Comdisco, Inc. (with respect to
400,000 shares of Class A Common Stock, subject to issuance of
additional shares in satisfaction of certain obligations under
Master Services Agreement);
5. Merger Agreement dated July 28, 1997, between R. Chadwick
Paul, Jr., John G. Englesson and NEXTLINK Communications, Inc.
(with respect to 582,665 shares of Class A Common Stock, subject
to issuance of up to an additional 436,998 shares under earnout
provisions);
6. Stock Purchase Agreement dated October 31, 1997, between
NEXTLINK Communications, Inc. and Rosewood Property Management
Company and Prime II Management, L.P. (with respect to 441,336
shares of Class A Common Stock);
7. Registration Rights Agreement dated November 4, 1997,
between NEXTLINK Communications, Inc. and Wendy
P. McCaw (with respect to 9,722,649 shares of Class B Common
Stock);
8. Asset Purchase Agreement dated September 12, 1997, between
NEXTLINK Illinois, Inc., NEXTLINK Communications, Inc. and Unicom
Thermal Technologies, Inc., as amended by that certain Fifth
Amendment thereto (transaction not closed; not shares issued with
respect thereto); and
9. Registration Rights Agreement dated March 31, 1998, by and
between NEXTLINK Communications, Inc. and Smith Barney Inc. and
Goldman, Sachs & Co., as representatives of the several
Purchasers named in Schedule I to the Purchase Agreement dated
March 27, 1998 by and between such parties, with respect to
4,000,000 shares of 6(OMEGA)% Cumulative Convertible Preferred
Stock (liquidation preference $50 per share) of the Company and
of the Class A Common Stock, par value $0.02 per share, of the
Company into which such Convertible Preferred Stock is
convertible.
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