UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Teligent, Inc.
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(Name of Issuer)
Class A Common Stock, par value $.01 per share
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(Title of Class of Securities)
87959Y 10 3
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(CUSIP Number)
Lynn Forester
c/o FirstMark Holdings, Inc.
116 East 65th Street
New York, New York 10021
(212) 980-2828
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Warren de Wied, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
November 26, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box |_|.
SCHEDULE 13D
CUSIP No. 87959Y 10 3
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Lynn Forester
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,831,410
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 1,831,410
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,831,410
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25%
14 TYPE OF REPORTING PERSON
IN
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to the
shares of Class A Common Stock, par value $.01 (the "Shares"), of
Teligent, Inc., a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 8065 Leesburg Pike,
Vienna, Virginia 22182.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is being filed by Lynn Forester. Lynn Forester
is a citizen of the United States of America and is a private
investor. The business address of Lynn Forester is c/o FirstMark
Holdings, Inc., 116 East 65th Street, New York, New York 10021.
During the last five years, Lynn Forester (i) has not been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and (ii) has not been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which she was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Lynn Forester acquired the Shares beneficially owned by her from
the Company on November 26, 1997 pursuant to the merger of Teligent,
L.L.C. with and into the Company (the "Reorganization Merger"), upon
the terms of the Agreement and Plan of Merger, dated as of October 6,
1997, by and between the Company and Teligent, L.L.C. As a result of
the Reorganization Merger, the member interest of Lynn Forester in
Teligent, L.L.C. was converted into 1,831,410 Shares.
Except as described in this item, Lynn Forester has not effected
any transaction in the securities of the Company in the past sixty
days.
ITEM 4. PURPOSE OF TRANSACTION
Lynn Forester acquired the Shares covered by this Statement for
investment purposes and intends to evaluate the performance of the
Shares as an investment in the ordinary course of her business. Lynn
Forester may from time to time acquire additional securities of the
Company or dispose of some or all of the Shares which she beneficially
owns. Such actions will depend upon a variety of factors, including,
without limitation, current and anticipated future trading prices for
such securities, the financial condition, results of operations and
prospects of the Company, alternate investment opportunities, and
general economic, financial market and industry conditions.
Except as set forth above, Lynn Forester does not have any plans
or proposals which would relate to or result in any of the matters set
forth in items (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Lynn Forester owns 1,831,410 Shares as of the date of this
Statement, representing an aggregate of approximately 25% of the
outstanding Shares (based upon 7,331,410 Shares reported by the
Company to be outstanding after giving effect to the Company's
offering of 5,500,000 Shares pursuant to Amendment No. 4 to the
Company's Registration Statement on Form S-1 dated November 21, 1997).
(b) Lynn Forester has sole power to vote and to dispose of all of
the Shares beneficially owned by her.
(c) See Item 3.
(d) and (e). Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the Stock Contribution Agreement, dated as of March
10, 1997 (the "FirstMark Agreement"), by and between Associated
Communications, L.L.C. (later renamed Teligent, L.L.C.), FirstMark
Communications, Inc., Lynn Forester, and, for certain limited
purposes, Microwave Services, Inc. ("MSI") and Digital Services
Corporation ("DSC"), Lynn Forester was granted certain limited
"piggyback" and demand registration rights with respect to the Shares
into which Lynn Forester's equity interest in Teligent L.L.C. was
converted pursuant to the Reorganization Merger (the "Registrable
Securities"). In addition, in the FirstMark Agreement, Lynn Forester
granted to MSI and DSC a right of first refusal with respect to any
sale or other disposition for value by her of any equity interest in
the Company, other than any sale by her in the public market of the
Registrable Securities registered under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to Rule 144 under the
Securities Act. The FirstMark Agreement is included as Exhibit 1 to
this Statement, and the foregoing description of the FirstMark
Agreement is qualified in its entirety by reference to such Exhibit,
which is hereby incorporated herein by reference.
In connection with the consummation on November 26, 1997 of the
Company's initial public offering of its Shares ("IPO"), Lynn Forester
entered into a lock-up agreement (the "Lock-Up Agreement") with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated ("Merrill Lynch") and the other underwriters for the IPO,
whereby she agreed not to, without the prior written consent of
Merrill Lynch, directly or indirectly (i) offer, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of common stock of the
Company or any securities convertible into or exchangeable or
exercisable for common stock of the Company, or file any registration
statement under the Securities Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequences of ownership of any common stock
of the Company, before the expiration of a 180-day period, subject to
certain exceptions. The Lock-Up Agreement is included as Exhibit 2 to
this Statement, and the foregoing description of the Lock-Up Agreement
is qualified in its entirety by reference to such Exhibit, which is
hereby incorporated herein by reference.
Except as described above, Lynn Forester is not a party to any
contract, arrangement, understanding or relationship with respect to
any securities of the Company, including but not limited to transfer
or voting of any of the securities, finder's fees, joint ventures,
loan or option agreements, puts or calls, guarantees of profits,
divisions of profits or losses or the giving or withholding of
proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Stock Contribution Agreement, dated as of March 10,
1997, by and between Associated Communications,
L.L.C., FirstMark Communications, Inc. and Lynn
Forester.
Exhibit 2 Letter Agreement, dated November 12, 1997, between
Lynn Forester and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon
Brothers Inc., Bear, Stearns & Co., Inc., Goldman,
Sachs & Co., Merrill Lynch International, Salomon
Brothers International Limited, Bear, Stearns
International Limited and Goldman Sachs
International.
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
December 8, 1997
/s/ Lynn Forester
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Lynn Forester
EXHIBIT 1
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STOCK CONTRIBUTION AGREEMENT
DATED AS OF MARCH 10, 1997
BY AND BETWEEN
ASSOCIATED COMMUNICATIONS, L.L.C.,
FIRSTMARK COMMUNICATIONS, INC.
AND
LYNN FORESTER
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TABLE OF CONTENTS
Page
----
Section 1. Definitional Provisions....................................1
(a) Defined Terms...................................1
(b) Other Definitional Provisions...................6
Section 2. Actions of Associated and Contributor Upon Signing
the Agreement...........................................7
Section 3. Contribution of FirstMark Stock............................7
(a) The Closing.....................................7
(b) Contribution of the Stock.......................8
(c) Consideration...................................8
(d) Conversion of Associated........................9
(e) Trust Channels and Related DEMS Systems.........9
(f) Certain Operating Expenses.....................11
Section 4. Conditions to Consummating the Contribution...............11
Section 5. Termination; Extension Payments...........................12
Section 6. Withdrawal of FirstMark DEMS Applications.................14
(a) Withdrawal.....................................14
(b) Conveyance to Trust............................14
Section 7. Additional Covenants and Agreements of Contributor
and FirstMark...........................................14
(a) Cooperation....................................14
(b) Conduct of Business............................15
(c) Access.........................................15
(d) Capital Stock..................................15
(e) Dividends and Distributions....................15
(f) Debt; Liabilities..............................15
(g) Certain Agreements.............................15
(h) Covenants Regarding DEMS Systems and
FirstMark DEMS Applications..................16
(i) Noncompetition.................................17
(j) Confidentiality................................18
(k) Intercompany Indebtedness......................18
Section 8. Additional Covenants and Agreements of Associated.........18
(a) Cooperation by Associated......................18
(b) Conduct of Business............................18
(c) Books and Records; Personnel...................18
(d) Interim Control of DEMS Systems................19
(e) Opposition to DEMS Licenses....................19
(f) Teledesic Settlement...........................20
(g) Contributor Registration Rights................21
(h) Tag-Along and Drag-Along Rights................22
(i) Right of First Refusal.........................23
(j) Confidentiality................................25
(k) Non-disclosure of Financial Terms..............26
(l) Anti-Dilution Rights...........................26
Section 9. Tax Matters...............................................27
(a) Tax Indemnification by Contributor.............27
(b) Apportionment of Taxes.........................27
(c) Refunds........................................28
(d) Cooperation....................................28
(e) Certain Other Definitions......................28
(f) Certain Taxes..................................28
(g) Tax Treatment of Indemnity Payments............28
(h) Certain Representations........................28
Section 10. Representations and Warranties...........................29
(a) Representations and Warranties of
Contributor and FirstMark....................29
(b) Representations and Warranties of Associated...32
Section 11. Miscellaneous............................................34
(a) Further Assurances.............................34
(b) Binding Effect.................................34
(c) Indemnification; Joint and Several
Liability of FirstMark and Contributor
Prior to Closing.............................34
(d) Survival.......................................35
(e) Entire Agreement...............................35
(f) Costs and Expenses.............................35
(g) Amendment......................................35
(h) Waiver; Cumulative Rights......................35
(i) Notices........................................35
(j) Governing Law..................................37
(k) Counterparts...................................37
(l) Headings.......................................37
Schedule I - DEMS Licenses
Schedule II - FirstMark DEMS Applications
Schedule 7(g) Extraordinary Contracts of FirstMark
Schedule 9(h)(i) Tax Matters
Schedule 10(a)(vi) Regulatory Matters
Schedule 10(a)(vii) Subscription Contracts
Schedule 10(a)(x) Assets and Liabilities of FirstMark
Schedule 10(b)(i) Capitalization of Associated
Exhibit A - Signing Opinion of Lukas McGowan Nace & Gutierrez
Exhibit B - Closing Opinion of Lukas McGowan Nace & Gutierrez
STOCK CONTRIBUTION AGREEMENT
AGREEMENT dated as of March 10, 1997, by and between
ASSOCIATED COMMUNICATIONS, L.L.C., a Delaware limited liability company
(together with its successors, "Associated"), FIRSTMARK COMMUNICATIONS,
INC., a Delaware corporation (together with its successors, "FirstMark"),
and LYNN FORESTER ("Contributor"), and, for purposes of Sections 8(h) and
(i) only, Microwave Services, Inc., a Delaware corporation (together with
its successors, "MSI") and Digital Services Corporation, a Virginia
corporation (together with its successors, "DSC," and, collectively with
MSI, the "Original Shareholders").
WHEREAS, Contributor owns all of the issued and outstanding
capital stock of FirstMark (the "Stock") and all of the issued and
outstanding capital stock of Netwave Inc., a Delaware corporation (together
with its successors, "Netwave"); and
WHEREAS, FirstMark has been granted licenses by the FCC to
provide, and to construct and operate facilities for the provision of,
common carrier digital electronic message services ("DEMS") in the Los
Angeles SMSA and the San Francisco SMSA and has pending before the FCC
applications to provide, and to construct and operate facilities for the
provision of, DEMS in the New York SMSA and the Boston SMSA; and
WHEREAS, Contributor desires to contribute, and Associated
desires to accept the contribution of, the Stock (the "Contribution"), and
Associated desires that Contributor cause, and Contributor has agreed to
cause, FirstMark to withdraw the FirstMark DEMS Applications, all upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in connection with the Contribution, Associated
desires to acquire, and Contributor has agreed to cause Netwave to issue to
Associated, shares of common stock of Netwave, upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and agreements contained herein, the parties
hereto agree as follows:
Section 1. Definitional Provisions.
(a) Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Accepting Original Shareholder" shall have the meaning set
forth in Section 8(i) hereof.
"Affiliate" shall mean, as to any Person, any other Person
(i) that is a subsidiary of such Person or (ii) that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise; the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Agreement" shall mean this Agreement, as amended, modified,
supplemented or restated from time to time.
"Associated" shall have the meaning set forth in the first
paragraph hereof.
"Books and Records" shall have the meaning set forth in
Section 8(c) hereof.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York, New York are authorized or obligated to close by law or executive
order.
"Change in Control Application" shall mean the application
required under FCC regulations to be filed with the FCC for approval of the
Contribution.
"Closing" shall have the meaning set forth in Section 3(a)
hereof.
"Closing Date" shall have the meaning set forth in Section
3(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall have the meaning set forth
in Section 8(j) hereof.
"Contribution" shall have the meaning set forth in the third
"WHEREAS" clause hereof.
"Contributor" shall have the meaning set forth in the first
paragraph hereof.
"Contributor Registrable Securities" shall have the meaning
set forth in Section 8(g) hereof.
"DEMS" shall have the meaning set forth in the second
"WHEREAS" clause hereof.
"DEMS Facilities" shall mean facilities and equipment for the
provision of DEMS in the geographic area or areas covered by any or all of
the DEMS Licenses.
"DEMS Licenses" shall mean the licenses listed on Schedule I
hereto granted by the FCC to FirstMark (and any FCC waivers relating
thereto) any amendments, modifications or renewals thereof, and any other
licenses granted by the FCC to FirstMark after the date hereof (and any FCC
waivers relating thereto) to construct DEMS Facilities or provide DEMS in
any of the geographic areas covered by any of the licenses listed on
Schedule I hereto, or by any amendments, modifications or renewals thereof,
and any licenses, authorizations or approvals granted to FirstMark by any
PUC, together with any amendments, modifications or renewals thereof, with
respect to any DEMS Facilities or DEMS in any of the geographic areas
covered by any of the licenses listed on Schedule I hereto or by any
amendments, modifications or renewals thereof, in each case whether in the
18 GHz frequency band or any other frequency band to which DEMS are
relocated by the FCC. Except as otherwise expressly provided herein, as
used herein "DEMS License" refers to such license with respect to any or
all of the channels covered thereby.
"DEMS Systems" shall mean all assets, property and equipment
comprising or relating to the DEMS Facilities, including without limitation
any DEMS License(s) relating thereto.
"DSC" shall have the meaning set forth in the first paragraph
hereof.
"Equity Interest" shall have the meaning set forth in Section
8(h) hereof.
"Equityholders Agreement" shall mean any shareholder,
operating or similar agreement which establishes certain rights and
obligations of equityholders of Associated. As of the date hereof,
"Equityholders Agreement" means the Limited Liability Company Agreement.
"Extension Payment" shall mean, with respect to each one year
extension of this Agreement as provided in Section 5(b) hereof, an amount
in cash equal to $1,000,000.
"FCC" shall mean the United States Federal Communications
Commission and any successor agency.
"FirstMark" shall have the meaning set forth in the first
paragraph hereof.
"FirstMark DEMS Application License" shall have the meaning
set forth in Section 6(b) hereof.
"FirstMark DEMS Applications" shall mean the applications of
FirstMark pending on the date hereof before the FCC for licenses to
provide, and to construct and operate facilities for the provision of,
DEMS, together with any amendments, modifications or renewals thereof, in
each case whether in the 18 GHz frequency band or any other frequency band
to which DEMS are relocated by the FCC, which applications as currently
pending are listed on Schedule II hereto.
"First Refusal Interest" shall have the meaning set forth in
Section 8(i) hereof.
"First Refusal Notice" shall have the meaning set forth in
Section 8(i) hereof.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any entity or
official properly exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Interest" shall have the meaning set forth in the Limited
Liability Company Agreement; provided that, if the Interests in Associated
have been changed into or exchanged for any other equity securities, the
term "Interest" shall refer to the number and class of equity securities
into or for which such Interests have been changed or exchanged.
"IPO" shall have the meaning set forth in Section 8(g)
hereof.
"IRS" shall have the meaning set forth in Section 9(e)
hereof.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement and any capital lease).
"Limited Liability Company Agreement" shall mean the Limited
Liability Company Agreement of the Company dated as of March 5, 1996, as
amended as of August 16, 1996, and as further amended from time to time.
"Mandl " shall mean Alex J. Mandl, currently the Chief
Executive Officer of Associated.
"Mandl Employment Agreement" shall mean the Employment
Agreement dated as of August 19, 1996 between Associated and Mandl, as in
effect on the date hereof.
"Member" shall have the meaning set forth in the Limited
Liability Company Agreement.
"Membership Percentage" shall have the meaning set forth in
the Limited Liability Company Agreement. References in this Agreement to
the Membership Percentage represented by any Interest issued to Contributor
hereunder are to such Membership Percentage calculated as of the date of
this Agreement, after giving effect to the issuance to Contributor of such
Interest and any Interest previously issued to Contributor as if all such
Interests had been issued as of the date of this Agreement (that is, the
Interest receivable by Contributor will be subject to dilution from and
after the date of this Agreement (subject to Section 8(k) hereof), such
that the Interest issued to Contributor at the Closing or upon the release
from the Trust of any Trust Channel or upon the grant by the FCC or the
release from the Trust of any Applicable License may represent a percentage
Interest in Associated when so issued that is less than the Membership
Percentage referred to in Sections 3(c) or 3(e), as applicable).
"MSI" shall have the meaning set forth in the first paragraph
hereof.
"Netwave" shall have the meaning set forth in the first
"WHEREAS" clause hereof.
"Offer" shall have the meaning set forth in Section 8(i)
hereof.
"Offering Price" shall have the meaning set forth in Section
8(i) hereof.
"Operating Expenses" shall have the meaning set forth in
Section 3(f) hereof.
"Original Shareholders" shall have the meaning set forth in
the first paragraph hereof.
"Person" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, joint-stock
company, estate, limited liability company, unincorporated organization or
other legal entity or organization.
"Pre-Closing Tax Period" shall have the meaning set forth in
Section 9(a) hereof.
"Pro Rata Share" shall have the meaning set forth in Section
8(i) hereof.
"PUC" shall mean any state public utility commission of
competent jurisdiction, the approval of which is required to consummate any
DEMS Systems Transfer.
"Related DEMS System" shall have the meaning set forth in
Section 3(e) hereof.
"Representative" shall have the meaning set forth in Section
8(j) hereof.
"Requirement of Law" shall mean, as to any Person, any
statute, law, rule, regulation, ordinance, code, license, permit, order,
judgment, decree or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its
property is subject.
"Requisite Approvals" shall have the meaning set forth in
Section 4(a) hereof.
"Requisite Regulatory Approvals" shall mean decisions of the
FCC and of any applicable PUC approving the Contribution, and any other
consents, approvals or authorizations of any other Governmental Authority
required in connection with the Contribution.
"Return" shall have the meaning set forth in Section 9(e)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"SMSA" shall mean Standard Metropolitan Statistical Area.
"Stock" shall mean all of the issued and outstanding stock of
FirstMark.
"Straddle Period" shall have the meaning set forth in Section
9(b) hereof.
"Tax" shall have the meaning set forth in Section 9(e)
hereof.
"Taxing Authority" shall have the meaning set forth in
Section 9(e) hereof.
"Teledesic" shall mean Teledesic Corp., a Delaware
corporation.
"Teledesic Settlement" shall have the meaning set forth in
Section 8(f) hereof.
"Transfer" shall have the meaning set forth in Section 8(i)
hereof.
"Trust" shall have the meaning set forth in Section 3(e)
hereof.
"Trust Agreement" shall have the meaning set forth in Section
3(e) hereof.
"Trust Channel" shall have the meaning set forth in Section
3(e) hereof.
(b) Other Definitional Provisions.
(i) Any term defined in the singular shall have
a comparable meaning when used in the plural, and vice versa.
(ii) As used herein, the neuter gender shall
also denote the masculine and feminine, and the masculine gender
shall also denote the neuter and feminine, where the context so
permits.
(iii) The words "hereof", "herein" and
"hereunder", and words of a similar import, when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to Sections
shall refer to Sections of this Agreement, unless otherwise
expressly provided.
Section 2. Actions of Associated and Contributor Upon Signing the Agreement.
(a) As an inducement to Contributor to enter into this
Agreement and in partial consideration for the Contribution, concurrently
with the execution and delivery hereof, Associated is paying or causing to
be paid to Contributor a non-refundable cash payment of $5,570,000, by wire
transfer of immediately available funds to an account previously designated
by Contributor to Associated. Concurrently with and as a condition to such
payment, Contributor is delivering or causing to be delivered to Associated
an opinion of Lukas McGowan Nace & Gutierrez, Chartered, special FCC
counsel to Contributor, in the form of Exhibit A hereto.
(b) As a further inducement to Contributor to enter into this
Agreement and in consideration of the mutual covenants and agreements of
the parties contained herein with respect to the Contribution, as promptly
as practicable after the execution and delivery hereof, pursuant to a
Subscription Agreement in form and substance reasonably satisfactory to
Netwave and Associated, Netwave shall issue to Associated shares of common
stock of Netwave constituting ten percent (10%) of the outstanding shares
of capital stock of Netwave on a fully diluted basis immediately after
giving effect to such issuance, and Associated shall deliver to Netwave
$200,000 by wire transfer of immediately available funds to an account of
Netwave previously designated by Contributor to Associated.
(c) Concurrently with the execution and delivery hereof,
FirstMark is delivering to Associated FirstMark's original technology plan,
marketing study and business plan relating to development of DEMS in the 18
GHz frequency band.
Section 3. Contribution of FirstMark Stock.
(a) The Closing. The closing of the Contribution (the
"Closing") shall occur at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York, not later than five (5)
Business Days after satisfaction or waiver of the conditions to Closing
specified in Sections 4(a) and (b) hereof, or at such other time and/or
place and/or on such other date as the parties may mutually agree (the
"Closing Date").
(b) Contribution of the Stock.
(i) At the Closing, Contributor shall contribute
to Associated, and Associated shall accept the contribution from
Contributor of, the Stock.
(ii) At the Closing, Contributor shall deliver
to Associated certificates representing the Stock, free and clear
of all Liens, duly endorsed in blank for transfer or accompanied
by duly executed stock powers assigning the Stock in blank.
(c) Consideration. The aggregate consideration for the
Contribution (in addition to the amount previously paid pursuant to Section
2(a) hereof) shall consist of the following:
(i) $4,950,000 payable in cash to Contributor by
wire transfer of immediately available funds to an account
designated by Contributor to Associated not less than two (2)
Business Days prior to the Closing; and
(ii) an Interest of the same class or classes as
that then held by the Original Shareholders which represents a
5.00% Membership Percentage. Commencing as of the Closing,
Contributor shall share in the profits and losses of Associated as
provided in the Limited Liability Company Agreement and a capital
account shall be established for Contributor in an amount equal to
that percentage of the aggregate capital accounts of the Members
equal to Contributor's percentage Interest. The Interest issued to
Contributor shall be evidenced by the Limited Liability Company
Agreement, which Contributor shall sign at the Closing and thereby
become a party to, with Schedule A thereto appropriately amended
to reflect Contributor's admission as a Member and Contributor's
percentage Interest. In the event of any conflict or inconsistency
between the rights and obligations of Contributor under the
Limited Liability Company Agreement and this Agreement, the
provisions of this Agreement shall control. Without limiting the
immediately preceding sentence, Sections 4.1(n), 8.7, 10.3(a) and
10.3(b) (and Section 10.1 to the extent that it relates to the
foregoing subsections of Section 10.3) of the Limited Liability
Company Agreement shall not apply to Contributor. Associated shall
give Contributor written notice of any changes (which notice shall
include the full text of such changes) that are made in the
Limited Liability Company Agreement from time to time, such notice
to be given within fifteen (15) days following any such change;
provided that no amendment or modification to the Limited
Liability Company Agreement shall impose on Contributor any
additional financial obligations, other obligations (except for
immaterial non-financial obligations) or any obligations
inconsistent with the two immediately preceding sentences.
(d) Conversion of Associated. If, prior to the Closing,
Associated shall be reorganized as, or converted or merged into, an entity
taxed as a corporation for federal income tax purposes, then Associated
shall promptly (and in any event not less than ten (10) days prior to the
Closing) notify Contributor thereof. If Associated has been reorganized as,
or converted or merged into, an entity taxed as a corporation for federal
income tax purposes, then at Contributor's sole option, exercisable by
written notice to Associated not less than ten (10) days prior to the
Closing, the Contribution contemplated by this Agreement shall be
restructured as a merger of FirstMark with and into Associated or, at
Associated's option, a wholly owned subsidiary of Associated, pursuant to
which the Stock shall be converted into the right to receive the
consideration contemplated by this Section 3. If Contributor exercises its
option under this paragraph (d), each of Contributor, FirstMark and
Associated shall take all actions necessary to effect the transactions
contemplated by this Agreement as a merger in lieu of the Contribution.
(e) Trust Channels and Related DEMS Systems
(i) If at the Closing control of any DEMS
License or channels covered thereby is not permitted by the FCC to
be transferred as contemplated by this Agreement, the cash
consideration for the Contribution provided for in Section 3(c)
above shall be reduced by $618,750 for each channel control of
which is not permitted to be transferred to Associated and the
Membership Percentage represented by the Interest in Associated to
be issued to Contributor at the Closing shall be reduced by an
amount equal to the product of (a) 0.6250% and (b) the number of
channels control of which is not permitted to be transferred.
(ii) Any channels control of which is not
permitted to be transferred at the Closing (each, a "Trust
Channel" and collectively, the "Trust Channels") and the related
DEMS Systems (each, a "Related DEMS System" and collectively, the
Related DEMS Systems"), shall be conveyed by FirstMark prior to
the Closing to a trust (the "Trust") established by FirstMark
pursuant to a trust agreement (the "Trust Agreement") containing
terms reasonably acceptable to FirstMark, Contributor and
Associated. The operations of the Trust Channels shall be
conducted by the trustee of the Trust in accordance with the
directions of Contributor, and neither Associated nor FirstMark
shall directly or indirectly control, supervise or direct, or
attempt to control, supervise or direct, such operations. After
the Closing, Associated, Contributor and FirstMark shall cooperate
and use their reasonable best efforts, at Associated's expense, to
obtain all Requisite Approvals for the transfer of control of each
Trust Channel, in which event, subject to Section 4(d) hereof,
such Trust Channel and Related DEMS System shall be released from
the Trust to FirstMark. Notwithstanding the foregoing, if less
than all of the channels for which FirstMark holds a DEMS License
are Trust Channels, no portion of the Related DEMS System shall be
conveyed by FirstMark to the Trust, but FirstMark shall enter into
arrangements reasonably acceptable to Contributor and Associated
and consistent with the FCC's rules giving the Trust rights to use
such DEMS System in connection with the operations of the Trust
Channels.
(iii) Concurrently with the release of any Trust
Channel and Related DEMS System (if any) from the Trust to
FirstMark, Associated shall deliver to Contributor the following
consideration:
(A) $618,750 in cash with respect to each Trust
Channel and Related DEMS System (if any) so released,
which amount shall be paid to Contributor by wire
transfer of immediately available funds to an account
designated by Contributor to Associated not less than two
(2) Business Days prior to the release of the applicable
Trust Channel and Related DEMS System (if any) from the
Trust (provided that the aggregate cash consideration to
be paid by Associated pursuant to this Section 3 if
control of all channels for which FirstMark holds a DEMS
License to construct DEMS Facilities or provide DEMS in
the Los Angeles SMSA and San Francisco SMSA is
transferred by Contributor shall not exceed $4,950,000;
and
(B) with respect to each Trust Channel and
Related DEMS System (if any) so released from the Trust
to FirstMark, an Interest in Associated representing a
0.6250% Membership Percentage (provided that the
aggregate Interest in Associated to be issued to
Contributor if control of all channels for which
FirstMark holds a DEMS License to construct DEMS
Facilities or provide DEMS in the Los Angeles SMSA and
San Francisco SMSA is transferred by Contributor shall
not exceed a 5.00 % Membership Percentage).
(f) Certain Operating Expenses. Associated shall reimburse
Contributor in cash at the Closing or, with respect to any DEMS License or
channels covered thereby control of which is not permitted to be
transferred at the Closing, upon transfer of control of such DEMS License
or channels covered thereby, for all expenditures incurred and paid by
FirstMark or Contributor from and after the date six (6) months after the
date hereof required to fund actions deemed by Contributor and/or FirstMark
to be necessary or desirable to be taken in order to fulfill customer
requirements in connection with the regular operation of the DEMS Systems,
including, without limitation, the implementation of marketing,
construction and development plans and legal fees and expenses related
thereto (collectively, the "Operating Expenses"). Reimbursements by
Associated for Operating Expenses under this Section 3(f) shall be made by
wire transfer of immediately available funds to an account previously
designated by Contributor to Associated, against receipt by Associated of
reasonably itemized invoices or other records documenting such Operating
Expenses.
Section 4. Conditions to Consummating the Contribution.
(a) Conditions to Associated's Obligation to Consummate the
Contribution. Associated's obligation to consummate the Contribution is
subject to satisfaction (or, to the extent permissible, waiver by
Associated) of the following conditions:
(i) the representations and warranties of
Contributor and FirstMark contained in this Agreement shall be
true and accurate in all material respects as of the date when
made and (unless made as of a specified date) as of the Closing
Date as if made on and as of such date;
(ii) Contributor and FirstMark shall have
performed in all material respects all of their respective
agreements and covenants contained in this Agreement which are
required to be performed by it on or prior to the Closing Date;
(iii) the parties hereto shall have received all
Requisite Regulatory Approvals, and all other required consents,
approvals or authorizations of any other third party, in
connection with the Contribution (collectively, the "Requisite
Approvals") shall have been obtained and the Requisite Regulatory
Approvals shall not be subject to administrative or judicial
review, reconsideration or appeal; and
(iv) Associated shall have received an opinion
of Lukas McGowan Nace & Gutierrez, Chartered, special FCC counsel
to Contributor, dated the Closing Date, in the form of Exhibit B
hereto.
(b) Conditions to Contributor's Obligation to Consummate the
Contribution. Contributor's obligation to consummate the Contribution is
subject to satisfaction (or, to the extent permissible, waiver) of the
following conditions:
(i) the representations and warranties of
Associated contained in this Agreement shall be true and accurate
in all material respects as of the date when made and (unless made
as of a specified date) as of the Closing Date as if made on and
as of such date;
(ii) Associated shall have performed in all
material respects all of its agreements and covenants contained in
this Agreement which are required to be performed by it on or
prior to the Closing Date; and
(iii) the parties hereto shall have received all
Requisite Approvals.
(c) Certain Regulatory Matters. Notwithstanding the
provisions of paragraphs (a)(iii) and (b)(iii) of this Section 4, if the
Requisite Approvals in connection with the Contribution have been obtained
but contain restrictions the effect of which is to prevent the transfer of
control of a portion of the DEMS Licenses or channels covered thereby, the
parties hereto shall use all commercially reasonable efforts to cause such
restrictions to be removed. If such restrictions have not been removed
within ninety (90) days after the obtaining of the Requisite Approvals, the
conditions set forth in paragraphs (a)(iii) and (b)(iii) of this Section 4
shall be deemed to have been satisfied, and with respect to any DEMS
License or channels covered thereby which cannot be transferred at the
Closing, the provisions of Section 3(e) shall apply.
(d) Conditions to Release of Trust Channels. The conditions
set forth in paragraphs (a) and (b) above shall apply, mutatis mutandis, to
the release of any Trust Channel and the Related DEMS System (if any) to
FirstMark, and the payment of the consideration therefor, as contemplated
by Section 3(e) hereof.
Section 5. Termination; Extension Payments.
(a) If either (i) the Closing has not theretofore occurred or
(ii) the Closing has occurred but in connection therewith one or more Trust
Channels were conveyed to the Trust and all of such Trust Channels have not
been released to FirstMark from the Trust as contemplated by Section
3(e)(ii) hereof, this Agreement and any Trust Agreement shall terminate on
the second anniversary of the date hereof; provided that if the Closing has
not occurred or any Trust Channels have not been released to FirstMark from
the Trust by reason of the breach by Contributor or FirstMark, on the one
hand, or by Associated, on the other hand, of any of its respective
representations and warranties contained in this Agreement, then the date
of termination of this Agreement shall be extended, at the option of the
non-breaching party, for thirty (30) days from the date on which this
Agreement would otherwise have terminated; and provided, further, that if
the Closing has not occurred or any Trust Channels have not been released
to FirstMark from the Trust by reason of the breach by Contributor or
FirstMark, on the one hand, or by Associated, on the other hand, of any of
its respective covenants contained in this Agreement, then the date of
termination of this Agreement shall be extended, at the option of the
non-breaching party, for a period or periods not to exceed in the aggregate
one (1) year from the date on which this Agreement would otherwise have
terminated.
(b) Notwithstanding the preceding paragraph (a), the date of
termination of this Agreement (and any Trust Agreement) may, at the option
of Associated, be extended (collectively but not individually) for two
successive one year periods if, prior to the then scheduled termination
date, Associated shall have paid or caused to be paid to Contributor an
Extension Payment by wire transfer of immediately available funds to an
account previously designated by Contributor to Associated.
(c) If this Agreement terminates prior to the Closing, the
provisions of this Section 5(c), Sections 5(d), 5(e), 7(h)(v), 7(j), 8(f)
(but only in the event that there has been a Teledesic Settlement prior to
such termination and subject to the last sentence of Section 8(f)), 8(j),
8(k), 11(e), 11(f), 11(h), 11(j) and 11(l) hereof shall survive such
termination without limitation as to time, and all other provisions of this
Agreement shall become void and of no further force or effect; provided,
however, that any termination of this Agreement shall not relieve any party
of any damages or other amounts for which it would otherwise be liable by
reason of any breach, prior to such termination, of any of its
representations and warranties or covenants contained in this Agreement;
and provided, further, that no party shall have any liability under this
Agreement for the failure of any representation or warranty of such party
which was true and correct as of the date of this Agreement to continue to
be true and correct after the date of this Agreement, unless the failure of
such representation or warranty to continue to be true and correct results
from the breach by such party of any of its agreements or covenants
contained in this Agreement.
(d) If this Agreement is terminated prior to the Closing by
reason of a breach of this Agreement by Contributor or FirstMark,
Contributor shall be obligated to pay to Associated, promptly (and in any
event within two (2) Business Days) following such termination, the sum of
$600,000 in cash. If this Agreement is terminated without fault of any
party hereto, Contributor shall be obligated to pay to Associated, promptly
(and in any event within two (2) Business Days) following such termination,
the sum of $300,000 in cash.
(e) If this Agreement is terminated prior to the Closing,
each of Associated, Contributor and FirstMark agrees that neither it nor
any of its Affiliates shall, after such termination, oppose, challenge or
in any manner take an adverse position, directly or indirectly, with
respect to any DEMS application of the other party or any of its Affiliates
or the grant to the other party or any of its Affiliates of any DEMS
license, in each case whether in the 18 GHz frequency band or any other
frequency band to which DEMS are relocated by the FCC; provided that,
subject to and without limitation of the obligations of any party under the
other provisions of this Agreement, the provisions of this paragraph (e)
shall not apply to any existing or future DEMS application or DEMS license
of any party to the extent such DEMS application or DEMS license is with
respect to a channel as to which the other party, currently or in the
future, holds a DEMS application or DEMS license.
Section 6. Withdrawal of FirstMark DEMS Applications.
(a) Withdrawal. At such time or times prior to the Closing
and in such manner as Associated may specify, Contributor shall cause
FirstMark promptly to withdraw the FirstMark DEMS Applications (other than
with respect to channel 31 for the New York SMSA) and, upon the request and
at the expense of Associated, Contributor and FirstMark will assist and
cooperate with Associated in seeking to obtain FCC approval of any license
applications filed by MSI or Associated or any of their respective
Affiliates with the FCC to provide DEMS in the New York SMSA or the Boston
SMSA. In consideration of the withdrawal by FirstMark of the foregoing
FirstMark DEMS Applications, upon the FCC's grant of FirstMark's request
for withdrawal of such FirstMark DEMS Applications and for approval of this
Agreement, Associated shall pay to Contributor the sum of $50,000 in
reimbursement of expenses incurred by Contributor and FirstMark in
connection with such FirstMark DEMS Applications.
(b) Conveyance to Trust. If, (i) either (x) prior to the
Closing, FirstMark is granted a DEMS license by the FCC pursuant to the
FirstMark DEMS Application with respect to channel 31 in the New York SMSA
(the "FirstMark DEMS Application License") or (y) the FirstMark DEMS
Application License has not been granted prior to the Closing and the
FirstMark DEMS Application with respect to channel 31 remains outstanding,
and (ii) the transfer of control at the Closing of the FirstMark DEMS
Application License or such FirstMark DEMS Application, as the case may be,
is not permitted under the terms of the Requisite Approvals, the FirstMark
DEMS Application License or such FirstMark DEMS Application, as the case
may be, shall be conveyed by FirstMark prior to the Closing to the Trust.
After the Closing, Associated, Contributor and FirstMark shall cooperate
and use their reasonable best efforts, at Associated's expense, to obtain
all Requisite Approvals for the transfer of control of the FirstMark DEMS
Application License or such FirstMark DEMS Application, as the case may be,
in which event the FirstMark DEMS Application License or such FirstMark
DEMS Application, as the case may be, shall be released from the Trust to
FirstMark, without payment of any additional consideration by Associated.
Section 7. Additional Covenants and Agreements of Contributor and FirstMark.
(a) Cooperation. From and after the date this Agreement,
Contributor and FirstMark shall use their reasonable efforts, and shall
cooperate with Associated, in each case at Associated's expense, to secure
all Requisite Approvals to enable Contributor, FirstMark and Associated to
effect the transactions contemplated by this Agreement, and shall otherwise
use their reasonable efforts, at Associated's expense, to cause the
consummation of such transactions in accordance with the terms and
conditions of this Agreement.
(b) Conduct of Business. Except as may be otherwise
contemplated by this Agreement or the Exhibits or Schedules hereto, or
except as Associated may otherwise consent to in writing, from the date of
this Agreement through the Closing, Contributor and FirstMark shall operate
the business of FirstMark solely in the ordinary course of business; it
being understood that the relocation by FirstMark of radio equipment from
one site to another site in connection with the fulfillment of customer
build-out requirements shall not be prohibited by this paragraph.
(c) Access. From the date of this Agreement and prior to the
Closing, Contributor and FirstMark shall provide Associated with such
information as Associated may from time to time reasonably request with
respect to FirstMark and the transactions contemplated by this Agreement,
and shall provide Associated and its representatives reasonable access
during regular business hours and upon reasonable notice to the properties,
books and records of FirstMark as Associated may from time to time
reasonably request.
(d) Capital Stock. Neither FirstMark nor Contributor shall
issue, sell, transfer, pledge or otherwise encumber any shares of capital
stock of FirstMark, or grant or issue any option, warrant, right or
convertible or exchangeable security exercisable for, convertible into or
exchangeable for shares of capital stock of FirstMark, or make any other
changes in the capital structure of FirstMark, or enter into any contract
with respect to any of the foregoing.
(e) Dividends and Distributions. FirstMark shall not declare,
set aside, pay or make any dividend or other distribution or payment with
respect to shares of its capital stock, and shall not purchase or redeem
any shares of its capital stock.
(f) Debt; Liabilities. FirstMark shall not incur or assume
any indebtedness for borrowed money other than any such indebtedness that
will be paid in full prior to the Closing and shall not make any loans,
advances or capital contributions to, or investments in, any other Person.
From the date of this Agreement through the Closing, FirstMark shall incur
no liabilities other than liabilities arising in the ordinary course of
business of the operations of the DEMS Systems that will not, individually
or in the aggregate, have a material adverse effect on the assets, business
or operations of FirstMark.
(g) Certain Agreements. FirstMark shall not (i) encumber
(unless such encumbrance is removed prior to the Closing without cost or
expense to Associated), sell, lease or otherwise dispose of any assets, or
acquire any assets other than in the ordinary course of business or as
otherwise necessary or desirable to fulfill customer requirements, (ii)
authorize, propose or enter into an agreement in principle or definitive
agreement with respect to any merger, consolidation, other business
combination, liquidation or dissolution pursuant to which FirstMark would
be acquired or would acquire or dispose of (in any such case, by merger,
consolidation, acquisition or disposition of stock or assets, or similar
transaction) assets, (iii) assume, guarantee, endorse (other than checks in
the ordinary course of business) or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, (iv) enter into any commitment or transaction outside the
ordinary course of business except as set forth on Schedule 7(g) hereto, or
(v) enter into any contract or commitment to do any of the foregoing.
(h) Covenants Regarding DEMS Systems and FirstMark DEMS
Applications.
(i) Between the date of this Agreement and the
Closing, at Associated's expense, Contributor and FirstMark shall
use all commercially reasonable efforts to maintain in full force
and effect all necessary federal, state and local regulatory
agency authorizations relating to such DEMS System, and shall
operate such DEMS System in accordance with all Requirements of
Law applicable thereto.
(ii) Between the date of this Agreement and the
Closing, neither Contributor nor FirstMark shall sell or otherwise
dispose of, or create Liens or otherwise encumber, any of the DEMS
Systems (including without limitation any of the DEMS Licenses or
DEMS Facilities).
(iii) Upon and as a condition to Associated's
issuance to Contributor of any Interest, Contributor shall execute
and deliver, and thereby become a party to, any Equityholders
Agreement, subject to the last three sentences of Section 3(c) of
this Agreement.
(iv) Except as contemplated by Schedule 7(g),
between the date of this Agreement and the Closing, all customer
subscription contracts with respect to DEMS to be provided through
one or more of the DEMS Systems entered into after the date hereof
shall be entered into by FirstMark only in the ordinary course of
business and shall contain only customary provisions.
(v) Until the Closing, or until such time prior
to the Closing as Associated directs Contributor to cause
FirstMark to withdraw a FirstMark DEMS Application pursuant to
Section 6 hereof, FirstMark shall, and Contributor shall cause
FirstMark to, prosecute such FirstMark DEMS Application, at
Associated's expense, to the extent required by the FCC's rules to
retain FirstMark's eligibility and qualifications for the DEMS
licenses requested by such FirstMark DEMS Application.
(vi) Neither Contributor, FirstMark nor any of
their Affiliates shall (A) oppose, challenge or in any manner take
an adverse position, directly or indirectly, with respect to (i)
any existing or future DEMS applications or licenses of
Associated, DSC or MSI, in each case whether in the 18 GHz
frequency band or any other frequency band to which DEMS are
relocated by the FCC (and FirstMark shall promptly withdraw or
rescind any such previous opposition, challenge or adverse
position); provided that, subject to and without limitation of
Contributor's and FirstMark's obligations under the other
provisions of this Agreement, prior to the Closing the provisions
of this clause (A) shall not apply to any existing or future DEMS
application or DEMS license of Associated to the extent such DEMS
application or DEMS license is with respect to a channel as to
which FirstMark holds a DEMS License, or (ii) any change or
modification to the rules generally applicable to DEMS, DEMS
licenses or DEMS frequencies proposed, ordered or implemented by
the FCC, so long as such change or modification would not
adversely affect FirstMark in a manner different (on a
proportionate and comparable basis) from Associated, MSI, DSC and
their Affiliates, or (B) seek authorizations, directly or
indirectly, with respect to any DEMS channel in the New York SMSA
or the Boston SMSA, in each case whether in the 18 GHz frequency
band or any other frequency band to which DEMS are relocated by
the FCC (except pursuant to a FirstMark DEMS Application).
(i) Noncompetition. Contributor agrees with Associated that,
from and after the date hereof, neither Contributor nor any of its
Affiliates will, alone or as a member, employee or agent of any
partnership, corporation, limited liability company or other business
entity, or as an officer, agent, employee, director, shareholder (except
for passive investments of not more than five percent (5%) of the
outstanding shares of or any other equity interest in any company or entity
listed or traded on a national securities exchange or on an
over-the-counter securities market) of or investor in any partnership,
corporation, limited liability company or other business entity, directly
or indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or work for or permit the
use of her or its name by, or be connected in any manner with, any business
(other than Associated) or activity (including without limitation
submitting any application for a license to provide services or construct
or operate equipment or facilities) which engages in or proposes to engage
in the provision in the United States of DEMS in the 18 GHz frequency band
or such other frequency band to which DEMS are relocated by the FCC or the
provision in Canada of fixed wireless voice, video or data transmission
services in any frequency band; provided that the foregoing shall not apply
to the ownership or operation by Contributor of FirstMark and the business
of FirstMark with respect to the DEMS Systems and the FirstMark DEMS
Applications to the extent consistent with the other provisions of this
Agreement. The parties intend that the covenant contained in this Section
7(i) shall be deemed to be a series of separate covenants, one for each
county of each state of the United States and province of Canada. Except
for geographic coverage, each separate covenant shall be deemed identical
in terms to the covenant contained in this paragraph. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants
deemed included in this paragraph, because, taken together, they cover too
extensive a geographic area, the parties intend that those of such
covenants (taken, in the case of the states, territories or counties within
any state in order of the applicable states, territories or counties which
are less populous) which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceedings shall, for the
purpose of such proceedings, be deemed eliminated from the provisions of
this paragraph. The term "county" as used herein shall be deemed to apply
to other similar political subdivisions, such as parishes, in those areas
which have such other political subdivisions.
(j) Confidentiality. If Contributor or FirstMark obtains,
directly or indirectly, information or records, whether prepared by
Associated, its advisors or otherwise, and whether written or oral,
concerning the business of Associated, Contributor and FirstMark shall be
bound by the provisions of Section 8(j) with respect to such information or
records to the same extent that Associated would be bound with respect to
Confidential Information.
(k) Intercompany Indebtedness. Prior to the Closing,
Contributor and FirstMark shall cause all outstanding indebtedness of
FirstMark to Contributor or any of her Affiliates to be cancelled or
discharged without any cost, liability (including, without limitation, any
Tax liability) or expense being incurred by FirstMark.
Section 8. Additional Covenants and Agreements of Associated.
(a) Cooperation by Associated. From and after the date of
this Agreement, Associated will use its reasonable efforts, and will
cooperate with Contributor, in each case at Associated's expense, to secure
all Requisite Approvals to enable Contributor and Associated to effect the
transactions contemplated by this Agreement, and will otherwise use its
reasonable efforts to cause the consummation of such transactions in
accordance with the terms and conditions of this Agreement.
(b) Conduct of Business. From the date of this Agreement
through the Closing, Associated shall not operate its business in any
manner with the intention of diminishing the value of the Interest to be
received by Contributor pursuant to this Agreement.
(c) Books and Records; Personnel. For a period of seven years
from the Closing Date:
(i) Associated shall not, and shall cause
FirstMark not to, dispose of or destroy any of the books and
records of FirstMark in their possession relating to periods prior
to the Closing ("Books and Records") without the prior written
consent of Contributor (which shall be deemed given if Contributor
fails to object in writing to such disposal or destruction with
twenty (20) days of receipt of notice from Associated of its
intention to effect such disposal or destruction).
(ii) Associated shall, and shall cause FirstMark
to, upon at least three (3) days prior written notice from
Contributor, allow Contributor and its agents reasonable access to
all Books and Records during normal working hours at Associated's
principal place of business or at any location where any Books and
Records are stored, and Contributor shall have the right, at its
own expense, to make copies of any Books and Records, in
connection with (x) any pending or threatened litigation in which
Contributor or any of its Affiliates is involved, (y) any
investigation or proceeding of any Governmental Authority in which
Contributor or any of its Affiliates is involved, or (z) the
preparation of any Returns; provided, however, that any such
access or copying shall be had or done in such a manner so as not
to interfere with the normal conduct of Associated's or
FirstMark's businesses, as applicable.
(iii) Contributor shall, and shall cause its
representatives to, keep confidential all Books and Records and
the information contained therein.
(d) Interim Control of DEMS Systems. Without limiting Section
7 hereof, between the date of this Agreement and the Closing, Associated
shall not directly or indirectly control, supervise or direct, or attempt
to control, supervise or direct, the operation of the DEMS Systems of
FirstMark and its Affiliates, and the operations of FirstMark and its
Affiliates shall be the sole responsibility of Contributor and FirstMark
and its Affiliates.
(e) Opposition to DEMS Licenses. Neither Associated nor any
of its Affiliates shall oppose, challenge or in any manner take an adverse
position, directly or indirectly, with respect to any DEMS License (and
Associated or its Affiliates shall promptly withdraw or rescind any such
previous opposition, challenge or adverse position); provided that, subject
to and without limitation of Associated's obligations under the other
provisions of this Agreement, prior to the Closing, the provisions of this
paragraph (e) shall not apply to any channel covered by an existing or
future DEMS License to the extent such DEMS License is with respect to a
channel as to which Associated holds a DEMS license. Notwithstanding any
other provision of this Agreement, if the FCC revokes a DEMS License with
respect to channel 31 in the Los Angeles SMSA or channel 30 in the San
Francisco SMSA and grants, pursuant to a decision that is no longer subject
to administrative or judicial review, reconsideration or appeal, a DEMS
license with respect to such channel, or a channel in substitution for such
channel, to MSI, DSC, Associated or any of their respective Affiliates,
then Contributor shall receive the consideration that she would have
received under Section 3(c) or Section 3(e), at the same time she would
have received such consideration under Section 3(c) or 3(e), if such
channel had been an asset of FirstMark at the Closing and/or had been
released from the Trust, as applicable.
(f) Teledesic Settlement. Associated agrees that (i) any
settlement with Teledesic with respect to DEMS licenses in the 18 GHz
frequency band which involves the relocation of DEMS to a frequency band
other than 18 GHz (a "Teledesic Settlement") will not adversely affect
FirstMark in a manner different (on a proportionate and comparable basis),
after giving effect to clause (ii) below, from Associated, MSI and DSC and
their respective Affiliates and (ii) Associated will reimburse Contributor
for expenditures actually made by FirstMark prior to the date of this
Agreement (and as to which Associated receives reasonable documentary
evidence from FirstMark as to incurrence and amount) in connection with the
DEMS Systems to the same extent (on a proportionate and comparable basis)
and subject to the same conditions and payable to Contributor by wire
transfer of immediately available funds to an account previously designated
by Contributor to Associated at the same time as Associated, MSI or DSC or
their respective Affiliates receive, pursuant to a Teledesic Settlement,
reimbursement for expenditures actually made by them prior to the date of
this Agreement in connection with the DEMS licenses and DEMS systems of
Associated, MSI or DSC or their respective Affiliates; provided that any
such reimbursement of Contributor shall not exceed $600,000 in the
aggregate, and shall be reduced dollar for dollar to the extent that
Contributor or FirstMark receives any amounts from Teledesic pursuant to
any separate agreement, arrangement or understanding with Teledesic (and
FirstMark and Contributor agree promptly to notify Associated of their
receipt of any such payments). Associated agrees that it shall, promptly
following receipt of FCC approval of the Teledesic Settlement which is no
longer subject to administrative or judicial review, reconsideration or
appeal, provide Contributor with a true and correct copy of the
agreement(s) providing for the Teledesic Settlement, subject to execution
of an appropriate confidentiality agreement by Contributor. Without the
prior written consent of Associated, neither Contributor nor FirstMark nor
any of their respective Affiliates shall oppose, challenge, or in any
manner take, directly or indirectly, an adverse position with respect to,
any Teledesic Settlement, or any term thereof, or any plan adopted or order
issued by the FCC to relocate DEMS to a frequency band other than 18 GHz.
If this Agreement is terminated prior to the Closing (x) by reason of a
breach of this Agreement by Contributor or FirstMark, the provisions of
clause (ii) of the first sentence of this paragraph shall be of no further
force or effect, (y) by reason of a breach of this Agreement by Associated,
the provisions of clause (ii) of the first sentence of this paragraph shall
survive termination, or (z) without fault of either party, the provisions
of clause (ii) of the first sentence of this paragraph shall survive
termination, except that the obligation of Associated under such clause
shall be limited to 50% of the expenditures reimbursable under such clause
(ii) and not more than $300,000 in the aggregate.
(g) Contributor Registration Rights.
(i) Contributor "Piggyback". Contributor shall
have the same rights with respect to registration, pursuant to a
registration statement filed by Associated under the Securities
Act, of equity securities of Associated issued to Contributor
pursuant to this Agreement as Mandl has pursuant to clause (A) of
Section 4(d)(I) of the Mandl Employment Agreement. Associated
shall, if requested in writing by Contributor, use all reasonable
efforts to cause to be included in such registration statement up
to an amount of the equity securities of Associated then owned by
Contributor (of the same class as the equity securities of
Associated then owned by or issuable to Mandl) which were issued
to Contributor pursuant to this Agreement ("Contributor
Registrable Securities") proportionate to the amount of equity
securities which are then owned by or issuable to Mandl which are
entitled to be included in such registration statement (based on
the total amount of such equity securities then owned by or
issuable to Mandl and the total amount of Contributor Registrable
Securities then owned by Contributor, respectively). If, in
connection with an underwritten offering registered pursuant to a
registration statement, the managing underwriter imposes a
limitation on the amount of equity securities which may be
included in such registration statement, then Associated shall be
obligated to use all reasonable efforts to include in such
registration statement the Contributor Registrable Securities
validly requested by Contributor in accordance with the terms
hereof to be included in such registration statement (x) only
after the inclusion of all equity securities proposed to be sold
by Associated for its own account and (y) subject to reduction of
the amount of Contributor Registrable Securities and any other
equity securities to be included in such registration statement on
behalf of any Person other than Associated on a pro rata basis in
accordance with the number of Contributor Registrable Securities
and such other equity securities requested to be included in such
registration statement.
(ii) Demand Registration Rights. In addition to
the registration rights afforded by clause (i) of this Section
8(g), at any time after the first anniversary of the closing of
Associated's initial public offering (the "IPO"), Contributor
shall be entitled to one demand registration under the Securities
Act and under such state securities laws as Contributor may
reasonably request (provided that Associated shall not be required
to consent to general service of process in any jurisdiction where
it is not then so subject) in respect of Contributor Registrable
Securities, provided that such demand registration right shall
apply only if the amount of Contributor Registrable Securities to
be registered (x) constitutes at least 50% of the greatest amount
of Contributor Registrable Securities owned by Contributor at any
time and (y) has an anticipated aggregate offering price (before
underwriters' fees, commissions and discounts) of at least
$10,000,000.
(iii) Restrictions. The registration rights of
Contributor provided for in this Section 8(g) shall not be
transferable to any transferee of Contributor Registrable
Securities except (i) during her lifetime by gratuitous transfers
to grantor trusts, charitable remainder trusts or to immediate
family members or trusts for their benefit, provided that any such
transferee agrees in writing to be bound by the provisions of this
Section 8(g) or (ii) upon her death by will or the laws of descent
and distribution. In addition, such registration rights shall be
subject to Contributor entering into underwriting (if applicable),
indemnification, and other customary agreements, including
customary lock-up provisions requested by the managing underwriter
of any offering, and to Associated's right to defer (or require
Contributor to suspend sales pursuant to) any such registration if
(but only for so long as) it determines in good faith that such
registration (or continued sales) would require disclosure which
would be materially adverse to Associated's interests. Associated
shall keep any registration statement filed under clause (ii)
above effective for at least ninety (90) days (increased by the
number of days, if any, that sales under such registration
statement are suspended as provided above). Associated shall bear
all registration expenses (exclusive of underwriting fees,
discounts and commissions) under this Section 8(g) and in such
connection shall provide Contributor with indemnification and
contribution against liabilities under the securities laws in
customary form.
(iv) Contributor agrees to execute a customary
lock-up agreement in connection with the IPO, whether or not
Contributor is a selling stockholder in the IPO.
(h) Tag-Along and Drag-Along Rights. If, prior to the time
that equity securities of Associated (of the same class as the Contributor
Registrable Securities) are publicly traded, the Original Shareholders
shall sell to a third party (other than an Affiliate of such Original
Shareholder) any of their equity interests in Associated at a time when
Contributor holds any equity interest in the Company (an "Equity
Interest"):
(i) The Original Shareholders shall require the
purchaser of their equity interests to purchase, at Contributor's
election, the same percentage of the aggregate Equity Interest
then held by Contributor as the percentage of the aggregate equity
interests of the Original Shareholders which is being purchased;
such purchase from Contributor shall be made on the same terms and
for the same consideration as the purchase from the Original
Shareholders; and
(ii) The Original Shareholders, at their
election, may require the purchaser of their equity interests to
purchase, and Contributor to sell, the same percentage of the
aggregate Equity Interest then held by Contributor as the
percentage of the aggregate equity interests of the Original
Shareholders which is being purchased; any such purchase from
Contributor shall be made on the same terms and for the same
consideration as the purchase from the Original Shareholders.
(i) Right of First Refusal. Upon the terms and subject to the
conditions of this Section 8(i), Contributor grants the Original
Shareholders a right of first refusal with respect to any sale or other
disposition for value by Contributor (a "Transfer") of any Equity Interest.
(i) If Contributor desires to effect a Transfer
of some or all of its Equity Interest pursuant to a bona fide
offer (an "Offer") from any person or entity (an "Offeror"),
Contributor shall give written notice of such Offer (a "First
Refusal Notice") to each of the Original Shareholders. The First
Refusal Notice shall specify the number or amount of securities
comprising the Equity Interest proposed to be transferred pursuant
to such Offer (the "First Refusal Interest"), the price proposed
to be paid by the Offeror (the "Offer Price"), the identity of the
Offeror and the other terms and conditions of such Offer, and
shall be accompanied by a true and correct copy of the Offer. If
any part of the consideration proposed in the Offer consists of
property other than cash, the price proposed to be paid pursuant
to such Offer shall be deemed to include the fair market value of
such non-cash consideration, as determined in good faith by the
board of directors of Associated. If Contributor objects to the
fair market value, as so determined, Contributor may require that
Associated obtain a determination of the fair market value of such
non-cash consideration pursuant to the procedures set forth in
paragraph (v) of this Section 8(i), and such determination shall
be final and binding on all parties.
(ii) Each Original Shareholder shall have the
option to purchase the First Refusal Interest at the Offer Price
and on such other terms as are set forth in the Offer, by giving
notice to Contributor within thirty (30) days of receipt by such
Original Shareholder of the First Refusal Notice (an Original
Shareholder which gives such notice being referred to as an
"Accepting Original Shareholder"), and by purchasing such First
Refusal Interest for the Offer Price in cash, against delivery of
the First Refusal Interest (with appropriate transfer
documentation) free and clear of any Liens within fifteen (15)
days following the expiration of such thirty (30) day period;
provided, however, that if Accepting Original Shareholders elect
in the aggregate to purchase more than 100% of the First Refusal
Interest, then the portion of the First Refusal Interest which may
be purchased by any Accepting Original Shareholder that has
elected to purchase more than such Accepting Original
Shareholder's Pro Rata Share (as defined below) of the First
Refusal Interest shall be reduced (based on each such Accepting
Original Shareholder's Pro Rata Share), but not below such
Accepting Original Shareholder's Pro Rata Share; and provided,
further, that the date for such purchase may be deferred solely to
the extent necessary to obtain any governmental consents or
approvals required to complete such purchase or, if applicable, to
the extent necessary to complete the determination of the fair
market value of any non-cash consideration proposed to be paid by
the Offeror, as provided in paragraph (i) above. For purposes of
this paragraph (ii) of this Section 8(i), an Accepting Original
Shareholder's "Pro Rata Share" shall be the percentage which such
Accepting Original Shareholder's ownership interest in Associated
represents of the ownership interest in Associated of all
Accepting Original Shareholders.
(iii) If the Original Shareholders do not give
timely notice of their election to purchase the entire First
Refusal Interest, or if such notice is timely given but the
Accepting Original Shareholders fail to purchase the entire First
Refusal Interest within the applicable time period specified in
this Section 8(i), then Contributor may, within the 90-day period
immediately following the expiration of the period during which
the Original Shareholders may give notice of such election, or, if
applicable, within the 90-day period immediately following such
failure to purchase the entire First Refusal Interest, transfer
the First Refusal Interest to the Offeror at a price not less than
the Offer Price and on the same terms and subject to the same
conditions as were set forth in the First Refusal Notice. If
Contributor does not complete such Transfer within such 90-day
period, no subsequent Transfer of all or any part of its Equity
Interest may be made without again complying with this Section
8(i), it being understood and agreed that the retention by
Contributor of a security interest in some or part of the First
Refusal Interest which is transferred shall not mean that such
Transfer has not been completed.
(iv) If Contributor fails to comply with this
Section 8(i) with respect to all or any part of its Equity
Interest (including without limitation any beneficial interest
therein), any attempted or purported Transfer thereof shall be
void and of no force or effect.
(v) The fair market value of any non-cash
consideration or property the value of which is to be determined
pursuant to the last sentence of paragraph (i) of this Section
8(i) shall be determined in accordance with the following
procedure: Contributor and Associated shall each select a
nationally recognized appraiser, which shall determine the
valuation or other issue in question. If the higher of the two
original appraisal values is not more than ten percent (10%) above
the lower appraisal value, the value in question shall be the
value agreed upon by the two original appraisers or, in the
absence of such an agreement, the value in question shall be the
average of the two original appraisal values. If the higher of the
two original appraisal values is more than ten percent (10%) above
the lower appraisal value, the two appraisers shall select a third
nationally recognized appraiser who shall determine a value which
shall be at least equal to the lower appraisal value and whose
determination of the value in question shall be final and binding
on all parties. All costs and expenses relating to any appraisal
or review conducted under this paragraph shall be borne by
Associated.
(vi) This Section 8(i) shall not apply to the
sale by Contributor in the public market of Contributor
Registrable Securities registered under the Securities Act or
pursuant to Rule 144 under the Securities Act.
(j) Confidentiality.
(i) Associated shall, and shall cause its
representatives to, keep confidential all information and records,
whether prepared by Contributor, its advisors or otherwise, and
whether written or oral, which were obtained, directly or
indirectly, by Associated or its representatives concerning the
business of FirstMark ("Confidential Information"). Associated
shall, and shall cause its representatives to, use Confidential
Information solely in connection with its analysis and review of
the transactions contemplated by this Agreement or in connection
with operating the business of FirstMark.
(ii) Associated may disclose Confidential
Information to any of its directors, officers, employees, agents
and advisors (each a "Representative" and, collectively, the
"Representatives") who need to know such Confidential Information
for the purpose of assisting Associated in connection with the
transactions contemplated by this Agreement or with operating the
business of FirstMark; provided, however, that prior to making
such disclosure, Associated shall advise each such Representative
of Associated's obligations under this Section 8(j) and Associated
shall be responsible for any breach of this Agreement by any such
Representative. Associated may disclose Confidential Information
if required by legal process or by operation of applicable law;
provided, however, that Associated shall first promptly advise and
consult with Contributor and its counsel concerning the
information Associated proposes to disclose.
(iii) Associated's obligations under clauses (i)
and (ii) of this Section 8(j) do not apply to information which
(x) was known by Associated prior to such disclosure and not
subject to any confidentiality agreement or obligation of secrecy
to Contributor or FirstMark of which Associated is aware or
reasonably should be aware, (y) at the time of disclosure is
generally available to and known by the public or the
telecommunications industry other than as a result of disclosure
in violation of clause (i) or (ii) of this Section 8(j) or (z) was
or becomes available to Associated on a non-confidential basis
from a source other than Contributor or its agents or advisors;
provided, however, that such source is not bound by a
confidentiality agreement or obligation of secrecy to Contributor
in respect thereof of which Associated is aware or reasonably
should be aware.
(iv) In the event that this Agreement is
terminated, all Confidential Information, whether or not then in
Associated's possession, and any copies thereof or notes or
extracts therefrom, shall be returned to Contributor, without
retaining any copies thereof, and Associated shall destroy, as
soon as practicable, all copies of any analyses, studies,
compilations or other documents prepared by Associated or any of
its Representatives to the extent that they contain, reflect or
are generated from any Confidential Information.
(v) Associated acknowledges and agrees that any
breach by it of the provisions of this Section 8(j) will cause
Contributor irreparable injury and damage, for which Contributor
cannot be adequately compensated in damages. Associated,
therefore, expressly agrees that Contributor shall be entitled to
seek injunctive relief and/or other equitable relief to prevent
any breach of the provisions of this Section 8(j), or any part
thereof, and to secure their enforcement.
(vi) The provisions of this Section 8(j) shall
not survive the Closing, except that the provisions of this
Section 8(j) shall survive with respect to any DEMS Licenses and
DEMS Systems unless and until control thereof is transferred to
Associated pursuant to this Agreement.
(k) Non-disclosure of Financial Terms. Associated agrees
that, except as requested by the FCC or required by law or legal process or
in connection with any financing, strategic alliance, acquisition or
disposition transaction, it shall not disclose to any third party, other
than its Affiliates or Representatives, the financial terms of the
transactions contemplated by this Agreement without the prior written
consent of Contributor.
(l) Anti-Dilution Rights. Associated agrees that the
Membership Percentage represented by the Interest to be issued to
Contributor under this Agreement (regardless of when any portion of such
Interest is issued hereunder) shall not be diluted by the first $75 million
of equity investments in Associated by the Original Shareholders and their
Affiliates from the date of this Agreement through August 19, 1997 and
shall be diluted in respect of any other equity investments by the Original
Shareholders or their Affiliates after the date of this Agreement based
upon (A) the amount of such equity investment and (B) the fair market value
of Associated (as determined in good faith by the board of directors of
Associated).
Section 9. Tax Matters.
(a) Tax Indemnification by Contributor.
(i) Contributor shall be liable for, and shall
indemnify Associated and its Affiliates and hold them harmless
from and against, any Taxes of FirstMark for taxable periods
ending on or before the Closing Date ("Pre-Closing Tax Periods")
or portions of taxable periods ending on or before the Closing
Date and any loss, damage, liability or expense, including, but
not limited to, reasonable fees for attorneys and other outside
consultants, incurred in connection with such Taxes.
(ii) Payments required under this Section 9(a)
shall be made within 30 days of Associated furnishing Contributor
with written evidence that Associated has paid such amounts or
such amounts are due and payable to a Taxing Authority.
(b) Apportionment of Taxes. In order to apportion
appropriately any Taxes relating to any taxable period beginning prior to
and ending after the Closing Date ("Straddle Period"), the parties hereto
shall, to the extent permitted under applicable law, elect with the
relevant Tax Authority to treat for all purposes, the Closing Date as the
last day of the taxable year or period of FirstMark, and such period shall
be treated as a short taxable year and a Pre-Closing Tax Period for
purposes of this Section 9. In any case where applicable law does not
permit FirstMark to treat the Closing Date as the last day of the taxable
year or period with respect to Taxes that are payable with respect to a
Straddle Period, the portion of any such Taxes that are allocable to the
portion of the taxable year ending on the Closing Date shall be deemed to
be equal to the amount which would be payable if the taxable year or period
ended on the Closing Date.
(c) Refunds.
(i) Contributor shall be entitled to any refunds
of Taxes attributable to FirstMark (including refunds paid by
means of credit against other or future Tax liabilities) for a
Pre-Closing Tax Period or the portion of a Straddle Period ending
on or before the Closing Date other than refunds arising from a
carryback of a loss or credit from any period other than a
Pre-Closing Tax Period.
(ii) Associated shall forward to Contributor any
refunds to which Contributor is entitled (pursuant to the terms of
this Section 9(c)) within 5 days after receipt thereof. In the
case of a refund received in the form of a credit against other or
future Tax liabilities, reimbursement in respect of such refund
shall be due on the due date for payment of the Taxes against
which such refund has been credited.
(d) Cooperation. After the Closing Date, each of Associated
and Contributor shall make available to the other, as reasonably requested,
and to any Taxing Authority, all information, records and documents
relating to Tax liabilities or potential Tax liabilities relating to
FirstMark and shall preserve all such information, records and documents
until the expiration of any applicable statute of limitations or extension
thereof. Associated shall render such assistance as shall be reasonably
requested by Contributor so as to comply with the responsibilities imposed
on Contributor by Section 9(f).
(e) Certain Other Definitions. For purposes of this Agreement
(i) "IRS" means the Internal Revenue Service; (ii) "Return" means all
returns, reports, declarations, estimates, information returns, statements
and forms of any nature regarding Taxes, including remittance advices,
required to be filed with any Taxing Authority or depository; (iii) "Tax"
means any federal, state, local or foreign tax, including, without
limitation, income (net or gross), gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, registration,
value added, excise, natural resources, severance, stamp, occupation,
premium, windfall profit, customs, duties, real property, personal
property, capital stock, social security, unemployment, disability,
payroll, license, employee or other withholding, or other tax, of any kind
whatsoever, and including any interest, penalties or additions to tax
imposed with respect thereto; and (iv) "Taxing Authority" means any
Governmental Authority, domestic or foreign, having jurisdiction over the
assessment, determination, collection, or other imposition of Tax.
(f) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement ("Transfer Taxes")
shall be paid by Contributor when due, and Contributor shall file all
necessary Returns and other documentation with respect to all such Transfer
Taxes, and, if required by applicable law, Associated will, and will cause
FirstMark to, join in the execution of any such Returns and other
documentation. Associated shall reimburse Contributor for one-half of all
Transfer Taxes and one-half of the cost of filing Returns relating to
Transfer Taxes.
(g) Tax Treatment of Indemnity Payments. The Tax treatment of
all indemnity payments made by either party to or for the benefit of the
other party under this Agreement shall be treated by the parties hereto as
an adjustment to the consideration.
(h) Certain Representations. Contributor and FirstMark hereby
jointly and severally represent and warrant to Associated that (i) except
as set forth on Schedule 9(h)(i), FirstMark has filed or has had filed on
its behalf in a timely manner (within any applicable extension periods)
with the appropriate Taxing Authority all income and other materials
Returns with respect to Taxes of FirstMark; (ii) all material Taxes with
respect to FirstMark have been paid in full or have been provided for in
accordance with generally accepted accounting principles on Schedule
10(a)(x); (iii) there are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any federal, state, local
or foreign income or other material Returns required to be filed by or with
respect to FirstMark; (iv) none of the Returns of or with respect to
FirstMark is currently being audited or examined by any Taxing Authority;
and (v) no deficiency for any income or other material Taxes has been
assessed with respect to FirstMark which has not been abated or paid in
full. FirstMark is not, and has not at any time been, a member of a
consolidated group for federal income tax purposes.
Section 10. Representations and Warranties.
(a) Representations and Warranties of Contributor and
FirstMark. Contributor and FirstMark hereby jointly and severally represent
and warrant to Associated as follows:
(i) Capitalization. The authorized capital stock
of FirstMark consists of one thousand (1,000) shares of common
stock, par value $.01 per share, of which one hundred (100) shares
are issued and outstanding and owned of record and beneficially by
Contributor. All of the shares comprising the Stock are validly
issued, fully paid and non-assessable and are held by Contributor
free and clear of all Liens. There are outstanding no securities
convertible into, exchangeable for, or carrying the right to
acquire, equity securities of FirstMark, or subscriptions,
warrants, options, rights or other arrangements or commitments
obligating FirstMark to issue or dispose of any securities or any
ownership interest therein. The Contribution of the Stock to
Associated pursuant to Section 3 hereof will vest in Associated
legal and valid title to the Stock, free and clear of all Liens
(other than Liens created by Associated).
(ii) Litigation. There is no action or
proceeding in any court or before any Governmental Authority
pending or, to Contributor's knowledge, threatened against
Contributor or any of its Affiliates, with respect to which there
is a reasonable likelihood of a determination which would have a
material adverse affect on the ability of Contributor to perform
its obligations under this Agreement or which is otherwise
material to FirstMark. Neither Contributor nor any of its
Affiliates is subject to any outstanding order, ruling, judgment
or decree which would have a material adverse effect on the
ability of Contributor to perform its obligations under this
Agreement or which is otherwise material to FirstMark.
(iii) Corporate Organization. FirstMark is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(iv) Enforceability. This Agreement has been
duly executed and delivered by, and constitutes the valid and
binding obligation of, Contributor and FirstMark, enforceable
against Contributor and FirstMark in accordance with its terms.
(v) No Violation; No Consents or Approvals. The
execution, delivery and performance by Contributor and FirstMark
of this Agreement does not conflict with, result in a breach of or
cause a default under, with or without the giving of notice or the
passage of time, or both, or require any consent or approval of
any party pursuant to, the certificate of incorporation of
FirstMark or any material agreement or instrument to which
Contributor or FirstMark is a party or by which either of them or
any of their respective properties is bound, nor does it conflict
with or violate any Requirement of Law or require any consent or
approval of any Governmental Authority other than the Requisite
Regulatory Approvals.
(vi) DEMS Licenses; FirstMark DEMS Applications.
(A) FirstMark duly and validly holds each of the
DEMS Licenses listed on Schedule I, which are the only licenses
for DEMS granted to FirstMark or any of its Affiliates as of the
date of this Agreement. Each of the DEMS Licenses has been validly
issued, is in full force and effect, has not been suspended,
revoked, canceled, or modified in any adverse way, is not subject
to any conditions or requirements that have not been imposed upon
all such licenses generally, and, except as set forth on Schedule
10(a)(vi) hereto, is not subject to any pending regulatory or
judicial review. To the best knowledge of Contributor and
FirstMark, other than objections by Teledesic, there is not
pending any application, petition, objection, or other pleading
with the FCC or any court of appeals which questions the validity
of or contests any of the DEMS Licenses. To the best knowledge of
Contributor and FirstMark, no pending or threatened action or
matter has occurred that would inhibit or preclude the renewal of
any DEMS License in the ordinary course.
(B) FirstMark has, at all times, operated the
DEMS Systems in material compliance with the Communications Act of
1934, as amended (the "Act"), the rules of the FCC, and the terms
of the DEMS Licenses. No noncompliance with the Act, the rules of
the FCC or the terms of the DEMS Licenses has occurred with
respect to the DEMS Licenses which permits, or after notice or
lapse of time or both would permit, revocation or termination of
any DEMS License or would result in any impairment of the rights
of FirstMark with respect to the DEMS Licenses. All applications
and material reports required by the rules of the FCC have been
timely filed and all representations made in such applications and
reports are truthful and accurate in all material respects.
No radio equipment used in the operation of the DEMS Systems has
been modified from its manufacturers' type-accepted specifications
or causes interference to other FCC-licensed radio station
facilities. All structures that support radio equipment used in
the operation of the DEMS Systems are, and since their
construction have been, reported, registered, marked, lighted,
inspected and maintained in accordance in all material respects
with the rules of the FCC and the standards of the Federal
Aviation Administration.
(C) Schedule I includes a list of all
applications for additions to or modifications of the DEMS Systems
that are pending as of the date of this Agreement before the FCC.
(D) Except as disclosed on Schedule 10(a)(vi)
hereto, FirstMark possesses all authorizations required by any PUC
or other Governmental Authority with jurisdiction over the DEMS
Systems, including, without limitation, certificates of public
convenience and necessity, permits necessary for the use of land
or construction of facilities, and zoning variances (collectively,
the "Local Authorizations"). A list of all Local Authorizations in
effect as of the date of this Agreement is included in Schedule I.
The Local Authorizations are in full force and effect, have not
been suspended, revoked, canceled, or modified in any adverse way,
and are not subject to any conditions or requirements that have
not been imposed upon all wireless communications providers
generally and are not subject to any pending regulatory or
judicial review. To the best knowledge of Contributor and
FirstMark, there is not pending any application, petition,
objection, or other pleading with any state, county, or other
local regulatory agency or court of appeals which questions the
validity of or contests any of the Local Authorizations. FirstMark
has at all times operated the DEMS Systems in material compliance
with all state, county, and other local statutes and ordinances.
All facilities used in the operation of the DEMS Systems are, and
since their construction have been, in material compliance with
all applicable land use and zoning statutes and ordinances.
(E) No communications facility used in
connection with the DEMS Systems has been constructed by FirstMark
under circumstances where such construction may have significantly
affected the environment pursuant to the rules of the FCC, without
the preparation of an environmental assessment and a prior
determination by the FCC that such construction would result in no
significant environmental effect.
(F) The FirstMark DEMS Applications are the only
applications of FirstMark or any of its Affiliates for any DEMS
license.
(vii) Subscription Contracts. Schedule
10(a)(vii) hereto (as supplemented at the Closing by identifying
all additions thereto between the date hereof and such date) sets
forth all subscription contracts for the provision of DEMS entered
into by FirstMark. Accurate and complete copies of all contracts
listed on Schedule 10(a)(vii) have been provided to Associated.
(viii) Tangible Assets. All material tangible
assets comprising a part of the DEMS Systems are in good working
order and condition.
(ix) Intellectual Property. FirstMark has, and
upon consummation of the Contribution will have, all intellectual
property rights associated with the DEMS Systems and such
intellectual property rights do not and will not infringe upon the
intellectual property rights of any Person.
(x) No Undisclosed Assets or Liabilities.
Schedule 10(a)(x) hereto sets forth all assets and liabilities of
FirstMark as of the date of this Agreement. Between the date of
this Agreement and the Closing, except as expressly permitted by
this Agreement, the Schedules and Exhibits hereto, FirstMark will
not incur any liabilities other than liabilities arising in the
ordinary course of business of the operations of the DEMS Systems
that will not, individually or in the aggregate, have a material
adverse effect on the assets, business or operations of FirstMark.
(b) Representations and Warranties of Associated. Associated
hereby represents and warrants to Contributor and FirstMark as follows:
(i) Capitalization. Schedule 10(b)(i) sets forth
the outstanding Membership Percentage and the capital account of
each Member as of the date of this Agreement. As of the date of
this Agreement, except pursuant to the Mandl Employment Agreement
and under Associated's Equity Incentive Plan, there are
outstanding no securities or other instruments convertible into,
exchangeable for, or carrying the right to acquire, any Interest,
or subscriptions, warrants, options, rights or other arrangements
or commitments (other than this Agreement) obligating Associated
to issue any Interest, or any ownership interest therein.
(ii) Corporate Organization. Associated is a
limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(iii) Corporate Power and Authority. Associated
has the requisite limited liability company power and authority to
enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Associated of this
Agreement and the consummation by Associated of the transactions
contemplated hereby have been duly authorized by all requisite
limited liability company action on the part of Associated, and no
other limited liability company proceedings on the part of
Associated or its members are necessary to authorize this
Agreement and the transactions contemplated hereby. The Original
Shareholders have irrevocably waived all rights under Section
5.1(d) of the Limited Liability Company Agreement in connection
with the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Associated and
constitutes the valid and binding obligation of Associated,
enforceable against Associated in accordance with its terms.
(iv) No Violation. The execution, delivery and
performance by Associated of this Agreement does not conflict
with, result in a breach of or cause a default under, with or
without the giving of notice or the passage of time, or both, or
require any consent or approval of any party pursuant to, its
operating agreement or any material agreement or instrument to
which it is a party or by which it or any of its property is
bound, nor does it conflict with or violate any Requirement of Law
or require any consent or approval of any Governmental Authority
other than the Requisite Regulatory Approvals.
(v) Litigation. As of the date of this
Agreement, there is no litigation pending or, to Associated's
knowledge, threatened against Associated or any of its Affiliates
with respect to which there is a reasonable likelihood of a
determination which would have a material adverse effect on the
ability of Associated to perform its obligations under this
Agreement. As of the date of this Agreement, neither Associated
nor any of its Affiliated is subject to any outstanding orders,
rulings, judgments or decrees which would have a material adverse
effect on the ability of Associated to perform its obligations
under this Agreement.
(vi) Acquisition of DEMS Licenses. As of the
date of this Agreement, Associated and its Affiliates have no
agreement or understanding with any Person (other than Contributor
or FirstMark) with respect to the direct or indirect purchase or
sale of any DEMS license or any Person which holds any DEMS
license, and as of the date of this Agreement, neither Associated
nor any of its Affiliates is engaged in any discussions or
negotiations relating to any such purchase or sale.
Section 11. Miscellaneous.
(a) Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under any Requirement of
Law to perform its obligations hereunder and to consummate and make
effective the transactions contemplated to be consummated by such party
under this Agreement. Without limitation of the generality of the
foregoing, each party hereto (i) agrees to use all reasonable efforts to
obtain, and to cooperate with the other party in obtaining, as promptly as
practicable as contemplated by this Agreement, any and all Requisite
Approvals, and (ii) agrees that it will not take any action, or enter into
any agreement, which is inconsistent with, or which would impair or
restrict in any manner, its right or ability to promptly perform its
obligations hereunder.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, personal
representatives and permitted assigns of the parties hereto, provided that
neither this Agreement nor any rights or obligations hereunder may be
assigned or delegated by Contributor without Associated's prior written
consent. For purposes of this Agreement the term "successor" includes,
without limitation, any Person who or which acquires in a single or series
of related transactions more than 50% of the assets, earnings or voting
stock of a party.
(c) Indemnification; Joint and Several Liability of FirstMark
and Contributor Prior to Closing.
(i) From and after the Closing, Contributor
shall be liable for, and shall indemnify Associated and hold her
harmless from and against, any and all losses, claims, damages or
liabilities incurred by Associated, or to which Associated becomes
subject, to the extent that such losses, claims, damages or
liabilities result from the breach by Contributor or FirstMark of
any of their respective representations and warranties or
covenants contained in this Agreement. In addition, Contributor
shall be liable for, and shall indemnify Associated and its
Affiliates (including FirstMark) and hold them harmless from and
against, any and all losses, claims, damages or liabilities
incurred by Associated or any of its Affiliates, or to which any
of them becomes subject, to the extent that such losses, claims,
damages or liabilities result from FirstMark's former status as an
Affiliate of Contributor. Payments required under this paragraph
shall be made within 30 days of Associated's request therefor.
(ii) From and after the Closing, Associated
shall be liable for, and shall indemnify Contributor and hold her
harmless from and against, any and all losses, claims, damages or
liabilities incurred by Contributor, or to which Contributor
becomes subject, to the extent that such losses, claims, damages
or liabilities result from the breach by Associated of any of its
representations and warranties or covenants contained in this
Agreement. Payments required under this paragraph shall be made
within 30 days of Contributor's request therefor.
(iii) Contributor and FirstMark shall be jointly
and severally liable for any breach by either of them prior to the
Closing of their obligations hereunder; provided that, if the
Closing has occurred, Contributor shall be solely liable for any
such breach.
(d) Survival. The representations and warranties of the
parties contained herein shall survive the Closing of the transactions
contemplated hereby. The covenants and agreements contained herein to be
performed or complied with prior to the Closing (or termination of the
Trust Agreement, if applicable) shall expire at the Closing (or termination
of the Trust Agreement, if applicable). The covenants and agreements
contained herein to be performed or complied with after the Closing shall
survive the Closing in accordance with their terms without limitation as to
time unless otherwise specifically indicated. Nothing in this Section 11(d)
shall limit the rights and remedies of any party for any breach by another
party of any of its representations, warranties, covenants or other
agreements under this Agreement.
(e) Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) and the other agreements and instruments which may be
entered into in connection herewith constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and
shall supersede any prior expressions of intent or understanding with
respect to the transactions provided for herein and therein.
(f) Costs and Expenses. Except as otherwise provided in this
Agreement, each party agrees to bear its own expenses, fees and costs
incurred in connection with the transactions contemplated by this
Agreement.
(g) Amendment. Any amendment hereto shall be effective only
if in writing and signed by each of the parties hereto.
(h) Waiver; Cumulative Rights. No provision of this Agreement
shall be deemed to have been waived by any act or knowledge of either party
or of such party's agents, officers or employees, but only by an instrument
in writing signed by such party and delivered to the other party hereto
specifying such waiver. The failure or delay of either party to require
performance by the other party of any provision hereof shall not affect its
right to require performance of such provision unless and until such
performance has been waived in writing. Each and every right hereunder is
cumulative and may be exercised in whole or in part from time to time.
(i) Notices. All notices, demands, requests, certificates or
other communications under this Agreement shall be in writing and shall be
mailed by certified or registered mail (return receipt requested) with
charges prepaid, hand delivered or sent by facsimile transmission or by
commercial courier to the address set forth below for each of the parties
(or at such other address as shall be specified by a party by like notice
to the other party):
(i) if to Associated:
Associated Communications, L.L.C.
11 Canal Center Plaza Suite 300A
Alexandria, VA 22314
Attention: Laurence Harris, Esq.
General Counsel
Facsimile: (703) 299-4585
with copies to:
The Associated Group, Inc.
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Attention: Scott G. Bruce, Esq.
Facsimile: (610) 660-4920
and
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attention: Kent A. Coit, Esq.
Facsimile: (617) 573-4822
(ii) if to Contributor or FirstMark:
Lynn Forester
c/o FirstMark Holdings, Inc.
527 Madison Avenue
New York, New York 10022
and
Lynn Forester
1185 Park Avenue
Apartment 14B
New York, New York 10128
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Stephen Fraidin, Esq.
Facsimile: (212) 859-4000
and
Starr & Company
350 Park Avenue
New York, New York 10022
Attention: Kenneth Starr
Facsimile: (212) 759-6694
Notices shall be deemed delivered when received; provided that any notice
delivered after business hours or on a Saturday, Sunday or legal holiday at
the place of such delivery shall be deemed for purposes of computing any
time period hereunder to have been delivered on the next business day in
such place of delivery. Nothing in this Section 11(i) shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including litigation arising out of
or in connection with this Agreement), which service shall be effected as
required by applicable law.
(j) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of New York,
without reference to its conflicts of law principles.
(k) Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
(l) Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereof on the date first above written.
ASSOCIATED COMMUNICATIONS, L.L.C.
By: /s/ Alex J. Mandl
-----------------------------------
Name: Alex J. Mandl
Title: Chairman & CEO
FIRSTMARK COMMUNICATIONS, INC.
By: /s/ Lynn Forester
----------------------------------
Name: Lynn Forester
Title:President and Chief Executive Officer
/s/ Lynn Forester
----------------------------------
Lynn Forester
Signed and agreed upon, as to
Sections 8(h) and 8(i) only.
MICROWAVE SERVICES, INC.
By: /s/ William H. Berkman
-------------------------------
Name: William H. Berkman
Title: President
DIGITAL SERVICES CORPORATION
By: /s/ Rajendra Singh
-------------------------------
Name: Rajendra Singh
Title: President
EXHIBIT 2
November 12, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
BEAR, STEARNS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreements
North Tower
World Financial Center
New York, New York 10281
Re: Proposed Public Offering by Teligent, Inc.
------------------------------------------
Dear Sirs:
The undersigned, understands that Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Salomon
Brothers Inc, Bear, Stearns & Co., Inc. and Goldman, Sachs & Co.
Propose to enter into a U.S. Purchase Agreement and Merrill Lynch
International, Salomon Brothers International Limited, Bear, Stearns
International Limited and Goldman Sachs International propose to enter
into an International Purchase Agreement (together, the "Purchase
Agreements") with Teligent, Inc., a Delaware corporation (the
"Company") providing for the public offering of shares (the
"Securities") of the Company's Class A Common Stock, par value $.01
per share.
In recognition of the benefit that such an offering will confer
upon the undersigned and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase
Agreements that, during a period of 180 days from the date of the
Purchase Agreements, the undersigned will not, without the prior
written consent of Merrill Lynch, directly or indirectly, (i) offer,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any
shares of common stock of the Company or any securities convertible
into or exchangeable or exercisable for common stock of the Company,
whether now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has or hereafter acquires the power
of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of any common stock
of the Company, whether such swap or transaction is to be settled by
delivery of common stock of the Company or other securities, in cash
or otherwise; provided, however, that the undersigned may without such
consent (i) exercise any outstanding stock options granted pursuant to
employment agreements or employee benefit plans of the Company
referred to in the Prospectuses (as defined in the Purchase
Agreements) so long as the undersigned agrees to be bound by this
Agreement with respect to shares of common stock issues upon such
exercise, (ii) make bona fide gifts of shares of common stock of the
Company so long as the transferee agrees to be bound by this Agreement
with respect to such shares and (iii) make a bona fide pledge or
pledges of shares of common stock of the Company, provided the pledgee
agrees in writing to be bound by this Agreement upon becoming entitled
to obtain ownership of such shares pursuant to any seizure or
foreclosure with respect to such pledged shares.
Very truly yours,
Signature: /s/ Lynn Forester
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Print Name: Lynn Forester
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