EXHIBIT 4.1
-------------
STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION OF
MOTOROLA XXXXX ACQUISITION, INC.
AND
MOTOROLA XXXXX, INC.
BY
AMSC ACQUISITION COMPANY, INC.
A WHOLLY-OWNED SUBSIDIARY
OF
AMERICAN MOBILE SATELLITE CORPORATION
Dated as of December 31, 1997
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS.................................................. 1
ARTICLE 2. MERGER, PURCHASE AND SALE OF SHARES .......................... 13
Section 2.1 Merger, Purchase and Sale of Shares ................... 13
Section 2.2 MAI Purchase Price and MAA Purchase Price ............. 14
Section 2.3 Purchase Price Adjustments ............................ 14
Section 2.4 Post-Closing Purchase Price Adjustment ................ 15
Section 2.5 Closing Place, Date and Time .......................... 17
Section 2.6 FCC Authorization and Final Order ..................... 17
Section 2.7 Deliveries at Closing ................................. 18
Section 2.8 Deliveries Post-Closing ............................... 20
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER ..................... 20
Section 3.1 Organization and Good Standing ........................ 20
Section 3.2 Authority; No Required Consents or Governmental
Authorizations; No Breach of Statute or Contract;
Enforceability ........................................ 21
Section 3.3 Ownership of Shares ................................... 23
Section 3.4 Capitalization of MAA, MAI and the Subsidiaries ....... 23
Section 3.5 Corporate Records ..................................... 23
Section 3.6 Employee Benefit Plans ................................ 24
Section 3.7 Broker's or Finder's Fees ............................. 26
Section 3.8 Financial Statements .................................. 26
Section 3.9 Accounts Receivable ................................... 27
Section 3.10 Absence of Undisclosed Liabilities .................... 27
Section 3.11 Existing Condition .................................... 28
Section 3.12 Title to Properties; Leasehold Interests .............. 30
Section 3.13 Condition of Tangible Assets .......................... 30
Section 3.14 Books of Account ...................................... 31
Section 3.15 Litigation........................................... 31
Section 3.16 Compliance with Law.................................. 31
Section 3.17 Environmental Matters................................ 32
Section 3.18 Insurance............................................ 32
Section 3.19 Contracts and Commitments............................ 33
Section 3.20 Additional Information............................... 34
Section 3.21 Intellectual Property................................ 35
Section 3.22 No Third Party Options............................... 37
Section 3.23 Tariffs; FCC Licenses; Non-FCC Authorizations........ 37
Section 3.24 Officer and Employee Compensation.................... 39
Section 3.25 Indebtedness......................................... 39
Section 3.26 Access; Sophistication; etc.......................... 39
Section 3.27 Investment Representation............................ 40
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF AMSC AND PURCHASER.......... 41
Section 4.1 Organization and Good Standing....................... 41
Section 4.2 Authority; No Required Consents or Governmental
Authorizations or Breach of Statute or Contract;
Enforceability....................................... 41
Section 4.3 Broker's or Finder's Fees............................ 43
Section 4.4 Access; Sophistication; etc.......................... 43
Section 4.5 Investment Representation............................ 43
Section 4.6 SEC Filings; Financial Statements.................... 44
Section 4.7 Absence of Certain Changes........................... 45
Section 4.8 Absence of Undisclosed Liabilities................... 45
Section 4.9 Litigation........................................... 45
ARTICLE 5. CERTAIN AGREEMENTS............................................ 46
Section 5.1 Conduct of the Business.............................. 46
Section 5.2 Access to Information................................ 49
Section 5.3 Efforts; Further Assurances;......................... 49
Section 5.4 Permits Books and Records............................ 50
Section 5.5 Governmental Regulatory Approvals.................... 50
Section 5.6 FCC Consent.......................................... 51
Section 5.7 HSR Act Review....................................... 51
Section 5.8 Registration Rights.................................. 51
Section 5.9 Lock-up.............................................. 51
Section 5.10 Nonsolicitation...................................... 52
Section 5.11 IBM Contract Renewal................................. 52
Section 5.12 UPS Contract......................................... 52
Section 5.13 Escrow Agreement..................................... 52
Section 5.14 Employee Transition.................................. 53
Section 5.15 Updated Disclosure Schedule.......................... 53
Section 5.16 Nextel Proceeds...................................... 53
Section 5.17 Non-Vendor Intercompany Financing Arrangements....... 53
Section 5.18 Intercompany Agreements.............................. 54
ARTICLE 6. CONDITIONS TO CLOSING......................................... 54
Section 6.1 Conditions to Obligation of Purchaser................ 54
Section 6.2 Conditions to Obligations of Seller.................. 56
ARTICLE 7. INDEMNIFICATION .............................................. 58
Section 7.1 Indemnification by Seller............................ 58
Section 7.2 Indemnification by AMSC.............................. 59
Section 7.3 Limitations on Indemnification for Breaches of
Representations and
Warranties........................................... 59
Section 7.4 Survival of Representations and Warranties........... 60
Section 7.5 Method of Asserting Claims........................... 60
Section 7.6 Method of Payment.................................... 62
Section 7.7 Limitation of Recourse............................... 63
Section 7.8 Acknowledgment by Seller, Purchaser and AMSC......... 63
ARTICLE 8. TAX MATTERS .................................................. 64
Section 8.1 Seller's Tax Representations and Warranties.......... 64
Section 8.2 AMSC's Tax Representations and Warranties............ 66
Section 8.3 Tax Returns, Audits, Contests, Etc.; Tax Cooperation;
Tax Sharing Agreements; Tax Records.................. 68
Section 8.4 Asset Purchase Treatment for MAI Shares.............. 72
Section 8.5 Tax-Free Reorganization Treatment.................... 76
Section 8.6 Transfer Taxes....................................... 76
Section 8.7 General Tax Indemnifications......................... 76
Section 8.8 Exclusive Remedy for Taxes........................... 81
Section 8.9 Survival and Purchase Price Adjustment............... 81
ARTICLE 9. TERMINATION OF AGREEMENT; PAYMENT OF EXPENSES; WAIVER
OF CONDITIONS ................................................ 82
Section 9.1 Termination Pre-Agreement............................ 82
Section 9.2 Termination Post-Closing............................. 83
Section 9.3 Payment of Expenses; Waiver of Conditions............ 84
ARTICLE 10. MISCELLANEOUS ............................................... 84
Section 10.1 Amendments........................................... 84
Section 10.2 Further Instruments and Assurances................... 84
Section 10.3 Public Announcements................................. 85
Section 10.4 Governing Law........................................ 85
Section 10.5 Notices.............................................. 85
Section 10.6 Assignment and Binding Effect........................ 86
Section 10.7 Entire Agreement..................................... 86
Section 10.8 Severability......................................... 87
Section 10.9 Counterparts......................................... 87
Section 10.10 No Third Party Beneficiaries......................... 87
Section 10.11 Delays or Omissions.................................. 87
Section 10.12 Construction......................................... 87
Section 10.13 Knowledge Standard................................... 88
Section 10.14 Expenses............................................. 88
EXHIBITS
Exhibit
A AMSC Warrants
B Registration Rights Agreement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
December 31, 1997 and is entered into by and among MOTOROLA, INC., a Delaware
corporation ("Seller"), MOTOROLA XXXXX ACQUISITION, INC. a Delaware corporation
("MAA"), and MOTOROLA XXXXX, INC. a Delaware corporation ("MAI"), and American
Mobile Satellite Corporation, a Delaware corporation ("AMSC"), and AMSC
Acquisition Company, Inc., a Delaware corporation ("Purchaser").
ARTICLE 1. DEFINITIONS.
Section 1.1 Definitions.
"Acquisition Proposal" has the meaning set forth in Section 5.9.
"Adverse Legal Opinion" has the meaning set forth in Section
2.6(a).
"Affiliate" shall mean with respect to any Person, any other Person
that is directly or indirectly controlling, controlled by or under common
control with such Person or entity or any of its subsidiaries, and the term
"control" (including the terms "controlled by" and "under common control with")
means having, directly or indirectly, the power to direct or cause the direction
of the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise.
"Affiliated Group" shall mean an "affiliated group" as defined in
Section 1504(a) of the Code.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
"AMSC Common Stock" shall mean the common stock, par value $0.01
per share, of AMSC.
"AMSC Group" shall mean any Affiliated Group including AMSC, any
successor thereof or, if such Affiliated Group shall cease to exist, AMSC and
any successors thereto.
"AMSC Shareholder Approval" has the meaning set forth in Section
2.7(a)(iv).
"AMSC Warrants" shall mean warrants issued by AMSC to Seller
substantially in the form attached hereto as Exhibit A.
"XXXXX" means XXXXX Company.
"XXXXX Balance Sheet" shall mean the unaudited consolidated balance
sheet of XXXXX Holding as of September 30, 1997.
"XXXXX Balance Sheet Date" has the meaning set forth in Section 3.8.
"XXXXX Holding" means XXXXX Holding Company.
"Benefit Plan" shall mean any plan, agreement, arrangement or commitment
which is an employment or consulting agreement, executive or incentive
compensation plan, bonus plan, retention bonus plan, deferred compensation
agreement, employee pension, profit sharing, savings or retirement plan,
employee stock option or stock purchase plan, group life, health, disability,
sick pay or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, severance, holiday,
vacation, Christmas or other bonus plans (including, but not limited to,
employee benefit plans, as defined in Section 3(3) of ERISA), maintained for the
benefit of any employee or director or former employee or former director of
MAA, MAI or any of the Subsidiaries whether or not maintained by MAA, MAI or any
of the Subsidiaries or with respect to which MAA, MAI or any of the Subsidiaries
makes or has any obligation to make contributions.
"Books and Records" shall mean all of MAA's, MAI's and each of the
Subsidiaries' customer or subscriber lists and records, accounts and billing
records (including a copy of the detailed general ledger and the summary trial
balances, where available), detailed continuing property records, equipment
records, plans, blueprints, specifications, designs, drawings, surveys,
engineering reports, personnel records (where applicable) and all other
documents, computer data and records (including records and files on computer
disks or stored electronically) relating to the Subsidiaries.
"Business Day" means any day other than Saturday, Sunday or a day
that constitutes a legal holiday in the State of Illinois or the District of
Columbia.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Claim Notice" has the meaning set forth in Section 7.5(a).
"Closing" has the meaning set forth in Section 2.5.
"Closing Cash Payment" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 2.5.
"Closing Financial Statements" shall mean (i) the unaudited
consolidated income statement and statement of cash flows for XXXXX Holding for
the period from January 1, 1998 through the Closing Date and (ii) the unaudited
consolidated balance sheet for XXXXX Holding effective as of the Closing Date.
"Closing Stock Payment" has the meaning set forth in Section 2.3.
"Closing Working Capital" has the meaning set forth in Section 2.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Agreements" shall mean the Registration Rights
Agreement, the Escrow Agreement and all such other agreements entered into by
the parties hereto in connection with the transactions contemplated hereby.
"Common Stock" shall mean the common stock, par value $.01 per
share, of MAA and the common stock, par value $.01 per share, of MAI.
"Companies" shall mean MAA, MAI and the Subsidiaries.
"Company" shall mean any one of the Companies.
"Consideration Shares" has the meaning set forth in Section 2.2.
"Control" shall mean the power to direct the management and
policies of a Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Cumulative Temporary Differences" means the differences between
the bases in assets and liabilities for Financial Statement and income Tax
purposes that will result in the recognition of different amounts of income and
expense for Financial Statement and income Tax purposes in future periods.
"Disclosure Schedule" shall mean the Disclosure Schedule, including
the Introduction thereto, delivered simultaneously herewith by Seller and dated
as of even date herewith.
"Environmental Conditions" shall mean any and all acts, omissions,
events, circumstances, and conditions, including any pollution, contamination,
degradation, damage, or injury caused by, related to, or arising from or in
connection with the generation, use, handling, treatment, storage, disposal,
discharge, emission or release of Hazardous Materials.
"Environmental Laws" shall mean all federal, state, local or
municipal laws, rules, regulations, statutes, and ordinances and orders of any
Governmental Entity relating to (a) the control of any potential pollutant, or
protection of the air, water or land, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, and (c)
exposure to hazardous, toxic or other substances alleged to be harmful.
"Environmental Laws" shall include the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, the Superfund Amendments and
Reauthorization Act, the Toxic Substances Control Act, the Safe Drinking Water
Act, and the CERCLA, and shall also include all state, local and municipal laws,
rules, regulations, statutes, ordinances and orders dealing with the subject
matter of the above listed federal statutes or promulgated by any governmental
or quasi-governmental agency thereunder in order to carry out the purposes of
any federal, state, local or municipal law.
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative and/or monitoring costs and any
other related costs and expenses), other causes of action recognized now or at
any later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorneys' fees and
other legal costs incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directive embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of, in connection with, or under Environmental Laws,
(b) pursuant to any claim by a Governmental Entity or other Person for personal
injury, property damage, damage to natural resources, remediation, or payment or
reimbursement of response costs incurred or expended by such Governmental Entity
or Person pursuant to common law or statute, or (c) as a result of Environmental
Conditions.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any person, firm or entity (whether or
not incorporated) which, by reason of its relationship with MAA, MAI or any of
the Subsidiaries, is required to be aggregated with MAA, MAI or any of the
Subsidiaries under Sections 414(b), (c) or (m) of the Code or which, together
with MAA, MAI or any of the Subsidiaries, is a member of a controlled group
within the meaning of Section 4001(a) of ERISA.
"Escrow Agent" shall mean a national banking association, trust
company or similar entity mutually acceptable to the parties.
"Escrow Agreement" shall mean an escrow agreement by and among
Seller, Purchaser, AMSC and the Escrow Agent containing such terms as are usual
and customary for similar documents used in similar circumstances, and
containing specifically the following terms:
(a) Upon consummation of the financing contemplated under Section
6.1(l) hereof, Purchaser shall deposit all of the net proceeds thereof with the
Escrow Agent (the "Escrowed Funds"); (b) Prior to the Closing, the Escrowed
Funds shall be maintained for the benefit of Purchaser, with the interest
accruing
thereon until the Closing Date being allocated to Purchaser; (c) Upon Closing,
(i) the MAI Purchase Price portion of the Escrowed Funds shall be maintained for
the benefit of Seller, with the interest accruing on such amount beginning as of
the Closing Date being allocated to Seller (the "Seller Escrowed Funds"), and
(ii) the remainder of the Escrowed Funds (including any interest accrued on the
Escrowed Funds prior to the Closing Date) shall be maintained for the benefit of
Purchaser, with the interest accruing on such remaining amount of Escrowed Funds
beginning as of the Closing Date being allocated to Purchaser (the "Purchaser
Escrowed Funds"); (d) Upon issuance of a Final Order from the FCC granting
consent with respect to the FCC Authorization, the Seller Escrowed Funds shall
be released to Seller and the Purchaser Escrowed Funds shall be released to
Purchaser; (e) In the event of a termination of this Agreement pursuant to
Article 9, all of the Escrowed Funds (including all interest accrued thereon)
shall be released to Purchaser.
"Estimated Working Capital" has the meaning set forth in Section
2.3.
"FCC" shall mean the Federal Communications Commission.
"FCC Authorization" has the meaning set forth in Section 2.6(a).
"FCC Consents" has the meaning set forth in Section 5.6.
"FCC Licenses" shall mean all licenses, certificates, permits or
other authorizations granted to MAA, MAI or any of the Subsidiaries by the FCC
that are used in the conduct of the business of MAA, MAI or the Subsidiaries.
"Final Order" shall mean an action or decision as to which: (1) no
request for a stay is pending, no stay is in effect, and any deadline for filing
such request that may be designated by statute or regulation has passed; (2) no
petition for rehearing or reconsideration or application for review is pending
and the time for filing any such petition or application has passed; (3) the FCC
(or comparable body exercising jurisdiction) does not have the action or
decision under reconsideration on its own motion and the specified time for
initiating such reconsideration has passed; and (4) no appeal is pending or in
effect and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
"Final Payment" has the meaning set forth in Section 2.4.
"Financial Statements" shall mean the consolidated balance sheets of XXXXX
Holding as of December 31, 1997, December 31, 1996, and December 31, 1995, the
related statements of income and retained earnings and notes thereto for the 12-
month periods then ended, examined by Price Waterhouse, LLP (or, in the case of
those for 1997, KPMG Peat Marwick), independent certified public accountants,
and the unaudited consolidated balance sheet of XXXXX Holding as of September
30, 1997 and the related consolidated statements of income and retained earnings
for the 9-month period then ended.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Governmental Entity" shall mean any public body or authority, including
courts of competent jurisdiction, domestic or foreign.
"Hazardous Materials" shall mean any (a) petroleum or petroleum products,
(b) hazardous substances as defined by ss. 101(14) of CERCLA and (c) any other
chemical, substance or waste that is regulated by any Governmental Entity under
any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnification Threshold Amount" has the meaning set forth in Section
7.3(a).
"Indemnitee" has the meaning set forth in Section 7.5.
"Indemnitor" has the meaning set forth in Section 7.5.
"Intellectual Property" shall mean all of the following
throughout the universe: (i) patents and patent applications and all forms and
equivalents thereof, including divisions, continuations, continuations-in-part,
utility patents, design patents, extensions, reissued and reexamined patents,
patents of addition, confirmation patents, importation patents, registration
patents, and inventor's certificates; (ii) rights to file patent applications
and other interests in inventions and discoveries, whether reduced to practice
or not, on which no patent application has been filed; (iii) copyrights and all
related and equivalent rights, including copyright registrations, applications
for copyright registration, moral rights, and neighboring rights; (iv) common
law and other trademarks, trade names, trade dress, and service marks, and
registrations and applications for registration thereof; (v) rights in
industrial designs, mask works, and registrations and applications for
registration thereof; (vi) trade secrets; (vii) methods, processes, computer
software, designs, drawings, laboratory notebooks, technical data, research and
development data, know-how, market reports, consumer investigations, product
surveys, distribution methods, and customer lists; (viii) licenses to or under
and shop rights in any of the foregoing; and (ix) all other proprietary
information; provided, however, that the term "Intellectual Property" shall not
include any generally available "off-the-shelf" software purchased for use in
the day-to-day operations of the Companies.
"Interim Financial Statement" shall mean the XXXXX Balance Sheet and
the related consolidated statements of income and retained earnings and notes
thereto for the 9-month period then ended.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Litigation" shall mean, with respect to any Person, any action,
claim, demand, suit, proceeding, citation, summons, subpoena, inquiry or
investigation of any nature, civil, criminal, regulatory or otherwise, in law or
in equity, pending or threatened against, by or affecting such Person or any of
its properties or assets, by or before any court, tribunal, arbitrator or other
Governmental Entity.
"Lock-up Period" has the meaning set forth in Section 5.9.
"Losses" has the meaning set forth in Section 7.1.
"MAA Purchase Price" has the meaning set forth in Section 2.2(B).
"MAA Shares" shall mean all of the shares of capital stock of MAA
outstanding immediately prior to the Closing.
"MAI Purchase Price" has the meaning set forth in Section 2.2(A).
"MAI Shares" shall mean all of the shares of capital stock of MAI
outstanding immediately prior to the Closing.
"Management Employee" shall mean the key managers of XXXXX, to be
designated by Seller prior to the time Purchaser's obligations to Seller arise
under the last sentence of Section 5.14 herein, not to exceed 12 employees.
"Market Value" shall mean the average of the closing prices of the
AMSC Common Stock on the Nasdaq Stock Market (National Market System) for the 20
trading days immediately preceding the date of such calculation.
"Material Adverse Effect" shall mean a material adverse effect on MAA,
MAI and the Subsidiaries, taken as a whole.
"Material Adverse Change" shall mean a material adverse change in the
business, operation, assets, properties, or condition (financial or otherwise)
of MAI, MAA and the Subsidiaries, taken as a whole.
"Merger" has the meaning set forth in Section 2.1(a).
"Merger Sub" shall mean a wholly-owned subsidiary of AMSC established
for the purpose of consummating the Merger with MAA.
"Multiemployer Plan" shall mean each Benefit Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"NASD" has the meaning set forth in Section 2.7(a)(iv).
"Non-FCC Authorizations" shall mean all licenses, certificates,
permits, franchises, or other authorizations (other than FCC Licenses) granted
to MAA, MAI or any of the Subsidiaries by Governmental Entities that are used in
or relate to the conduct of the business of MAA, MAI or any of the Subsidiaries,
including, without limitation, those from any state public service commission,
public utility commission or similar state agency.
"Nonsolicitation Period" has the meaning set forth in Section 5.10.
"Notice Period" has the meaning set forth in Section 7.5(b).
"Other Subsidiaries" shall mean the Subsidiaries other than XXXXX.
"Other Tax Costs" means liabilities, costs and expenses (including
reasonable expenses of investigation and reasonable attorneys' fees and
expenses) arising out of or incidental to the imposition, assessment or
assertion of Taxes; provided, however, that expenses for investigation and
attorneys' fees incurred prior to the time the indemnified party notifies the
indemnifying party of its claim for indemnification shall not constitute Other
Tax Costs if the indemnifying party acknowledges in writing within fifteen (15)
days of the time of such notice that it assumes full and complete financial
responsibility for the issue or issues for which indemnification is sought; and
further provided, that Other Tax Costs shall not include any expenses for
investigation or attorney fees incurred subsequent to the notification referred
to in the preceding clause of this definition provided the indemnifying party
timely makes the written acknowledgment described in such clause and is actively
handling the matter with respect to which indemnification is acknowledged.
"Permitted Lien" shall mean (a) tax Liens with respect to taxes not
yet due and payable; or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves (as determined in accordance with
and to the extent required by GAAP) have been established on the books of any
Subsidiary with respect thereto; (b) deposits or pledges made in connection with
or to secure payment of utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security obligations;
(c) interests or title of a lessor under any lease, mechanics',
materialmen's or contractors' Liens or any similar Lien or restriction for
amounts not yet due and payable; (d) easements, rights-of-way, restrictions and
other similar charges and encumbrances not materially interfering with the
ordinary conduct of the business of the Subsidiaries or detracting from the
value of the assets of its Subsidiaries; (e) other Liens, imperfections in
title, charges, easements, restrictions and encumbrances; which, individually or
in the aggregate, do not detract from the value in any material respect, or
materially interfere with the present use of the property subject thereto or
affected thereby.
"Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Purchaser" has the meaning set forth in the introductory paragraph
hereof.
"Real Property" has the meaning set forth in Section 3.20(a).
"Realty Rights" shall mean those certain easements, privileges, right-
of-way agreements, surface use rights, servitudes, and other real property
interests necessary for access to or which are ancillary or appurtenant to the
use and enjoyment of other Real Property or the operation of the business of
MAA, MAI or the Subsidiaries.
"Reconciliation Adjustment in Favor of Purchaser" has the meaning set
forth in Section 2.4.
"Reconciliation Adjustment in Favor of Seller" has the meaning set
forth in Section 2.4.
"Registration Rights Agreement" has the meaning set forth in
Section 5.8.
"Regulatory Approvals" has the meaning set forth in Section 5.5.
"Required Consents" has the meaning set forth in Section 3.2(b).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller" has the meaning set forth in the introductory paragraph
hereof.
"Seller Group" shall mean any Affiliated Group including Seller or any
successor thereof or, if such Affiliated Group shall cease to exist, Seller and
any successors thereto.
"Severance Package" has the meaning set forth in Section 5.14.
"Shares" shall mean all of the MAA Shares and MAI Shares.
"Short Taxable Year" shall mean any Taxable Year that either begins or
ends on the Closing Date or begins on the date immediately after the Closing
Date, in either case by reason of the purchase and sale of the Shares.
"Split Period" means a taxable period that begins on or before the
Closing Date and ends after the Closing Date.
"State" means any state of the United States of America, the District
of Columbia, or a local jurisdiction thereof.
"Subsidiaries" shall mean XXXXX, XXXXX Holding, Radio Data Network
Holding Corporation, and each corporation, limited liability company and
partnership identified as such in Section 3.1 of the Disclosure Schedule.
"Tax" or "Taxes" shall mean all taxes, however denominated, including
any interest, penalties or additions to tax or other additional amounts that may
become payable in respect thereof, imposed by any federal, State, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all net or gross income taxes, payroll and employee taxes (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), withholding taxes, unemployment insurance taxes,
social security (or similar) taxes, disability taxes, registration taxes, sales
and use taxes, excise taxes, franchise taxes, gross receipts taxes, occupation
taxes, premium taxes, windfall profits taxes, environmental taxes (including
taxes under Code Section 59A), real and
personal property taxes, ad valorem taxes, stamp taxes, value added taxes,
alternative or add-on minimum taxes, transfer taxes, profits taxes, licenses,
estimated taxes, severance taxes, duties (custom and others), workers'
compensation taxes, and other taxes, customs, duties, fees, assessments, charges
or obligations of the same or of a similar nature, whether arising before, on or
after the Closing Date.
"Tax Returns" shall mean all returns, declarations, reports,
estimates, and information statements and returns relating to Taxes, including
but not limited to, original returns and filings, amended returns, claims for
refunds, and information returns, and any schedules or attachments to any of the
foregoing.
"Taxable Year" shall mean any taxable year or any other taxable period
(including any Short Taxable Year) with respect to which any Tax may be imposed
under any applicable statute, rule or regulation.
"Threshold Amount" shall mean an amount resulting from an adverse
effect on the financial condition, assets or results of operations of MAA, MAI
or any of the Subsidiaries exceeding $50,000.
"UPS Contract" has the meaning set forth in Section 5.12.
"Working Capital Schedule" has the meaning set forth in Section
2.4(a).
ARTICLE 2. MERGER, PURCHASE AND SALE OF SHARES.
Section 2.1 Merger, Purchase and Sale of Shares. On the Closing Date,
on the terms and subject to the conditions hereinafter set forth:
(a) AMSC shall cause Merger Sub to be merged with and into MAA (the
"Merger") such that (i) each issued and outstanding share of capital stock of
Merger Sub prior to the Merger shall be converted into one MAA Share, and (ii)
any MAA Shares issued and outstanding prior to the Merger shall be converted
into the right to receive the MAA Purchase Price to be delivered in exchange
therefor, such that following the Merger, MAA shall be a wholly-owned subsidiary
of AMSC. The certificate of incorporation of Merger Sub, as
in effect on the date of the Merger shall be the certificate of incorporation of
MAA. Immediately following the Merger, AMSC shall transfer all of the MAA Shares
to Purchaser.
(b) Seller shall sell, assign, transfer and deliver to Purchaser, and
Purchaser shall purchase, all of the MAI Shares free and clear of all Liens,
subject to release by the Escrow Agent of the MAI Purchase Price to Seller,
pursuant to the terms of the Escrow Agreement.
Section 2.2 MAI Purchase Price and MAA Purchase Price. The purchase prices
to be paid by AMSC and Purchaser for the MAI Shares and the MAA Shares shall be
paid on the Closing Date as follows: (A) for the MAI Shares, by depositing with
the Escrow Agent Fifty Million Dollars ($50,000,000) in immediately available
funds, subject to adjustment pursuant to Sections 2.3 and 2.4 below (the "MAI
Purchase Price"), payable by the Escrow Agent to Seller upon receipt by the
parties of a Final Order from the FCC with respect to the FCC Authorization; and
(B) with respect to the MAA Shares acquired pursuant to the terms of Section
2.1(a), by AMSC delivering to Seller 6,549,217 shares of AMSC Common Stock (the
"Consideration Shares") having, in the aggregate, a Market Value as of the date
hereof of Fifty Million Dollars ($50,000,000), subject to adjustment pursuant to
Sections 2.3 and 2.4 below (the "MAA Purchase Price"), to Seller; provided,
however, that the total number of Consideration Shares shall not exceed 19.95%
of the total number of shares of AMSC Common Stock outstanding as of the Closing
Date (including the Consideration Shares), and, in such case, AMSC shall also
deliver to Seller, AMSC Warrants to purchase that number of shares of AMSC
Common Stock equal to the difference between (i) the number of Consideration
Shares which would be delivered but for this proviso and (ii) that number of
shares equal to 19.95% of the total number of shares of AMSC Common Stock
outstanding as of the Closing Date.
Section 2.3 Purchase Price Adjustments. The MAI Purchase Price and the MAA
Purchase Price shall each be decreased by 50% of the negative difference
between the Closing Working Capital and $7,300,000. Seller shall estimate the
Closing Working Capital in good faith (the "Estimated Working Capital") and
deliver such estimate to Buyer not less than five Business Days prior to the
Closing Date. At Closing, (i) the cash payment of the MAI Purchase Price shall
be $50,000,000 minus 50% of the negative difference between the Estimated
Working Capital and $7,300,000 (the "Closing Cash Payment"), and (ii) the shares
of AMSC Common Stock delivered in payment of the MAA Purchase Price shall be
6,549,217 minus such number of shares having, in the aggregate, a Market Value
as of the date hereof equal to 50% of the negative difference between the
Estimated Working Capital and $7,300,000 (the "Closing Stock Payment"). For
purposes of this Agreement, the term "Closing Working Capital" shall mean the
lesser of $7,300,000 and the actual working capital of XXXXX, on a consolidated
basis, as of the Closing Date determined from the books and records of XXXXX in
accordance with past practice and, to the extent not inconsistent therewith,
GAAP; provided, however, that in no event shall the proceeds referenced in
Section 5.16 hereof be included in the calculation of the Closing Working
Capital.
Section 2.4 Post-Closing Purchase Price Adjustment.
(a) Not more than 60 days after the Closing, Purchaser shall prepare
and deliver to Seller a schedule (the "Working Capital Schedule") showing (i)
the calculation of the actual Closing Working Capital of XXXXX; (ii) the amount,
if any, by which the Closing Working Capital exceeds the Estimated Working
Capital (a "Reconciliation Adjustment in Favor of Seller"); and (iii) the
amount, if any, by which the Estimated Working Capital is less than the Closing
Working Capital (a "Reconciliation Adjustment in Favor of Purchaser").
(b) The proposed actual Closing Working Capital shown in the Working
Capital Schedule shall become final and binding upon the parties unless, within
30 days of delivery of the Working Capital Schedule, Seller shall notify
Purchaser of its objection thereto. If within 30 days following the receipt of
such notice by Seller any of such differences shall not
have been resolved, such unresolved issues shall be referred to a nationally
recognized firm of independent certified public accountants, mutually acceptable
to the parties, for resolution, whose opinion thereon and the resulting actual
Closing Working Capital shall be final, binding and not subject to any appeal.
The fees and expenses of such public accounting firm shall be paid one-half by
Purchaser and one-half by Seller.
(c) On the applicable date referred to in Section 2.4(d), (i) if
there is a Reconciliation Adjustment in Favor of Seller, Purchaser shall (x) pay
to Seller a cash amount equal to 50% of the Reconciliation Adjustment in Favor
of Seller and (y) deliver to the Seller a certificate evidencing such number of
shares of AMSC Common Stock having, in aggregate, a Market Value on the Closing
Date equal to 50% of the Reconciliation Adjustment in Favor of Seller; and (ii)
if there is a Reconciliation Adjustment in Favor of Purchaser, Seller shall (i)
pay to Purchaser a cash amount equal to 50% of the Reconciliation Adjustment in
Favor of Purchaser and (y) deliver to the Purchaser a stock certificate endorsed
in blank such number of shares of AMSC Common Stock having, in aggregate, a
Market Value on the Closing Date equal to 50% of the Reconciliation Adjustment
in Favor of Purchaser. Any such payment is hereinafter referred to as a "Final
Payment." In the event that the Escrow Agent holds any cash at the time of the
Final Payment, such payment to the Seller or such payment by the Seller, as
applicable, shall instead be made to or by the Escrow Agent. Notwithstanding the
foregoing, in the event that any issuance to Seller of shares of AMSC Common
Stock under this Section 2.4 would, when taken together with the issuance to
Seller of shares of AMSC Common Stock under Section 2.2, cause the number of
such shares issued to Seller in the aggregate to exceed 19.95% of the total
number of shares of AMSC Common Stock outstanding as of the date of the proposed
issuance of shares under this Section 2.4(c) (including the shares to be so
issued), AMSC shall deliver to Seller AMSC Warrants to purchase that number of
shares of AMSC Common Stock equal to the difference between (i) the number of
total shares which would be delivered pursuant to Section 2.2 and
this Section 2.4 but for this sentence and (ii) that number of shares equal to
19.95% of the total number of shares of AMSC Common Stock outstanding as of the
Closing Date.
(d) Any Final Payment shall be made as follows: (i) the cash portion
of any Final Payment shall be made by wire transfer of immediately available
funds within 5 Business Days after its determination in accordance with this
Section 2.4, to an account specified by the party to receive such Final Payment;
and (ii) the portion of any Final Payment payable in AMSC Common Stock shall be
made by transferring the stock certificate(s) representing such shares (and, if
applicable, stock powers executed in blank), within five Business Days after its
determination in accordance with this Section 2.4, to the party to receive such
Final Payment. All such shares shall be delivered free and clear of any Liens.
Section 2.5 Closing Place, Date and Time. The closing of the purchase and
sale of the Shares (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxx, 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000 or at such other place as
Seller and Purchaser may agree, upon the effective date of the FCC
Authorization, or if Seller and Purchaser otherwise agree, then the Closing
shall take place at such later time and date as may be mutually agreed upon in
writing by the Seller and Purchaser. All transactions shall be deemed to take
effect at close of business, local time, on the effective date of the FCC
Authorization or such other time and date as may be mutually agreed upon by
Seller and Purchaser (such time and date or such other time and date being
referred to herein as the "Closing Date").
Section 2.6 FCC Authorization and Final Order.
(a) FCC Authorization. Upon grant of a consent by the FCC sufficient
to authorize transfer of the Shares to Purchaser and to permit Purchaser to
operate the businesses of XXXXX and the Other Subsidiaries (the "FCC
Authorization"), and satisfaction or waiver of the representations,
warranties and covenants herein, the parties shall hold the Closing on the
Closing Date; provided, however, that in the event either Seller or Purchaser
obtains an opinion of legal counsel, in substance and in form, and from counsel,
reasonably satisfactory to the other party, that there exists a material
likelihood that the FCC will issue an adverse Final Order with respect to the
FCC Authorization (an "Adverse Legal Opinion"), the Closing shall not take place
until receipt of a Final Order of the FCC.
(b) Favorable Final Order. Upon receipt by the parties of a Final
Order from the FCC granting consent with respect to the FCC Authorization, the
MAI Purchase Price shall be released by the Escrow Agent to the Seller in
accordance with the terms of the Escrow Agreement.
Section 2.7 Deliveries at the Closing.
(a) At the Closing, Purchaser and AMSC shall deliver the following:
(i) to the Escrow Agent, the MAI Purchase Price in immediately
available funds, pursuant to the terms of the Escrow Agreement;
(ii) to the Seller, the MAA Purchase Price, represented by one
or more certificates evidencing AMSC Common Stock and, if applicable, AMSC
Warrants;
(iii) to Seller, certified copies of resolutions duly adopted by
AMSC and Purchaser constituting all necessary corporate authorization for the
consummation by AMSC and Purchaser of the transactions contemplated by this
Agreement;
(iv) to Seller, certified copies of meeting minutes and
resolutions duly adopted by the shareholders of AMSC Common Stock approving the
transactions contemplated herein, as and to the extent required under the Rules
of the National Association of Securities Dealers, Inc. ("NASD") (the "AMSC
Shareholder Approval");
(v) to Seller, the certificate
required by Section 6.2(d);
(vi) to Seller, certificates of incumbency for all relevant
officers or directors of AMSC and Purchaser executing this Agreement and any
other documents pursuant to this Agreement;
(vii) to Seller, an opinion or opinions of counsel to AMSC and
Purchaser in form and substance reasonably satisfactory, including opinions with
respect to the due organization and good standing of AMSC and Purchaser, due
authorization of AMSC and Purchaser to consummate and perform their respective
obligations under the Agreement and Collateral Agreements, and the due
authorization and valid issuance of the AMSC Common Stock to Seller;
(viii) to Seller, an executed Registration Rights Agreement; and
(ix) to Seller, such other documents, instruments, certificates
and writings as reasonably may be requested by Seller at least three Business
Days prior to the Closing.
(b) At the Closing, Seller shall deliver the following:
(i) to the Purchaser, the stock certificates representing all
of the Shares, endorsed in blank or accompanied by duly executed instruments of
transfer;
(ii) to AMSC and Purchaser, the certificates required by
Section 6.1(d);
(iii) to AMSC and Purchaser, certified copies of the certificate
of incorporation and by-laws or comparable organizational documents of MAA, MAI
and each of the Subsidiaries and evidence of good standing of each in its
respective jurisdiction of incorporation and in each jurisdiction where each is
qualified to transact business as a foreign corporation;
(iv) to AMSC and Purchaser, the written resignations effective
as of the Closing Date of all directors and officers of MAA, MAI and each of the
Subsidiaries;
(v) to AMSC and Purchaser, the minute books, corporate seals
and stock ledger, or analogous documents, of MAA, MAI and each of the
Subsidiaries together with certificates evidencing all of the outstanding shares
of stock, or other comparable evidence of ownership interest, issued by each of
the Subsidiaries;
(vi) to AMSC and Purchaser, an opinion or opinions of counsel
to Seller in form and substance reasonably satisfactory, including opinions with
respect to the due organization and good standing of Seller, MAA, MAI and the
Subsidiaries, due authorization of Seller, MAI and MAA to consummate and perform
their respective obligations under the Agreement and Collateral Agreements, and
the due authorization and valid issuance of the MAA Shares and MAI Shares to
Seller;
(vii) to AMSC and Purchaser, such other documents, instruments,
certificates and writings as reasonably may be requested by AMSC or Purchaser at
least three Business Days prior to the Closing.
Section 2.8 Deliveries Post-Closing. Within 15 Business Days of the
Closing Date, Seller shall deliver to Purchaser the Closing Financial
Statements.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller hereby represents and warrants as follows to Purchaser and AMSC:
Section 3.1 Organization and Good Standing.
(a) MAA, MAI and each of the Subsidiaries are duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of organization and each has the full corporate or partnership power to conduct
its business as presently conducted and to own and operate the assets and
properties now owned and operated by it. Section 3.1(a) of the Disclosure
Schedule sets forth the full name of each of the Subsidiaries
and the state of organization of MAA, MAI and each of the Subsidiaries and each
other jurisdiction in which MAA, MAI or the Subsidiaries is qualified to do
business. Except as set forth in Section 3.1(a) of the Disclosure Schedule, MAA
and MAI and each of the Subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which qualification is required as set
forth in Section 3.1(a) of the Disclosure Schedule except, in each case, to the
extent that the failure to be so qualified is not reasonably expected to have a
Material Adverse Effect.
(b) Neither MAA nor MAI has any subsidiaries or owns any shares of
any corporation or has any ownership or other investment interest, either of
record, beneficially, or equitably, in any association, partnership, joint
venture or other legal entity other than the 50% general partnership interest
each of MAA and MAI owns in XXXXX Holding. XXXXX Holding does not own any
subsidiaries or own any shares of any corporation and does not have any
ownership or other investment interest, either of record, beneficially, or
equitably, in any association, partnership, joint venture or other legal entity
other than its ownership of all of the issued and outstanding stock of Radio
Data Network Holding Corporation and its ownership of all of the issued and
outstanding general partnership interest in XXXXX which is not owned by Radio
Data Network Holding Corporation. Radio Data Network Holding Corporation does
not own any subsidiaries or own any shares of any corporation and does not have
any ownership or other investment interest, either of record, beneficially, or
equitably, in any association, partnership, joint venture or other legal entity
other than its ownership of all of the issued and outstanding general
partnership interest in XXXXX which is not owned by XXXXX Holding. XXXXX does
not own any subsidiaries or own any shares of any corporation and does not have
any ownership or other investment interest, either of record, beneficially, or
equitably, in any association, partnership, joint venture or other legal entity.
(c) Section 3.1(c) of the Disclosure Schedule lists the directors and
officers of MAA, MAI and each of the Subsidiaries. Seller has
caused to be delivered to Purchaser true and complete copies of the certificate
of incorporation and bylaws of MAA and MAI, the comparable organizational
documents of each of the Subsidiaries, and, to the extent that they relate to
the period from January 1, 1995 to the date hereof, the records of meetings of
their respective stockholders, members or partners, as the case may be, board of
directors, managers and any committees of their respective board of directors or
managers, and all of the stock record books for all periods of MAA and MAI.
Neither MAA, MAI nor any of the Subsidiaries is in default under or in violation
of any provision of its certificate of incorporation, bylaws or comparable
organizational documents.
Section 3.2 Authority; No Required Consents or Governmental
Authorizations; No Breach of Statute or Contract;
Enforceability.
(a) Seller, MAA and MAI each has the full power and lawful authority
to execute and deliver this Agreement and all Collateral Agreements related
hereto and to consummate and perform the transactions contemplated hereby in the
manner herein provided. The execution and delivery of this Agreement and all
Collateral Agreements related hereto by Seller, MAA and MAI and the consummation
and performance by Seller, MAA and MAI of the transactions contemplated hereby
in the manner herein provided have been duly and validly authorized by all
necessary corporate action.
(b) Except as set forth in Section 3.2(b) of the Disclosure Schedule
(each such item being a "Required Consent"), and except for approvals, consents
or authorizations of, or filings with or notices to any governmental agency or
body or any other third party that may be required in connection with the
issuance of AMSC Common Stock or AMSC Warrants as contemplated hereby, neither
the execution and delivery by Seller, MAA and MAI of this Agreement or all
Collateral Agreements related hereto nor the consummation and performance by
Seller, MAA and MAI of the transactions contemplated hereby in the manner herein
provided (i) requires the approval, consent or authorization of, or any filing
with or notice to, any federal, state, local or other governmental agency or
body or any other third party, other than (A) approvals, consents,
authorizations, filings or notices of a character such that a failure to obtain
them would, reasonably be expected to have a Material Adverse Effect or
otherwise hinder the consummation of the transactions contemplated hereby and
(B) approvals, consents, authorizations, filings or notices which have been
obtained, made or given, or (ii) conflicts with or will result in an uncured or
unwaived breach or violation of any term or provision of, constitutes a default
under or will cause the acceleration of any payments pursuant to (A) the
certificates of incorporation, charters or By-laws, or comparable organizational
documents of MAA, MAI or any of the Subsidiaries, (B) any indenture, mortgage,
deed of trust, lease, note or note agreement or any other agreement or
instrument to which Seller, MAA, MAI or any of the Subsidiaries is a party or by
which Seller, MAA, MAI or any of the Subsidiaries or any of their assets or
properties is bound, (C) any governmental license, franchise, permit or other
authorization held by Seller, MAA, MAI or any of the Subsidiaries or (D) any
law, judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator or governmental agency or body applicable to Seller, MAA, MAI
or any of the Subsidiaries the breach or violation of which would, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect or
otherwise prevent the consummation of the transactions contemplated hereby.
(c) This Agreement constitutes, and all Collateral Agreements related
hereto will be, when executed and delivered by Purchaser, assuming the
enforceability of this Agreement and such Collateral Agreements upon Purchaser,
valid and binding obligations of Seller, MAA and MAI, and will be enforceable
against Seller, MAA and MAI in accordance with their terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally.
Section 3.3 Ownership of Shares. The Shares are owned by Seller
beneficially and of record, free and clear of all Liens.
Section 3.4 Capitalization of MAA, MAI and the Subsidiaries. The
authorized capital stock of MAA consists of 1,000 shares of Common Stock, 1,000
of which shares are issued and are outstanding on the date hereof. The
authorized capital stock of MAI consists of 1,000 shares of Common Stock, 1,000
of which shares are issued and are outstanding on the date hereof. All of the
Shares have been duly authorized, are validly issued and outstanding, and are
fully paid and nonassessable. They are owned beneficially and of record as shown
in Section 3.4 of the Disclosure Schedule. There are no preemptive rights with
respect to any of the Shares. The authorized capital stock of each of the
corporate Subsidiaries and the ownership of each Subsidiary's respective capital
interests, are as shown in Section 3.4 of the Disclosure Schedule. The
percentage ownership interests in each of the non-corporate Subsidiaries are as
shown in Section 3.4 of the Disclosure Schedule. All of the outstanding
ownership interests of the Subsidiaries have been duly authorized, validly
issued and are fully paid and nonassessable. There are no preemptive rights with
respect to any such ownership interests. Except as shown in Section 3.4 of the
Disclosure Schedule, each of MAA and MAI owns their respective interests in each
Subsidiary beneficially and of record free and clear of all Liens. There are no
outstanding agreements, subscriptions, options, warrants, convertible
securities, calls, commitments or rights of any kind (contingent or otherwise)
pertaining to the issuance or purchase of any securities of MAA, MAI or any of
the Subsidiaries.
Section 3.5 Corporate Records. Purchaser and AMSC have been provided with
current, correct and complete copies of all charter documents or partnership
agreements, as the case may be, of MAA, MAI and the Subsidiaries, respectively,
including all amendments thereto and restatements thereof. The stock record
books, or comparable ownership record books, of MAA, MAI and of each of the
Subsidiaries, respectively, are also current, correct and
complete and reflects the issuance of all of the Shares to Seller. All existing
minutes of meetings and resolutions of MAA, MAI and the Subsidiaries have been
provided to Purchaser and AMSC and are correct, and there have been no other
actions or proceedings of MAA's, MAI's or any Subsidiary's shareholders, members
or partners, as the case may be, or boards of directors, managers or committees
thereof of a nature which would have to be disclosed under this Agreement that
has not been so disclosed.
Section 3.6 Employee Benefit Plans.
(a) Section 3.6(a) of the Disclosure Schedule contains a true and
complete list of the Benefit Plans. Neither MAA, MAI, nor any Subsidiary has any
formal plan or commitment, whether legally binding or not, to create any
additional plan or modify or change any existing Benefit Plan that would affect
any employee or director or former employee or former director of MAA, MAI or
any Subsidiary.
(b) With respect to each of the Benefit Plans, Seller has heretofore
delivered to AMSC true and complete copies of each of the following documents:
(i) the Benefit Plan and related documents (including all amendments thereto);
(ii) the two most recent annual reports, financial statements, and actuarial
reports, if any; (iii) the most recent summary plan description, together with
each summary of material modifications, required under ERISA with respect to
such Benefit Plan, and all material employee communications relating to such
Benefit Plan; and (iv) the most recent determination letter received from the
IRS with respect to each Benefit Plan that is intended to be qualified under the
Code and all material communications to or from the IRS or any other
governmental or regulatory authority relating to each Benefit Plan.
(c) No liability under Title IV of ERISA has been incurred by XXXXX
or any ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to MAA, MAI or any
Subsidiary of incurring a liability under such Title. None of the Benefit Plans
is subject to Title IV of ERISA.
(d) Neither MAA, MAI nor any Subsidiary, nor any of the Benefit
Plans, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in a prohibited transaction (within the meaning of Section
406 of ERISA and Section 4975 of the Code) in connection with which MAA, MAI, or
any Subsidiary could incur, either directly or indirectly, liability for either
a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code or any other liability or
cost.
(e) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts that XXXXX or any ERISA Affiliate
is required to pay under Section 412 of the Code or under the terms of the
Benefit Plans, and all amounts that have not been paid by MAA, MAI or any
Subsidiary under the Benefit Plans are properly accrued through the Closing Date
and recorded on the Closing Financial Statements.
(f) None of the Benefit Plans is a Multiemployer Plan, a "multiple
employer welfare arrangement," as such term is defined in Section 3(40) of
ERISA, or a single employer plan that has two or more contributing sponsors, at
least two of whom are not under common control, within the meaning of Section
4063(a) of ERISA.
(g) Each of the Benefit Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, and a
determination letter to that effect has been issued by the IRS with respect to
each such Benefit Plan. Each of the Benefit Plans that is intended to satisfy
the requirements of Section 125 or 501(c)(9) of the Code satisfies such
requirements. Each of the Benefit Plans has been operated and administered in
all material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Code.
(h) There are no actions, suits or claims pending, or, to the
knowledge of Sellers, threatened or anticipated (other than
routine claims for benefits) against any Benefit Plan, the assets of any
Benefit Plan or against XXXXX or any ERISA Affiliate with respect to any Benefit
Plan. There is no judgment, decree, injunction, rule or order of any court,
governmental body, commission, agency or arbitrator outstanding against or in
favor of any Benefit Plan or any fiduciary thereof (other than rules of general
applicability). There are no pending or threatened audits or investigations by
any governmental body, commission or agency involving any Benefit Plan.
(i) No Benefit Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees or directors after retirement or other termination of service
(other than (i) coverage mandated by applicable law, (ii) death benefit or
retirement benefits under any "employee pension plan," as that term is defined
in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the XXXXX Balance Sheet or (iv) benefits, the full cost of which
is borne by the current or former employee or director (or his beneficiary)).
(j) None of the assets of the Benefit Plans (i) constitute employer
real property or employer securities (within the meaning of Section 407(d) of
ERISA), or (ii) are invested in any property, security or other ownership
interest that is not publicly traded.
(k) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or director of
MAA, MAI, or any Subsidiary to severance pay, unemployment compensation or any
similar payment, or (ii) accelerate the time of payment or vesting, or increase
the amount, of any compensation due to any such current or former employee or
director, or (iii) renew or extend the term of any agreement regarding
compensation for any such current or former employee or director. On and after
January 1, 1997, except as set forth on Section 3.6(k) of the Disclosure
Schedule no employee or former employee of MAA, MAI or any of the Subsidiaries
has become covered by, or a participant in, the XXXXX Supplemental
Executive Retirement Plan, Long-Term Incentive Plan, or Retention Bonus Plan.
Section 3.7 Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of Seller or under its authority is or will be
entitled, directly or indirectly, to collect from or otherwise hold Purchaser,
AMSC, MAA, MAI or any of the Subsidiaries liable for any broker's or finder's
fee or any other commission or similar fee in connection with any of the
transactions contemplated herein.
Section 3.8 Financial Statements. (a) The Financial Statements are complete
copies of all of which have been delivered to Purchaser, present fairly in all
material respects the financial position and assets and liabilities of XXXXX
Holding as of their respective dates, and the results of its operations for the
fiscal periods then ended, in conformity with GAAP provided, however, that the
Interim Financial Statements are subject to normal, year-end adjustment and lack
footnotes and other presentation items. On the Closing Date, the consolidated
balance sheet of XXXXX Holding as of December 31, 1997, the related consolidated
statements of income and retained earnings and notes thereto for the 12-month
period then ended, examined by KPMG Peat Marwick, independent certified public
accountants, a complete copy of which shall have been delivered to Purchaser
prior to the Closing Date, shall present fairly in all material respects the
financial position and assets and liabilities of XXXXX Holding as of December
31, 1997, and the results of its operations for the fiscal period then ended, in
conformity with GAAP. All references in this Agreement to the "XXXXX Balance
Sheet Date" shall be deemed to refer to September 30, 1997; provided, however,
that on the Closing Date all references in this Agreement to the "XXXXX Balance
Sheet Date" shall be deemed to refer to the audited December 31, 1997.
(b) Neither Seller nor any other Person regularly compiles, maintains
or prepares financial statements for MAI or MAA. Each of MAA, XXX, XXXXX Holding
and Radio Data Network Holding Corporation undertakes no
regular financial or business activities and has no material assets other than
its ownership interests in the Subsidiaries.
Section 3.9 Accounts Receivable. All accounts receivable included in the
calculation of the actual Closing Working Capital pursuant to Section 2.4 will
have arisen only in the ordinary course of business, consistent with past
practice, and will not be subject to defenses, set-offs or counterclaims. All of
such accounts receivable are generally due within 30 days after being accrued on
the books of XXXXX. The allowance for such doubtful accounts in the calculation
of the actual Closing Working Capital pursuant to Section 2.4 has been
determined in accordance with GAAP.
Section 3.10 Absence of Undisclosed Liabilities. Except as disclosed in
Section 3.10 of the Disclosure Schedule or elsewhere in this Agreement or the
Disclosure Schedule, neither MAA nor MAI has any liabilities or obligations,
either accrued, absolute, contingent or otherwise. Except as disclosed in
Section 3.10 of the Disclosure Schedule or elsewhere in this Agreement or the
Disclosure Schedule, none of the Subsidiaries has any liabilities or
obligations, either accrued, absolute, contingent or otherwise, except:
(a) those liabilities or obligations set forth on the XXXXX Balance
Sheet and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed on the
Disclosure Schedule or not required to be disclosed because of the term or
amount involved or otherwise; and
(c) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course of
business since the XXXXX Balance Sheet Date.
For purposes of this Section, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility,
known or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
Section 3.11 Existing Condition. Except as disclosed in Section 3.11 of the
Disclosure Schedule, since December 31, 1996 in the case of MAA and MAI and
since the XXXXX Balance Sheet Date in the case of the Subsidiaries, neither MAA,
MAI nor any of the Subsidiaries has:
(a) declared, set aside or paid any dividend or made or agreed to
make any other distribution or payment in respect of its capital shares or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
acquire any of its capital shares;
(b) incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or is reasonably expected to cause a Material Adverse Effect;
(c) sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past practice;
(d) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any Lien, conditional
sales contract or other encumbrance of any nature whatsoever any of its assets
or properties, other than Permitted Liens;
(e) made or suffered any material amendment or any termination of any
material agreement, contract, commitment, lease or plan to which it is a party
or by which it is bound, or cancelled, modified or waived any debts or claims
held by it, other than in the ordinary course of business consistent with past
practice;
(f) suffered any damage, destruction or loss, whether or not
covered by insurance which has had a Material Adverse Effect or suffered any
repeated, recurring or prolonged shortage, cessation or interruption of supplies
or utility services required to conduct its business and operations;
(g) suffered any Material Adverse Change after taking into account
all disclosures set forth on the Disclosure Schedule;
(h) received notice or has knowledge of any actual or threatened
labor, union organizing effort, strike or other occurrence, event or condition
or any similar character which has had or could reasonably be expected to have a
Material Adverse Effect;
(i) received any notice or has any knowledge of any basis for
assertions of liability, claims, causes of action, charges, suits, complaints,
administrative proceedings, government investigations or proceedings,
arbitrations or other proceedings pending or threatened against MAA, MAI or any
of the Subsidiaries relating to any current or former employee or director of
MAA, MAI or any of the Subsidiaries, or any federal, state or local laws and
regulations thereunder or the common law relating to employment or employment
practices of MAA, MAI or any of the Subsidiaries;
(j) made any capital expenditure or capital addition or betterment
except such as may be involved in ordinary repair, maintenance and replacement
of its assets;
(k) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its shareholders, partners, directors, officers or employees, or
made any increase in, or any addition to, other benefits to which any of its
shareholders, partners, directors, officers or employees may be entitled other
than in the ordinary cause of business;
(l) changed any of the accounting principles followed by it or the
methods of applying such principles; or
(m) entered into any transaction other than as contemplated by this
Agreement or in the ordinary course of business consistent with past practice.
Section 3.12 Title to Properties; Leasehold Interests. MAA, MAI and each of
the Subsidiaries has valid title to all of its properties and assets, real,
personal and mixed, including all Real Property, and all of such properties and
assets free and clear of all Liens, except Permitted Liens and those items
disclosed in Section 3.12 of the Disclosure Schedule. All leases, licenses,
permits and authorizations in any manner related to the real or personal
properties used by MAA, MAI or any of the Subsidiaries and all other
instruments, documents and agreements pursuant to which MAA, MAI or any of the
Subsidiaries has obtained the right to use any real or personal property are in
good standing, valid and effective in accordance with their respective terms,
and there is not under any of such instruments, documents or agreements any
existing default or event which with notice or lapse of time, or both, would
constitute a default and in respect of which MAA, MAI or any of the Subsidiaries
has not taken adequate steps to prevent a default from occurring.
Section 3.13 Condition of Tangible Assets. All buildings, structures,
facilities, automobiles, trucks, other vehicles, machinery, equipment and other
material items of tangible personal property owned or operated by MAA, MAI or
any of the Subsidiaries are usable in the regular and ordinary course of
business of MAA, MAI or the Subsidiaries and conform in all material respects to
all applicable laws, ordinances, codes, rules and regulations relating to their
construction, use and operation. The failure, if any, of such buildings,
structures, facilities, automobiles, trucks, other vehicles, machinery,
equipment and other material items of tangible personal property to be in good
operating condition, subject to normal wear and maintenance, is not reasonably
expected to have a Material Adverse Effect.
Section 3.14 Books of Account. The books of account of XXXXX reflect all of
its items of income and expense, and all of its assets, liabilities and accruals
required to be reflected therein, in accordance with
GAAP.
Section 3.15 Litigation. Except as listed in Section 3.15 of the
Disclosure Schedule, no litigation, arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority is pending or, to the knowledge of Seller,
threatened against MAA, MAI or any of the Subsidiaries or their assets,
properties or business, or the transactions contemplated by this Agreement.
Other than as listed in Section 3.15 of the Disclosure Schedule, neither MAA,
MAI nor any of the Subsidiaries is a party to or subject to the provisions of
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority.
Section 3.16 Compliance with Law. MAA, MAI and each of the
Subsidiaries has complied with each, and is not in violation of any, law,
ordinance, or governmental rule or regulation to which they or their business,
operations, assets or properties are subject and has not failed to obtain or to
adhere to the requirements of any license, permit or authorization necessary to
the ownership of its assets and properties or to the conduct of its business,
which noncompliance, violation or failure to obtain or adhere to would
reasonably be expected to have a Material Adverse Effect. Neither MAA, MAI, any
of the Subsidiaries nor any officer, employee or agent thereof, or consultant
thereto has unlawfully offered, paid, or agreed to pay, directly or indirectly,
any money or anything of value to, or for the benefit of, any individual who is
or was a candidate for public office, or an official or employee of any
governmental or regulatory body or authority or an officer or employee of any
client, customer or supplier of MAA, MAI or any of the Subsidiaries.
Section 3.17 Environmental Matters. Section 3.17 of the Disclosure
Schedule contains an accurate and complete description of all Environmental
Liabilities, investigations, actions, proceedings of whatsoever nature, whether
pending or to Seller's knowledge threatened, involving MAA, MAI or any of the
Subsidiaries or their respective properties, assets, operations or businesses
arising under any Environmental Law. Except as specified in Section 3.17 of the
Disclosure Schedule: (a) the business of MAA, MAI and the Subsidiaries, the
methods and means employed by MAA, MAI and the Subsidiaries in the operation
thereof (including all operations and conditions at or in the properties of MAA,
MAI and the Subsidiaries), and the assets owned, leased, held or operated by
MAA, MAI and the Subsidiaries, comply in all material respects with all
Environmental Laws; (b) MAA, MAI and the Subsidiaries have obtained all permits
under Environmental Laws necessary to their operations, and all such permits are
in good standing and MAA, MAI and the Subsidiaries are in compliance with all
material terms and conditions of such permits; and (c) neither MAA, MAI nor any
of the Subsidiaries has received (i) any written claim or notice of violation,
lien, complaint, suit, order or other written claim or notice to the effect that
it is or may be liable to any Person as a result of (A) the environmental
condition of any of their respective properties or any other property, or (B)
the release or threatened release of any Hazardous Materials, or (ii) any letter
or request for information under Section 104 of CERCLA or comparable state laws,
and to Seller's knowledge, none of the operations of MAA, MAI or the
Subsidiaries are the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release or threatened
release, of any Hazardous Material at MAA's, MAI's or the Subsidiaries'
properties or at any other location, including any location to which MAA, MAI or
the Subsidiaries have transported, or arranged for the transportation of, any
Hazardous Materials.
Section 3.18 Insurance. Section 3.18 of the Disclosure Schedule
contains a correct and complete list of all insurance policies or binders of
insurance held by or on behalf XXXXX relating to its business or any of its
assets or properties (specifying the insurer, the amount of the coverage, the
type of insurance, the risks insured and any pending claims thereunder). The
policies and binders listed in Section 3.18 of the Disclosure Schedule hereto
are duly in force as of the date hereof. There is no default with respect to any
material provision contained in any such policy or binder, nor has there been
any failure to give any notice or present any claim under any such policy or
binder in a timely fashion or in the manner or detail required by the policy or
binder. There are no outstanding unpaid premiums or claims. No notice of
cancellation or nonrenewal with respect to, or disallowance of any claim under,
any such policy or binder has been received by MAA, MAI or any of the
Subsidiaries. Section 3.18 of the Disclosure Schedule also contains a true and
complete description of all outstanding bonds and other surety arrangements
issued or entered into in connection with the business and operations of MAA,
MAI or any of the Subsidiaries.
Section 3.19 Contracts and Commitments. Except as listed and described
in Section 3.19 of the Disclosure Schedule, neither MAA, MAI nor any of the
Subsidiaries is a party to any written or oral:
(a) agreement, contract or commitment with any present or former
shareholder, director, officer, employee or consultant or for the employment of
any person, including any consultant pursuant to which payments thereunder are
obligations of MAA, MAI or any Subsidiary which are not payable by Seller;
(b) agreement, contract, commitment or arrangement with any labor
union or other representative of employees;
(c) agreement, contract, commitment for the future purchase of,
or payment for, supplies or products, or for the performance of services by a
third party, involving in any one case $50,000 or more;
(d) agreement, contract, commitment to sell or supply products or
to perform services, having with respect to revenues to be delivered or
potential liabilities reasonably to be incurred in any one case $100,000 or more
on an annual basis;
(e) agreement, contract, commitment not otherwise listed on the
Disclosure Schedule and continuing over a period of more than twelve months
from the date hereof or exceeding $100,000 in value;
(f) lease for office space under which MAA, MAI or any of the
Subsidiaries is either the lessor or lessee;
(g) agreement, contract or commitment for any charitable or
political contribution;
(h) agreement, contract, or commitment for any capital expenditure
in excess of $100,000;
(i) agreement, contract or commitment limiting or restraining it
from engaging or competing in any lines of business with any person, and neither
Seller nor any officer or employee of XXXXX is subject to any such agreement,
contract or commitment which would prohibit them from continuing their
employment in the same capacity as that in which they currently perform services
for XXXXX; or
(j) agreement, contract or commitment by or between MAA, MAI or
any of the Subsidiaries and Seller or any Affiliate of Seller (other than MAA,
MAI or any of the Subsidiaries).
Except as may be disclosed in Section 3.19 of the Disclosure
Schedule, to Seller's knowledge, each of the agreements, contracts, commitments,
leases and other instruments, documents and undertakings listed on the
Disclosure Schedule is in full force and effect; Seller, MAI, MAA or the
Subsidiaries which are parties thereto, and, to the knowledge of Seller, all
other parties thereto are in compliance with the provisions thereof and are not
in default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein and no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder by MAI, MAA or the Subsidiaries or, to the
knowledge of Seller, by any other parties thereto; and, except as may be
disclosed on the Disclosure Schedule, to the knowledge of Seller, no such
agreement, contract, commitment, lease or other instrument, document or
undertaking, in the reasonable opinion of Seller, contains any contractual
requirement with which there is a reasonable likelihood MAA,
MAI, the Subsidiaries or any other party thereto will be unable to comply,
assuming that MAA, MAI and the Subsidiaries continue in all material respects to
be in the same financial condition as they are as of the date hereof.
Section 3.20 Additional Information. Section 3.20 of the
Disclosure Schedule, to the extent not described elsewhere in the Disclosure
Schedule, contains accurate lists and summary descriptions of the following:
(a) all real property and interests in real property
(including Realty Rights) owned, leased or otherwise held by MAA, MAI or any of
the Subsidiaries other than antennae and transmitter sites (collectively, "Real
Property") as of the date hereof which listing shall be updated as of the
Closing, specifying which are owned, which are leased and which constitute
Realty Rights and, (i) with respect to the owned Real Property, if any,
specifying its cost or original value and the net book value as of the XXXXX
Balance Sheet Date and (ii) with respect to leased or otherwise held Real
Property, the current term of ownership and rental rate applicable thereto;
(b) all machinery, vehicles and equipment owned by MAA, MAI
or the Subsidiaries which has an original cost of at least $50,000, specifying
the cost thereof and the net book value thereof as of the XXXXX Balance Sheet
Date;
(c) the names of all present officers and directors of MAA,
MAI and each of the Subsidiaries;
(d) the names and addresses of every bank and other
financial institution in which MAA, MAI or any of the Subsidiaries maintains an
account (whether checking, savings or otherwise), lock box or safe deposit box,
and the account numbers and names of persons having signing authority or other
access thereto;
(e) the names of all persons authorized to borrow money or
incur indebtedness for borrowed money on behalf of MAA, MAI or any of the
Subsidiaries or obligate MAA, MAI or any of the Subsidiaries as a
guarantor with respect to indebtedness for borrowed money; and
(f) the names of all persons holding powers of attorney from
MAA, MAI or any of the Subsidiaries and a summary statement of the terms
thereof.
Section 3.21 Intellectual Property.
(a) Section 3.21(a) of the Disclosure Schedule accurately
lists all of the Intellectual Property owned by MAA, MAI or any of the
Subsidiaries which has been duly registered with, filed in or issued by, as the
case may be, the United States Patent and Trademark Office, U.S. Copyright
Office, or any similar governmental agency in any foreign country, as indicated
in Section 3.21(a) of the Disclosure Schedule. Unless otherwise indicated in
such Section 3.21(a), MAA, MAI or the Subsidiaries own the entire right, title
and interest in and to such Intellectual Property (including, without
limitation, the exclusive right to use and license the same). Except as set
forth in Section 3.21(a) of the Disclosure Schedule, neither MAA, MAI nor any of
the Subsidiaries has granted, any license or other right with respect to such
Intellectual Property which does or which will, subsequent to the Closing,
permit or enable any Person other than MAA, MAI or the Subsidiaries to use such
Intellectual Property. To the knowledge of Seller, no such Intellectual Property
or MAA's, MAI's or the Subsidiaries' use thereof, infringes or violates the
rights of third parties. To the knowledge of Seller, MAA and MAI, except as
indicated in Section 3.21(a) of the Disclosure Schedule, no Person is infringing
upon any of the Intellectual Property listed in Section 3.21(a) of the
Disclosure Schedule.
(b) Set forth in Section 3.21(b) of the Disclosure Schedule
is a list of all Intellectual Property owned by third parties which is licensed
to, or otherwise used in the business of, MAA, MAI or any of the Subsidiaries.
All such Intellectual Property is licensed pursuant to valid written agreements.
MAA's, MAI's or the Subsidiaries use of such listed Intellectual Property owned
by Seller or any of its Affiliates (other than MAA, MAI or the
Subsidiaries), does not infringe or violate the rights of third parties. Except
only as set forth in Section 3.21(b) of the Disclosure Schedule, there is no
pending or threatened written claim against MAA, MAI or any of the Subsidiaries,
or to Seller's knowledge, the licensors of such licensed Intellectual Property
asserting that any of such licensed Intellectual Property, or MAA's, MAI's or
the Subsidiaries' use thereof, infringes or violates the rights of third parties
or that MAA, MAI or any of the Subsidiaries is in breach of any such agreement.
(c) To the knowledge of Seller, MAA, MAI and the
Subsidiaries own or have the right to use all Intellectual Property used in
their businesses as conducted on the date hereof. Upon consummation of the
transactions contemplated by this Agreement, MAA, MAI and the Subsidiaries will
be entitled to continue to use all Intellectual Property used in the business of
MAA, MAI or the Subsidiaries as it is used to conduct their business as of the
Closing Date without any limitation, impairment or alteration thereof and
without the payment of any fees or license or other payments. Section 3.21(c) of
the Disclosure Schedule lists all written notices or claims received by MAA, MAI
or any of the Subsidiaries which claim infringement by MAA, MAI or the
Subsidiaries of any Intellectual Property which is claimed to be owned by any
other person. To the knowledge of Seller, there is no basis for any such claim
listed in Section 3.21(c) of the Disclosure Schedule.
Section 3.22 No Third Party Options. There are no existing
agreements, options, commitments or rights with, to or in any person to acquire
any of MAA, MAI or any of the Subsidiaries' assets or properties or any interest
therein, except for this Agreement and those contracts entered into in the
normal course of business consistent with past practice for the sale of MAA's
MAI's or any Subsidiary's products or services.
Section 3.23 Tariffs; FCC Licenses; Non-FCC Authorizations.
(a) Section 3.23(a) of the Disclosure Schedule
lists each tariff applicable to MAA, MAI or any of the Subsidiaries as of the
date hereof, a true and correct copy of each of which has been or will be
provided to Purchaser. Except as otherwise set forth in Section 3.23(a) of the
Disclosure Schedule, (i) such tariffs stand in full force and effect, and there
is no outstanding notice of cancellation or termination or, to Seller's
knowledge, any threatened cancellation or termination in connection therewith,
(ii) neither MAA, MAI nor any of the Subsidiaries is subject to, any
restrictions or conditions applicable to such tariffs that limit or would limit
the operation of its business (other than restrictions or conditions generally
applicable to tariffs of that type). Neither MAA, MAI nor any of the
Subsidiaries is in violation under the terms and conditions of any of its
tariffs in any manner which could reasonably be expected to result in a
Threshold Amount with respect to MAA, MAI or any of the Subsidiaries. Except as
set forth in Section 3.23(a) of the Disclosure Schedule, there are no
applications by MAA, MAI or any of the Subsidiaries or to Seller's knowledge,
complaints, filings, orders or petitions by others or proceedings pending or
threatened before the appropriate regulatory authority relating to the business
or operations or regulatory tariffs of MAA, MAI or any of the Subsidiaries as of
the date hereof.
(b) Section 3.23(b) of the Disclosure Schedule lists each
FCC License held by MAA, MAI or any of the Subsidiaries as of the date hereof
which list shall be updated as of the Closing Date. Except as otherwise set
forth in Section 3.23(b) of the Disclosure Schedule, such FCC Licenses
constitute all FCC Licenses necessary for the conduct of the business of MAA,
MAI and each of the Subsidiaries as conducted and as anticipated as of the date
hereof to be conducted in the 12 month period following the date hereof and
thereafter as contemplated in material respects under the UPS Contract. Except
as otherwise set forth in Section 3.23(b) of the Disclosure Schedule, each such
FCC License is in full force and effect, and there is no outstanding notice of
cancellation or termination or, to Seller's knowledge, any threatened
cancellation or termination in connection therewith. None of such FCC Licenses
is subject to any restrictions or conditions except as set forth on Section
3.23(b) of the Disclosure Schedule that limit the operations of MAA, MAI or any
of the Subsidiaries (other than restrictions or conditions generally applicable
to licenses of that type). Subject to the Communications Act of 1934, as
amended, and the regulations thereunder, the FCC Licenses are free from all
security interests, liens, claims, or encumbrances of any nature whatsoever.
Except as set forth in Section 3.23(b) of the Disclosure Schedule, there are no
applications by MAA, MAI or any of its Subsidiaries or, to Seller's knowledge,
complaints or petitions by others or proceedings pending or threatened before
the FCC relating to the business or FCC Licenses of MAA, MAI or any of the
Subsidiaries as of the date hereof or which could reasonably be expected to
result in a Threshold Amount with respect to MAA, MAI or any of the Subsidiaries
as of the Closing Date.
(c) Section 3.23(c) of the Disclosure Schedule lists all
material Non-FCC Authorizations necessary for the conduct of the business of
MAA, MAI and each of the Subsidiaries as of the date hereof which list shall be
updated as of the Closing Date. Except as otherwise set forth in Section 3.23(c)
of the Disclosure Schedule, each such material Non-FCC Authorization is in full
force and effect. No event has occurred with respect to any such material Non-
FCC Authorization which (i) permits, or after notice or lapse of time or both
would permit, revocation or termination thereof, or (ii) would result in any
other impairment of the rights of the holder of such Non-FCC Authorization.
Section 3.24 Officer and Employee Compensation. Section 3.24 of the
Disclosure Schedule lists each officer and employee of MAA, MAI and each of the
Subsidiaries and such officer's or employee's corresponding annual compensation
amount payable by any of MAA, MAI or any such Subsidiary as of December 31,
1997.
Section 3.25 Indebtedness. Neither MAA, MAI nor any of the
Subsidiaries is subject to any note, debenture, bond, conditional
sale or equipment trust agreement, letter of credit agreement, loan agreement,
or other contract or commitment for the borrowing or lending of money
(including, without limitation, loans to or from officers, directors,
shareholders, or any members of their immediate families), any non-vendor
financing arrangement with Seller or any Affiliate of Seller (other than the
Subsidiaries), or any agreement or arrangement for a line of credit, or
guarantee, pledge or undertaking of the indebtedness of any other Person.
Section 3.26 Access; Sophistication; etc.
(a) Purchaser and AMSC have furnished to Seller copies of
their respective most recent financial statements and Seller in agreeing to
accept the AMSC Common Stock has reviewed such documents and has relied only on
(i) the statements and information contained therein and (ii) the
representations, warranties, terms and conditions of this Agreement.
(b) Seller acknowledges that all documents, books and
records requested by Seller pertaining to Purchaser and AMSC have been made
available for inspection by Seller and its agents and representatives; that
Seller and its agents and representatives have had a reasonable opportunity to
ask questions of and receive answers from Purchaser and AMSC or officers or
employees acting on behalf of Purchaser and AMSC concerning the terms and
conditions of the AMSC Common Stock and the business and prospects of Purchaser
and AMSC. Seller and its respective agents and representatives have such
knowledge and experience in financial and business matters as to enable them to
utilize the information made available to them in connection with the
transactions contemplated hereby, to evaluate the merits and risks of accepting
the AMSC Common Stock and to make an informed decision with respect thereto and
such an evaluation and informed decision have been made.
Section 3.27 Investment Representation. Seller is acquiring the
shares of AMSC Common Stock to be received by Seller upon consummation of the
sale of Seller's Shares to Purchaser for its own account for investment only and
not with a view to making a distribution thereof within the meaning of the
Securities Act of 1933, as amended. Seller agrees that it will not sell or
transfer such shares of AMSC Common Stock, except in accordance with the terms
of the legend set forth below, unless such shares are subsequently registered or
an exemption from registration is available. Seller is aware that the shares of
AMSC Common Stock it is receiving have not been registered under the Securities
Act of 1933, as amended, or any state or other jurisdiction's securities laws,
and that the shares of AMSC Common Stock must be held indefinitely unless
subsequently registered or an exemption from such registration is available.
Seller is aware that it will not be readily able to liquidate its shares of AMSC
Common Stock. Seller understands and agrees that the shares of AMSC Common Stock
to be received by Seller will bear legends substantially to the effect set forth
below and that a stop transfer order may be placed with respect thereto.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTRATION STATEMENTS UNDER SUCH
LAWS ARE THEN IN EFFECT OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF IS THEN APPLICABLE TO SUCH OFFER OR SALE.
The shares of Common Stock represented by this certificate may not
be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of
except in accordance with the terms of the Registration Rights Agreement dated
as of , 1998, a copy of which is on file at the office of the Corporation.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF AMSC AND PURCHASER
AMSC and Purchaser each hereby represents and warrants to Seller as
follows:
Section 4.1 Organization and Good Standing. Each of AMSC and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has full corporate power to conduct its business
as presently or then conducted and to own and operate the assets and properties
now or then owned and operated by it.
Section 4.2 Authority; No Required Consents or Governmental
Authorizations or Breach of Statute or Contract; Enforceability.
(a) Each of AMSC and Purchaser has the full corporate power
and lawful authority to execute and deliver this Agreement and to consummate and
perform the transactions contemplated hereby in the manner herein provided. The
execution and delivery of this Agreement by AMSC and Purchaser and the
consummation and performance by AMSC and Purchaser of the transactions
contemplated hereby in the manner herein provided has been duly and validly
authorized by all necessary corporate or other action.
(b) The AMSC Common Stock when issued to Seller will be duly
authorized, validly issued free and clear of all liens, pledges, claims,
security interests, options or other encumbrances of any nature whatsoever.
(c) Except for the applicable requirements of the HSR Act,
the AMSC Shareholder Approval and, to the knowledge of AMSC and Purchaser, the
Required Consents, neither the execution and delivery by AMSC and Purchaser of
this Agreement nor the consummation and performance by AMSC and Purchaser of the
transactions contemplated hereby in the manner herein provided (i) requires the
approval, consent or authorization of, or any filing with or notice to, any
federal, state, provincial, local or other governmental agency or body or any
other third party, other than (A) approvals, consents, authorizations, filings
or notices of a character such that a failure to obtain, file or give them would
not singly or in the aggregate have a material adverse effect on AMSC and
Purchaser or otherwise impair or affect the validity of this Agreement or
prevent or hinder the consummation of the transactions contemplated hereby and
(B) approvals, consents, authorizations, filings or notices which have been
obtained, made or given, or (ii) conflicts with or will result in the uncured
and unwaived breach or violation of any term or provision of, constitutes a
default under or will cause the acceleration of any payments pursuant to (A) the
Certificates of Incorporation or By-laws of AMSC and Purchaser, (B) any material
indenture, mortgage, deed of trust, lease, note or note agreement or any other
agreement or instrument to which either AMSC or Purchaser is a party or by which
either AMSC or Purchaser or any of their respective assets or properties are
bound, (C) any material governmental license, franchise, permit or other
authorization held by either AMSC or Purchaser or (D) any law, judgment, order,
writ, injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or body applicable to either AMSC or Purchaser.
(d) This Agreement, when executed and delivered by Seller,
MAA and MAI and assuming the enforceability of this Agreement upon Seller will
be the valid and binding obligations of AMSC and Purchaser, and will be
enforceable against AMSC and Purchaser in accordance with its terms, subject to
bankruptcy, insolvency or other laws affecting the rights of creditors
generally.
(e) Except as set forth on Schedule 4.2, there are no (i)
statutory, contractual or other preemptive rights with respect to the issuance
or transfer of any shares of AMSC Common Stock or other securities of AMSC; (ii)
outstanding options, warrants or rights to purchase, repurchase or otherwise
subscribe for any equity securities, any securities convertible into or
exchangeable for its capital stock or other ownership interests of AMSC (other
than the issuance of AMSC Common Stock pursuant to this Agreement); (iii)
obligations of AMSC, whether absolute or contingent, to issue or repurchase any
shares of equity securities or other ownership interests or to share or make any
payments based on its revenues, profits or net income; (iv) indebtedness or
securities directly or indirectly convertible into any equity securities of
AMSC; or (v) voting trusts, proxies, or any other agreements, restrictions or
understandings with respect to the voting of the capital shares of AMSC or to
any other aspect of AMSC's affairs (including any registration rights).
Section 4.3 Broker's or Finder's Fees. No agent, broker, investment
banker, person or firm acting on behalf of Purchaser, AMSC or under their
authority is or will be entitled, directly or indirectly, to collect from or
otherwise hold Seller, MAA, or MAI liable for any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated herein.
Section 4.4 Access; Sophistication; etc.
(a) Seller, MAA and MAI have furnished to AMSC and Purchaser
copies of their respective most recent financial statements and AMSC and
Purchaser in agreeing to accept the Shares reviewed such documents and have
relied only on (i) the statements and information contained therein and (ii) the
representations, warranties, terms and conditions of this Agreement.
(b) Each of AMSC and Purchaser acknowledges that all
documents, books and records requested by AMSC or Purchaser pertaining to MAA,
MAI and the Subsidiaries have been made available for inspection by AMSC and
Purchaser and their agents and representatives; that AMSC and Purchaser and
their agents and representatives have had a reasonable opportunity to ask
questions of and receive answers from Seller, MAA, MAI and the Subsidiaries or
officers or employees acting on behalf of Seller, MAA, MAI or the Subsidiaries
concerning the terms and conditions of the Shares and the business and prospects
of MAI, MAA and the Subsidiaries. AMSC and Purchaser and their respective agents
and representatives have such knowledge and experience in financial and business
matters as to enable them to utilize the information made available to them in
connection with the transactions contemplated hereby, to evaluate the merits and
risks of accepting the Shares and to make an informed decision with respect
thereto and such an evaluation and informed decision have been made.
Section 4.5 Investment Representation. Purchaser is acquiring the
Shares to be received by Purchaser upon consummation of the transactions
contemplated herein for its own account for investment only and not with a view
to making a distribution thereof within the meaning of the Securities Act of
1933, as amended. Purchaser agrees that it will not sell or transfer such
Shares, except in accordance with the terms of the legend set forth below.
Purchaser is aware that the Shares it is receiving have not been registered
under the Securities Act of 1933, as amended, or any state or other
jurisdiction's securities laws, and that the Shares must be held indefinitely
unless subsequently registered or an exemption from such registration is
available. Purchaser is aware that it will not be readily able to liquidate its
Shares. Purchaser understands and agrees that the Shares to be received by
Purchaser will bear a legend substantially to the effect set forth below and
that a stop transfer order may be placed with respect thereto.
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE SECURITIES LAW OF ANY
JURISDICTION AND MAY NOT BE TRANSFERRED UNTIL (A) A REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (B) IN THE
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
Section 4.6 SEC Filings; Financial Statements.
(a) AMSC has made available to Seller a complete and
accurate copy of each report, schedule, registration statement and definitive
proxy statement filed by AMSC with the SEC on or after January 1, 1996 (the
"AMSC SEC Reports"), which are all the forms, reports and documents required to
be filed by AMSC with the SEC since such date. The AMSC SEC Reports complied
with the requirements of the Securities Act or the Exchange Act, as the case may
be at the times they were filed (or if amended or superseded by a filing prior
to the date of this Agreement then or the date of such filing).
(b) Each of the sets of consolidated financial statements
(including, in case, any notes thereto) contained in the AMSC SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved and fairly presents in all material respects the consolidated
financial position of AMSC and its material subsidiaries as at the respective
dates thereof and the consolidated results of their operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal year-end audit adjustments.
(c) AMSC has previously furnished to Seller a complete and
correct copy of any amendments or modifications that have not yet been filed
with the SEC but that are required to be filed in agreements, documents, or
other instruments which previously had been filed by AMSC with the SEC pursuant
to the Securities Act or the Exchange Act.
Section 4.7 Absence of Certain Changes or Events. Since September
30, 1997, there has not been (a) any change, or any development or combination
of developments of which management of AMSC has knowledge, which has had or
would reasonably be expected to have a material adverse effect on AMSC or (b)
any damages, destruction or loss, whether or not covered by insurance which has
had or would reasonably be expected to have a material adverse effect on AMSC.
Section 4.8 Absence of Undisclosed Liabilities. Except as disclosed
in the AMSC SEC Reports or in this Agreement, neither AMSC nor any of its
Subsidiaries has liabilities or obligations, either accrued, absolute,
contingent or otherwise, except:
(a) those liabilities or obligations set forth on the latest
balance sheet in the AMSC SEC Reports and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of business
under any agreement, contract, commitment, lease or plan; and
(c) those liabilities or obligations incurred, consistently
with past business practice, in or as a result of the normal and
ordinary course of business since the date of the latest balance sheet set forth
in the AMSC SEC Reports. For purposes of this Section, the term "liabilities"
shall include, without limitation, any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured.
Section 4.9 Litigation. Except as described in the AMSC SEC
Reports, no material litigation, arbitration, investigation, or other proceeding
of or before any court, arbitrator or governmental or regulatory official, body
or authority is pending or, to the knowledge of AMSC, threatened against AMSC or
any of its Subsidiaries. Other than as so described, neither AMSC nor any of its
Subsidiaries is a party to or subject to the provisions of any judgment, order,
writ, injunction or decre
ARTICLE 5. CERTAIN AGREEMENTS
Section 5.1 Conduct of the Business. From the date hereof until the
Closing Date, except as otherwise contemplated by this Agreement or disclosed in
the Disclosure Schedule, Seller shall, and shall cause MAA, XXX, XXXXX and each
of the Other Subsidiaries to, conduct their respective businesses in the
ordinary course consistent with past practice and in such manner that, at the
Closing, the representations and warranties of Seller shall be true and correct
in all material respects, and until issuance of a Final Order, AMSC and
Purchaser shall conduct the business of XXXXX in good faith. Without limiting
the generality of the foregoing, except as otherwise contemplated by this
Agreement, from the date hereof until the Closing Date, without the prior
written consent of AMSC and Purchaser, Seller will not permit MAA, MAI or any of
the Subsidiaries to:
(a) issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge or
other encumbrance of (x) any additional partnership interests or shares of their
capital stock of any class, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any partnership
interests or shares of their capital stock, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any partnership interests or shares of their capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any partnership interests or shares of their capital stock, or
(y) any other securities in respect of, in lieu of, or in substitution for,
partnership interests or shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of their outstanding securities or,
in the case of MAA or MAI, to pay any dividends (except for cash dividends) or
make any other distributions to their respective shareholders;
(c) split, combine, subdivide or reclassify any shares of
their capital stock;
(d) (i) grant any increases in the compensation of any of
their directors, officers or employees, except in the ordinary course of
business, (ii) pay or agree to pay any pension, retirement allowance or other
material employee benefit not required by any of the existing benefit,
severance, pension or employment plans, agreements or arrangements as in effect
on the date hereof to any such director, officer or key employees, whether past
or present, (iii) enter into any new or materially amend any existing employment
agreement with any such director, officer or key employee, (iv) enter into any
new or materially amend any existing severance agreement with any such director,
officer or key employee, or (v) except as may be required to comply with
applicable law, become obligated under any new Multiemployer Plan, Benefit Plan,
severance plan or arrangement, which was not in existence on the date hereof or
amend by any such plan or arrangement in existence on the date hereof if the
effect thereof would be to enhance benefits thereunder;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of MAA, MAI or any of the Subsidiaries;
(f) make any acquisition by means of merger, consolidation
or otherwise;
(g) adopt any amendments to their Partnership Agreement,
Certificate of Incorporation, charter or By-Laws;
(h) incur any indebtedness for borrowed money or guarantee
any such indebtedness or make any loans, advances or capital contributions to,
or investments in, any other Person (other than to any of the Subsidiaries or
loans to their respective employees, in the ordinary course of business);
(i) engage in the conduct of any business other than
telecommunications and related businesses;
(j) enter into any agreement providing for acceleration of
payment or performance or other consequence as a result of a change of control
of MAA, MAI or any of the Subsidiaries;
(k) operate in other than the usual, regular and ordinary
course and in accordance with past practices and, to the extent consistent with
such operation and with the other covenants contained herein, to use its good
faith efforts to continue normal purchasing, payments of accounts payable,
rental, leasing, renewal, financing, marketing, advertising, promotional and
maintenance expenditures with respect to the business of MAA, MAI and the
Subsidiaries; provided, Seller shall not on behalf of MAA, MAI or any of the
Subsidiaries, and shall not permit MAA, MAI or any of the Subsidiaries to,
accelerate or delay any payment of accounts payable, or xxxx any customer in
advance beyond existing and usual contractual terms for services to be performed
after the date hereof;
(l) except as otherwise contemplated in this Agreement, fail
to maintain all authorizations and licenses materially necessary for the conduct
by MAA, MAI or the Subsidiaries of their respective businesses in accordance
with past custom and practice, including but not limited to failure to proceed
with any actions necessary to ensure the build-outs referenced in the
two FCC orders, each dated June 5, 1996, granting extensions of time to commence
services (No. 7110-02);
(m) fail to maintain all insurance policies and binders
shown in Section 3.18 of the Disclosure Schedule unless new or replacement
insurance policies or binders with similar coverage are obtained;
(n) submit or file with, except as otherwise contemplated in
this Agreement, or otherwise voluntarily participate as a party to any
stipulation, pleading, filing or other proceeding with the FCC, any state public
service commission, public utility commission or similar state agency, or any
other regulatory authority with jurisdiction over MAA, MAI or the Subsidiaries
where such stipulation, pleading, filing or other proceeding could reasonably be
expected to result in a Threshold Amount with respect to MAA, MAI or any of the
Subsidiaries or fail to notify AMSC promptly of any involuntary participation in
any of the foregoing;
(o) enter into any contract, agreement, commitment or other
binding arrangement that would result in a liability or financial commitment
which in the aggregate exceeds $25,000, other than amounts reflected on MAA, MAI
or any Subsidiary's capital or operating budgets; or
(p) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 5.2 Access to Information. Subject to applicable law,
Seller, MAA and MAI will give AMSC and Purchaser, their counsel, financial
advisors, auditors and other authorized representatives reasonable access during
business hours after reasonable notice to the offices, properties, books and
records of MAA, MAI and each of the Subsidiaries and will instruct the
employees, counsel and financial advisors of Seller, MAA, MAI and the
Subsidiaries to cooperate with AMSC and Purchaser in theinvestigation of MAA,
MAI and the Subsidiaries.
Section 5.3 Efforts; Further Assurances; Permits.
(a) Subject to the terms and conditions of this Agreement,
each party will use all commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement, including, without limitation, preparing and
making any filings required to be made under applicable law. Each of the parties
shall furnish to the other parties such necessary information and reasonable
assistance as such other party may request in connection with the foregoing.
(b) In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
AMSC, Purchaser and Seller shall, and Seller shall cause the proper officers
and/or directors of MAA, MAI and the Subsidiaries to, take all such necessary or
desirable action.
(c) Upon AMSC's or Purchaser's request, Seller will use, and
will cause MAA, MAI and the Subsidiaries to use, commercially reasonable efforts
to assist AMSC and Purchaser in obtaining any permits, licenses or other
authorizations necessary for AMSC's and Purchaser's operation of MAA, MAI and
the Subsidiaries consistent with past practice after the Closing Date.
(d) In the event that at any time, any order, decree or
injunction shall be entered which prevents or delays the consummation of any of
the transactions contemplated by this Agreement, each party shall promptly use
its best efforts to cause such order, decree or injunction to be reversed,
vacated or modified in order to permit such transactions to proceed as
expeditiously as possible.
Section 5.4 Books and Records. AMSC, Purchaser and Seller agree to
retain for a period of three years or longer if otherwise required by law after
the Closing Date, any and all Books and Records (hard copy, electronic or
otherwise) related to MAA, MAI and the Subsidiaries and in the possession of
Seller, MAA, MAI or the Subsidiaries for all periods through the Closing Date or
related to the transactions contemplated hereby. Notwithstanding the foregoing,
either party may notify the other of its desire to discontinue retention of
specified documents in accordance with applicable record retention requirements
during such period upon thirty days' written notice and such party may elect to
assume custody thereof. In the event any party needs access to such Books and
Records for purposes of verifying any representations and warranties contained
in this Agreement, responding to inquiries from Governmental Entities,
indemnifying, defending and holding harmless other parties hereto, in accordance
with applicable provisions of this Agreement or any other legitimate business
purpose, each party will allow representatives of the other parties access to
such books and records upon reasonable notice during regular business hours for
the sole purpose of obtaining information for use as aforesaid and will permit
such other party to make such extracts and copies thereof as may be necessary or
convenient and, if required for such purpose, to have access to and possession
of original documents.
Within 15 Business Days after the Closing Date, Seller shall provide to
Purchaser the Closing Financial Statements.
Section 5.5 Governmental Regulatory Approvals. As promptly as
practicable after the date hereof, AMSC, Purchaser and Seller shall, and Seller
shall cause MAA, MAI and the Subsidiaries to, file the required applications and
notices with the appropriate Governmental Entities as necessary for consummation
of the transactions contemplated by this Agreement (the "Regulatory Approvals").
To the extent transferable, Seller will transfer any existing Non-FCC
Authorizations to Purchaser. Each party agrees to use its best efforts to obtain
the Regulatory Approvals and the parties agree to cooperate fully with each
other and with all Governmental Entities to obtain the Regulatory Approvals at
the earliest practicable date.
Section 5.6 FCC Consent. As promptly as practicable after the
execution of this Agreement, the parties shall file all appropriate
applications and requests with the FCC seeking, and shall use their best efforts
to obtain, (i) the FCC's consent to the transfer of control of the licensed
Subsidiaries to Purchaser under the FCC Licenses (as listed in Section 3.23(b)
of the Disclosure Schedule), and (ii) any necessary FCC waivers (all such
consents or waivers are collectively referred to as "FCC Consents").
Section 5.7 HSR Act Review. As promptly as practicable after the
execution of this Agreement, the parties will make such filings as may be
required by the HSR Act with respect to the sale contemplated by this Agreement.
Thereafter, the parties will file as promptly as practicable any supplemental
information that may be requested by the U.S. Federal Trade Commission or the
U.S. Department of Justice pursuant to the HSR Act. The parties agree to
cooperate in seeking early termination of the waiting periods under the HSR Act.
Section 5.8 Registration Rights. The Seller and AMSC shall execute
a registration rights agreement, substantially in the form attached hereto as
Exhibit B (the "Registration Rights Agreement").
Section 5.9 Lock-up. Seller hereby agrees not to transfer, except
to a wholly-owned Affiliate of Seller and except pursuant to a Piggyback
Registration under the Registration Rights Agreement (as defined therein) and
except pursuant to Section 1 of that certain Participation Rights Agreement of
even date herewith, any shares of AMSC Common Stock now owned or hereafter
acquired by Seller during the one year period beginning on the Closing Date (the
"Lock-up Period"). Seller further agrees, during the Lock-up Period, not to (nor
will it permit any agent or Affiliate of Seller to) solicit, initiate or
encourage any Acquisition Proposal or furnish any information to, or cooperate
with, any Person, corporation, firm, or other entity with respect to an
Acquisition Proposal, unless Seller obtains prior written consent from AMSC. As
used herein, "Acquisition Proposal" means a proposal for a merger or other
business combination involving AMSC or for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, AMSC. Seller
shall promptly communicate to AMSC the terms of any Acquisition Proposal which
it may receive during such Lock-up Period.
Section 5.10 Nonsolicitation. During the period beginning on the
date hereof and ending on the one-year anniversary of the Closing Date (the
"Nonsolicitation Period"), Seller shall not, nor shall Seller permit any of its
officers, directors, employees, Person it Controls, agents or other
representatives to, directly or indirectly, without prior written consent of
AMSC, (i) actively solicit any employee of, or (ii) actively solicit any
employee who, within the six months prior to the date of such solicitation or
hiring, had been an employee of, MAA, MAI or any of the Subsidiaries unless such
employee's employment was terminated by or at the request of MAA, MAI or any
Subsidiary. It is understood that generic advertising shall not constitute
"active solicitation" for purposes of this Section 5.10. AMSC and Purchaser may
seek injunctive relief to prevent any such violations during the Nonsolicitation
Period and also may seek monetary damages in respect of any violations of this
Section 5.10.
Nothing in this Section 5.10 shall prevent Seller or any Person it controls from
hiring any such employee so long as such hiring is not the result of the
solicitation prohibited under this Section 5.10.
Section 5.11 IBM Contract Renewal. Seller shall deliver to AMSC and
Purchaser a fully executed renewal of the services contract by and between XXXXX
and International Business Machines in substance and form reasonably
satisfactory to Purchaser.
Section 5.12 UPS Contract. Seller shall deliver to AMSC and
Purchaser a fully executed services contract by and between XXXXX and United
Parcel Service, substantially in substance and form as signed by UPS and
previously provided to Purchaser (the "UPS Contract").
Section 5.13 Escrow Agreement. AMSC, Purchaser and
Seller shall have executed the Escrow Agreement.
Section 5.14 Employee Transition. Purchaser shall provide, as a
general matter, compensation, benefits and continued employment generally
comparable in the aggregate to those received by the employees of XXXXX prior to
the Closing, consistent with Purchaser and AMSC's financial, structuring, and
organizational considerations, including existing AMSC employee compensation
considerations. Promptly after the date hereof and prior to the Closing, these
compensation benefits and employment provisions will be presented to Seller. In
the event that Purchaser terminates the employment of a Management Employee
within 12 months after the Closing Date, Purchaser shall provide such Management
Employee with the Severance Package (as defined below). Promptly after the date
hereof and prior to the Closing, the substantial terms of the severance package
for Management Employees shall (i) be presented to Seller and be reasonably
acceptable to Seller and (ii) shall contain standard terms generally offered to
management employees of similarly situated companies (the "Severance Package").
Section 5.15 Updated Disclosure Schedule. From the date hereof
until the Closing Date, Seller shall disclose to Purchaser and AMSC in writing
any material variances from the representations and warranties contained in
Article 3 or Article 8 hereof promptly upon discovery thereof, and such
disclosures shall update the Disclosure Schedule for purposes of Articles 3, 7
and 8.
Section 5.16 Nextel Proceeds. XXXXX has entered into an Asset
Purchase Agreement by and between XXXXX and Nextel West Corp., dated July 11,
1997, which provides for the acquisition of certain XXXXX business assets. The
right of XXXXX to receive any and all proceeds under such agreement shall be
deemed for all purposes to be assigned to Seller and (i) prior to the Closing,
Seller shall be entitled to collect and keep such proceeds for its own
account (and cause XXXXX to cooperate in such regard) and (ii) prior to Closing,
Seller may cause the Company to assign to Seller for payment from Nextel West
Corp. the proceeds from such agreement.
Section 5.17 Non-Vendor Intercompany Financing Arrangements. Any
non-vendor financing arrangement existing as of the Closing between Seller or
any Seller Affiliate (other than the Subsidiaries), on the one hand, and MAA or
MAI, on the other hand, is hereby cancelled and extinguished without any further
obligations related thereto on the part of MAA or MAI. I.
Section 5.18 Intercompany Agreements. Notwithstanding anything to
the contrary in any agreement between Xxxxx or Motorola entered into at any time
prior to the Closing Date:
(a) For the purpose of each such agreement, Seller hereby
consents to the transactions contemplated by this Agreement.
(b) All such agreements shall continue in full force and
effect notwithstanding the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, any provision limiting the application
of any such agreement to XXXXX while it remains a subsidiary of Seller shall be
without force or effect.
(c) After the Closing Date, XXXXX may assign or otherwise
transfer any or all of its rights under any such agreements to AMSC or any
Affiliate of AMSC that holds substantially all the assets of XXXXX, and if XXXXX
does so, such agreements shall continue in full force and effect notwithstanding
such transfer.
ARTICLE 6. CONDITIONS TO CLOSING
Section 6.1 Conditions to Obligation of Purchaser. The obligation
of Purchaser to purchase the Shares shall be subject to the satisfaction or
waiver by Purchaser of the following conditions:
(a) Representations and Warranties of Seller to be True. The
representations and warranties of Seller herein contained shall be true and
correct in all material respects on the date hereof and at the Closing Date with
the same effect as though made at such time, except (i) insofar as any of such
representations and warranties are given as of a particular date and relate
solely to a particular date or period, and (ii) to the extent any of such
representations and warranties have been waived hereunder or affected by the
transactions contemplated or permitted herein. Seller shall have performed, or
caused MAA, MAI and the Subsidiaries to perform, in all material respects all
obligations and complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by them
at or prior to the Closing Date.
(b) No Injunction or Other Governmental Action. (i) No
preliminary or permanent injunction, decree or other order issued by any court
of competent jurisdiction or by any governmental or regulatory body or any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Entity after the date of this Agreement which prohibits the
consummation of the transactions contemplated hereby shall be in effect; and
(ii) no governmental agency or body shall have instituted any suit, action, or
legal or administrative proceeding to restrain, enjoin or otherwise question the
validity or legality of the transactions contemplated by this Agreement and no
order or decree so restraining or enjoining such transactions shall be in
effect.
(c) Statutory Requirements; Regulatory Approvals;
Contractual Consents. (i) All required waiting periods under the HSR Act shall
have expired or been terminated; (ii) all Regulatory Approvals and all other
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations or terminations of waiting periods imposed by, the FCC, any
state public service commission, public utility commission or similar state
agency, or other Governmental Entities necessary to effect the transactions
contemplated by this Agreement shall have occurred, been filed or been obtained
and become Final Orders, provided, that nothing in this paragraph shall be
deemed to prohibit Closing upon issuance of the FCC Authorization pursuant to
the terms set forth in Section 2.6(a); and (iii) all other Required Consents
shall have been obtained and shall be in full force and effect.
(d) Certificate. Seller shall have delivered to Purchaser a
certificate to the effect that each of the conditions specified above in Section
6.1(a)-(c) has been satisfied in all respects;
(e) Escrow Agreement. Seller and the Escrow Agent shall have
executed the Escrow Agreement.
(f) IBM Contract Renewal. Seller shall have delivered a
fully executed renewal of the services contract by and between XXXXX and
International Business Machines in substance and form reasonably satisfactory to
Purchaser.
(g) UPS Contract. Seller shall have delivered a fully
executed services contract by and between XXXXX and United Parcel Service
substantially in substance and form as signed by UPS and previously provided to
Purchaser.
(h) Directors and Non-Employee Officers. Purchaser and AMSC
shall have received the resignations, effective as of the Closing, of all
directors and non-employee officers of MAA, MAI and each of the Subsidiaries.
(i) AMSC Shareholder Approval. Purchaser shall have received
AMSC Shareholder Approval as and to the extent required.
(j) Deliveries. All actions to be taken by Seller, MAA
and MAI in connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably satisfactory in
form and substance to Purchaser. Each of the deliveries required under Section
2.7(b) shall have been prepared to the reasonable satisfaction of Purchaser and
AMSC and their counsel.
(k) No Material Adverse Change. Since the date of this
Agreement, there shall not have been any Material Adverse Change.
(l) Financing. Purchaser shall have obtained, on terms and
conditions reasonably satisfactory to it, financing in the capital markets
sufficient to consummate the transactions contemplated hereby.
Purchaser may waive any condition specified in this Section
6.1 if Purchaser executes a writing so stating at or prior to Closing.
Section 6.2 Conditions to Obligations of Seller. The obligation of
Seller to sell the Shares shall be subject to the satisfaction or waiver by
Seller of the following conditions:
(a) Representations and Warranties of Purchaser and AMSC to
Be True. The representations and warranties of Purchaser and AMSC herein
contained shall be true and correct in all material respects on the date hereof
and at the Closing Date with the same effect as though made at such time, except
(i) insofar as any of such representations and warranties are given as of a
particular date and relate solely to a particular date or period, and (ii) to
the extent any of such representations and warranties have been waived hereunder
or affected by the transactions contemplated or permitted herein. AMSC and
Purchaser shall have performed in all material respects all obligations and
complied in all material respects with all covenants and conditions
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date.
(b) No Injunction or Other Governmental Action. (i) No
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or by any governmental or regulatory body nor any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Entity after the date of this Agreement which prohibits the
consummation of the transactions contemplated hereby shall be in effect; and
(ii) no governmental agency or body shall have instituted any suit, action, or
legal or administrative proceeding to restrain, enjoin or otherwise question the
validity or legality of the transactions contemplated by this Agreement and no
order or decree so restraining or enjoining such transactions shall be in
effect.
(c) Statutory Requirements; Regulatory Approvals. (i) All
required waiting periods under the HSR Act shall have expired or been
terminated; (ii) all Regulatory Approvals and all other authorizations,
consents, orders or approvals of, or declarations or filings with, or
expirations or terminations of waiting periods imposed by, the FCC, any state
public service commission, public utility commission or similar state agency, or
other Governmental Entities necessary to effect the transactions contemplated by
this Agreement shall have occurred, been filed or been obtained and become Final
Orders, provided, that nothing in this paragraph shall be deemed to prohibit
Closing upon issuance of the FCC Authorization pursuant to the terms set forth
in Section 2.6(a); and (iii) all other Required Consents shall have been
obtained and shall be in full force and effect.
(d) Certificate. Purchaser shall have delivered to Seller a
certificate to the effect that each of the conditions specified above in Section
6.2(a)-(c) has been satisfied in all respects.
(e) Registration Rights. AMSC shall have
executed the Registration Rights Agreement.
(f) Escrow Agreement. Purchaser, AMSC and the Escrow Agent
shall have executed the Escrow Agreement on or prior to the date hereof.
(g) Deliveries. All actions to be taken by Purchaser and
AMSC in connection with consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory in form and
substance to Seller. The deliveries required under Section 2.7(a) shall have
been prepared to the reasonable satisfaction of Seller and its counsel.
(h) Minimum Stock Price. The Market Value of AMSC Common
Stock as of the Closing Date shall be at least 70% of the Market Value as of the
date hereof, after taking into account all stock splits, reverse stock splits
and similar adjustments to the number of shares of AMSC Common Stock outstanding
on the date hereof.
ARTICLE 7. INDEMNIFICATION
Section 7.1 Indemnification by Seller. Seller shall indemnify,
defend and hold Purchaser and their Affiliates harmless from and against any and
all liabilities, losses, damages, costs and expenses (collectively, "Losses")
asserted against, imposed on, or incurred or suffered by Purchaser, MAA, MAI or
the Subsidiaries as a result of any of the following:
(a) the inaccuracy of any representation or the breach of
any warranty set forth in Article 3 or in any agreement or certificate executed
and delivered by Seller pursuant to this Agreement;
(b) the non-fulfillment of any unwaived covenant or
agreement on the part of Seller set forth in this Agreement or in any agreement
or certificate executed and delivered pursuant to this Agreement; and
(c) any and all actions, suits, claims, proceedings,
investigations, audits, examinations, demands, assessments, fines, judgments,
settlements, interest, penalties, costs, remedial actions and other expenses
(including without limitation reasonable audit, engineering, consulting and
legal fees) pertaining to or arising out of any of the foregoing.
Section 7.2 Indemnification by AMSC. AMSC shall indemnify, defend
and hold Seller and its Affiliates harmless from and against any and all Losses
asserted against, imposed on, or incurred or suffered by Seller or such
Affiliates as a result of any of the following:
(a) the inaccuracy of any representation or the breach of
any warranty set forth in Article 4 or in any agreement or certificate executed
and delivered by AMSC or Purchaser pursuant to this Agreement;
(b) the nonfulfillment of any unwaived covenant or agreement
on the part of AMSC or Purchaser set forth in this Agreement or in any agreement
or certificate executed and delivered pursuant to this Agreement; and
(c) any and all actions, suits, claims, proceedings,
investigations, audits, examinations, demands, assessments, fines, judgments,
settlements, interest, penalties, costs, remedial actions and other expenses
(including without limitation reasonable audit, engineering, consulting and
legal fees) pertaining to or arising out of any of the foregoing.
Section 7.3 Limitations on Indemnification for Breaches of
Representations and Warranties.
The following indemnification provisions shall apply to all
breaches of representations, warranties or covenants by Seller (including those
in Article 8), except those contained in Sections 3.1, 3.2, 3.3, 3.4, or 3.5 or
as otherwise specifically provided in this Agreement, and all breaches of
representations, warranties or covenants of Purchaser and AMSC (including those
in Article 8), except those contained in Sections 4.1 and 4.2 or as
otherwise specifically provided in this Agreement:
(a) No Indemnitor shall be liable for indemnification until
the total amount of Losses incurred by the Indemnitee exceeds $300,000 (the
"Indemnification Threshold Amount") provided that if the Indemnification
Threshold Amount is exceeded with respect to Losses for which an Indemnitor has
an indemnification obligation under this Article 7 or Article 8, then such
Indemnitor's obligation shall include the full amount of such Losses as if the
limitation contained in this subsection (a) did not exist.
(b) Except as provided under Section 7.3(c), no Indemnitor
shall be liable for indemnification payments under any provision of this
Agreement to the extent such aggregate indemnification payments by such
Indemnitor exceed $10,000,000.
(c) Notwithstanding any other provision in this Agreement,
there shall be no limit for indemnification payments with respect to any breach
of the representations and warranties contained in Section 3.25 or pursuant to
Section 8.7(i) hereof.
Section 7.4 Survival of Representations and Warranties. The
representations and warranties of the parties hereto shall survive the Closing
and shall, except as otherwise specifically set forth in this Agreement, expire
two years after the Closing Date, except as otherwise specifically provided in
this Agreement. Notwithstanding the preceding, the representations and
warranties set forth in Sections 3.7, 3.8, 3.9, 3.10 (except for the
representations and warranties pursuant to the first sentence of such Section
3.10, the survival period of which shall be two years), 3.11, 3.12, 3.13, 3.14,
3.15, 3.17, 3.18, 3.20, 3.24, 3.25, 3.26, 3.27, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8 and
4.9 shall expire one year after the date hereof.
Section 7.5 Method of Asserting Claims. All claims for
indemnification by a party entitled to be indemnified hereunder (an
"Indemnitee") by another party hereto (an "Indemnitor"), except
for claims relating to Taxes which shall be governed by the provisions of
Article 8, shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an
Indemnitee may claim indemnity is asserted against or sought to be collected
from an Indemnitee by a third party, the Indemnitee shall notify the Indemnitor
within 20 days following the receipt by the Indemnitee of such claim or demand,
specifying the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
Failure of an Indemnitee to so notify an Indemnitor within such 20-day period
shall not relieve an Indemnitor of its obligation to indemnify the Indemnitee
for such claim or demand except to the extent that the delay in giving notice of
such claim or demand in fact materially prejudices (i) the defense of such claim
or demand where the Indemnitor has the right to control such defense or (ii)
participation in the defense of such claim or demand where the Indemnitor has a
right of participation. Any party hereto against whom a claim or demand is
asserted by a third party shall, without prejudice to any right of
indemnification hereunder, appropriately respond to such claim or demand
(whether by answer, denial, request for extension of time or other action) to
such claim or demand within any applicable time period, so as to preserve any
rights or remedies it or any other party may have against the person making such
claim or demand.
(b) An Indemnitor shall have thirty (30) days from the date
on which the Claim Notice is duly given (the "Notice Period") to notify an
Indemnitee (i) whether or not it disputes the liability of the Indemnitor to the
Indemnitee hereunder with respect to such claim or demand and (ii) whether or
not the Indemnitor desires, at its sole cost and expense, to defend the
Indemnitee against such claim or demand. If an Indemnitor does not notify an
Indemnitee within the Notice Period that it disputes its liability to the
Indemnitee, the Indemnitor shall be liable for the amount of any resulting
Losses.
(c) In the event an Indemnitor notifies an Indemnitee within
the Notice Period that it desires to defend the Indemnitee against such a claim
against or demand from the Indemnitee, then except as hereinafter provided the
Indemnitor shall defend, at its sole cost and expense, the Indemnitee by
appropriate proceedings, shall use its best efforts to settle or prosecute such
proceedings to a final conclusion in such a manner as to avoid any risk of the
Indemnitee (or MAA, MAI or the Subsidiaries, if a Purchaser is the Indemnitee)
becoming subject to any injunctive or other equitable order or relief or to
liability for any other matter, and shall control the conduct of such defense;
provided, however, that the Indemnitor shall not, without the prior written
consent of the Indemnitee, consent to the entry of any judgment against the
Indemnitee or enter into any settlement or compromise which does not include, as
an unconditional term thereof, the giving by the claimant or plaintiff to the
Indemnitee of a release, in form and substance reasonably satisfactory to the
Indemnitee, from all liability in respect of such claim or litigation. If the
Indemnitee desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense.
(d) Prior to an Indemnitor's settling any claim or demand
the defense of which it has assumed control, the Indemnitor shall obtain the
Indemnitee's approval, confirmed in writing in accordance with the notice
provisions hereof, which approval shall not be unreasonably withheld or delayed.
If an Indemnitee notifies an Indemnitor of its disapproval of such settlement,
the Indemnitee shall thereupon become liable, from and after the date of its
disapproval, for the amount of any award, judgment, costs or expenses (including
attorney fees) in excess of the proposed settlement amount and shall have the
right to elect to control the defense of such claim at its sole cost and
expense.
(e) In the event an Indemnitee should have a claim against
an Indemnitor hereunder which does not involve a claim or demand being asserted
against or sought to be collected from the Indemnitee (or MAA,
MAI or the Subsidiaries, if a Purchaser is the Indemnitee) by a third party, the
Indemnitee shall promptly send a Claim Notice with respect to such claim to the
Indemnitor. If the Indemnitor does not notify the Indemnitee within the Notice
Period that it disputes such claim, the Indemnitor shall be liable for the
amount of any resulting Losses.
Section 7.6 Method of Payment. Any indemnification payment by
Purchaser to Seller pursuant to this Article 7 or Article 8 shall be made in
immediately available funds. Any indemnification payment by Seller to Purchaser
pursuant to this Article 7 or Article 8 shall be made (i) first, in AMSC Common
Stock received by Seller pursuant to this Agreement, and (ii) second, to the
extent such indemnification payment amount exceeds the aggregate Market Value of
the AMSC Common Stock held by Seller, in immediately available funds; provided,
however, that any indemnification payments by Seller to Purchaser with respect
to any breach of the representations and warranties contained in Section 3.25 or
pursuant to Section 8.7(i) shall be made in immediately available funds. For
purposes of any indemnification payment made by Seller pursuant to the
immediately preceding sentence, the Market Value of the AMSC Common Stock shall
be calculated as the higher of (A) the Market Value as of the date hereof, and
(B) the Market Value as of the date of such indemnification payment.
Section 7.7 Limitation of Recourse.
(a) Following the Closing, except with respect to claims
based upon fraud, the indemnification provided by Article 7 or Article 8 shall
be the sole and exclusive remedy for any Losses of any party hereto with respect
to any misrepresentation or inaccuracy in, or breach of, any representations or
warranties or any breach or failure in performance prior to Closing of any
covenants or agreements made by any party in this Agreement or in any exhibit or
schedules hereto or any certificate delivered hereunder.
(b) No claim shall be brought or maintained by AMSC or
Purchaser or their respective successors or permitted assigns against any
officer, director or employee (present or former) of any of the Companies or
Seller, or by Seller or its respective successors or permitted assigns against
any officer, director or employee (present or former) of Purchaser or AMSC, and
no recourse shall be brought or granted against any such persons, by virtue of
or based upon any alleged misrepresentation or inaccuracy in or breach of any of
the representations, warranties or covenants of any of the Companies or Seller
on the one hand, or Purchaser or AMSC on the other hand, set forth or contained
in this Agreement or any exhibit or schedule hereto or any certificate delivered
hereunder, except to the extent that the same shall have been the result of
fraud by any such Person (and in the event of such fraud, such recourse shall be
brought or granted solely against the Person or Persons committing such fraud).
Section 7.8 Acknowledgment by Seller, Purchaser and AMSC. Seller,
Purchaser and AMSC each hereby acknowledges that it has conducted to its
satisfaction, an independent investigation and verification of the financial
condition, results of operations, assets, liabilities, properties and projected
operations of AMSC and the Companies, respectively, and in making their
respective determination to proceed with the transactions contemplated by this
Agreement, (i) Seller has relied on the results of its own independent
investigation and verification and the representations and warranties of AMSC
and Purchaser expressly and specifically set forth in this Agreement, and (ii)
Purchaser and AMSC have each relied on the results of their own independent
investigation and verification and the representations and warranties of Seller
and the Companies expressly and specifically set forth in this Agreement. SUCH
REPRESENTATIONS AND WARRANTIES BY SELLER AND THE COMPANIES ON THE ONE HAND, AND
BY AMSC AND PURCHASER ON THE OTHER HAND, CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SUCH PARTIES TO THE OTHER PARTIES IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH PARTY
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED (INCLUDING, BUT NOT
LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL
CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF THE COMPANIES) ARE
SPECIFICALLY DISCLAIMED BY SELLER AND THE COMPANIES AND OF AMSC ARE SPECIFICALLY
DISCLAIMED BY AMSC AND PURCHASER.
ARTICLE 8. TAX MATTERS
Section 8.1 Seller's Tax Representations and Warranties. Seller
hereby represents and warrants to AMSC that:
(a) For the period from its incorporation through the
Closing Date, MAI was and will remain a member of the Seller Group and was and
will be included in the consolidated federal income tax returns of the Seller
Group.
(b) For the period from its incorporation through the
Closing Date, MAA was and will remain a member of the Seller Group and was and
will be included in the consolidated federal income tax returns of the Seller
Group.
(c) For the period from their formation through the Closing
Date, each of XXXXX Holding and XXXXX was and will remain a partnership for
federal and State income Tax purposes.
(d) Except as set forth on Section 8.1(d) of the Disclosure
Schedule, all Tax Returns required to have been filed by the Companies and any
affiliated, consolidated, combined, unitary or other groups of which any Company
is, will be (at any time on or prior to the Closing Date) or was a member have
been or will be filed timely and are or will be accurate and correct in all
material respects insofar as they relate to the Companies, and, insofar as they
relate to the Companies, all Taxes due and payable (for taxable periods ending
on or before the Closing Date and for that portion of any Split Period ending on
the Closing Date) by any Company and any affiliated, consolidated, combined,
unitary or other groups of which any Company is, will be (at any time on or
prior to the Closing Date) or was a member (i) have been or will be paid or (ii)
adequate reserves and/or liabilities have been or will be established for such
Taxes on the financial books and records of the Companies.
(e) Each of the Companies has established (and through the
Closing Date will establish) on its Financial Statements and other financial
books and records reserves and/or liabilities that are adequate for the payment
of all Taxes not yet due and payable for taxable periods ending on or before the
Closing Date and for that portion of any Split Period ending on the Closing
Date.
(f) Prior to the Closing Date, each of the Companies will
pay Taxes at such times and in such manner as are consistent with its past
practices.
(g) Except as set forth on Section 8.1(g) of the Disclosure
Schedule, no waivers of statutes of limitation have been given or requested with
respect to any Tax Returns covering any Company or any Taxes payable by any
Company.
(h) Except as set forth on Section 8.1(h) of the Disclosure
Schedule or for matters that have been resolved, no deficiency or adjustment for
any unpaid Taxes of any Company has been proposed, asserted or assessed.
(i) There are no Liens with respect to Taxes (except for
such Liens for Taxes as are disclosed in Section 3.12 of the Disclosure Schedule
and except for Liens for Taxes, assessments or other governmental charges not
yet delinquent) upon any of the properties or assets, real, personal or mixed,
tangible or intangible, of the Companies.
(j) Except as set forth on Section 8.1(j) of the Disclosure
Schedule, no Company (i) is or will become a party to any agreement providing
for the allocation or sharing of, or indemnification for, Taxes, or (ii) is or
prior to the Closing will become required to include in income any adjustment in
tax periods ending after the Closing Date pursuant to Section 481(a) of the
Code.
(k) No formal or informal plan of liquidation has been
adopted by any Company.
(l) Except as set forth on Section 8.1(l) of the
Disclosure Schedule, neither Seller nor any Company: (i) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by a Company; and (ii) has
executed or entered into a closing agreement affecting a Company pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of State, local or foreign law.
(m) Within twenty (20) days after the date of this
Agreement, Seller shall provide to AMSC a schedule of all tax elections that
have been made with respect to any Company (or any predecessor thereof) that
would have any effect on such Company after December 31, 1996, but only to the
extent that such elections were made affirmatively by the filing of a separate
document evidencing any such election. In addition, Seller shall use all
commercially reasonable efforts to identify to AMSC in writing within such
twenty (20) day period any other such tax elections that were not made
affirmatively by the filing of a separate document evidencing such tax
elections.
(n) Except as set forth on Section 8.1(n) of the Disclosure
Schedule, neither Seller nor any Company has received written notice to the
effect that the Company is subject to any penalty by reason of a violation of
any Tax order, Tax rule or Tax regulation or with respect to any Tax Return.
Section 8.2 AMSC's Tax Representations and Warranties. AMSC hereby
represents and warrants to Seller that:
(a) Except for any transaction contemplated by this
Agreement (e.g., an election under Section 338(h)(10) of the Code), AMSC shall
cause the Companies not to engage in any transaction outside the ordinary course
of business on the Closing Date after the Closing if such transaction would
increase the tax liability of any of the Companies for any Taxable Year or
portion thereof ending on the Closing Date. AMSC and Seller agree to treat any
transaction of the Companies which is (i)--outside the ordinary course of
business and (ii) occurs on the Closing Date but after the Closing as occurring,
for federal income Tax purposes, at the beginning of the day after the Closing
Date, in accordance with Treasury Regulations Section 1.1502-76(b)(1)(ii)(B).
(b) To the knowledge of AMSC, the fair market value of the
shares of AMSC Common Stock and other consideration received by Seller pursuant
to the Merger will be approximately equal to the fair market value of the MAA
Shares surrendered pursuant to the Merger in exchange therefor.
(c) To the knowledge of AMSC, following the Merger, MAA will
hold at least 90 percent of the fair market value of Merger Sub's net assets and
at least 70 percent of the fair market value of Merger Sub's gross assets held
immediately prior to the Merger. For purposes of this representation, amounts
used by Merger Sub to pay Merger-related expenses will be included as assets of
Merger Sub immediately prior to the Merger.
(d) Immediately prior to the Merger, AMSC will be in control
of Merger Sub within the meaning of Section 368(c) of the Code.
(e) AMSC has no plan or intention to reacquire any of the
shares of AMSC Common Stock issued in the Merger.
(f) As of the date of this Agreement and at all times
through and including the effective time of the Merger, AMSC had and has no plan
or intention of causing or permitting MAA to issue additional shares of stock
that would result in AMSC (or any permissible transferee thereof) losing control
of MAA within the meaning of Section 368(c) of the Code. Except as provided in
the next sentence, at any time during the eighteen (18) months following the
Closing Date, if AMSC causes or permits MAA to issue additional shares of stock
such that AMSC (or any permissible transferee thereof) loses control of MAA
within the meaning of Section 368(c) of the Code, AMSC shall, prior to such
issuance, provide an opinion of Xxxxxx & Xxxxxx, or other counsel reasonably
acceptable to Seller, that such issuance of additional shares will not cause the
Merger to fail to qualify as a tax-free reorganization under Section
368(a)(2)(E) of the Code. The second sentence of this Section 8.2(f) shall not
apply if, prior to such issuance of additional shares of MAA stock, Seller and
its Affiliates do not own at least fifty percent (50%) of the AMSC Common Stock
received by Seller in the Merger.
(g) AMSC has no plan or intention (i) to liquidate MAA, (ii)
to sell or otherwise dispose of the MAA Shares except for transfers of such
shares to corporations controlled by AMSC, or (iii) to cause MAA to sell or
otherwise dispose of any of its assets or of any of the assets acquired from
Merger Sub, except for dispositions made in the ordinary course of business or
transfers of assets to a corporation controlled by MAA within the meaning of
Section 368(c) of the Code.
(h) Merger Sub will have no liabilities assumed by MAA, and
will not transfer to MAA any assets subject to liabilities, in the Merger.
(i) Following the Merger, MAA will continue its historic
business or use a significant portion of its historic business assets in a
business.
(j) AMSC and Merger Sub will pay their respective expenses,
if any, incurred in connection with the Merger.
(k) There is no intercorporate indebtedness existing between
AMSC and MAA or between Merger Sub and MAA that was issued, acquired, or will be
settled at a discount.
(l) AMSC does not own, nor has it owned during the past five
years, any shares of the stock of MAA.
(m) Neither AMSC nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(n) AMSC shall cause each of the representations contained
in Section 8.2(a) through (m) to be true through the effective time of the
Merger.
Section 8.3 Tax Returns, Audits, Contests, Etc.; Tax Cooperation;
Tax Sharing Agreements; Tax Records.
(a) Seller shall prepare and file timely or cause to be
prepared and filed timely (i) all Tax Returns of or including any Company or
Benefit Plan for any Taxable Year (including any Short Taxable Year) the due
date (including extensions) for which is on or before the Closing Date, (ii) the
federal income Tax Returns of the Companies (e.g., Forms 1065 and separate Forms
1120 for inclusion in the consolidated federal income Tax Returns of the Seller
Group) for any Taxable Year--(including any Short Taxable Year) ending on or
before the Closing Date, and (iii) all Tax Returns for any affiliated,
consolidated, combined, unitary or other group of which any Company is, was or
will be a member prior to the Closing Date (other than any Tax Return for a
Taxable Year ending after the Closing Date for such a group that consists solely
of two or more of the Companies). In addition to the Tax Returns that it is
required to file under the immediately preceding sentence, Seller may, on or
before the Closing Date, file any Tax Return of or including any Company for any
Taxable Year (including any Short Taxable Year) that ends on or before the
Closing Date.
(b) (i) AMSC shall be responsible for the preparation and
filing of all Tax Returns of the Companies that are due (including extensions)
after the Closing Date, other than (A) Tax Returns that Seller is required to
file under the first sentence of Section 8.3(a) and (B) Tax Returns that Seller
has filed on or before the Closing Date pursuant to the second sentence of
Section 8.3(a), provided, however, that AMSC shall have no obligation to prepare
any Tax Return for any affiliated, consolidated, unitary or other group of which
any Company is, was or will be a member prior to the Closing Date (other than
any Tax Return that is due (including extensions) after the Closing Date for
such a group that consists solely of two or more of the Companies).
(ii) At the Closing, Seller shall provide AMSC with a
list of all unfiled Tax Returns for or including any Company for Taxable Years
ending on or before the Closing Date.
(iii) If, pursuant to Section 8.7(a), Seller is liable to
indemnify AMSC for any Taxes shown on a Tax Return that AMSC is required to file
under Section 8.3(b)(i), AMSC shall use all commercially reasonable efforts to
provide Seller with a copy of any such Tax Return (along with a computation of
the amount of Tax shown on such Tax Return for which Seller is responsible) a
reasonable time prior to the filing thereof. AMSC shall use all commercially
reasonable efforts to provide any such income Tax Return at least sixty (60)
days prior to the due date thereof. AMSC will consider any suggestion made by
Seller with respect to the calculations and positions taken in such Tax Returns.
Failure by AMSC to comply with the provisions of this Section 8.3(b)(iii) will
in no way eliminate, limit or restrict Seller's indemnification obligations set
forth in Section 8.7.
(c) (i) Seller shall pay or cause to be paid (A) all Taxes of the
Companies or Taxes for which any Company may be liable that are due on or before
the Closing Date, and (B) the federal and State income Taxes of the Companies
for any Taxable Year (including any Short Taxable Year) ending on or before the
Closing Date.
(ii) No later than 180 days following the Closing Date, AMSC
shall provide to Seller a federal income Tax computation and related schedules
and data for each Company having a Short Taxable Year ending on the Closing
Date, which Tax computation shall be consistent with Tax Returns filed for prior
Taxable Years and shall reflect the income, gain or loss of such Company for
that Short Taxable Year other than any income, gain or loss arising or resulting
from any election described in Section 8.4.
(iii) Seller shall use all commercially reasonable efforts to
complete prior to the Closing Date all necessary federal income Tax computations
and related schedules and data for each Company for the Taxable Years of the
Companies ending on December 31, 1997. To the extent necessary for Seller to
complete such computations, schedules and data, AMSC shall allow Seller and its
agents reasonable access after the Closing Date to the books and records of the
Companies.
(iv) Except as provided in Section 8.3(c)(i), AMSC shall pay or
cause to be paid all Taxes of the Companies that are due after the Closing Date.
(v) The provisions of this Section 8.3(c) shall not be
construed or applied to limit or broaden the indemnification obligations of
either Seller or AMSC under Section 8.7 except as specifically provided therein.
All Tax Returns and computations referred to in this Article 8 shall be prepared
in a manner consistent with prior Tax Returns, insofar as such Tax Returns and
computations referred to in this Article 8 relate solely to the Companies.
(d) AMSC and Seller shall use all commercially reasonable efforts to
provide each other with copies of Tax Returns (including amended Tax Returns) of
or including any Company to the extent any such Tax Returns are relevant in
determining either party's obligations under this Agreement, including, but not
limited to, the indemnification obligations in Section 8.7 and the procedural
obligations in this Section 8.3. The provisions of this Section 8.3 shall not be
construed or applied to limit or broaden the indemnification obligations of
either Seller or AMSC under Section 8.7 except as specifically provided therein.
(e) Seller and AMSC shall provide prior notice to, and cooperate
fully with, each other in connection with any audit examinations of any Company
by any governmental taxing authority with respect to any Taxes, including but
not limited to the furnishing or making available of records, books of account
or other materials reasonably necessary or helpful for the defense against the
assertions of any taxing authority as to any Taxes or deficiencies thereof.
(f) Seller and AMSC shall cooperate with one another and their
respective representatives, in a prompt and timely manner, in connection with
the preparation, signing, and filing of, and any administrative or judicial
proceeding involving, any Tax Return filed or required to be filed by or for (i)
the Seller Group, any member thereof, or any Company for any
Taxable Year (including any Short Taxable Year) ending on or before the Closing
Date, or (ii) the AMSC Group, any member thereof, or any Company for any Taxable
Year (including any Short Taxable Year) ending after the Closing Date, with
respect to any item or issue affecting the property or operations of any
Company. Such cooperation shall include, but not be limited to, making available
to the other party, during normal business hours, all books, records (including,
but not limited to, working papers and schedules), information, officers and
employees (without substantial interruption of employment) reasonably requested
and necessary or useful in connection with any Tax inquiry, audit,
investigation, dispute, litigation or any other matter requiring any such books,
records, information, officers or employees for any reasonable business purpose.
Notwithstanding the foregoing, neither party shall be required to furnish to the
other Tax Returns or drafts thereof of the Seller Group, the AMSC Group, or any
affiliated, consolidated, combined, unitary or other group of which any Company
is, will be or was a member, as the case may be, for any Taxable Year, except
that each party shall furnish to the other the applicable portions of such Tax
Returns reporting the operations of the Companies and the applicable portions of
all reports relating to the examination by the IRS or any other federal, State
or local governmental agency. Any information obtained pursuant to this Article
8 shall be held in strict confidence and shall be used solely in connection with
the reason for which it was requested.
(g) As of the Closing Date, any and all Tax sharing or allocation
agreements shall terminate as between any Company, on the one hand, and Seller
or any Affiliates thereof, on the other hand, for all Taxes regardless of the
Taxable Year for which such Taxes are imposed, and the provisions of this
Agreement shall apply thereafter.
(h) (i) AMSC shall not, and shall not permit any other person or
entity to, dispose of or destroy any of the business records and files of any
Company in existence on the Closing Date relating to Taxes without first
offering to turn over possession thereof to Seller by written notice to Seller
at least 30 days prior to the proposed date of such disposition or destruction.
(ii) Seller shall not, and shall not permit any other person or
entity to, dispose of or destroy any business records and files relating to
Taxes of any Company now in the possession of, or subsequently acquired by,
either Seller, any member of the Seller Group or any Affiliate of Seller without
first offering to turn over possession thereof to AMSC by written notice to AMSC
at least 30 days prior to the proposed date of such disposition or destruction.
Section 8.4 Asset Purchase Treatment for MAI Shares.
(a) (i) At the sole election of Purchaser, Purchaser and Seller shall
elect for federal Tax purposes to treat the purchase and sale of the MAI Shares
pursuant to this Agreement as a purchase and sale of the assets of MAI in
accordance with the provisions of Code Section 338 generally and Code Section
338(h)(10) specifically. If an election is to be made as provided in the
preceding sentence, Purchaser and Seller agree to make timely all elections
necessary to carry out the provisions of this Section 8.4(a)(i) and to report
the purchase and sale of the MAI Shares consistent with the preceding sentence
and in accordance with the provisions of this Article 8.
(ii) If Purchaser and Seller make the election in Section
8.4(a)(i), then Purchaser and Seller shall elect, for State income Tax purposes,
to treat the purchase and sale of the MAI Shares as a purchase and sale of the
assets of MAI to the extent permitted by applicable law. If an election is to be
made as provided in the preceding sentence, Purchaser and Seller agree to make
timely all elections necessary to carry out the provisions of this Section
8.4(a)(ii) and to report the purchase and sale of the MAI Shares consistent with
the preceding sentence and in accordance with the provisions of this Article 8.
In any State(s) where it is unclear whether applicable law permits the purchase
and sale of the MAI Shares to be treated as a purchase and sale of assets,
Purchaser and Seller agree to treat the purchase and sale of the MAI Shares as a
purchase and sale of the assets of MAI provided that
Seller and Purchaser otherwise make the election described in Section 8.4(a)(i).
(iii) The provisions of Section 8.4(b), (c), (d) and (e) below
shall apply if Seller and Purchaser make an election described in Section
8.4(a)(i) or (ii).
(b) Seller shall pay or otherwise be liable for (and shall indemnify
and hold harmless AMSC, its subsidiaries and the Companies against) any and all
Taxes and Other Tax Costs attributable to the recognition of income by Seller or
any Company (and Seller shall receive the tax benefit from any loss) from the
treatment of the purchase and sale of the MAI Shares as a purchase and sale of
the assets of MAI in accordance with the provisions of Section 8.4(a).
(c) Purchaser and Seller hereby agree to determine the fair market
value of the assets, both tangible and intangible, of MAI (and of any
partnership Affiliates of MAI and MAA) (the "Assets") for purposes of allocating
the consideration to be paid for, and the amount realized on the sale of, the
Assets. This determination, which shall be binding upon Purchaser and Seller in
accordance with the provisions of Section 1060(a) of the Code, shall be made as
follows:
(i) No later than sixty (60) days (or such later date as the
parties mutually agree) following the Closing Date, Purchaser shall cause an
appraiser (the "Appraiser"), which shall be reasonably acceptable to Seller, to
provide to Purchaser and Seller an appraisal of the fair market valuations of
the Assets (the "Appraisal"). For purposes of this Section 8.4(c), the "fair
market value" of an Asset shall mean the amount a willing buyer would pay to a
willing seller for the actual property in question (and not calculated based
solely upon the replacement cost for such property) in an arm's length
transaction where each party to the transaction has full knowledge of all
relevant information concerning such property.
(ii) Each of Seller and Purchaser may provide the Appraiser
with such information as it believes will be useful to the Appraiser
in preparing the Appraisal. Copies of any written materials provided to the
Appraiser by either Seller or Purchaser shall simultaneously be provided to the
other party. All oral communication with the Appraiser shall be made through
Purchaser, which shall provide Seller with reasonable opportunities to speak and
meet with the Appraiser to express any views Seller reasonably believes are
pertinent to the preparation of the Appraisal.
(iii) Purchaser shall pay the basic fee of the Appraiser as set
at the time the Appraiser is initially engaged by Purchaser. To the extent that
any additional fees, costs or expenses are incurred as a result of documents
provided by Seller, communications initiated by Seller or meetings held at
Seller's request, Seller shall pay such fees, costs or expenses.
(iv) The fair market valuations of the Assets determined by the
Appraiser pursuant to this Section 8.4(c) shall be the fair market valuations of
the Assets for Tax purposes and shall be binding upon Seller and Purchaser as
provided in this Agreement.
(d) Neither Seller nor Purchaser nor any Affiliate of Seller or
Purchaser shall take a position in any Tax proceeding, Tax audit or otherwise
inconsistent with the fair market value determinations described in Section
8.4(c); provided, however, that (i) nothing contained herein shall require
Seller or Purchaser to contest any challenge to such determinations, and (ii)
nothing contained herein shall prevent Seller, Purchaser, or any of their
Affiliates from filing protective amended Tax Returns or claims for refunds
after a Tax authority has challenged such determinations. In the event that any
claim shall be made by any taxing authority against either Purchaser or any
Company (or any successor thereto), on the one hand, or Seller, on the other
hand, that, if successful, would have the effect of altering such fair market
value determinations, then the party that is the subject of such claim
("Involved Party") shall give notice thereof to the other party ("Other Party")
in writing within 30 business days thereof. Thereafter, except as provided in
the next sentence, the Involved Party shall have control of any contest relating
thereto, but the Involved Party shall consider in good faith any
request or suggestion by the Other Party for any conference, hearing or
proceeding relating to such contest, shall (to the extent it is feasible to do
so) permit the Other Party to participate therein at such Other Party's expense
and shall not object to such Other Party's submission of briefs and memoranda of
law relating thereto, and shall provide the Other Party with any relevant
information reasonably requested by such Other Party. Notwithstanding the
provisions of the preceding sentence, the Other Party shall have control of any
contest relating to the fair market valuations if the Involved Party has
notified the Other Party that the Other Party is obligated under the provisions
of Section 8.7 to indemnify the Involved Party for any Tax liability relating to
the proposed adjustments to the fair market valuations and the Other party shall
have provided to the Involved Party the written notice and acknowledgment of
financial responsibility referred to in the first sentence of Section 8.7(g).
(e) Purchaser and Seller each agrees to prepare and file all Internal
Revenue Service forms and the required schedules thereto and all requisite State
and local forms and schedules ("Forms") required to be filed by either or both
of them providing for the treatment of the purchase and sale of the MAI Shares
as purchases and sales of the Assets in accordance with the provisions of
Section 8.4(a). Purchaser shall request in writing from Seller, or Seller shall
request in writing from Purchaser, any information (reasonably within the
knowledge or possession of the person from whom requested) necessary to complete
the Forms, which information shall be provided no later than 30 days following
any such request. All such Forms shall be prepared consistent with the fair
market valuations of the Assets determined under Section 8.4(c), provided,
however, that Seller and Purchaser each recognize that appropriate adjustments
will be made for transaction and other costs and as required by any applicable
laws or regulations in determining the amount realized upon the disposition of
the Assets or the amount paid for the Assets.
Section 8.5 Tax-Free Reorganization Treatment for the MAA Merger.
Seller and AMSC agree that they intend that the Merger qualify as a tax-free
reorganization described in Section 368(a)(2)(E) of the Code, and Seller and
AMSC shall file all Tax Returns in a manner consistent with such treatment
(including satisfying all reporting requirements necessary to obtain such
treatment). Neither Seller nor AMSC nor any Affiliate of Seller or AMSC shall
take a position in any Tax proceeding, Tax audit or otherwise inconsistent with
the treatment of the Merger as a tax-free reorganization qualifying under
Section 368(a)(2)(E) of the Code; provided, however, that nothing contained
herein shall prevent Seller, AMSC, or any of their Affiliates from filing
protective amended Tax Returns or claims for refund after a Tax authority has
challenged such treatment.
Section 8.6 Transfer Taxes. Notwithstanding any other provision in this
Agreement, Seller and AMSC shall each be responsible for and pay one-half of any
transfer taxes, recording taxes, bulk sale taxes and similar transaction taxes
resulting from the transfer of the MAI Shares, the MAA Shares or the deemed
transfer of the equity interests in or the assets of any Company as a result of
the transactions contemplated by this Agreement. Each party hereto hereby shall
pay all such taxes and file all necessary documentation as required under the
applicable statutory provisions with respect to all such taxes in a timely
manner. Not later than fifteen (15) business days following receipt of written
notice from AMSC or Seller that it has paid any Taxes described in this Section
8.6, the other party shall pay to the payor its one-half share of such Taxes.
Section 8.7 General Tax Indemnifications.
(a) Seller shall indemnify and hold harmless AMSC and its Affiliates
(including the Companies) from and against any and all Taxes with respect to
which any Company or any entity as successor thereto may be liable to the extent
such Taxes are (i) attributable to any breach of any of Seller's
representations, warranties or covenants contained in this Article 8, (ii)
payable with respect to any Taxable Year ending on or prior to the Closing Date,
or (iii) payable with respect to that portion of any Split Period that is prior
to and including the Closing Date. Seller shall also indemnify and hold harmless
AMSC and its Affiliates (including the Companies) from and against (iv) any and
all Other Tax Costs relating to any Taxes described in this Section 8.7(a), and
(v) any and all Taxes and Other Tax Costs arising in any Taxable Year ending
after the Closing Date that result from any adjustment to any Tax Return of or
including the Company for any Taxable Year ending on or before the Closing Date,
provided, however, that the indemnification pursuant to this Section 8.7(a)(v)
shall not apply to the extent that such adjustment relates to whether any asset
is depreciable or amortizable, and further provided that any Tax or Other Tax
Cost indemnifiable under any other provision of this Article 8 shall not be
indemnifiable a second time under this Section 8.7(a)(v), and further provided
that any indemnification pursuant to this Section 8.7(a)(v) shall not apply to
any adjustment involving any agreement with a tax authority unless it has a
Material Adverse Effect on any Company (or any successor thereto).
Notwithstanding the preceding, Seller shall not be obligated to indemnify AMSC
or any of its Affiliates (including the Companies) for, in the case of taxes
described in clauses (ii), (iii), (iv) and (v), any Taxes that result from
AMSC's breach of any representation or warranty contained in this Article 8(ii).
(b) AMSC shall indemnify and hold harmless Seller and its Affiliates
from and against any and all Taxes with respect to which Seller, any of Seller's
Affiliates, any Company or any entity as successor thereto may be liable to the
extent such Taxes are (i) attributable to any breach of any of AMSC's
representations or warranties contained in this Article 8, (ii) insofar as they
relate to any Company or any entity as successor thereto, payable with respect
to any Taxable Year beginning and ending after the Closing Date, or (iii)
insofar as they relate to any Company or any entity as successor thereto,
payable with respect to that portion of any Split Period that begins after the
Closing Date. AMSC shall also indemnify and hold harmless Seller and its
Affiliates from and against (iv) any and all Other Tax Costs relating to any
Taxes described in this Section 8.7(b). Notwithstanding the preceding, AMSC
shall not be obligated to indemnify Seller or any of its Affiliates for, in the
case of taxes described in clauses (ii), (iii) and (iv), any Taxes that result
from Seller's breach of any representation or warranty contained in this Article
8. For purposes of this Section 8.7(b), if AMSC's obligation to indemnify for
Taxes arises as a result of the Merger failing to qualify as a reorganization
under Section 368(a) of the Code, such obligation shall be limited to an amount
that reflects the value of the timing difference between (x) the year in which
such Taxes are actually payable and (y) the year or years in which Seller
disposes of the AMSC Common Stock received by Seller in the merger, adjusted to
take into account any Tax benefit Seller may realize from the early payment.
(c) If the Seller's indemnification obligation under this section 8.7
arises in respect of any adjustment (i) for which AMSC or any of its Affiliates
(including any of the Companies) receives indemnification from the Seller and
(ii) which results in any Tax benefit to AMSC or any Affiliate of AMSC
(including any of the Companies) thereof for any Taxable Year or Split Period
beginning after the Closing Date which would not, but for such adjustment, be
available, AMSC shall pay, or shall cause to be paid, to the Seller an amount
equal to the actual Tax saving produced by such Tax benefit at the time such Tax
saving is realized by AMSC or any of its Affiliates (including any of the
Companies). The amount of any such Tax saving for any Taxable period shall be
the amount of the reduction in Taxes payable to a taxing authority by AMSC or
any of its Affiliates (including any of the Companies) thereof with respect to
such Taxable Year or Split Period as compared to the Taxes that would have been
payable to a taxing authority by AMSC or any of its Affiliates (including any of
the Companies) with respect to such Taxable Year or Split Period in the absence
of such Tax benefit.
(d) For purposes of this Section 8.7, in the case of any Taxes that
are payable with respect to a Split Period, the portion of such Taxes
allocable to Seller or to the portion of the Split Period ending on the Closing
Date shall be equal to (i) in the case of Taxes imposed on the basis of income
or receipts, an amount determined on the basis of a closing of the books as of
the end of the Closing Date and (ii) in the case of any other Taxes, the product
of the total Taxes for the period multiplied by a fraction the numerator of
which is the number of days in the Split Period from the commencement of the
Split Period through and including the Closing Date and the denominator of which
is the number of days in the entire Split Period (provided, however, that for
purposes of this clause (ii) appropriate adjustments shall be made to reflect
specific events that can be identified and specifically allocated as occurring
on or prior to the Closing Date (in which case Seller shall be responsible for
any Taxes related thereto) or occurring after the Closing Date (in which case
AMSC shall be responsible for any Taxes related thereto)). Notwithstanding any
other provision in this Section 8.7(d), Section 8.2(a) or any other provision in
this Agreement, any income, gain, gross receipts, net receipts or similar Tax
item recognized by any Company as a result of any transaction described in
Section 5.17 shall be treated as recognized by such Company for all Tax purposes
exclusively in (x) Taxable Years ending on or prior to the Closing Date, and/or
(y) those portions of Split Periods that are prior to and including the Closing
Date.
(e) Seller or AMSC, as the case may be (the "Tax Indemnitee"), shall
notify the other party (the "Tax Indemnitor") in writing in a reasonably prompt
fashion of any written inquiries, notices of audit, assertions of liability, or
other written communications from or with a Tax authority that relate to Taxes
with respect to which the Tax Indemnitor may be liable under this Article 8 (a
"Tax Claim"). Failure by the Tax Indemnitee to notify the Tax Indemnitor as
required by this Section 8.7(e) shall not relieve the Tax Indemnitor of its
liability and obligation to indemnify the Tax Indemnitee under this Agreement
unless such failure precludes the Tax Indemnitor from contesting the Taxes
giving rise to its indemnification obligation and there is at least a reasonable
possibility that the Tax Indemnitor would have
prevailed in challenging such Taxes.
(f) Seller and AMSC shall take all reasonable steps and actions
necessary or appropriate to minimize any indemnification obligations either
party may have under this Section 8.7.
(g) Except as provided in the next sentence, within thirty (30) days
of receiving notice of a Tax Claim, the Tax Indemnitor, at its sole cost and
expense, may elect, by written notice to the Tax Indemnitee, to assume sole
responsibility for defending such Tax Claim, but only if, in such written notice
to the Tax Indemnitee, the Tax Indemnitor acknowledges full and complete
financial responsibility for all Taxes covered by such Tax Claim and all Other
Tax Costs related thereto. Notwithstanding the provisions of the preceding
sentence, Seller shall not have the rights to settle or litigate any Tax Claim,
or to control and determine the timing and amount of any payment or deposit of
an amount relating to any Tax Claim, the submission or content of documentation,
returns or other Tax forms, protests, memoranda of law and briefs, the conduct
of oral arguments or presentations, the selection of witnesses and the
negotiation of stipulations of fact with respect to any Taxable Year ending
after the Closing Date. If the Tax Indemnitor assumes responsibility for
defending a Tax Claim pursuant to this Section 8.7(g), it shall keep the Tax
Indemnitee reasonably informed of the status of such Tax Claim, and the Tax
Indemnitee and its representatives shall be entitled to attend any meetings or
hearings involving the Tax Claim at its own expense. If the Tax Indemnitor does
not elect to assume control of defending any Tax Claim, the Tax Indemnitee may
settle or defend such Tax Claim. In such a case, if the Tax Indemnitor is
responsible for the asserted Taxes under this Article 8, the Tax Indemnitor
shall indemnify the Tax Indemnitee for the reasonable cost of its defense, in
addition to the underlying Taxes.
(h) Any unresolved dispute relating to any payments or
indemnification obligations of either Seller or AMSC to the other pursuant to
the provisions of this Article 8 shall be submitted to an arbitrator mutually
acceptable to Seller and AMSC (or, if the parties are unable to agree upon an
arbitrator, to an arbitrator selected by the American Arbitration Association).
Any such arbitration shall be conducted in accordance with the rules of the
American Arbitration Association in effect at the time of the arbitration. Where
any dispute relates to a position to be taken on any Tax Return of or including
a Company, the parties shall use reasonable efforts to resolve the dispute
informally or pursuant to arbitration prior to filing such Tax Return. In the
event the parties are unable to resolve any dispute prior to filing a Tax
Return, the position taken on the Tax Return shall have no impact or influence
on the resolution of the underlying dispute, and in no way shall prejudice
either party's rights or obligations under this Article 8, nor shall any
resolution of any dispute have any impact on how a Tax Return must be filed. In
the event an indemnification dispute arises that is based on a disagreement as
to how a Tax Return of or including a Company should be filed, the
indemnification obligations of the indemnifying party under this Section 8.7
shall be determined consistent with the filing position advanced by such party
if such position is not inconsistent with prior Tax Returns and accounting
conventions and is proper and legal. If a Tax authority subsequently determines
that the position advanced by the indemnifying party is incorrect, the
indemnifying party's obligation to indemnify the other party shall be determined
consistent with the determination of the Tax authority.
(i) Notwithstanding Section 8.7(b), AMSC shall not be responsible
for, and Seller shall indemnify and hold harmless AMSC and its Affiliates
(including the Companies) from and against any and all Taxes or Other Tax Costs
with respect to which any Company or any entity as successor thereto may be
liable to the extent such Taxes arise in any Taxable Year ending after Closing
Date that result from any income, net receipts, gross receipts, gain or similar
items recognized by any Company as a result of the transactions contemplated in
Section 5.16.
(j) AMSC and Seller agree to cooperate in good faith in carrying out
the provisions of this Article 8.
(k) This Article 8 shall be construed and applied to avoid
any double counting of any payments, credits or other benefits with respect to
any representation, warranty, covenant or indemnity set forth herein.
Section 8.8 Exclusive Remedy for Taxes. Except as provided in
Section 7.3, this Article 8 provides the exclusive agreement between Seller,
AMSC and their respective Affiliates regarding responsibility for the Taxes of
the Companies.
Section 8.9 Survival and Purchase Price Adjustment.
(a) Notwithstanding any other provision of this Agreement,
the covenants, promises, indemnifications and other obligations of the parties
hereto set forth in this Article 8 shall survive the Closing until fully carried
out and the expiration of any applicable statute of limitations relating to the
Taxes covered thereby.
(b) In the event any payments are made to Seller pursuant to
the provisions of this Article 8, such payments are adjustments to the purchase
price paid for the MAI Shares as set forth in Section 2.2(B).
ARTICLE 9. TERMINATION OF AGREEMENT; PAYMENT OF EXPENSES;
WAIVER OF CONDITIONS
Section 9.1 Termination Pre-Closing. Anything herein to the
contrary notwithstanding, this Agreement may be terminated at any time before
the Closing Date as follows (such date of termination being the "Termination
Date"), and in no other manner:
(a) Mutual Consent. By mutual written consent of Purchaser
and Seller.
(b) Expiration Date. By either Purchaser or Seller, if the
Closing shall not have occurred on or before June 30, 1998.
(c) Early Expiration Date. By Seller, if the
Purchaser shall have not provided to Seller a waiver or evidence (satisfactory
to Seller) of satisfaction of the condition set forth in Section 6.1(l) on or
prior to the later of (i) 60 days after the end of the initial FCC comment
period relating to the transactions contemplated hereby, and (ii) 14 days after
the FCC Authorization, for any reason other than the breach or inaction of the
party seeking to exercise its termination rights under this Section 9.1.
(d) Prohibition. By written notice of either Seller or
Purchaser if there shall have been entered a Final Order or injunction of any
Governmental Entity restraining or prohibiting the consummation of the
transactions contemplated hereby, including but not limited to the failure of
the parties to obtain an FCC Authorization.
(e) Breach; Failure of Condition. Purchaser may terminate
this Agreement by giving written notice to Seller at any time prior to the
Closing in the event Seller is (and AMSC and Purchaser are not) in breach in any
material respect, and Seller may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing in the event Purchaser or
AMSC is (and Seller is not) in breach in any material respect, of any
representation, warranty, or covenant contained in this Agreement and, in either
case, such breach has not been fully cured by the breaching party within 30 days
after written notice of such breach has been delivered to the breaching party by
the terminating party;
(f) Share Price. Seller may terminate this Agreement on the
Closing Date if the Market Value of a share of AMSC Common Stock calculated as
of the Closing Date has declined by more than 30% from the Market Value of a
share of AMSC Common Stock calculated as of the date hereof, after taking into
account all stock splits, reverse stock splits and similar adjustments to the
number of shares of AMSC Common Stock outstanding on the date hereof.
(g) FCC Final Order. Seller or Purchaser may
terminate this Agreement in the event that a Final Order of the FCC has not been
received when, under the terms of the Escrow Agreement, any period of time
applicable to the Escrowed Funds has expired thereby causing a return of the
Escrowed Funds, by providing notice to such other party within 30 Business Days
of such expiration. In the event a termination occurs pursuant to this Section
9.1(g):
(i) Purchaser shall return the Shares to Seller;
(ii) Seller shall return to Purchaser the AMSC Common
Stock issued to Seller for the MAA Shares pursuant to the terms of Section
2.1(a); and
(iii) each of the parties shall have only those rights
and obligations held by such party prior to the Closing Date.
Section 9.2 Termination Post-Closing. In the event that the Closing
proceeds upon receipt of an FCC Authorization that is not a Final Order, and an
adverse Final Order of the FCC is received that will not permit Purchaser to
operate MAA, MAI and the Subsidiaries as contemplated, Purchaser may terminate
this Agreement by providing notice to Seller within 30 Business Days of receipt
of the adverse Final Order of the FCC. In the event that a termination occurs
pursuant to this Section 9.2:
(a) the Escrow Agent shall return the MAI Purchase Price to
the Purchaser;
(b) Purchaser shall return the Shares to Seller;
(c) Seller shall return to Purchaser the AMSC Common Stock
issued to Seller for the MAA Shares pursuant to the terms of Section 2.1(a); and
(d) each parties shall have only those rights and
obligations held by such party prior to the Closing Date.
Section 9.3 Payment of Expenses; Waiver of Conditions. (a) Except
as set forth in Section 9.3(b), in the event that this Agreement shall be
terminated pursuant to this Article 9, all obligations of the parties hereto
under this Agreement shall terminate and there shall be no liability of any
party to any other party hereto and each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel, its auditors and its actuaries;
provided, however, that if this Agreement shall be terminated pursuant to
Section 9.1(b), such termination shall not release any party hereto from any
liability that such party may have for any breach occurring prior to the
Termination Date of any representation, warranty or covenant made by such party
in this Agreement.
(b) In the event this Agreement is terminated pursuant to
Section 9.1(c), then Seller shall be entitled to be reimbursed by Purchaser for
its expenses incurred in connection with the negotiation and execution of and
otherwise in connection with this Agreement which expenses shall be deemed to be
equal to $4,000,000 in immediately available funds, which funds shall be
delivered to Seller not later than two days after the Termination Date.
ARTICLE 10. MISCELLANEOUS
Section 10.1 Amendments. Subject to applicable law, this Agreement
and any exhibit or schedule attached hereto may be amended at any time prior to
the Closing Date by an instrument in writing duly signed by or on behalf of each
of the parties hereto.
Section 10.2 Further Instruments and Assurances. At or prior to and
after the Closing, each party shall from time to time, at the request of any
other party and without further cost or expense to such other party, execute and
deliver such other instruments and take such other actions as shall be
reasonably required by any other party in order to carry out the transactions,
agreements and covenants contained in or contemplated by this Agreement.
Section 10.3 Public Announcements. Press releases and other public
communications of any sort relating to this Agreement or the transactions
contemplated hereby shall be subject to the prior written consent of all parties
to this Agreement as to the contents of any such public disclosure, such consent
not being unreasonably withheld, conditioned or delayed; provided, however, each
party hereto shall be entitled to make any disclosure as is required under
applicable law, subpoena or final, nonappealable court order, in the reasonable
judgment of such disclosing party.
Section 10.4 Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
Section 10.5 Notices. All communications under this Agreement shall
be in writing and shall be deemed to have been duly given (i) on the date of
receipt if served personally or by confirmed facsimile or other similar
communication, (ii) on the first day after sending if sent for guaranteed next
day delivery by a next-day courier service or (iii) on the fourth Business Day
after mailing if mailed to the party or parties to whom notice is to be given by
registered or certified mail, return receipt requested, postage prepaid, and
properly addressed as follows:
If to Purchaser:
American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
and
American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
If to Seller:
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
Any party may change its address for purposes of this Section 10.5 by giving the
other parties hereto notice of the new address in the manner set forth above.
Section 10.6 Assignment and Binding Effect. This Agreement may not
be assigned by any party hereto without the prior written consent of the other
parties. Subject to the foregoing, all of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and assigns of the parties hereto.
Section 10.7 Entire Agreement. This Agreement, the exhibits and
schedules hereto, the Disclosure Schedule dated as of even date herewith, and
other documents delivered pursuant hereto, referred to herein or executed and
delivered in connection with the transactions contemplated hereby, contain the
entire agreement among Purchaser, Seller, MAA and MAI with respect to the
transactions contemplated herein and, except as provided herein, supersede all
previous negotiations, commitments and writings.
Section 10.8 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 10.9 Counterparts. This Agreement may be executed and
delivered in two or more counterparts, each of which shall be deemed an
original.
Section 10.10 No Third Party Beneficiaries. Nothing in this
Agreement is intended to confer any rights or remedies, whether express or
implied, under or by reason of this Agreement, on any persons other than the
parties hereto and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement. Notwithstanding the preceding,
any other provision herein or in any Collateral Agreement, Purchaser and AMSC
shall be entitled to assign this Agreement, to third party lenders as collateral
for their loans from such entities.
Section 10.11 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to Purchaser, AMSC or Seller upon any breach
or default of Purchaser, AMSC or Seller, respectively, under this Agreement,
shall impair any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.
Section 10.12 Construction. This Agreement is to be deemed to
have been prepared jointly by the parties hereto after arms length negotiations,
and any uncertainty or ambiguity existing herein shall not be interpreted
against any party, but according to the application of the rules of
interpretation of contracts.
Section 10.13 Knowledge Standard. The term "knowledge," "best of
knowledge," "know" and any similar term when used with respect to Seller, MAA or
MAI means actual (and not constructive) knowledge of any director, officer or
employee of Seller or an Affiliate of Seller, including but not limited to MAA,
MAI and the Subsidiaries.
Section 10.14 Expenses. Except as otherwise provided herein, all
costs, fees and expenses incurred in connection with this Agreement shall be
paid by the party incurring such cost, fee or expense, except that filing fees
related to the FCC Consents shall be shared jointly by Seller and Purchaser. All
costs and expenses of MAA, MAI and the Subsidiaries associated with the
negotiation, execution, delivery and consummation of the Agreement shall be
deemed to be the responsibility of Seller and at or before the Closing Sellers
shall reimburse MAA, MAI and the Subsidiaries therefor.
IN WITNESS WHEREOF, each of Seller, MAA, MAI, AMSC and Purchaser
has caused this Agreement to be duly executed on its behalf, as of the day and
year first above written.
MOTOROLA, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------
Title: Vice President
------------------------------
MOTOROLA XXXXX ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------
Title: Vice President
------------------------------
MOTOROLA XXXXX, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
------------------------------
Title: Corporate Vice President
and Director of Business
Development
------------------------------
AMERICAN MOBILE SATELLITE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------
Title: CEO and President
------------------------------
AMSC ACQUISITION COMPANY, INC.
By:/s/Xxxx X. Xxxxxxx
---------------
Name: Xxxx X. Xxxxxxx
---------------
Title: CEO and President
-----------------
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR SOLD EXCEPT
IN COMPLIANCE THEREWITH OR PURSUANT TO AN EXEMPTION THEREFROM.
AMERICAN MOBILE SATELLITE CORPORATION
Warrant for the Purchase of Shares of Common
Stock of American Mobile Satellite Corporation
No. ___ Warrant to Purchase
____________ Shares
FOR VALUE RECEIVED, AMERICAN MOBILE SATELLITE CORPORATION, a
Delaware corporation (the "Company"), hereby certifies that MOTOROLA, INC., its
successor or permitted assigns (the "Holder"), is entitled, subject to the
provisions of this Warrant, to purchase from the Company, at the times specified
herein, _______________ (___________) (the "Warrant Share Amount") fully paid
and non-assessable shares of Common Stock of the Company, par value $.01 per
share (the "Common Stock"), at a purchase price per share equal to the Exercise
Price (as hereinafter defined). The Warrant Share Amount and the Exercise Price
are subject to adjustment from time to time as hereinafter set forth.
1. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Accepted Alien Ownership Percentage Limitation" means
24.99% or, in the event of a modification of the Alien Ownership Restrictions
subsequent to the date hereof, such percentage limitation upon the Company's
Alien ownership as may be in effect from time to time as a result of such
modification, less 0.01%.
"Alien" means any alien or a representative thereof, or a foreign
government or a representative thereof, or a corporation or other entity
organized under the laws of any foreign government.
"Alien Ownership Percentage" means, with respect to any Person, the
percentage of total ownership in such Person owned of record, as well as the
percentage of total ownership in such Person voted, by Aliens; provided, that if
under the Alien Ownership Restrictions such Person would be deemed to have a
percentage of total ownership owned of record or voted by Aliens other than the
actual percentage so owned or voted, then such Person's Alien Ownership
Percentage shall be such deemed percentage.
"Alien Ownership Restrictions" means Section 310(b) of the
Communications Act, as modified by any interpretation, ruling or order of the
Federal Communications Commission (or any successor agency) applicable to the
Company or any of its subsidiaries.
"AMSC" means AMSC Acquisition Company, Inc., a Delaware corporation
and a wholly-owned subsidiary of the Company.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other
day.
on which commercial banks in the City of New York are authorized by law to
close.
"Closing Price" has the meaning set forth in Section 10.D.
"Common Stock" has the meaning set forth in the preamble hereof.
"Communications Act" means the Communications Act of 1934, as
amended, or any successor statute.
"Company" has the meaning set forth in the preamble hereof.
"Constituent Person" has the meaning set forth in Section 11.
"Current Market Price Per Common Share" has the meaning set forth
in Section 10.D.
"Exercise Date" means the applicable date of exercise of this
Warrant, as indicated on the Warrant Exercise Notice delivered by the Holder.
"Exercise Price" means initially $0.01 per Warrant Share, as
adjusted from time to time.
"Exercising Holder" has the meaning set forth in Section 3.A.
"Expiration Date" means ______ __, 200_, at 5:00 p.m. New York City
time.
"FCC" means the Federal Communications Commission, or such
successor agency of the Federal government with responsibility for administering
the Communications Act.
"MAA" means Motorola XXXXX Acquisition, Inc.
"MAI" means Motorola XXXXX, Inc.
"NASDAQ" means the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation System.
"NASD Limit" has the meaning set forth in Section 4.
"NYSE" means the New York Stock Exchange Inc.
"Non-Electing Share" has the meaning set forth in Section 11.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or any other entity or organization
including a government or political subdivision or an agency or instrumentality
thereof.
"Registration Rights Agreement" has the meaning set forth in
Section 16.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Stock Purchase Agreement" means the Stock Purchase Agreement by
and among the Company, AMSC, the Holder, MAA and MAI, dated as of December ___,
1998.
"Warrant Exercise Notice" means the Warrant Exercise Notice forming
a part hereof.
"Warrant Margin" means, on any date, the difference of (x) the
greater of (A) the average of the Closing Prices (as defined in Section 10.D) on
each of the 20 trading days immediately preceding such date and (B) the Closing
Price [on the trading days] prior to the such date, minus (y) the Exercise
Price.
"Warrant Share Amount" has the meaning set forth in the preamble
hereof.
"Warrant Shares" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time.
2. EXERCISE OF WARRANT.
A. Subject to Section 15 hereof, the Holder is entitled to
exercise this Warrant in whole or in part at any time, or from time to time, to
and including the Expiration Date or, if such day is not a Business Day, then on
the next succeeding day that shall be a Business Day. To exercise this Warrant,
the Holder shall execute and deliver to the Company at its address set forth in
Section 12 hereof a Warrant Exercise Notice substantially in the form annexed
hereto and shall deliver to the Company (x) this Warrant, including the Warrant
Exercise Subscription Form forming a part hereof duly executed by the Holder,
and (y) subject to Section 2.B, payment of the Exercise Price then in effect for
such Warrant Shares. Upon such delivery and payment, the Holder shall be deemed
to be the holder of record of the Warrant Shares subject to such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder.
B. The Exercise Price may be paid in cash or by certified or
official bank check or bank cashier's check payable to the order of the Company
or by wire transfer of immediately available funds to an account designated by
the Company or by cancellation of indebtedness owed to the Holder or by any
combination of such methods. In the alternative, the Holder may exercise its
right to receive Warrant Shares (i) on a net basis, such that, without the
exchange of any funds, the Holder will receive that number of Warrant Shares
(and such other consideration) otherwise issuable (or payable) upon exercise of
this Warrant less that number of Warrant Shares having an aggregate Current
Market Price Per Common Share on the Exercise Date equal to the aggregate
Exercise Price that would otherwise have been paid by the Holder for the Warrant
Shares or (ii) delivery to the Company, together with appropriate stock powers,
of certificates evidencing shares of Common Stock having an aggregate Current
Market Price Per Common Share on the Exercise Date of not less than the
aggregate Exercise Price. The Company shall pay any and all documentary, stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of this Warrant and the issue and delivery of the Warrant Shares.
C. If the Holder exercises this Warrant in part, this
Warrant shall be surrendered by the Holder to the Company and a new Warrant of
the same tenor and for the unexercised number of Warrant Shares shall be
executed by the Company. The Company shall register the new Warrant in the name
of the Holder or in such name or names of its transferee(s) pursuant to Section
8 hereof as may be directed in writing by the Holder and deliver the new Warrant
to the Person or Persons entitled to receive the same.
D. Except as otherwise provided in Section 3, upon surrender
of this Warrant in conformity with the foregoing provisions, the Company shall
transfer to the Holder of this Warrant appropriate evidence of ownership of the
shares of Common Stock or other securities or property (including any money) to
which the Holder is entitled, registered or otherwise placed in, or payable to
the order of, the name or names of the Holder or its transferee(s) as may be
directed in writing by the Holder, and shall deliver such evidence of ownership
and any other securities or property (including any money) to the Person or
Persons entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in Section 7 below.
3. OWNERSHIP LIMITATION. If at any time the exercise of any
Warrants pursuant to Section 2 would cause the Company's Alien Ownership
Percentage to exceed the Accepted Alien Ownership Percentage Limitation, then in
lieu of issuing shares of Common Stock pursuant to Section 2:
A. the Company shall issue to each Holder exercising
Warrants at such time (each an "Exercising Holder") whose Alien Ownership
Percentage is less than or equal to the Accepted Alien Ownership Percentage
Limitation the number of shares of Common
Stock to which such Exercising Holder is entitled pursuant
to Section 2;
B. the Company shall issue to each Exercising Holder whose
Alien Ownership Percentage is greater than the Accepted Alien Ownership
Percentage Limitation (each, an "Affected Exercising Holder") a number of shares
of Common Stock equal to the quotient of (x) the product of (A) the number of
shares of Common Stock that, immediately after giving effect to any issuances of
Common Stock pursuant to the foregoing Section 3.A, could be issued to a Person
with a 100% Alien Ownership Percentage without causing the Company's Alien
Ownership Percentage to exceed the Accepted Alien Ownership Percentage
Limitation, multiplied by (B) the number of shares of Common Stock to which such
Affected Exercising Holder would be entitled pursuant to Section 2 but for the
application of this Section 3, divided by (y) the product of (A) the aggregate
number of shares of Common Stock to which all Affected Exercising Holders would
be entitled pursuant to Section 2 but for the application of this Section 3,
multiplied by (B) such Affected Exercising Holder's Alien Ownership Percentage;
provided that in no event shall the number of shares of Common Stock issuable to
any Affected Exercising Holder pursuant to this Section 3.B exceed the number of
shares of Common Stock to which such Affected Exercising Holder would have been
entitled pursuant to Section 2 but for the application of this Section 3; and
C. the Company shall deliver by wire transfer of immediately
available funds to the account of each Affected Exercising Holder specified in
such Affected Exercising Holder's Warrant Exercise Notice, an amount equal to
the product of (x) the number of shares of Common Stock to which such Affected
Exercising Holder would have been entitled pursuant to Section 2 that are not
issuable to such Affected Exercising Holder pursuant to the foregoing Section
3.B, multiplied by (y) the Warrant Margin on the Exercise Date.
4. RESTRICTIVE LEGEND. Upon original issuance thereof, and
until such time at the same shall have been registered under the Securities Act
or sold pursuant to Rule 144 promulgated thereunder (or any similar rule or
regulation), each Warrant and any certificates evidencing Warrant Shares shall
bear a legend substantially in the form of the legend set forth on the first
page hereof, unless in the opinion of counsel reasonably satisfactory to the
Company, such legend is no longer required by the Securities Act.
5. RESERVATION OF SHARES. The Company hereby agrees that at
all times it shall reserve for issuance and delivery upon exercise of this
Warrant such number of its authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale
(other than general regulatory restrictions under the Communications Act) and
free and clear of all preemptive rights.
6. FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Warrant
and in lieu of delivery of any such fractional share upon any exercise hereof,
the Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the Current Market Price Per Common Share on the Exercise Date.
7. EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.
A. The Company shall from time to time register the exchange
or transfer of any outstanding Warrant in a Warrant register to be maintained by
the Company upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, duly executed by
the registered
Holder or Holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney. Each taker and holder of this Warrant by
taking or holding the same, consents and agrees that the registered holder
hereof may be treated by the Company and all other Persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the Person entitled
to exercise the rights represented hereby.
B. Prior to any proposed transfer of the Warrants or the
Warrant Shares, unless such transfer is made pursuant to an effective
registration statement under the Securities Act the Holder will deliver to the
Company, if so requested by the Company, an opinion of counsel reasonably
satisfactory in form and substance to the Company, to the effect that the
Warrants or Warrant Shares, as applicable, may be sold or otherwise transferred
without registration under the Securities Act. Subject to the preceding
sentence, the Holder of this Warrant shall be entitled, without obtaining the
consent of the Company, to assign and transfer this Warrant, at any time in
whole or from time to time in part, to any Person or Persons. Subject to the
foregoing, upon surrender of this Warrant to the Company, together with the
attached Warrant Assignment Form duly executed, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee or
assignees named in such instrument of assignment and, if the Holder's entire
interest is not being assigned, in the name of the Holder, and this Warrant
shall promptly be cancelled.
8. LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the
Company of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the loss, theft, destruction or mutilation of this Warrant, and
(if requested by the Company in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company shall execute and deliver a new Warrant
of like tenor and date representing the right to purchase an equivalent number
of Warrant Shares.
9. ANTI-DILUTION PROVISIONS.
A. In case the Company shall at any time after the date
hereof (i) declare a dividend or make a distribution on Common Stock payable in
Common Stock or other shares of the Company's capital stock, (ii) subdivide,
split or reclassify the outstanding Common Stock into a larger number of shares,
(iii) combine or reclassify the outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock in a reclassification
of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then in each such case the Warrant Share Amount shall be adjusted to equal the
number of shares to which the holder of this Warrant would have been entitled
upon the occurrence of such event if this Warrant had been exercised immediately
prior to such time. Such adjustment shall be made successively whenever any
event listed above shall occur.
B. In case the Company shall fix a record date for the
making of a distribution to holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, assets or
other property (excluding cash dividends, other cash distributions from current
or retained earnings or dividends payable in Common Stock for which an
adjustment has been made pursuant to Section 9.A), the Warrant Share Amount to
be in effect after such record date shall be determined by multiplying the
Warrant Share Amount
in effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price Per Common Share, and the denominator of
which shall be such Current Market Price Per Common Share on such record date,
less the fair market value (determined by the Board of Directors of the Company;
provided that if the Holder shall object to any such determination, the Board of
Directors shall retain an independent appraiser reasonably satisfactory to the
Holder to determine such fair market value) of the portion of the assets, other
property or evidence of indebtedness so to be distributed which is applicable to
one share of Common Stock. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Warrant Share Amount shall again be adjusted to be the Warrant Share
Amount which would then be in effect if such record date had not been fixed.
C. If as a result of any event or for any other reason, any
adjustment is made which increases the number of shares of Common Stock issuable
upon conversion, exercise or exchange of, or in the conversion or exercise price
or exchange ratio applicable to, any outstanding securities of the Company that
are convertible into, or exercisable or exchangeable for, Common Stock of the
Company, then a corresponding adjustment shall be made hereunder to increase the
Warrant Share Amount, but only to the extent that no such adjustment has been
made pursuant to Section 9.A or B hereof with respect to such event or for such
other reason.
D. For the purpose of any computation under Section 3 or
Section 9.B hereof, on any determination date the "Current Market Price Per
Common Share" shall be deemed to be the
average (weighted by daily trading volume) of the Closing Prices (as defined
below) per share of Common Stock for the 20 consecutive trading days immediately
prior to such date. "Closing Price" means (1) if shares of Common Stock then are
listed and traded on the NYSE, the closing price on such day as reported, on the
NYSE Composite Transactions Tape; (2) if shares of Common Stock then are not
listed and traded on the NYSE, the closing price on such day as reported by the
principal national securities exchange on which the shares are listed and
traded; (3) if shares of Common Stock then are not listed and traded on any such
securities exchange, the last reported sale price on such day on the NASDAQ; or
(4) if shares of Common Stock then are not traded on the NASDAQ National Market,
the average of the highest reported bid and lowest reported asked price on such
day as reported by NASDAQ. If on any determination date shares of Common Stock
are not quoted by any such organization, the Current Market Price Per Common
Share shall be the fair market value of such shares on such determination date
as reasonably determined by the Board of Directors. If the Holder shall object
to any determination by the Board of Directors of the Current Market Price Per
Common Share, the Current Market Price Per Common Share shall be the fair market
value per share of Common Stock as determined by an independent appraiser
retained by the Company at its expense and reasonably acceptable to the Holder.
For purposes of any computation under this Section 9, the number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company.
E. No adjustment in the Warrant Share Amount or the Exercise
Price shall be required unless such adjustment would require an
increase or decrease of at least one percent of such amount; provided that any
adjustments which by reason of this Section 9.F are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 9 shall be made to the nearest one tenth of
a cent or to the nearest hundredth of a share as the case may be.
G. In the event that, at any time as a result of the
provisions of this Section 9, the holder of this Warrant upon subsequent
exercise shall become entitled to receive any shares of capital stock of the
Company other than Common Stock, the number of such other shares so receivable
upon exercise of this Warrant shall thereafter be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained herein.
H. Upon any adjustment pursuant to this Section 9, the
Company shall promptly thereafter (i) cause to be filed with the Company a
certificate of an officer of the Company setting forth the Warrant Share Amount
and Exercise Price after such adjustment and setting forth in reasonable detail
the method of calculation and the facts upon which such calculations are based,
and (ii) cause to be given to each registered Holder of this Warrant at the
address as set forth in Section 11 written notice of such adjustments. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be delivered pursuant to Section 12.B.
10. REORGANIZATION, CONSOLIDATION, MERGER, OR SALE OF
ASSETS. In case of any reclassification, redesignation, reorganization of
recapitalization by the Company (other than as set forth in Section 9) or
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any sale or transfer of all substantially
all of the assets of the Company or of the Person formed by such consolidation
or resulting from such merger or which acquires such assets, as the case may be,
the Holder shall have the right thereafter to exercise this Warrant for the kind
and amount of securities, cash and other property receivable upon such
reclassification, redesignation, reorganization, recapitalization,
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock for which this Warrant may have been exercised in full immediately
prior to such reclassification, redesignation, reorganization, recapitalization,
consolidation, merger, sale or transfer, assuming (i) such holder of Common
Stock is not a Person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be ("Constituent Person"), or an Affiliate of
a Constituent Person and (ii) in the case of a consolidation, merger, sale or
transfer which includes an election as to the consideration to be received by
the holders, such holder of Common Stock failed to exercise its rights of
election, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer (provided that if
the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock held immediately prior to such consolidation, merger, sale or transfer by
other than a Constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised ("Non-electing share"),
then for the purpose of this Section 10 the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by each Non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing shares. Adjustments for
events subsequent to the effective date of such reclassification, redesignation,
reorganization, recapitalization, consolidation, merger and sale of assets shall
be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. In any such event, effective provisions shall be
made in the certificate or articles of incorporation of the resulting or
surviving corporation, in any contract of sale, conveyance, lease or transfer,
or otherwise so that the provision set forth herein for the protection of the
rights of the Holder shall thereafter continue to be applicable; and any such
resulting or surviving corporation shall expressly assume the obligation to
deliver, upon exercise, such shares of stock, other securities, cash and
property. The provisions of this Section 11 shall similarly apply to successive
consolidations, mergers, sales, leases or transfers.
11. NOTICES. Any notice, demand or delivery authorized or
required by this Warrant shall be in writing and shall be given to the Holder or
the Company, as the case may be, at its address (or telecopier number) set forth
below, or such other address (or telecopier number) as shall have been furnished
to the party giving or making such notice, demand or delivery:
If to the Company:
American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxx.
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx,
General Counsel
With a copy to:
Xxxxxx & Xxxxxx
000 - 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If to the Holder:
Motorola, Inc.
Law Department, IL01/11
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx,
Corporate Vice President and General Counsel
With a copy to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
12. NOTICES TO WARRANT HOLDERS.
A. The Company shall provide to the Holder, at its address
and in the manner set forth in Section 12, a notice of expiration of this
Warrant not less than 90 nor more than 120 days prior to the Expiration Date.
B. In the event:
(a) the Company shall authorize the issuance to holders
of shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or warrants;
or
(b) the Company shall authorize the distribution to
holders of shares of Common Stock of assets, including cash, evidences of its
indebtedness, or other securities; or
(c) of any reorganization, consolidation or merger to
which the Company is a party and for which approval of any shareholders of the
Company is required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants, or a tender
offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
-2-
(e) the Company proposes to take any action that would
require an adjustment to the Warrant Share Amount or the Exercise Price pursuant
to Section 10 hereof; then the Company shall cause to be given to the registered
Holder of this Warrant, at least 20 days prior to the applicable record date
hereinafter specified, or 20 days prior to the date of the event in the case of
events for which there is no record date a written notice stating (i) the date
as of which the holders of record of shares of Common Stock entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such reorganization,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 13.B or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
13. RIGHTS OF THE HOLDER. Prior to the exercise of any
Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or to
receive any notice of meetings of stockholders or any notice of any proceedings
of the Company except as may be specifically provided for herein. Nothing
contained herein shall impose any obligation on the Holder to
purchase any securities or impose any liabilities on such Holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
14. LIMITATION ON EXERCISE OF WARRANT; CANCELLATION OF
WARRANTS. Notwithstanding anything to the contrary in this Warrant, this Warrant
shall be exercisable at any given time only for the number of Warrant Shares
which is equal to the applicable Warrant Share Amount as in effect from time to
time.
15. REGISTRATION RIGHTS. The Holder of this Warrant is
entitled to certain registration rights with respect to the Warrant Shares
issuable upon the exercise thereof. Said registration rights are set forth in a
Registration Rights Agreement dated as of December __, 1997, by and among the
Company and the Holder (the "Registration Rights Agreement"). By acceptance of
this Warrant, the Holder hereof agrees that upon exercise of this Warrant, in
whole or in part, such Holder will be bound by the Registration Rights Agreement
as a holder of Registrable Securities thereunder. The Company agrees that upon
transfer of this Warrant, in whole or in part, pursuant to Section 7 hereof, the
transferee shall be entitled to become a party to the Registration Rights
Agreement if not already a party thereto. A copy of the Registration Rights
Agreement may be obtained by the Holder hereof upon written request to the
Company.
16. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS WARRANT AND
ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND THE PERFORMANCE THEREOF
SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HERETO
IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
17. AMENDMENTS; WAIVERS. Any provision of this Warrant may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Holder and the Company, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder operate as a waiver thereof or shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power of privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
18. COUNTERPARTS. This Warrant may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
19. FCC COMPLIANCE. Notwithstanding any provisions of this
Warrant to the contrary, in the event that the consent of the FCC to the
exercise of this Warrant is required to be obtained prior to such exercise, this
Warrant shall not be exercisable unless and until such FCC consent shall have
been obtained. In the event that this Warrant is intended to be exercised and
such FCC consent is required to be obtained, the Company and the Holder shall
use commercially reasonable efforts to obtain such FCC consent promptly.
(signature page follows)
-3-
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of ________ __, 1998.
AMERICAN MOBILE SATELLITE CORPORATION
By:
-------------------------------------
Name:
Title:
Acknowledged and Agreed:
MOTOROLA, INC.
By:
-------------------------
Name:
Title:
-4-
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant
by execution of the Warrant Exercise Subscription Form)
To: American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxx.
Xxxxxx, XX 00000
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $.01 per share, of
American Mobile Satellite Corporation. The undersigned intends to exercise the
Warrant to purchase ___________________ shares (the "Shares") at $0.01 per Share
(the "Exercise Price") [pursuant to the [net exercise] [delivery of Common
Stock] provision of Section 2.B of the Warrant]. [The undersigned intends to pay
the aggregate Exercise Price for the Share in cash, certified or official bank
or bank cashier's check or by wire transfer of immediately available funds to an
account to designated by the Company or by cancellation of indebtedness owed to
the Holder (or a combination of such methods) as indicated below.]
The undersigned hereby certifies that to the best of its knowledge its
Alien Ownership Percentage as of the date hereof is ___________.
Date:
----------------------- -----------------------------------------
(Signature of Owner)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
Payment: $_____________ cash
$_____________ check
$_____________ wire transfer
$_____________ cancellation of indebtedness
[Wire Transfer Instructions, if required pursuant to Section 3 or 4 of the
Warrant: _______________________]
-5-
WARRANT EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of the Warrant
after delivery of Warrant Exercise Notice)
To: American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxx.
Xxxxxx, XX 00000
The undersigned irrevocably exercises the Warrant for the purchase of
__________________________ shares (the "Shares") of Common Stock, par value $.01
per share, of American Mobile Satellite Corporation (the "Company") at $____ per
Share (the "Exercise Price") and [herewith makes payment of $_____________, such
payment being made in cash or by certified or official bank or bank cashier's
check payable to the order of the Company or by wire transfer or by cancellation
of indebtedness owed to the Holder or any combination of such methods] [the
undersigned Holder is exercising the Warrant pursuant to the [net exercise]
[delivery of shares of Common Stock] provision of Section 2.B of the Warrant],
all on the terms and conditions specified in the Warrant, surrenders this
Warrant and all right, title and interest therein to the Company and directs
that the Shares deliverable upon the exercise of this Warrant be registered or
placed in the name and at the address specified below and delivered thereto. If
said number of Shares is less than all of the shares of Common Stock for which
the Warrant is exercisable, the undersigned requests that a new Warrant
representing the remaining balance of such shares be registered in the name of
the undersigned or nominee hereinafter set forth, and further that such
certificate be delivered to the undersigned at the address hereinafter set forth
or to such other person or entity as is hereinafter set forth.
Date:
-----------------------
-----------------------------------------
(Signature of Owner)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
-6-
Securities and/or check to be issued to:
Please insert social security or identifying
number:
--------------------------------------------------------
Name:
----------------------------------------------------------
Street Address:
------------------------------------------------
City, State and Zip Code:
--------------------------------------
Any unexercised portion of the Warrant evidenced by the [within] Warrant to be
issued to:
Please insert social security or identifying
number:
--------------------------------------------------------
Name:
----------------------------------------------------------
Street Address:
------------------------------------------------
City, State and Zip Code:
--------------------------------------
-7-
WARRANT ASSIGNMENT FORM
Dated:
---------- -------------
FOR VALUE RECEIVED, ______________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
(the "Assignee") (please type or print in block letters),
(insert Assignee's address)
--------------------------------------------------------
(insert Assignee's social security and taxpayer ID number)
its right to purchase up to _________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the same on the books of the Company, with full
power of substitution in the premises.
-----------------------------------------
Signature
Signature Guarantee:
