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EXHIBIT 2
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
among
ATG I, INC.,
AT&T WIRELESS SERVICES, INC.,
▇▇▇▇▇▇ CANTEL INC.,
IRIDIUM LLC
and
IRIDIUM AERO ACQUISITION SUB, INC.
Dated as of December 22, 1998
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS......................................................1
1.1 Definitions........................................................1
ARTICLE 2 PURCHASE AND SALE................................................9
2.1 Purchase and Sale..................................................9
2.2 Purchase Price.....................................................9
ARTICLE 3 CLOSING.........................................................10
3.1 Closing...........................................................10
3.2 Delivery and Payment..............................................10
3.3 Other Deliveries by Sellers.......................................10
3.4 Other Deliveries by Buyer Parties.................................11
3.5 Adjusted Working Capital and Purchase Price Adjustment............12
3.6 Other Adjustments.................................................13
3.7 Objections to Determination.......................................14
3.8 Treatment of Adjustments..........................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE AWS PARTIES...............15
4.1 Organization of the AWS Parties; Authority........................15
4.2 Authorization; No Breach..........................................15
4.3 Organization of the Company.......................................16
4.4 Capitalization of the Company.....................................16
4.5 Share Ownership...................................................16
4.6 Governmental Consents.............................................17
4.7 Third Party Consents and Approvals................................18
4.8 Financial Matters.................................................18
4.9 Absence of Certain Changes........................................18
4.10 Real Property....................................................18
4.11 Compliance with Law..............................................19
4.12 Tax Matters......................................................19
4.13 Litigation.......................................................19
4.14 Contracts........................................................19
4.15 ERISA; Employee Benefits.........................................20
4.16 Labor Difficulties...............................................22
4.17 Insurance........................................................22
4.18 Environmental Matters............................................22
4.19 Undisclosed Liabilities..........................................22
4.20 Books and Records................................................22
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TABLE OF CONTENTS
(continued)
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4.21 Customers and Suppliers..........................................22
4.22 Projections......................................................23
4.23 Year 2000 Compliance.............................................23
4.24 Related Party Transactions.......................................23
4.25 Currency.........................................................23
4.26 Accuracy of Copies...............................................23
4.27 Brokers and Intermediaries.......................................23
4.28 Penalties .......................................................24
4.29 LIMITATION.......................................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CANTEL........................24
5.1 Organization of Cantel; Authority.................................24
5.2 Authorization; No Breach..........................................24
5.3 Share Ownership...................................................25
5.4 Governmental Consents.............................................25
5.5 Third Party Consents and Approvals................................25
5.6 Litigation........................................................25
5.7 Brokers and Intermediaries........................................25
5.8 Canadian Organization, Authority and Licenses.....................25
5.9 LIMITATION........................................................26
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER.........................26
6.1 Organization of Buyer; Authority..................................26
6.2 Authorization; No Breach..........................................26
6.3 Financial Capability..............................................27
6.4 Consents..........................................................27
6.5 Third Party Consents and Approvals................................27
6.6 Litigation........................................................27
6.7 Acquisition of Shares.............................................27
6.8 Maintenance of Corporate Existence................................27
6.9 Compliance and Qualifications.....................................28
6.10 Brokers and Intermediaries.......................................28
6.11 LIMITATION.......................................................28
ARTICLE 7 CERTAIN PRE-CLOSING COVENANTS AGREEMENTS OF THE PARTIES.........28
7.1 Access and Information............................................28
7.2 Conduct of the Business...........................................29
7.3 AWS Commitments...................................................31
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TABLE OF CONTENTS
(continued)
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7.4 Insurance.........................................................31
7.5 Iridium Commitments...............................................31
7.6 Announcements.....................................................32
7.7 Further Actions...................................................32
7.8 Expenses..........................................................33
7.9 Advertising.......................................................34
7.10 Certain Liabilities..............................................34
7.11 Canadian Service Marks...........................................34
7.12 Certain Working Capital Matters. ...............................34
7.13 AirOne Canada Letter Agreement...................................35
ARTICLE 8 OTHER COVENANTS AND AGREEMENTS OF THE PARTIES...................35
8.1 Employee Matters..................................................35
8.2 Access to Books and Records.......................................37
8.3 Tax Matters.......................................................41
8.4 Contingent Payment................................................42
8.5 Maintenance of Corporate Existence................................43
8.6 Confidentiality...................................................43
8.7 Further Assurances................................................44
ARTICLE 9 CONDITIONS PRECEDENT OF SELLER PARTIES..........................44
9.1 Representations and Warranties....................................44
9.2 Agreements........................................................44
9.3 Buyer Certificate.................................................44
9.4 Compliance with Law...............................................44
9.5 Consents..........................................................44
9.6 Opinion of Counsel to Buyer Parties...............................45
9.7 Release of Guarantees.............................................45
9.8 Notes.............................................................45
9.9 AirOne Canada Documentation ......................................45
ARTICLE 10 CONDITIONS PRECEDENT OF BUYER PARTIES...........................45
10.1 Representations and Warranties...................................45
10.2 Agreements.......................................................45
10.3 No Material Adverse Change. ....................................45
10.4 Sellers' Certificates............................................46
10.5 Compliance with Law..............................................46
10.6 Consents.........................................................46
10.7 Opinions of Counsel to Seller Parties............................46
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TABLE OF CONTENTS
(continued)
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10.8 FIRPTA Certificates..............................................46
10.9 AirOne Canada Documentation. ...................................46
ARTICLE 11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................46
11.1 Survival of Representations and Warranties.......................46
ARTICLE 12 INDEMNIFICATION.................................................47
12.1 Indemnification of Buyer Parties.................................47
12.2 Indemnification of Seller Parties................................47
12.3 Claims...........................................................47
12.4 Limitation of Liability..........................................48
12.5 Manner of Payment................................................49
ARTICLE 13 TERMINATION.....................................................49
13.1 Grounds for Termination..........................................49
13.2 Effect of Termination............................................49
ARTICLE 14 MISCELLANEOUS...................................................50
14.1 GOVERNING LAW....................................................50
14.2 Notices..........................................................50
14.3 Entire Agreement.................................................52
14.4 Amendments.......................................................53
14.5 Headings; References.............................................53
14.6 Counterparts.....................................................53
14.7 Parties in Interest; Assignment..................................53
14.8 Severability: Enforcement........................................53
14.9 Jurisdiction; Venue; Waiver of Jury Trial........................53
14.10 Waiver..........................................................54
14.11 Disclosure Schedules............................................54
SCHEDULES
Schedule X -- Adjusted Working Capital
Schedule Y -- Terms of Eligible Fleet Agreement
Schedule 3.2 -- Stock Ownership
Schedule 3.6 -- Existing Carrier Agreements
Schedule 3.6(c)(ii) -- CapEx Target Amount
Schedule 4.6(b) -- FCC Licenses
Schedule 4.6(c) -- Canada Licenses
Schedule 4.6(d) -- CDM Licenses
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TABLE OF CONTENTS
(continued)
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Schedule 4.13 -- Litigation
Schedule 4.14 -- Significant Contracts
Schedule 4.15(a) -- Benefit Plans
Schedule 4.15(h) -- Exceptions to Employee Pension Benefit Plan
Schedule 4.18 -- Environmental Permits
Schedule 4.21 -- Principal Customers
Schedule 5.8 -- AirOne Canada Communications Licenses
Schedule 7.2(c) -- Collective Bargaining Agreements
Schedule 7.3(c) -- Intercompany Accounts
Schedule 8.1(g) -- Final List
EXHIBITS
Exhibit A-1 -- Form of Intellectual Property Agreement
Exhibit A-2 -- Form of Business Marks Assignment Agreement
Exhibit B -- Form of Iridium Guarantee
Exhibit C-1 -- Form of First Promissory Note
Exhibit C-2 -- Form of Second Promissory Note
Exhibit D-1 -- Form of Pledge Agreement
Exhibit D-2 -- Form of Pledge and Security Agreement
Exhibit E -- Form of Transition Services Agreement
Exhibit F -- Form of Opinion of Counsel to Buyer Parties
Exhibit G -- Forms of Opinions of Counsel to Seller Parties
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 22,
1998, among ATG I, Inc., a Delaware corporation ("ATG"), AT&T Wireless Services,
Inc., a Delaware corporation and direct owner of all the issued and outstanding
capital stock of ATG ("AWS" and together with ATG, the "AWS Parties"), ▇▇▇▇▇▇
Cantel Inc., a Canadian corporation ("Cantel" and together with ATG, "Sellers"),
and Iridium LLC, a Delaware limited liability company ("Iridium"), and Iridium
Aero Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary
of Iridium ("Buyer" and together with Iridium, the "Buyer Parties").
W I T N E S S E T H:
WHEREAS, Sellers are the direct owners of all the issued and outstanding
shares (the "Shares") of capital stock of Claircom Communications Group, Inc.
(d/b/a AT&T Wireless Services, Aviation Communications Division), a Delaware
corporation (the "Company");
WHEREAS, upon the terms and conditions herein set forth, Buyer desires to
purchase from Sellers, and Sellers desire to sell to Buyer, the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms have
the meanings set forth below:
"ACHI" means AirOne Canada Holdings Inc., a corporation organized under
the laws of Canada, the capital stock of which is owned 80% by Cantel and 20% by
the Company.
"Adjusted Working Capital" means the adjusted working capital of the
Company at Closing as determined pursuant to Schedule X.
"Adjusted Working Capital Statement" has the meaning set forth in Section
3.5(a).
"Adverse Conditions" means, with respect to any Person, conditions
contained in any ruling or order of a Governmental Body that individually or in
the aggregate would have, or be likely to have, a Material Adverse Effect on
such Person.
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"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
other Person. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"AirOne Canada Communications" means the Canadian corporation that is
wholly owned by ACHI.
"AirOne Canada Letter Agreement" has the meaning set forth in Section
10.9.
"Allocation Agreement" has the meaning set forth in Section 8.3(e)(ii).
"Applicable Value" has the meaning set forth in Section 8.4(a).
"Appraiser" has the meaning set forth in Section 8.4(c).
"AT&T Corp." means AT&T Corp., a New York corporation.
"AT&T Receivables" has the meaning set forth in Section 3.5(d)
"ATG" has the meaning set forth in the preamble.
"AWS" has the meaning set forth in the preamble.
"AWS Parties" has the meaning set forth in the preamble.
"Base Amount" means $3,691,720.
"Benefit Plans" has the meaning set forth in Section 4.15(a).
"Best efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved. Without limiting the generality of the foregoing, an obligation to
use "best efforts" under this Agreement does not require the Person subject to
such obligation to make expenditures that materially decrease the economic
benefits accruing to such Person under this Agreement. Subject to the preceding
sentence, the obligation of a Person under this Agreement to use "best efforts"
to achieve a result that benefits another party to this Agreement requires such
Person to use the same resources that such person would have reasonably used in
achieving a similar result that would have benefitted such Person.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required to close.
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"Buyer" has the meaning set forth in the preamble.
"Buyer Parties" has the meaning set forth in the preamble.
"CDM" means Claircom de Mexico, S.A. de C.V., a company organized under
the laws of Mexico.
"Cantel" has the meaning set forth in the preamble.
"Cantel Payment" has the meaning set forth in Section 2.2.
"CapEx Target Amount" means the sum of (a) the amount set forth in column
B of Schedule 3.6(c)(ii) opposite the month set forth in column A of Schedule
3.6(c)(ii) in which the FCC Consent Date falls and (b) the product of the amount
set forth in column C of Schedule 3.6(c)(ii) opposite such month multiplied by a
fraction in which the numerator is the day of the month corresponding to the FCC
Consent Date and the denominator is the number of days in such month.
"Capital Expenditures" has the meaning set forth in Section 3.6(c)(iii).
"Cash Amount" means the amount of $9 million, subject to adjustment
pursuant to Section 3.6(c).
"Claircom Licensee" means Claircom Licensee Corporation, a Delaware
corporation, and a wholly-owned subsidiary of the Company.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in Section 4.4.
"Company" has the meaning set forth in the preamble.
"Company Employees" has the meaning set forth in Section 8.1.
"Company Revenue" means the revenue of the Company, which is calculated
consistent with GAAP and the following principles: (i) air-to-ground airtime
revenue is recognized when usage occurs, (ii) domestic service revenues are
recognized, net of revenue-based commissions and costs associated with billing,
collection and settlement services provided on behalf of the Company, when
earned, (iii) international service revenues are recognized net of any
contractual withholding amounts due to the applicable service provided, when
earned, (iv) sales of equipment
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and related services are recognized when such goods and services are shipped and
(v) royalty revenue is recognized when received pursuant to existing
royalty-based agreements.
"Company Subsidiary" means any entity in which the Company has a direct
or indirect equity interest in excess of at least 15%.
"Consultants" has the meaning set forth in Section 4.15(a).
"Contingent Amount" has the meaning set forth in Section 8.4(a).
"Damages" has the meaning set forth in Section 12.1.
"Directors" has the meaning set forth in Section 4.15(a).
"Disclosure Schedule" means the Disclosure Schedule of the AWS Parties,
Cantel or Buyer, as the case may be, delivered pursuant to this Agreement.
"Eligible Carrier" means United Airlines, Continental Airlines or Delta
Airlines.
"Eligible Fleet Agreement" means a binding agreement with an Eligible
Carrier, with respect to the domestic and international fleet of such Eligible
Carrier in the case of United Airlines or Continental Airlines, or the domestic
fleet in the case of Delta Airlines, containing terms no less favorable in the
aggregate than the terms described on Schedule Y hereto.
"Employees" has the meaning set forth in Section 4.15(a).
"Encumbrances" means any and all liens, claims, pledges, charges,
security interests, limitations, encumbrances and restrictions of any kind.
"Environmental Law" means all applicable state, federal and local laws,
regulations and rules, including common law, permits, licenses, registrations
and other governmental authorizations, judgments, decrees and orders relating to
pollution or the protection of the environment or the protection of public
health and safety from environmental concerns, in each case as of the Closing
Date.
"Environmental Permits" has the meaning set forth in Section 4.18.
"Equity Sale Value" has the meaning set forth in Section 8.4(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 4.15(c).
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"ERISA Affiliate Plan" has the meaning set forth in Section 4.15(c).
"Existing Carrier Agreements" means those agreements set forth on
Schedule 3.6 hereto.
"FAA" means the Federal Aviation Administration and any successor agency
or body.
"FCC" means the Federal Communications Commission and any successor
agency or body.
"FCC Consent" means an order of the FCC, or by the staff of the FCC
acting pursuant to delegated authority, granting its consent to the applications
referred to in Section 7.7(c) of this Agreement required to permit the
consummation of the Transactions.
"FCC Consent Date" means the date on which Public Notice is given of the
FCC Consent pursuant to Section 1.4 of the FCC's rules and regulations.
"FCC Licenses" means Licenses issued by the FCC.
"Final List" has the meaning set forth in Section 8.1.
"Final Order" means any FCC action that, by lapse of time or otherwise is
no longer subject to timely administrative or judicial reconsideration, review,
appeal or stay; provided, however, that the FCC Consent shall be deemed to have
become a Final Order 40 days after the FCC Consent Date unless the FCC Consent
has been stayed or Iridium, in its good faith judgment, believes that any
then-pending timely administrative or judicial reconsideration, review, appeal
or stay is likely to lead to the FCC Consent being set aside or denied or the
imposition of any Adverse Conditions with respect to Iridium or the Company and
Iridium so notifies AWS in writing within such 40 day period.
"Final Working Capital" has the meaning set forth in Section 3.5(a).
"Foreign Licenses" has the meaning set forth in Section 7.7(f).
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Body" means any domestic or foreign national, state,
multi-state or municipal or other local government, any subdivision, agency,
commission or authority thereof, any court, or any quasi-governmental or private
body exercising any regulatory or taxing authority thereunder.
"Guarantees" has the meaning set forth in Section 7.5(b).
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"Hazardous Substances" means any pollutant or contaminant or any toxic or
hazardous substance, material or waste, as those terms are defined in any
Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"Indemnifying Party" has the meaning set forth in Section 12.3.
"Indemnitee" has the meaning set forth in Section 12.3.
"Independent Accountant" has the meaning set forth in Section 3.7(b)(i).
"Intellectual Property Agreements" means (i) the Intellectual Property
Agreement, dated as of the Closing Date, in the form of Exhibit A-1 hereto, and
(ii) the Business Marks Assignment Agreement, dated as of the Closing Date, in
the form of Exhibit A-2 hereto.
"Interim 1998 Financial Statements" has the meaning set forth in Section
4.8(b).
"Iridium" has the meaning set forth in the preamble.
"Iridium Guarantee" means the guarantee, dated as of the Closing Date, by
Iridium in favor of the Sellers, in the form of Exhibit B hereto.
"IRS" means the Internal Revenue Service.
"Knowledge", "aware of" and similar terms, with respect to the AWS
Parties, means the knowledge, after reasonable inquiry, of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Aest, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, and with respect to the
Buyer Parties, means the knowledge, after reasonable inquiry, of ▇▇▇ ▇▇▇▇▇▇▇ and
F. ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Laws" means statutes, laws, regulations and rules of any Governmental
Body.
"Leased Property" has the meaning set forth in Section 4.10.
"Leases" has the meaning set forth in Section 4.10.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization consent or clearance (including, without limitation, any FAA
aeronautical hazard determinations) to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business to construct a ground station or to use an asset or
process, in each case issued or granted by a Governmental Body.
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"Liquid Investments" means certificates of deposits, securities and other
financial investments that are readily salable for cash without any
restrictions.
"Litigation" means a suit, legal action or arbitration.
"Material Adverse Effect" on a Person means a material adverse effect on
the business, assets, results of operations or financial condition of such
Person and its controlled affiliates taken as a whole.
"1997 Financial Statements" has the meaning set forth in Section 4.8(a).
"Nondisclosure Agreements" means that certain Nondisclosure Agreement
between Iridium LLC and the Company dated October 7, 1997, as supplemented by
letters between Iridium LLC and the Company dated October 7, 1997 and July 6,
1998 (which letter included AWS), that certain Addendum to Nondisclosure
Agreement among Iridium LLC, the Company and AWS dated as of July 6, 1998, and
the Individual Nondisclosure Agreement dated as of July 6, 1998 among the
Company, AWS and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇.
"Notes" means those certain promissory notes to be executed by the
Company in favor of ATG, in the aggregate principal amount of $39,400,000,
subject to adjustment in accordance with Sections 3.5 and 3.6, in the form of
Exhibits C-1 and C-2 hereto. Any such adjustment shall be made in the principal
amount of each Note in the proportion that such principal amount bears to the
aggregate principal amount of the Notes prior to such adjustment.
"Other Assets" has the meaning set forth in Section 8.4(c).
"Penalty Amount" means an amount equal to the penalties accrued and that
will accrue under the applicable airline contracts in connection with the
Company's failure to install or deliver any equipment in accordance with the
1999 Projected Installation Schedule (including, for the avoidance of doubt, any
penalties incurred under contracts with SAS) attached to Schedule X. Such
Penalty Amount shall include (i) penalties accrued up to the Closing Date and
(ii) penalties projected to accrue for a period of up to 90 days thereafter,
assuming that installation or delivery of the equipment affected by such failure
will be made on a timetable consistent with the Company's past practices.
"Pension Plan" has the meaning set forth in Section 4.15(b).
"Person" means an individual, corporation, partnership, trust,
unincorporated organization or other entity, or a Governmental Body.
"Pledge Agreement" means the Pledge Agreement, dated as of the Closing
Date, in the form of Exhibit D-1 hereto.
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"Pre-Closing Interest" means interest at a rate of 8% per annum accruing
on a specified principal amount from and including the FCC Consent Date to (but
excluding) the Closing Date.
"Preferred Stock" has the meaning set forth in Section 4.4.
"Purchase Price" has the meaning set forth in Section 2.2.
"Related Agreements" means the Notes, the Security Agreement, the Iridium
Guarantee, the Pledge Agreement, the Transition Services Agreement and the
Intellectual Property Agreements.
"Returns" means any return, report, estimate, declaration, information
return and statement of any nature with respect to Taxes, any declarations of
estimated Tax or any Tax reports.
"Sale Transaction" has the meaning set forth in Section 8.4(a).
"SAS" means Scandinavian Airlines System.
"Security Agreement" means the Pledge and Security Agreement, dated as of
the Closing Date, in the form of Exhibit D-2 hereto.
"Seller Parties" means AWS, ATG and Cantel.
"Sellers" has the meaning set forth in the preamble.
"Service Marks" has the meaning set forth in Section 7.11.
"Shares" has the meaning set forth in the preamble.
"Significant Contracts" has the meaning set forth in Section 4.14.
"Significant Party" has the meaning set forth in Section 7.5(c).
"Split Period" has the meaning set forth in Section 8.3(a)(i).
"Tax" or "Taxes" means any United States federal, state, local or foreign
income, business, occupation, environmental, gross receipts, ad valorem,
alternative or add-on minimum tax profits, severance, franchise, license,
transfer, sales, use, value added, payroll, employment, withholding, pension
plan, property (real or personal), production, excise or similar taxes
(including interest, penalties or additions to such taxes and any interest in
respect of such penalties or additions).
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"Tax Arbitrator" has the meaning set forth in Section 8.3(f).
"Tax Package" has the meaning set forth in Section 8.3(i).
"Tax Purchase Price" has the meaning set forth in Section 8.3(e)(ii).
"Tax Return" means any return, report, information return or other
document (including any related or supporting information) required to be filed
with any authority with respect to Taxes.
"Third Party Claims" has the meaning set forth in Section 12.3.
"Transaction Consideration" means the sum of (i) the Purchase Price and
(ii) the aggregate principal amount of the Notes, as adjusted pursuant to
Section 3.6, plus the Working Capital Excess, if any, or minus the Working
Capital Deficiency, if any.
"Transactions" means the transactions contemplated by this Agreement and
the Related Agreements.
"Transition Services Agreement" means the Transition Services Agreement,
dated as of the Closing Date, in the form of Exhibit E hereto.
"Treasury Regulations" means the rules and regulations of the IRS
promulgated under the Code.
"Value Period" has the meaning set forth in Section 8.4(a).
"Working Capital Deficiency" has the meaning set forth in Section
3.5(c)(ii).
"Working Capital Excess" has the meaning set forth in Section 3.5(c).
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, each of the Sellers agrees to sell, transfer, and deliver to Buyer,
and Buyer agrees to purchase and accept from each of the Sellers, at the
Closing, good, valid and marketable title to the Shares owned by such Seller,
free and clear of any Encumbrances, for the consideration specified in Section
2.2.
2.2 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration of the sale of the Shares, Buyer shall pay in cash
at the Closing, as the full purchase
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price for the Shares, (a) to Cantel, $1,000,000 plus, if the Closing occurs more
than fifteen days after the FCC Consent Date, the amount of Pre-Closing Interest
thereon (the "Cantel Payment"), and (b) to ATG, $24,600,000 plus, if the Closing
occurs more than fifteen days after the FCC Consent Date, the amount of
Pre-Closing Interest thereon (the "ATG Payment" and, together with the Cantel
Payment, the "Purchase Price"). The ATG Payment shall be subject to adjustment
as provided in Sections 3.5 and 3.6.
ARTICLE 3
CLOSING
3.1 Closing. The closing of the Transactions (the "Closing") will take
place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (local time) on the first Business Day after the
satisfaction or waiver of the conditions precedent in Sections 9.5 and 10.6, or
at such other time and place as Buyer and AWS shall agree in writing (the
"Closing Date").
3.2 Delivery and Payment. At the Closing, (a) each Seller shall deliver
to Buyer the stock certificates representing the Shares owned by such Seller set
forth opposite its name on Schedule 3.2 hereto, with duly executed stock powers
in blank and all requisite stock transfer tax stamps attached, and (b) Buyer
shall pay the Purchase Price (as adjusted) by wire transfer to Sellers in
immediately available funds to bank accounts designated by Sellers at least
three Business Days before the Closing Date.
3.3 Other Deliveries by Sellers.
A. At the Closing, AWS shall deliver, or cause the Company to deliver, to
Buyer the following:
(a) Certificates as to the good standing of AWS, ATG and the Company in
their respective states of organization;
(b) Certificates representing the issued and outstanding shares of the
Company's Common Stock owned by ATG;
(c) The resignations of all directors, other than the director designated
by Cantel, from the Board of Directors of the Company;
(d) The officer's certificates of AWS and ATG referred to in Section
10.4;
(e) The opinions of counsel referred to in Section 10.7;
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(f) Certificates of the Secretary of each of AWS and ATG as to (i) the
resolutions of such Seller Party with respect to the Agreement and the
Transactions and (ii) the incumbency of the officers of such Seller Party
executing the Agreement and the Related Agreements;
(g) A certificate of the Secretary of the Company as to the resolutions
of the Company's shareholders and directors with respect to the Notes;
(h) The Transition Services Agreement;
(i) Any other instruments and documents required to be delivered by the
AWS Parties or the Company at the Closing.
B. At the Closing, Cantel shall deliver to Buyer the following:
(a) Certificates representing the issued and outstanding shares of the
Company's Common Stock owned by Cantel;
(b) The resignation of the director designated by Cantel from the Board
of Directors of the Company;
(c) The officer's certificate of Cantel referred to in Section 10.4;
(d) The opinion of counsel to Cantel referred to in Section 10.7;
(e) A certificate of the Secretary of Cantel as to (i) the resolutions of
Cantel with respect to the Agreement, the Transactions and the AirOne Canada
Letter Agreement and (ii) the incumbency of the officers of Cantel executing the
Agreement and the AirOne Canada Letter Agreement; and
(f) Any other instruments and documents required to be delivered by
Cantel at the Closing.
3.4 Other Deliveries by Buyer Parties. At the Closing, Buyer shall
deliver, or cause Iridium to deliver, as applicable, to Sellers the following:
(a) Certificate as to the good standing of Buyer and Iridium in their
states of organization;
(b) The officer's certificates of Buyer and Iridium referred to in
Section 9.3;
(c) Opinions of counsel to each of Buyer and Iridium referred to in
Section 9.6;
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(d) Certificates of the Secretary of Buyer and Iridium as to (i) the
resolutions of Buyer and Iridium with respect to the Agreement and the
Transactions and (ii) the incumbency of the officers of Buyer and Iridium
executing the Agreement and the Related Agreements to which they are a party;
(e) The Iridium Guarantee;
(f) The Pledge Agreement;
(g) The Intellectual Property Agreements;
(h) The Security Agreement; and
(i) Any other instruments and documents required to be delivered by Buyer
or Iridium at the Closing.
3.5 Adjusted Working Capital and Purchase Price Adjustment.
(a) Determination of Final Working Capital. On or as promptly as
practicable after the Closing Date, but in no event later than 60 days following
the Closing Date, AWS will determine the Company's Adjusted Working Capital as
of the Closing Date in accordance with the provisions of Schedule X. Upon
completion of such determination, AWS will deliver to Buyer a statement (an
"Adjusted Working Capital Statement") setting forth its determination of the
Adjusted Working Capital. The Adjusted Working Capital shown on the Adjusted
Working Capital Statement shall be deemed the final determination of such amount
unless Buyer objects to such determination in accordance with Section 3.7, in
which case the final determination of such amount shall be made in accordance
with Section 3.7 (such amount as so finally determined is referred to herein as
the "Final Working Capital").
(b) Penalty Amount. Notwithstanding any other provisions of this
Agreement or of Schedule X, the Adjusted Working Capital Statement shall include
within "Accrued Expenses" the Penalty Amount, if any, and shall attach as an
exhibit to the Adjusted Working Capital Statement an explanation of, and
supporting documentation for, the calculation of the Penalty Amount, including
the revised installation schedule used to determine the Penalty Amount.
(c) Payment Amounts. (i) If the Final Working Capital exceeds the Base
Amount, Buyer shall pay to ATG the amount of such excess (the "Working Capital
Excess"), subject to the conditions set forth in paragraph (d); provided,
however, that notwithstanding anything to the contrary in this Section 3.5,
Buyer shall have no obligation under this sentence to pay to ATG an amount that
is greater than the sum of (A) $5,000,000 and (B) the amount of all AT&T
Receivables eligible for assignment in accordance with paragraph (d) below.
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(ii) If the Final Working Capital is less than the Base Amount, ATG shall
pay to Buyer the amount of such deficiency (the "Working Capital Deficiency"),
subject to the conditions set forth in paragraph (d) below.
(iii) Any payment required under this Section 3.5(c) shall be made within
5 days following the determination of the Final Working Capital.
(d) Payment Methods. Buyer shall pay any amount that it is required to
pay to ATG pursuant to clause (c)(i) of this Section 3.5 by the execution of
customary documentation to effect an absolute and unconditional assignment to
ATG of outstanding receivables owed to the Company by any Affiliate of AWS (the
"AT&T Receivables"). To the extent the AT&T Receivables are insufficient to
cover the entire amount of Buyer's Section 3.5(c)(i) payment obligations, Buyer
shall make up such shortfall with any combination of (i) cash and (ii) an
increase in the principal amount of the Notes, provided that after giving effect
to such increase the ratio of (x) the principal amount of the Notes, after
excluding any adjustment made pursuant to Section 3.6, to (y) the sum of the
Purchase Price and the cash referred to in the preceding clause (i) shall not
exceed 3:2. At Buyer's option, Buyer may require ATG to pay any amount required
to be paid by ATG to Buyer pursuant to clause (c)(ii) of this Section 3.5 by any
combination of (i) cash and (ii) a decrease in the aggregate principal amount of
the Notes, provided that after giving effect to any such cash payment the ratio
of (x) the aggregate principal amount of the Notes, after excluding any
adjustment made pursuant to Section 3.6, to (y) (I) the Purchase Price minus
(II) the amount of such cash payment shall not exceed 3:2. The amount of any
payment that Buyer is required to make pursuant to Section 3.5(c)(i) that is
satisfied by the assignment of AT&T Receivables shall be equal to the face
amount of the AT&T Receivables so assigned, and the amount of any payment that
Buyer or ATG is required to make pursuant to Section 3.5 (c)(i) or (ii), as the
case may be, that is satisfied by an increase or a decrease in the principal
amount of the Notes shall be the amount of such increase or decrease, as the
case may be. If Buyer effects an assignment of any AT&T Receivables, all risk of
collectibility and liability for any deficiencies shall be the sole
responsibility of ATG.
3.6 Other Adjustments.
(a) Eligible Fleet Agreements. In the event that prior to the Closing
Date the Company and an Eligible Carrier enter into an Eligible Fleet Agreement,
AWS shall cause the Company to promptly deliver a complete and correct copy
thereof to Buyer (and in any case at least three Business Days prior to the
Closing), together with a calculation in reasonable detail as to the adjustment
to the Transaction Consideration resulting therefrom. The Transaction
Consideration shall be increased by an amount equal to the sum of (i) $50,000
multiplied by the number of airplanes covered by such Eligible Fleet Agreement
with respect to which a firm order has been placed and (ii) $10,000 multiplied
by the number of airplanes covered by such Eligible Fleet Agreement with respect
to which an option to order the services of the Company has been granted. Any
such increase may be paid, at Buyer's option, by any combination of (i) an
increase in the aggregate principal amount of the Notes or (ii) an increase in
the ATG Payment; provided that in no case shall the ratio of the aggregate
principal amount of the Notes to the Purchase Price exceed 4:1.
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(b) Existing Carrier Agreements. In the event that prior to the Closing
Date an Existing Carrier Agreement shall be terminated, the Company shall
promptly give notice thereof to Buyer, together with a calculation in reasonable
detail as to the adjustment to the Transaction Consideration resulting
therefrom. The Transaction Consideration shall be decreased by an amount equal
to $50,000 multiplied by the number of airplanes covered by such Eligible Fleet
Agreement. Any such decrease shall be reflected by a decrease in the principal
amount of the Notes.
(c) Capital Expenditures.
(i) At least three Business Days prior to the Closing, AWS shall
provide to Buyer a statement setting forth in reasonable detail the Capital
Expenditures made by the Company between November 1, 1998 and the FCC Consent
Date. Buyer shall have 60 days from the Closing Date to object to such
statement, in which case the provisions of Section 3.7(b) shall apply unless the
parties otherwise agree. Once the amount of such Capital Expenditures is finally
determined pursuant to Section 3.7, any adjustment due in respect thereof shall
be paid in cash by the applicable party within 5 days following such
determination.
(ii) If the amount of the Capital Expenditures is less than the
CapEx Target Amount, AWS shall pay to the Company, as an adjustment of the Cash
Amount, an amount equal to such deficiency. If the amount of the Capital
Expenditures exceeds the CapEx Target Amount, Buyer shall cause the Company to
pay to AWS, as an adjustment of the Cash Amount, an amount equal to such excess.
(iii) For purposes of this Section, "Capital Expenditures" means
all costs associated with the acquisition and placing into service of all fixed
assets and property of the Company, including but not limited to the labor,
non-labor and equipment costs associated with installations of telephone and
SATCOM systems on commercial aircraft, product development and network
enhancements of ground and air network products, and investments in AirOne
Canada installations, and excluding all costs allocated to the Company's program
with SAS. All determinations concerning the designation of an item as a Capital
Expenditure hereunder shall be made by the Company in accordance with GAAP and
with the past practices and procedures of the Company.
3.7 Objections to Determination.
(a) Initial Objections. If Buyer believes that any determination
(including initial and revised calculations) made by AWS pursuant to Section 3.5
or 3.6 is incorrect, it may object thereto by delivering to AWS a statement of
its objections in reasonable detail within 15 days after the delivery to it of
the determination in question. Buyer and AWS shall attempt to resolve any such
disagreement promptly, but if agreement has not been reached within 10 days of
receipt of such
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objections, the disagreement shall be resolved forthwith in accordance with the
provisions of paragraph (b) of this Section 3.7.
(b) Determination by Independent Accountant.
(i) Any disagreement referred to in paragraph (a) above shall be
submitted forthwith to arbitration by a nationally recognized independent
accounting firm mutually agreed upon by KPMG Peat Marwick and
PricewaterhouseCoopers (the "Independent Accountant"). Each party shall
represent and warrant to the other that such Independent Accountant is not the
independent auditor of such party or the ultimate parent of such party.
(ii) The Independent Accountant shall as promptly as practicable
make a determination of the items in dispute, which determination shall be final
and binding upon the parties and shall be enforceable by a court of competent
jurisdiction. The cost of the Independent Accountant shall be borne equally by
AWS and Buyer.
3.8 Treatment of Adjustments. The parties agree to treat any adjustments
made pursuant to Sections 3.5 or 3.6 as adjustments to the Transaction
Consideration for United States federal, state, local and foreign tax purposes.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE AWS PARTIES
Each AWS Party jointly represents and warrants to the Buyer Parties that,
except as disclosed in the AWS Parties' Disclosure Schedule:
4.1 Organization of the AWS Parties; Authority. Each AWS Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, with the corporate power and authority
to enter into this Agreement and the Related Agreements to which it is a party
and to perform its obligations hereunder and thereunder.
4.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement, the Related Agreements to which it is a party and the
consummation of the Transactions have been duly authorized by all required
corporate action on the part of each AWS Party. This Agreement has been duly
executed and delivered by each AWS Party and constitutes, and as of the Closing
the Related Agreements to which it is a party will be duly executed and
delivered by it and upon execution and delivery each such Related Agreement
shall constitute, a valid and binding obligation of such AWS Party, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles. The execution and delivery by each AWS Party of this
Agreement and the Related Agreements to which
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it is a party and the consummation of the Transactions will not, except to the
extent that would not have or be likely to have a Material Adverse Effect on the
Company or any AWS Party, (a) violate any provision of any applicable law, rule
or regulation, (b) violate any order, judgment or decree applicable to any AWS
Party the Company, or Claircom Licensee, (c) conflict with, or result in a
breach of or default under any term or condition of the Certificate of
Incorporation or By-laws of any AWS Party or Claircom Licensee, or (d) violate,
conflict with, result in a breach of any provision of, or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, any agreement to which any AWS Party, the Company or Claircom
Licensee, is bound or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, any note, bond,
mortgage, indenture, deed of trust, lease, contract or agreement to which the
interest of any AWS Party in the Company or any of the Company's or Claircom
Licensee's properties may be bound or to which it is a party or result in the
creation of any Encumbrance upon any of the properties of the Company or
Claircom Licensee.
4.3 Organization of the Company. The Company, Claircom Licensee and, to
the knowledge of AWS, each Company Subsidiary, other than CDM, is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the corporate power and authority to own
or lease the properties and assets it now owns or holds under lease and to carry
on its business as currently conducted. The Company, Claircom Licensee and, to
the knowledge of AWS, each Company Subsidiary, other than CDM, is duly qualified
to do business and is in good standing in jurisdictions where the nature of the
properties owned or leased by it or the activities conducted by it make such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a Material Adverse Effect on the Company. The copies of
the Certificate of Incorporation and By-laws of the Company and each Company
Subsidiary heretofore delivered to Buyer are complete and correct copies of such
instruments as presently in effect. All minute books of the Company and each
Company Subsidiary have been made available to the Buyer Parties.
4.4 Capitalization of the Company. The authorized capital stock of the
Company consists of 50,000 authorized shares of common stock, par value $.01 per
share ("Common Stock"), 12,536 shares of which are issued and outstanding and
constitute the Shares, and 50,000 authorized shares of Preferred Stock, par
value of $.01 ("Preferred Stock"), none of which are issued and outstanding. All
of the Shares have been duly authorized and validly issued and are fully paid
and nonassessable. The Company has no other equity securities of any kind
authorized or outstanding, no outstanding securities convertible into or
exchangeable for or carrying the right to acquire any equity security of the
Company and no outstanding options, warrants or other agreements or commitments
under which the Company is obligated to issue any additional equity securities
of the Company.
4.5 Share Ownership. ATG is the record and beneficial owner of good and
valid title to the Shares set forth opposite its name on Schedule 3.2 and it
owns such Shares free and clear of any liens, encumbrances, equities or claims.
At the Closing, ATG shall transfer to Buyer good and
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valid title to such Shares. The Company is the record and beneficial owner of
good and valid title to all of the issued and outstanding shares of capital
stock of Claircom Licensee.
4.6 Governmental Consents. (a) Except as set forth in this Agreement, no
consent, license, approval, waiver, expiration of waiting period or
authorization of, or registration or declaration with, any Governmental Body is
required to be obtained or made by the AWS Parties, Claircom Licensee or the
Company in connection with the execution, delivery and performance of this
Agreement, the Related Agreements and the consummation of the Transactions.
(b) Claircom Licensee is the authorized and legal holder of all FCC
Licenses that are necessary for the Company to conduct its business in the
manner in which it is currently being conducted. Schedule 4.6(b) sets forth an
accurate and complete list of all FCC Licenses held by Claircom Licensee and
copies of such Licenses. All FCC Licenses listed on Schedule 4.6(b) are in full
force and effect. Claircom Licensee is in substantial compliance in all material
respects with all terms and conditions of, and all of its respective obligations
under, the FCC Licenses. Except for proceedings affecting the air-to-ground
radiotelephone service business generally, there is no pending, nor to the
knowledge of the AWS Parties or the Company, threatened proceeding or complaint
against Claircom Licensee that questions or contests the validity of, or seeks
the revocation, nonrenewal or suspension of, any FCC License listed on Schedule
4.6(b), or that seeks the imposition of any condition, administrative sanction,
modification or amendment with respect thereto which might reasonably result in
a Material Adverse Effect on the Company. To the knowledge of the AWS Parties
and the Company, there is no fact that would reasonably be expected to
disqualify the AWS Parties from obtaining the approval of the FCC to consummate
the Transactions.
(c) To the knowledge of AWS, ACHI and AirOne Canada Communications are in
substantial compliance in all material respects with all terms and conditions
of, and all of its obligations under, the Licenses. To the knowledge of the AWS
Parties or the Company, there is no pending or threatened proceeding or
complaint against Cantel, ACHI or AirOne Canada Communications that questions or
contests the validity of, or seeks the revocation, nonrenewal or suspension of,
any License listed on Schedule 4.6(c), or that seeks the imposition of any
condition, administrative sanction, modification or amendment with respect
thereto which might reasonably result in a Material Adverse Effect on ACHI.
There is no fact that, to the knowledge of the AWS Parties and the Company,
would reasonably be expected to disqualify any of Cantel, ACHI and AirOne Canada
Communications from obtaining the approval of the applicable Governmental Body
to consummate the Transactions and the transactions contemplated by the AirOne
Canada Letter Agreement.
(d) CDM is the authorized and legal holder of all Licenses that are
necessary for the Company to conduct its business in Mexico in the manner in
which it is currently being conducted. Schedule 4.6(d) sets forth an accurate
and complete list of all Licenses held by CDM and copies of such Licenses. All
Licenses listed on Schedule 4.6(d) are in full force and effect. To the
knowledge of the AWS Parties or the Company, there is no pending or threatened
proceeding or complaint
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against CDM that questions or contests the validity of, or seeks the revocation,
nonrenewal or suspension of, any License listed on Schedule 4.6(d), or that
seeks the imposition of any condition, administrative sanction, modification or
amendment with respect thereto which might reasonably result in a Material
Adverse Effect on the Company or CDM. There is no fact that, to the knowledge of
the AWS Parties and the Company, would reasonably be expected to disqualify CDM
from obtaining the approval of the applicable Government Body, if any, to
consummate the Transactions.
4.7 Third Party Consents and Approvals. The execution, delivery and
performance of this Agreement and the consummation of the Transactions by the
AWS Parties and the Company do not require the consent or approval of any third
party, except such consents and approvals which have been obtained or the
failure of which to obtain would not have, or be likely to have, a Material
Adverse Effect. The execution, delivery and performance of this Agreement, and
the consummation of the Transactions, by the AWS Parties or the Company do not
require the consent or approval of any party to a Significant Contract.
4.8 Financial Matters. (a) The Company has delivered to the Buyer Parties
the audited financial statements of the Company for the fiscal year ended
December 31, 1997, together with the notes to such financial statements
(collectively, the "1997 Financial Statements"). The audited balance sheet
included in the 1997 Financial Statements fairly presents, in all material
respects, the financial position of the Company as of its date and the audited
statement of operations included in the 1997 Financial Statements fairly
presents, in all material respects, the results of operations of the Company for
the period set forth therein, in each case in accordance with GAAP consistently
applied.
(b) The Company has also delivered to the Buyer Parties financial
statements with information for the nine-month period ended September 30, 1998
of the Company (the "Interim 1998 Financial Statements") and such nine-month
financial statements present fairly, in all material respects, in accordance
with GAAP, consistently applied, the financial condition and results of
operations of the Company as of and for the period ended September 30, 1998,
subject to the information in the notes contained therein.
4.9 Absence of Certain Changes. Since September 30, 1998 there have been
no changes in the business, assets or liabilities of the Company which
individually or in the aggregate have had, or are likely to have, a Material
Adverse Effect on the Company, other than changes of a general economic nature.
Since September 30, 1998, (a) the business of the Company has been operated in
the ordinary course of business consistent with past practice, (b) the Company
has not has entered into, or agreed to enter into, any transaction not in the
ordinary course of business and (c) the Company has not made any changes in its
accounting principles or practices.
4.10 Real Property. The Company does not have fee ownership of any real
property. The leases (the "Leases") of all real property leased by the Company
("Leased Property") are in full force and effect. The Company enjoys peaceful
and undisturbed possession under each such Lease and is not in default in any
material respect under any of such Leases and, to the Knowledge of the
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AWS Parties, no condition exists which with notice or lapse of time or both
would constitute such a default thereunder and the AWS Parties are not aware of
any default in any material respect by any other party to any such Lease. True
and correct copies of all material Leases and subleases have heretofore been
made available to the Buyer Parties. There are no consents required for any
material Lease to be in full force and effect following the sale of the Shares
and consummation of the Transactions. No condemnation, expropriation, eminent
domain or similar proceeding is pending or, to the Knowledge of the AWS Parties,
contemplated with respect to any of such Leased Property.
4.11 Compliance with Law. The Company has been, within the past three
years, and is presently in compliance with all Laws (other than the
Communications Act of 1934, as amended, and the rules and regulations
thereunder), except for such noncompliance with any of the foregoing as would
not individually or in the aggregate have, or be likely to have, a Material
Adverse Effect on the Company. The Company is presently in substantial
compliance in all material respects with the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC promulgated
thereunder, except for such noncompliance with any of the foregoing as would not
individually or in the aggregate have, or be likely to have, a Material Adverse
Effect on the Company.
4.12 Tax Matters. (a) Except as would not have or be likely to have a
Material Adverse Effect on the Company, (i) all Returns that are required to be
filed by or with respect to the Company through the Closing Date have been or
will be duly filed and were accurate in all material respects; (ii) all Taxes
due with respect to the Returns referred to in clause (i) have been or will be
paid in full or are accrued on the most recent balance sheet of the Company
delivered to Buyer under this Agreement; (iii) no issues that have been raised
by the relevant taxing authority in connection with the examination of any of
the Returns referred to in clause (i) are currently pending; (iv) no waivers of
statutes of limitation have been given by or requested with respect to any Taxes
of the Company; and (v) there are no Encumbrances with respect to Taxes, other
than Encumbrances for Taxes not yet due and payable.
(b) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(c) As a result of Buyer's purchase of the Shares, neither the Company
nor Buyer will be obligated to make a payment to an individual that would be an
"excess parachute payment" to a "disqualified individual", as those terms are
defined in Section 28OG of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
4.13 Litigation. There is no Litigation pending or, to the knowledge of
the AWS Parties, threatened against the AWS Parties, Claircom Licensee or the
Company which would impair the ability of the AWS Parties or the Company to
consummate the Transactions. Schedule 4.13 sets forth all Litigation pending
against the Company. There is no Litigation pending or, to the knowledge of the
AWS Parties, threatened against the Company or Claircom Licensee which
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Litigation, if adversely determined, would have, or be likely to have, a
Material Adverse Effect on the Company.
4.14 Contracts. As of the date hereof, Schedule 4.14 sets forth all
commitments or agreements to be performed by the Company after the Closing Date
pursuant to which the Company is obligated to expend or has any right to receive
more than $3,000,000 in any calendar year and which is not subject to
cancellation by the Company upon less than twelve (12) months' notice or without
penalty (collectively, the "Significant Contracts"). To the knowledge of the AWS
Parties, (i) the Company has complied in all material respects with the
provisions of all the Significant Contracts to which it is a party and is not in
material default thereunder, (ii) no other party to a Significant Contract is in
material default thereunder, and (iii) there are no events or conditions
currently existing that are reasonably likely to lead to a material default.
True, correct and complete copies of all Significant Contracts have heretofore
been made available by the Company to Buyer. The Company is not contractually
restricted from carrying out its business anywhere in the world.
4.15 ERISA; Employee Benefits.
(a) Schedule 4.15(a) contains a complete and accurate list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, severance, welfare and fringe benefit
plans, employment or severance agreements and all similar practices, policies
and arrangements in which any employee or former employee (the "Employees"),
consultant or former consultant (the "Consultants") or director or former
director (the "Directors") of the Company or any of its subsidiaries
participates or to which any such Employees, Consultants or Directors are a
party (the "Benefit Plans"). Except as set forth on Schedule 4.15(a), none of
the Benefit Plans are maintained or sponsored by the Company or its subsidiaries
and, except as indicated on Schedule 4.15(a), each Benefit Plan is maintained
and sponsored by AWS. Neither the Company nor any of its subsidiaries has any
commitment to create any additional material Benefit Plan or to modify or change
any existing Benefit Plan in any material respect. With respect to each Benefit
Plan, if applicable, the Company has provided or made available to Buyer true
and complete copies of existing: (A) 401(k) Plan documents and amendments
thereto; (B) the most recent summary plan description; (C) most recent
determination letter issued by the IRS.
(b) None of the Company or any of its subsidiaries has contributed, or
been obligated to contribute, to any Benefit Plans which are "multiemployer
plans" (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA) under
Subtitle E of ERISA at any time since September 26, 1980. All Benefit Plans have
been maintained and operated in material accordance with their terms and are in
substantial compliance with applicable law, including but not limited to ERISA
and the Code. No Benefit Plan is a "defined benefit plan" for purposes of ERISA
("Pension Plan"). Each Benefit Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service for "TRA" (as defined in Rev. Proc.
93-39)(including a determination that the related trust under such Benefit Plan
is exempt from tax under Section 501(a) of the Code), and the AWS Parties are
not aware of any circumstances likely
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to result in revocation of any such favorable determination letter. There is no
material pending or, to the Knowledge of the AWS Parties or the Company,
threatened Litigation relating to the Benefit Plans.
(c) No liability under Title IV of ERISA has been or is expected to be
incurred by the Company or any of its subsidiaries with respect to any ongoing,
frozen or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by either of them, or the
single-employer plan of any entity (an "ERISA Affiliate") which is considered
one employer with the Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate Plan").
(d) To the knowledge of the AWS Parties or the Company, all contributions
required to be made under the terms of any Benefit Plan or ERISA Affiliate Plan
have been timely made. All contributions accrued through the Closing Date with
respect to any Benefit Plan will be paid by the Company prior to the Closing
Date or will be properly recorded on the Closing Statement.
(e) To the knowledge of the AWS Parties or the Company, the Company has
no obligations for retiree health and life benefits under any Benefit Plan. To
the best knowledge of the AWS Parties or the Company, there has been no
communication to Employees by the Company or any of its subsidiaries that would
reasonably be expected to promise or guarantee such Employees retiree health or
life insurance or other retiree death benefits on a permanent basis.
(f) To the knowledge of the AWS Parties or the Company, all Benefit Plans
covering foreign Employees comply in all material respects with applicable local
law. The Company has no material unfunded liabilities with respect to any
Pension Plan which covers foreign Employees.
(g) To the knowledge of the AWS Parties or the Company, neither the
Company nor any ERISA Affiliate has engaged in a transaction with respect to any
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof, could subject the Company or any of its subsidiaries to a tax
or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA.
(h) Except as disclosed on Schedule 4.15(h), as a result, directly or
indirectly, of the Transactions (including, without limitation, as a result of
any termination of employment prior to or following the Closing Date), none of
the Buyer, the Company or any of their respective subsidiaries will be obligated
to make a payment that would be characterized as an "excess parachute payment"
to an individual who is a "disqualified individual" (as such terms are defined
in Section 280G of the Code), without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
(i) Except as set forth in Schedule 4.15(a), the consummation of the
Transactions will not (a) entitle any Employee, Consultant or Director of the
Company to severance pay, unemployment compensation or any other payment, or (b)
accelerate the time of payment or vesting,
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or increase the amount of compensation due any such Employee, Consultant or
Director. Except as set forth in Schedule 4.15(a), within the 24 month period
preceding the date hereof, the Company has taken no action to entitle, and the
Company does not owe, any employee or officer of the Company any severance pay
or other compensation that has not been paid.
4.16 Labor Difficulties. (a) There is no unfair labor practice complaint
against the Company pending, or to the Knowledge of the AWS Parties, threatened
before the National Labor Relations Board or other similar forum or, to the
Knowledge of the AWS Parties, efforts to organize with respect to employees of
the Company, (b) there is not now, nor has there been within the last three
years, any labor strike, slowdown or stoppage actually pending or threatened
against the Company and (c) no grievance which would have, or be likely to have,
a Material Adverse Effect on the Company nor any arbitration proceeding arising
out of or under collective bargaining agreements is pending and no claim
therefor exists. True and complete copies of all collective bargaining or union
contracts or agreements to which the Company is a party have been provided to
the Buyer Parties.
4.17 Insurance. The Company has made available to the Buyer Parties true
and complete copies of all insurance policies relating to the business or assets
of the Company, such policies remain in full force and effect as of the date
hereof and no notice of cancellation or termination has been received with
respect to any such policy.
4.18 Environmental Matters. The Company currently holds all material
permits, licenses, registrations and other governmental authorizations
(including exemptions, waivers, and the like) and financial assurance required
under Environmental Laws for the Company to operate its business as currently
conducted ("Environmental Permits"). All Environmental Permits are listed on
Schedule 4.18 hereto. The Company has not been notified by any Governmental Body
that (a) any Environmental Permit may be modified, suspended or revoked or (b)
any Environmental Permit cannot be renewed, transferred, provided or otherwise
obtained by the Company in the ordinary course of business.
4.19 Undisclosed Liabilities. The Company has no liabilities or
obligations, except to the extent such liabilities or obligations (a) are fully
reflected as liabilities or reserved for on the balance sheet contained in the
Interim 1998 Financial Statements, (b) have been incurred in the ordinary course
of business by the Company (which course of business does not include the
incurrence of liabilities for the failure to perform its obligations under
contracts), or (c) are disclosed in any Schedule hereto, or (with respect to any
of the representations and warranties set forth in this Article 4) are not
required to be disclosed on a Schedule to make such representation and warranty
true and would not, in the aggregate, result in a liability to the Company in
excess of $500,000.
4.20 Books and Records. The Company has made and will make available for
inspection by Buyer the books of account, relating to the business of the
Company and Claircom Licensee. The books of account of the Company reflect the
transactions and other matters required to be set forth under GAAP applied on a
consistent basis.
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4.21 Customers and Suppliers.
(a) To the best knowledge of the AWS Parties, no material supplier or
customer of the Company has canceled or otherwise terminated, or made any
written threat to the Company or to any of its Affiliates to cancel or otherwise
terminate, for any reason, including the consummation of the Transactions, its
relationship with the Company.
(b) Schedule 4.21 to this Agreement lists the material customers of the
Company, including each customer which represented in excess of 3% of Company
Revenue during the year ended December 31, 1997 or the nine months ended
September 30, 1998.
4.22 Projections. The financial projections provided by the Company to
Buyer were prepared by AWS and the Company in good faith and are based on
reasonable assumptions, in each case as of the date provided.
4.23 Year 2000 Compliance. All reprogramming or replacements required to
permit the proper functioning (but only to the extent that such proper
functioning would otherwise by impaired by the occurrence of the year 2000), in
and following the year 2000, of the computer systems and other equipment
containing embedded microchips of the Company and each Company Subsidiary, and
the testing of all such systems and equipment, as so reprogrammed, are expected
to be completed by September 30, 1999, except to the extent that the failure to
complete such reprogramming, replacements and/or testing by such time could not
reasonably be expected to result in a Material Adverse Effect on the Company.
The cost to the Company and the Company Subsidiaries of such reprogramming,
replacements and/or testing and of the reasonably foreseeable consequences of
year 2000 to the Company and the Company Subsidiaries is not anticipated to
result in a Material Adverse Effect on the Company.
4.24 Related Party Transactions. Except for such transactions which, in
the aggregate, have not had, and are not likely to have, a Material Adverse
Effect on the Company, all transactions between the Company and any other
operations of AWS or any Affiliate of AWS reflected in the 1997 Financial
Statements or the Interim 1998 Financial Statements or entered into since the
date of the Interim 1998 Financial Statements were (a) entered into in the
ordinary course of business consistent with past practice and (b) on terms no
less favorable to the Company than those that could be obtained in a comparable
arm's length transaction between two entities that were not Affiliates.
4.25 Currency. The Company conducts all of its business in, and receives
all payments due to it in, United States dollars.
4.26 Accuracy of Copies. The copies of documents furnished by the Company
to the Buyer Parties pursuant to the terms of this Agreement are complete and
accurate copies of such documents.
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4.27 Brokers and Intermediaries. Neither the AWS Parties nor the Company
has employed any broker, finder, consultant or intermediary in connection with
the Transactions that would be entitled to a broker's, finder's or similar fee
or commission in connection therewith.
4.28 Penalties. If the Company performs in accordance with the 1999
Projected Installation Schedule attached to Schedule X, no penalties could be
imposed under any airline contract as a result of the Company's failure to
install or deliver equipment in a timely manner.
4.29 LIMITATION. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS AGREEMENT, THE AWS PARTIES MAKE NO OTHER REPRESENTATIONS OR WARRANTIES,
AND HEREBY DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE
AWS PARTIES OR THE COMPANY OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE TRANSACTIONS, OR THE BUSINESS OF THE COMPANY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO BUYER OR ITS REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CANTEL
Cantel represents and warrants to the Buyer Parties that, except as
disclosed in its Disclosure Schedule:
5.1 Organization of Cantel; Authority. It is a corporation duly
incorporated, validly existing and in good standing under the laws of Canada,
with the corporate power and authority to enter into this Agreement and to
perform its obligations hereunder.
5.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement and the consummation of the Transactions have been duly
authorized by all required corporate action on the part of Cantel. This
Agreement has been duly executed and delivered by Cantel and constitutes a valid
and binding obligation of Cantel, enforceable against Cantel in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors, rights and to general equitable principles.
The execution and delivery by Cantel of this Agreement and the consummation of
the transactions contemplated hereby will not, except to the extent that would
not have, or be likely to have, a Material Adverse Effect on the Company or
Cantel, (a) violate any provision of any applicable law, rule or regulation, (b)
violate any order, judgment or decree applicable to Cantel, (c) conflict with,
or result in a breach of or default under any term or condition
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of the Certificate of Incorporation or By-laws of Cantel or (d) violate,
conflict with, result in a breach of any provision of, or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, any note, bond,
mortgage, indenture, deed of trust, lease, contract or agreement to which Cantel
or any of its properties may be bound or to which it is a party or result in the
creation of any Encumbrance upon any of the properties of the Company.
5.3 Share Ownership. Cantel is the record and beneficial owner of good
and valid title to the Shares set forth opposite its name on Schedule 3.2 and it
owns such Shares free and clear of any liens or encumbrances. At the Closing, it
shall transfer to Buyer, good and valid title to such Shares.
5.4 Governmental Consents. No consent, license, approval, waiver,
expiration of waiting period or authorization of, or registration or declaration
with, any Governmental Body is required to be obtained or made by Cantel in
connection with the execution, delivery and performance by Cantel of this
Agreement, the Transactions and the AirOne Canada Letter Agreement.
5.5 Third Party Consents and Approvals. The execution, delivery and
performance of this Agreement and the consummation of the Transactions by Cantel
do not require the consent or approval of any third party, except such consents
and approvals which have been obtained or the failure of which to obtain would
not have, or be likely to have, a Material Adverse Effect on the Company or
ACHI.
5.6 Litigation. There is no Litigation pending against Cantel or, to the
knowledge of Cantel, threatened against Cantel which would materially impair the
ability of Cantel to consummate the Transactions.
5.7 Brokers and Intermediaries. Cantel has not employed any broker,
finder, consultant or intermediary in connection with the Transactions that
would be entitled to a broker's, finder's or similar fee or commission in
connection therewith.
5.8 Canadian Organization, Authority and Licenses. Each of Cantel, ACHI
and AirOne Canada Communications is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, with the corporate power and authority to own or lease the
properties and assets it now owns or holds under lease and to carry on its
business as currently conducted. Each of ACHI and ACHI's subsidiaries is duly
qualified to do business and is in good standing in jurisdictions where the
nature of the properties owned or leased by it or the activities conducted by it
make such qualification necessary, except where the failure to be so qualified
and in good standing would not have a Material Adverse Effect on ACHI. AirOne
Canada Communications is the authorized and legal holder of all Licenses that
are necessary for ACHI and the Company to conduct their respective businesses in
Canada in the manner in which
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they currently are being conducted. Schedule 5.8 sets forth an accurate and
complete list of all Licenses held by AirOne Canada Communications and copies of
such Licenses. All Licenses listed on Schedule 5.8 are in full force and effect.
AirOne Canada Communications is in substantial compliance in all material
respects with all terms and conditions of, and all of its obligations under, the
Licenses. There is no pending, or to the knowledge of Cantel, threatened
proceeding or complaint against Cantel, ACHI or AirOne Canada Communications
that questions or contests the validity of, or seeks the revocation, nonrenewal
or suspension of, any License listed on Schedule 5.8, or that seeks the
imposition of any condition, administrative sanction, modification or amendment
with respect thereto which might reasonably result in a Material Adverse Effect
on the Company or ACHI. There is no fact that would reasonably be expected to
disqualify Cantel, ACHI, AirOne Canada Communications from obtaining the
approval of the applicable Governmental Body to consummate the Transactions and
the transactions contemplated by the AirOne Canada Letter Agreement.
5.9 LIMITATION. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS AGREEMENT, CANTEL MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, AND
HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY CANTEL
OR THE COMPANY OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE TRANSACTIONS, OR THE BUSINESS OF THE COMPANY, NOTWITHSTANDING THE DELIVERY
OR DISCLOSURE TO BUYER OR ITS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Each Buyer Party represents and warrants to the Seller Parties that,
except as disclosed in the Buyer Parties' Disclosure Schedule:
6.1 Organization of Buyer; Authority. (a) Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation, with the corporate power and authority to enter into this
Agreement and the Related Agreements to which it is a party and to perform its
obligations hereunder and thereunder.
(b) Iridium is a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware, with the limited
liability company power and authority to enter into this Agreement and the
Iridium Guarantee and to perform its obligations hereunder and thereunder.
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6.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement and the Related Agreements to which it is a party, and the
consummation of the Transactions have been duly authorized by all requisite
limited liability company or corporate action on the part of each Buyer Party.
This Agreement has been duly executed and delivered by each Buyer Party, and as
of the Closing the Related Agreements to which it is a party will be duly
executed and delivered by it and upon execution and delivery each Related
Agreement shall constitute a valid and binding obligation of each Buyer Party,
enforceable against Buyer in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors rights and to general
equitable principles. The execution and delivery by each Buyer Party of this
Agreement and the Related Agreements to which it is a party and the consummation
of the Transactions will not, except to the extent that would not have, or be
likely to have, a Material Adverse Effect on such Buyer Party, (a) violate any
provision of any applicable law, rule or regulation, (b) violate any order,
judgment or decree applicable to any Buyer Party, (c) conflict with, or result
in a breach of or default under, any term or condition of the Certificate of
Incorporation, By-laws or limited liability company agreement of any Buyer Party
or (d) violate, conflict with, result in a breach of any provision of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, any
note, bond, mortgage, indenture, deed of trust, lease, contract or agreement to
which any Buyer Party or any of their properties may be bound or to which it is
a party.
6.3 Financial Capability. On the Closing Date, Buyer shall have
sufficient funds available to comply with Buyer's obligations to consummate the
Transactions.
6.4 Consents. Except as set forth in this Agreement, no consent, license,
approval, waiver, expiration of waiting period or authorization of, or
registration or declaration with, any Governmental Body is required to be
obtained or made by any Buyer Party in connection with the execution, delivery
and performance of this Agreement, the Related Agreements and the consummation
of the Transactions.
6.5 Third Party Consents and Approvals. The execution, delivery and
performance of this Agreement and the Related Agreements, and the consummation
of the Transactions by any Buyer Party, do not require the consent or approval
of any third party, except such consents and approvals which have been obtained
or the failure of which to obtain would not have, or be likely to have, a
Material Adverse Effect on the Company.
6.6 Litigation. There is no Litigation pending or, to knowledge of any
Buyer Party, threatened against any Buyer Party which would materially impair
the ability of the Buyer Parties to consummate the Transactions.
6.7 Acquisition of Shares. The Shares are being acquired by Buyer for its
own account solely for the purpose of investment without the view to, or for
sale in connection with, any distribution thereof in violation of federal or
state securities laws and with no present intention of
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distributing or reselling any part thereof. Buyer shall not so distribute or
resell any Shares in violation of any such law; provided, Buyer may, subject to
its compliance with Section 8.5, transfer Shares to an Affiliate.
6.8 Maintenance of Corporate Existence. The Buyer intends to preserve its
corporate existence and has no present intention of transferring or assigning
any of the Shares or all or substantially all the assets of the Company (by
sale, merger or otherwise) to a non-corporate entity.
6.9 Compliance and Qualifications. To the knowledge of the Buyer Parties,
there is no fact concerning the Buyer Parties that has not been disclosed in
writing by them to AWS that would be reasonably likely (a) to render the Buyer
Parties legally, technically or financially unqualified under the Communications
Act of 1934, as amended, and the rules and regulations of the FCC thereunder, to
hold the FCC Licenses described in Schedule 4.6(b) or the Shares of the Company
or (b) to cause the acquisition of the Shares by the Buyer Parties to disqualify
Claircom Licensee from holding the FCC Licenses described in Schedule 4.6(b).
6.10 Brokers and Intermediaries. Buyer has not employed any broker,
finder, advisor or intermediary in connection with the Transactions which would
be entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof.
6.11 LIMITATION. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS AGREEMENT, THE BUYER PARTIES MAKE NO OTHER REPRESENTATIONS OR
WARRANTIES, AND HEREBY DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY
BUYER OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES,
WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE
TRANSACTIONS, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO SELLERS OR THEIR
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
ARTICLE 7
CERTAIN PRE-CLOSING COVENANTS AND
AGREEMENTS OF THE PARTIES
7.1 Access and Information. (a) Between the date of this Agreement and
the Closing Date, AWS shall, and shall cause the Company to, (i) give Buyer and
its authorized representatives full and complete access to all properties,
personnel, facilities and offices of the Company and to the books and records of
the Company (and permit Buyer to make copies thereof), (ii) permit Buyer to make
inspections thereof and (iii) cause its officers and employees to furnish Buyer
with such financial information and operating data and other information with
respect to the business and properties of the Company, and to discuss with Buyer
and its authorized representatives the affairs
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of the Company, all as Buyer may from time to time reasonably request for the
purposes of this Agreement during normal business hours and with reasonable
notice to the AWS Parties and the Company. Notwithstanding the foregoing, Buyer
acknowledges that with respect to certain confidential information, any
disclosure to be made to Buyer may be subject to the rights of third parties and
Buyer may be required to execute certain non-disclosure agreements and agrees to
execute any such agreements, or other documentation in connection therewith,
prior to being provided with or being given access to such information. In the
event that a Closing does not occur hereunder, the Buyer Parties agree that, for
a period of one year from the date the Agreement is terminated, neither the
Buyer Parties nor an affiliate or subsidiary of a Buyer Party shall directly or
indirectly induce any employee of the Company to terminate employment with the
Company and shall not directly or indirectly employ or offer employment to any
person who is or was employed by the Company unless such person shall have
ceased to be employed by the Company for a period of at least six months.
(b) Other than as permitted by the Nondisclosure Agreements, between the
date of this Agreement and the Closing Date, the Buyer Parties shall and shall
cause their officers and directors and shall use reasonable efforts to cause all
their other employees, auditors, attorneys, consultants, advisors and agents, to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, all confidential information of the AWS Parties or the Company furnished
to the Buyer Parties by AWS or the Company or their respective representatives
in connection with the Transactions and shall not release or disclose such
information to any other Person, except their auditors, attorneys, financial
advisors and other consultants, agents and advisors in connection with the
consummation of the Transactions, provided that if the Buyer Parties are
compelled to disclose any such information, the Buyer Parties shall provide AWS
with written notice as soon as reasonably practicable in order to provide AWS
with an opportunity to prevent or limit such disclosure and the Buyer Parties
shall provide reasonable cooperation to AWS in such regard. If the Closing does
not occur (i) such confidence shall be maintained by the Buyer Parties, and the
Buyer Parties shall cause their officers and directors and shall use reasonable
efforts to cause such other Persons to maintain such confidence, except to the
extent such information comes otherwise into the public domain and (ii) upon the
request of AWS or the Company, the Buyer Parties shall promptly return to AWS or
the Company any written materials remaining in its possession, which materials
it has received from AWS, the Company or their respective representatives,
together with all copies thereof in the possession of the Buyer Parties, and
shall certify to AWS that they have returned all such materials.
7.2 Conduct of the Business. Except as expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, AWS shall
cause the Company to conduct the Company's business only in the ordinary course
in substantially the same manner as heretofore conducted, and use all its
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and employees and preserve in all material
respects its present business relationships and goodwill (including, but not
limited to, its relationship with Cantel), provided that AWS shall not be
responsible for changes in the Company's business resulting from the
Transactions or from
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any actions taken or anticipated to be taken by Buyer following the Closing
Date, including, without limitation, any adverse reaction thereto from any
employee, customer or supplier, provided further that AWS shall use reasonable
efforts to inform Iridium of any such adverse reaction of which it or the
Company becomes aware that would have a material impact on the conduct of the
business. In addition, except as otherwise expressly provided in this Agreement
or as consented to by Buyer (such consent not to be unreasonably withheld),
between the date of this Agreement and the Closing Date, AWS shall not permit
the Company to:
(a) amend its Certificate of Incorporation or By-laws;
(b) purchase, redeem, issue, sell or otherwise acquire or dispose of,
either directly or indirectly, any of the Shares, or reclassify, split or
otherwise change any of the Shares or grant or enter into any options, warrants,
puts or calls or other rights to purchase, sell or convert any obligation into
any of the Shares;
(c) (i) make or grant any increase in the compensation (whether salary,
commission, bonus, benefits (retirement, severance or other) or other direct or
indirect remuneration) of Employees or enter into any contract or other binding
commitment in respect of any such increase, or (ii) amend, adopt or terminate
any 401(k) or health and welfare plan covering Employees in any way that
exclusively affects Employees of the Company, or (iii) enter into any
negotiations in respect of any collective bargaining agreement covering
Employees, except in each case in the ordinary course of business (including but
not limited to (in the case of clause (i)) increases in connection with employee
annual reviews provided the aggregate of all such increases does not exceed 5%
of the aggregate employee compensation paid by the Company), as provided in
Schedule 7.2(c) or as required by Law, or except to the extent that Seller has
agreed to bear the cost thereof; provided that, in addition to increases
otherwise permitted under this paragraph (c), the Company may further increase
the compensation of any Employee provided the aggregate amount of all such
increases pursuant to this proviso payable in any one quarter shall not exceed
$200,000;
(d) sell, assign, transfer, pledge, encumber or otherwise dispose of or
agree to sell, assign, transfer, pledge, encumber or otherwise dispose of any of
its assets or properties in excess of $350,000 in the aggregate or otherwise
material to the business or any other material right, except in each case in the
ordinary course of business;
(e) enter into any material contract, Eligible Fleet Agreement, or any
material amendment, supplement or waiver in respect of any material contract,
other than in the ordinary course of business;
(f) agree to pay any legal, accounting, brokerage, taxes or other
expenses in connection with this Agreement or the Transactions except any such
expenses or obligations to be paid in full prior to the Closing Date;
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(g) cancel or compromise any debt or claim, or waive or release any
material right, other than adjustments in the ordinary course of business for
goods and services sold and received which, in the aggregate, are not material
and the settlement of any pending or threatened litigation listed on Schedule
4.13;
(h) make or commit to make any capital expenditures or capital additions
or improvements in excess of an aggregate of $2 million, other than pursuant to
capital expenditure commitments disclosed on Schedule 3.6(c)(ii); or
(i) incur any indebtedness in excess of $500,000, except for the
incurrence of (i) indebtedness (excluding accounts payable incurred in the
ordinary course of business) pursuant to the Notes or (ii) indebtedness to AWS
or its affiliates that will be discharged prior to Closing or included in the
Adjusted Working Capital Statement;
(j) enter into any transaction that would have a material adverse effect
on Buyer's ability to conduct the business of the Company as currently
conducted; or
(k) agree or otherwise commit, whether in writing or otherwise, to do, or
take any action or omit to take any action that would result in, any of the
foregoing.
7.3 AWS Commitments.
(a) AWS shall perform, or cause ATG to perform, the obligations to be
performed by ATG under this Agreement and any Related Agreements to which ATG is
a party.
(b) At the Closing, AWS shall cause the Company to have cash, cash
equivalents and other Liquid Investments having a value at least equal to the
Cash Amount.
(c) Other than the intercompany account evidenced by the Notes and the
intercompany accounts listed on Schedule 7.3(c), AWS shall cause all
intercompany accounts of the Company owed to AWS or any of its Affiliates (other
than the Company) to be settled in full at or prior to the Closing. Any amount
owing by the Company not so settled shall be canceled at the Closing. With
respect to the foregoing, prior to the Closing the Company shall deliver to ATG
the Notes.
7.4 Insurance. AWS shall cause the Company to keep in effect until the
Closing all policies of insurance in effect as of the date hereof maintained by
AWS or the Company insuring the assets, properties, business or operations of
the Company. Upon Closing, coverage for the Company under all AT&T Corp.'s
insurance policies, as well as all of the Company's coverage under
insurance-related surety bonds, will cease as of that date. The Buyer Parties
are responsible for the uninsured portion of all claims (including any
deductible) for damages made against the Company before, on, or after the
closing date, unless the Seller Parties are responsible therefor pursuant to
Section 12.1.
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7.5 Iridium Commitments.
(a) Iridium shall perform, or cause Buyer to perform, the obligations to
be performed by Buyer under this Agreement and any Related Agreements to which
Buyer is a party.
(b) The Buyer Parties agree to use their reasonable efforts to cause the
AWS Parties and their Affiliates (other than the Company) to be released at the
Closing or as soon as practicable thereafter from any obligations or liabilities
under any guarantees in respect of any obligation of the Company with respect to
Significant Contracts (the "Guarantees"). If the Closing occurs, the Buyer
Parties agree to indemnify and hold harmless the AWS Parties and their
Affiliates (other than the Company) from any loss arising out of any such
unreleased Guarantees in connection with the failure of the Company or any of
its Affiliates to perform any obligations thereunder after the Closing.
(c) Upon the reasonable request of AWS or any party to a Significant
Contract (a "Significant Party") in connection with obtaining a consent to the
Transaction from a Significant Party, the Buyer Parties agree to guarantee the
performance of the Company thereunder or provide other reasonable assurances to
such Significant Party in connection therewith.
7.6 Announcements. Between the date of this Agreement and the Closing
Date, except to the extent required by applicable law or stock exchange rule or
regulation or in response to inquiries made from any Governmental Body: (a)
neither the Buyer Parties nor the Seller Parties shall, and none of them shall
permit any Affiliate to, issue any press release or public announcement of any
kind concerning, or otherwise publicly disclose, the Transactions without the
consent of the other; and in the event any such public announcement, release or
disclosure is required by law, the parties shall consult prior to the making
thereof and use their best efforts to agree upon a mutually satisfactory text;
(b) subject to Section 7.1 hereof, the Buyer Parties shall not, and shall not
permit their representatives, consultants and agents to, communicate with
customers, suppliers or employees of the Company with respect to the
Transactions or the business of the Company without the prior written consent of
AWS not to be unreasonably withheld; and (c) the Buyer Parties shall not (except
with respect to the HSR Act and the applications filed with the FCC and the FAA
pursuant to Section 7.7 hereof) communicate with any government officials with
respect to the Company or Sellers or the Transactions without the prior consent
of Sellers, which consent shall not be unreasonably withheld.
7.7 Further Actions. (a) The Seller Parties, the Company and the Buyer
Parties agree to use best efforts to take all actions and to do all things
necessary, proper or advisable to consummate the Transactions, including,
without limitation, to obtain or cause to be obtained all consents of third
parties (including without limitation consents of the FAA and other Governmental
Bodies) necessary to be obtained by any of them in order to consummate the
Transactions.
(b) As promptly as practicable, Buyer and Sellers shall file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice pursuant to the
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HSR Act all requisite documents and notifications (if any) in connection with
this Agreement and the Transactions. Buyer and Sellers shall coordinate and
cooperate with each other in exchanging such information and providing such
reasonable assistance as the other may require to comply with the HSR Act.
(c) In addition to the filing required by the HSR Act, Sellers and Buyer
shall, and AWS shall cause the Company to, (i) file with the FCC and any other
applicable Governmental Bodies (including, but not limited to the FAA) the
applications and related documents required to be filed by such Governmental
Bodies (and prosecute diligently any such applications, including providing such
information as such Governmental Bodies may reasonably request) in order to
consummate the Transactions, (ii) cooperate with the other as may reasonably be
requested in connection with the foregoing, and (iii) otherwise use their best
efforts to obtain promptly the requested consent and approval of the
applications by the FCC and any other applicable Governmental Bodies. The AWS
Parties and the Buyer Parties shall each pay one half of all FCC filing or other
Governmental Body filing or grant fees in connection with the applications
requesting its consent to the consummation of the Transactions.
(d) All license, regulatory and other fees assessed by any Governmental
Body shall be apportioned between AWS and Buyer based on number of days in the
assessment period prior to and after the Closing Date, respectively, except that
each party shall pay the portion of any fee, assessments or charge imposed on
the basis of gross receipts or gross revenue, including but not limited to
universal service charges, to the extent due on the gross receipts or gross
revenue earned by the Company while controlled by the party.
(e) At all times prior to the Closing, AWS and the Company shall promptly
notify Buyer in writing of any fact, condition, event or occurrence that comes
to the attention of AWS or the Company that is reasonably likely to result in
the failure of any of the conditions contained in Section 9 to be satisfied,
promptly upon either of them becoming aware of the same.
(f) Between the date of this Agreement and the Closing Date, AWS shall
cause the Company to use the Company's best efforts to (a) maintain (and to the
extent not currently enjoyed by the Company, obtain) all licenses, permits,
registrations, consents, approvals or authorizations necessary to conduct the
Company's businesses in the manner in which they are currently operated in
Mexico and Canada (the "Foreign Licenses") and (b) comply with the Foreign
Licenses as well as all applicable legal, regulatory or other governmental
requirements applicable to the Company's businesses as currently operated in
Mexico and Canada and, to the extent that ACHI, CDM or the Mexican or Canadian
operations are not currently in compliance with the Foreign Licenses or any
applicable Law, bring ACHI, CDM and such operations into compliance, except in
each case where such failure (individually or in the aggregate) does not, and is
not reasonably expected to, have a Material Adverse Effect on CDM or ACHI.
Notwithstanding the foregoing and any other provision of this Agreement creating
a comparable obligation with respect to the Foreign Licenses, the Company
Subsidiaries, the Company Subsidiaries holding such Foreign Licenses and
compliance with applicable legal, regulatory or other governmental requirements,
none of the Company, the
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Company Subsidiaries, Sellers or any affiliates of Sellers shall be required to
take any action that, in their good faith judgment, they would not have taken
with respect to the Foreign Licenses, the Company's business relating thereto,
the Company Subsidiaries holding such Foreign Licenses or compliance with
applicable legal, regulatory or other governmental requirements (i) in the
prudent conduct of the Company's business and (ii) absent the Transactions
contemplated by this Agreement.
7.8 Expenses. All costs and expenses incurred in connection with this
Agreement and the Transactions (including fees and disbursements of financial
advisors, accountants and attorneys and any brokers or finders), shall be paid
(a) by each Seller, if such costs or expenses are incurred by or on behalf of
such Seller or the Company and (b) by Buyer, if such costs or expenses are
incurred by or on behalf of Buyer, provided that Buyer shall be liable for all
sales, filing, recordation, transfer and similar taxes arising from or
associated with the sale and transfer of the Shares.
7.9 Advertising. Between the date of this Agreement and the Closing Date,
AWS shall cause the Company to arrange such advertisements and promotions as
Iridium may reasonably request from time to time to promote the Company's
services to be provided by Iridium after Closing (including without limitation,
print advertisements in in-flight magazines) provided that (a) Iridium shall
reimburse the Company for any related out-of-pocket expenses promptly upon the
Company's request (such request to attach the underlying invoices); (b) the
Company is not required to incur related out-of-pocket expenses in excess of
$500,000.00, (c) the Company is not required to arrange such advertisements or
promotions as may be reasonably objected to by the Company's counsel, Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇ L.L.P., on regulatory grounds and (d) any such
request shall have been approved by AWS, such approval not to be unreasonably
withheld (it being agreed that it shall be reasonable for AWS to withhold
approval of any advertisement or promotion that could be adverse to the
interests of AWS and its Affiliates).
7.10 Certain Liabilities. On or prior to the Closing Date, AWS and the
Company shall procure the release of the Company from any and all liabilities
payable to AT&T Corp. or any of its affiliates outstanding on the Closing Date
unless such liabilities are reflected on the Adjusted Working Capital Statement.
7.11 Canadian Service Marks. (a) At or prior to the Closing, AWS and
Cantel shall terminate the rights of AirOne Canada to use any trademark, service
▇▇▇▇, trade name, trade dress or other indicia of origin owned by AWS or Cantel
or their respective affiliates as well as any composite marks based thereon (the
"Service Marks"), and (b) neither Cantel nor Buyer Parties shall permit AirOne
Canada to use the Service Marks from and after the Closing, provided that Buyer
and AirOne Canada may continue to use such Service Marks provided they shall
remove such Service Marks from any equipment or manufacturing materials
(including but not limited to handsets and other telecommunications equipment on
board customer aircraft) as soon as practical but in no event later than six (6)
months after the Closing.
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7.12 Certain Working Capital Matters. (a) All accounts receivable, both
billed and unbilled, and other debts due and to be included in the calculation
of Adjusted Working Capital pursuant to Schedule X shall, at the time of such
calculation, represent bona fide indebtedness incurred by the applicable account
debtors and shall have arisen in the ordinary course of the Company's business.
All allowances for doubtful accounts reflected in such calculation shall be made
in accordance with the Company's past practices except that in no event shall
accounts receivable that are more than 270 days delinquent in payment be
included in such calculation, and, to the knowledge of AWS and the Company, no
account receivable shall be subject to a pledge in favor of any third party.
(b) Any liabilities payable to AT&T Corp. or any of its affiliates that
are included on the Adjusted Working Capital Statement shall represent valid
payables the amounts of which are fixed and not subject to change.
(c) The revised installation schedule to be attached to the Adjusted
Working Capital Statement shall be prepared by AWS in good faith and based on
reasonable assumptions.
7.13 AirOne Canada Letter Agreement. Each of the Buyer Parties and each
of the Seller Parties shall use its best efforts to satisfy, or cause the
satisfaction of, the condition set forth in Sections 9.9 and 10.9 as soon as is
reasonably possible.
ARTICLE 8
OTHER COVENANTS AND AGREEMENTS OF THE PARTIES
8.1 Employee Matters. (a) AWS has previously delivered to Buyer a
document that lists separately each current employee of the Company and each
such employee's name, job title, current salary and any other compensation items
(e.g., bonus, allowances, etc.), years of service and the current status of each
such employee (e.g., whether the employee is active, on short-term disability,
on leave of absence, etc.). Such document shall be updated by AWS fifteen (15)
days prior to the scheduled Closing Date and a final list of employees of the
Company as of the Closing Date ("Final List") shall be provided by AWS to Buyer
as soon as practicable (but in no event later than 7 days following the Closing
Date). For purposes of this Agreement, "Company Employee" shall refer to each
employee of the Company as of the Closing Date as set forth on the Final List.
(b) Effective as of the Closing Date, Buyer shall cause the Company to
continue to employ each employee of the Company at the same base rate of pay and
each employee of the Company shall be eligible for bonuses on substantially the
same basis as are provided to similarly situated employees of Buyer.
(c) Buyer shall either cause the Company to maintain in effect, for a
period of twelve months following the Closing Date, all severance pay plans in
effect for the benefit of employees of
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the Company immediately prior to the Closing Date or establish and maintain a
severance pay plan for all employees of the Company which provides severance
benefits equal to or greater than the severance pay plans in existence
immediately prior to the Closing Date.
(d) Except as specifically required in paragraphs (c), (f) and (g) of
this Section 8.1, nothing in this Agreement shall limit the ability of the
Company following the Closing Date to amend or terminate any Benefit Plan.
(e) The AWS Parties shall retain all liabilities with respect to benefits
accrued and claims incurred with respect to all Company Employees under any
Benefit Plan (with the exception of liabilities with respect to accrued sick or
vacation benefits which shall become a liability of the Buyer) as of the last
moment of the day before the Closing Date, including short-term disability
benefits for individuals who are receiving short-term disability benefits prior
to the Closing Date. Except as otherwise provided in this Agreement, as of the
last moment of the Closing Date, all Company Employees shall cease to
participate as active employees in or accrue benefits under the Benefit Plans.
Thereafter, neither Buyer nor any of its Affiliates shall assume nor shall any
Company Employee be entitled to participate in any of the Benefit Plans, except
to the extent such plans provide by their terms for participation after the
Closing Date or as otherwise required by law. Sellers shall be responsible for
providing any continuation coverage required pursuant to Section 4980B of the
Code as the result of any "qualifying event" (within the meaning of Section
4980B(f)(3) of the Code) occurring with respect to any Company Employee or any
spouse or dependent thereof on or prior to the Closing Date.
(f) Immediately after Closing, all Company Employees shall be eligible to
participate in the pension, savings, profit sharing, health and welfare benefit
plans, programs and practices of Buyer generally applicable to other similarly
situated employees of Buyer. Buyer agrees that all Company Employees and
dependents who participated in the AWS group health and welfare plans prior to
Closing shall be covered by Buyer's health and welfare plans immediately after
Closing. Buyer further agrees that it shall not materially adversely change such
plans, programs and practices for the one-year period following the Closing
Date. All employees of the Company shall be eligible to authorize a direct roll
over of their account balances in the AT&T Wireless Services 401(k) Retirement
Plan to the defined contribution plan maintained by Buyer.
(g) Buyer shall recognize, from and after the Closing Date, each Company
Employee's service, as set forth on Schedule 8.1(a) of this Agreement, for
purposes of determining eligibility to participate in and vesting, and, if
applicable, eligibility to commence retirement benefits (including any early
retirement subsidies), but not benefit accruals, under any qualified pension,
savings, or profit-sharing plans in which Company Employees may participate, or
such other qualified pension or profit-sharing plans maintained by Buyer or
established on or after the Closing Date in which Company Employees participate,
and for purposes of determining eligibility to participate in and the schedule
of benefits provided by any group health plans, vacation and other paid time off
plans and policies, severance, sick pay, disability and other welfare benefit
plans established or maintained by Buyer or its Affiliate on or after the
Closing Date; provided, however,
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that until December 31, 1999, each Company Employee shall be entitled to at
least the amount of vacation, sick leave, personal days and similar time off for
which they are eligible (and which remains unused) under the AWS Parties'
policies in effect immediately prior to the Closing Date, and for all subsequent
years, shall be entitled to the amount of vacation and sick leave as determined
under the sick leave, vacation and paid time off policy of Buyer or the Company,
as the case may, based on such Company Employee's service recognized pursuant to
this Section 8.1(g).
(h) Neither the AWS Parties nor their Affiliates shall have any
liabilities or obligations with respect to benefits accrued and claims incurred
under any such plans, or any other plans sponsored, maintained or contributed to
by Buyer for or in respect of any Company Employee, after the end of the day
before the Closing Date.
(i) For purposes of determining whether any Company Employee or his or
her covered dependents have satisfied any required co-payments, annual
deductibles and out-of-pocket maximums from and after the Closing under the
terms of the Company's or Buyer's or its Affiliate's group health plan for the
calendar year in which the Closing occurs, Company Employees and their covered
dependents shall be credited with the amount of deductibles and co-payments made
by, or on behalf of, such Company Employees and their covered dependents under
the AWS Parties' group health plan for such year.
(j) With respect to flexible spending arrangements in which Company
Employees participate, to the extent permitted under ERISA or the Code, the AWS
Parties shall continue to apply amounts credited to the accounts of Company
Employees for covered medical expenses to the extent that such expenses are
incurred on or before the Closing Date and with respect to dependent care
expenses to the extent such expenses are incurred on or before December 31 of
the year in which the Closing Date occurs.
8.2 Access to Books and Records.
(a) Access. On and after the Closing Date, Buyer shall cause the Company
to give to the Sellers and their representatives such access as Sellers may
reasonably request to the properties, books, records and employees of the
Company relating to any period ending on or before the Closing Date, for
purposes including but not limited to (i) preparing any Tax Return and financial
statements and responding to Tax audits relating to the Company, or (ii)
investigating, preparing the defense or prosecution of, prosecuting or defending
any litigation proceeding, or investigation pending, threatened or anticipated
by or against the Company or any of the Sellers, except in an action between the
parties hereto; provided that (x) the normal conduct of the business of the
Company shall not be disrupted thereby and (y) in the event of any litigation or
threatened litigation between the parties, the foregoing shall in no event be,
or be deemed to be, a waiver by a party of any right to assert the
attorney-client privilege or other applicable privilege. Subject to the
foregoing, such access shall include, without limitation, assuring the presence
of a party's former employees as witnesses at depositions, hearings or trials.
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(b) Maintenance of Records. For a period of six years after the Closing
Date, Buyer shall cause the Company to maintain the books and records of the
Company in existence as of the Closing Date. In the event AWS provides the Buyer
or the Company with a written request to be provided with such books and
records, prior to the end of such six year period, Buyer shall cause the Company
to refrain from disposing of any such books or records covering periods prior to
the Closing Date, and shall (at AWS' expense) provide such books and records to
AWS instead of disposing thereof.
8.3 Tax Matters.
(a) Liability for Taxes.
(i) Except for the amount of Taxes described in clause (A), (B)
or (C) of this clause (i) that is deducted in calculating the Final Working
Capital in accordance with Schedule X, the AWS Parties shall be liable for and
indemnify Buyer or the Company as the case may be, for all Taxes (A) imposed on
the Company, or for which the Company may otherwise be liable, for any taxable
year or period that ends on or before the Closing Date and, with respect to any
portion of a taxable year or period beginning before and ending after the
Closing Date ("Split Period"), the portion of such Split Period ending on and
including the Closing Date, (B) for which the Company is held liable as a member
of any combined, consolidated or unitary group of which the Sellers or any of
its Affiliates (other than the Company) is or was a member pursuant to any
federal, state, local or foreign law with respect to Taxes or (C) imposed as a
result of the parties making an election pursuant to Section 338(h)(10) of the
Code (including any similar election or inability to make such an election under
any state or local statute corresponding to federal laws).
(ii) The Company shall be liable for and Buyer shall indemnify
Sellers for all Taxes imposed on Sellers with respect to the Company for any
taxable year or period that begins after the Closing Date and, with respect to a
Split Period, the portion of such Split Period beginning after the Closing Date.
(b) Taxes for Short Taxable Year. For purposes of paragraph (a), whenever
it is necessary to determine the liability for Taxes of the Company for a
portion of a Split Period, the determination of the Taxes for the portion of the
Split Period ending on, and the portion of the Split Period beginning after, the
Closing Date, shall be determined by assuming that the Company had a taxable
year or period that ended at the close of the Closing Date, except that any such
Tax imposed annually based on ownership of assets on a particular date shall be
prorated to the period to and including the Closing Date and the period
thereafter.
(c) Tax Refunds. Sellers shall be entitled to any refund of any Taxes,
including interest paid thereon, if any, net of income taxes due thereon, with
respect to periods ending on or before the Closing Date. AWS shall have the
right to determine whether any claim for refund for such Taxes shall be made on
behalf of Sellers by the Company. If AWS elects to make a claim for refund, the
Buyer Parties and the Company shall cooperate fully in connection therewith.
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Notwithstanding the foregoing, Sellers shall not be entitled make any claim for
refund of Taxes which would adversely affect the liability for Taxes of Buyer or
the Company for any period after the Closing Date to any extent (including, but
not limited to, the imposition of income tax deficiencies, the reduction of
asset basis or cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or depreciation deductions, or
the reduction of loss or credit carryforwards) without the prior written consent
of Buyer. Such consent shall not be unreasonably withheld, and shall not be
necessary to the extent that Sellers have indemnified Buyer against the effects
of any such settlement. Sellers shall reimburse Buyer and the Company for
reasonable out-of-pocket expenses incurred in providing such cooperation.
(d) Coordination. Without the prior written consent of Sellers (which
consent may not be unreasonably withheld and shall not be necessary to the
extent that Buyer has indemnified the Sellers against the effects of any such
election or filing), neither Buyer, the Company, nor any Affiliate of Buyer
shall (i) make any election or (ii) file any amended Tax Return or propose or
agree to any adjustment of any item with the Internal Revenue Service or any
other taxing authority with respect to any tax period ending on, before or
including the Closing Date that would have the effect of increasing the
liability for any Taxes or reducing any Tax benefit of Sellers or the Company.
(e) Section 338(h)(10) Election.
(i) Buyer and Sellers shall take all steps necessary to make a
timely election under Section 338(h)(10) of the Code (and any comparable
election under state or foreign tax law) with respect to Buyer's acquisition of
the Shares from Sellers. Buyer and Sellers shall cooperate fully with each other
in the making of such election.
(ii) In particular and not by way of limitation, in order to
effect such election, Buyer and Sellers shall jointly execute necessary copies
of Internal Revenue Service Form 8023 and all attachments required to be filed
therewith pursuant to applicable Treasury Regulations. Accordingly, Buyer and
Sellers agree, on the Closing Date, to (x) enter into a Purchase Price
Allocation Agreement (the "Allocation Agreement") providing for the allocation
of the purchase price for tax purposes (as determined therein, the "Tax Purchase
Price") consistent with the provisions of Section 338 of the Code and Treasury
Regulations thereunder and (y) cooperate in the preparation of Form 8023 for
timely filing in each of their respective federal income Tax Returns. For
purposes of the Allocation Agreement, the allocation of the Tax Purchase Price
to the assets of the Company shall be as agreed to by Buyer and AWS, or, if
Buyer and AWS cannot agree, then the assets on which agreement has not been
reached shall be subject to an appraisal by an independent appraiser which shall
be acceptable to both parties. The amount of the Tax Purchase Price allocated to
such assets so appraised shall be equal to their respective appraised fair
market values. Unless otherwise prohibited by law, all foreign, federal, state
and local income Tax returns filed by Buyer and the Sellers shall be filed
consistently with the allocations made pursuant to the Allocation Agreement.
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(f) Tax Returns. Sellers shall file or cause to be filed when due,
including extensions thereof, all Returns that are required to be filed with
respect to the Company for taxable years or periods ending on or before the
Closing Date and shall pay any Taxes due in respect of such Returns, and Buyer
shall file or cause to be filed when due all Returns that are required to be
filed with respect to the Company for taxable years or periods beginning and
ending after the Closing Date and shall pay any Taxes due in respect of such
Returns. Sellers and Buyer shall jointly prepare and Buyer shall file or cause
to be filed all Returns that are required to be filed with respect to the
Company for any Split Period taxable year, and AWS and Buyer agree to negotiate
and resolve in good faith any issue arising as a result of the preparation of
such Tax Return. In the event the parties are unable to resolve any dispute
prior to thirty (30) Business Days before the due date of such Tax Return,
including extensions thereof, if a request for extension has been timely filed,
AWS and Buyer shall jointly select a public accounting firm with nationally
recognized tax expertise ("Tax Arbitrator") to resolve the dispute. If the Tax
Arbitrator has not resolved the dispute within five (5) Business Days prior to
the due date (including extensions) for the filing of the Tax Return in
question, then Buyer may file such Tax Return in accordance with its position on
such disputed issue without AWS' consent. Notwithstanding the filing of such Tax
Return, the Tax Arbitrator shall make a determination with respect to any
disputed issue, and the amount of Taxes for which Sellers are responsible
pursuant to Section 8.3(b) shall be as determined by the Tax Arbitrator. The
fees and expenses of the Tax Arbitrator shall be shared equally by Buyer and
Sellers. Not later than five (5) Business Days before the due date for the
payment of Taxes with respect to such Tax Return or (ii) in the event of a
dispute five (5) Business Days after notice to Sellers of resolution thereof,
Sellers shall pay to Buyer an amount equal to the Taxes allocable to Sellers
pursuant to Section 8.3(b). Notwithstanding the foregoing, in the case of a
dispute, Sellers shall pay to Buyer not later than five (5) Business Days before
the due date for the payment of Taxes with respect to such Tax Return, the
amount of Taxes that Sellers reasonably believe at such time is properly
allocable to Sellers pursuant to Section 8.3(b). No payment pursuant to this
Section shall exempt Sellers from their indemnification obligations pursuant to
this Agreement if the amount of Taxes as ultimately determined (on audit or
otherwise) for the periods covered by such Tax Returns that are the
responsibility of Sellers exceeds the amount of Sellers' payment under this
Section.
(g) Contest Provisions. Whenever Buyer receives a notice of any pending
or threatened audit or assessment for any taxable period for which Sellers are
or may be liable under this Agreement, Buyer shall promptly inform Sellers in
writing, provided that failure to comply with this provision shall not affect
Buyer's right to indemnification hereunder. AWS shall have the right to control,
at its own cost, any resulting proceedings and to determine whether and when to
settle any such claim, assessment or dispute to the extent such proceedings or
determinations affect the amount of Taxes for which Sellers are liable under
this Agreement. Notwithstanding the foregoing, Sellers shall not be entitled to
settle, either administratively or after the commencement of litigation, any
claim for Taxes which would adversely affect the liability for Taxes of Buyer or
the Company for any period after the Closing Date to any extent (including, but
not limited to, the imposition of income tax deficiencies, the reduction of
asset basis or cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or depreciation deductions, or
the reduction of loss or credit carryforwards) without the prior written consent
of Buyer. Such consent
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shall not be unreasonably withheld, and shall not be necessary to the extent
that Sellers have indemnified Buyer against the effects of any such settlement.
Whenever any taxing authority sends a notice of an audit, initiates an
examination of the Company or otherwise asserts a claim, makes an assessment or
disputes the amount of Taxes (i) for any taxable period for which Buyer is
liable under this Agreement or (ii) for any taxable period that involves an
issue that could potentially affect a taxable period for which Buyer is or may
be liable under this Agreement, Sellers shall promptly inform Buyer in writing,
and Buyer shall have the right to control, at its cost, any resulting
proceedings and to determine whether and when to settle any such claim,
assessment or dispute, except to the extent such proceedings affect the amount
of Taxes for which Sellers are liable under this Agreement.
(h) Termination of Tax Allocation Agreements. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into by AWS and the Company shall be terminated as to the Company as of
the Closing Date, and no payments which are owed by or to the Company pursuant
thereto shall be made thereunder.
(i) Information to be Provided by Buyer. With respect to the taxable year
of Sellers ending on the last day of the most recent full tax year and the
period in tax year 1999 prior to and including the Closing Date, Buyer shall
promptly cause the Company to prepare and provide to Sellers a package of tax
information materials (the "Tax Package"), which shall be completed in
accordance with past practice including past practice as to providing the
information, schedules and work papers and as to the method of computation of
separate taxable income or other relevant measure of income of the Company.
Buyer shall cause the Tax Package for the portion of the taxable period ending
on the Closing Date to be delivered to Sellers within one hundred twenty (120)
days after the Closing Date.
(j) Assistance and Cooperation. Each of Buyer and Sellers shall provide
the other with such assistance as may reasonably be requested by each of them in
connection with the preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each shall retain and provide
the other with any records or information which may be relevant to such Return,
audit or examination, proceedings or determination. Such assistance shall
include making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder and
shall include providing copies of any relevant Tax Return and supporting work
schedules. The party requesting assistance hereunder shall reimburse the other
for reasonable expense incurred in providing such assistance. Without limiting
in any way the foregoing provisions of Section 8.3 or this Section 8.3(j), Buyer
hereby agrees that it shall retain, until the appropriate statutes of limitation
(including any extensions) expire, copies of all Tax Returns, supporting work
schedules and other records or information which it possesses and which may be
relevant to such returns of the Company for all taxable periods ending on or
prior to the Closing Date, and that such records shall be maintained until the
expiration of the applicable statute of limitations, including any extensions
thereto. Further, Buyer shall not destroy or otherwise dispose of such records
without first providing Seller with a reasonable opportunity to review and copy
such records.
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(k) Survival of Obligations. Notwithstanding any other provision of this
Agreement, the rights and obligations of the parties set forth in this Section
8.3 shall remain in effect without limitation as to time.
8.4 Contingent Payment. (a) In the event of a Sale Transaction (as
defined below) occurring between the Closing Date and the date of the
eighteen-month anniversary of the Closing Date (the "Value Period"), Buyer shall
pay to Sellers, in accordance with the following provisions of this Section 8.4,
an amount (the "Contingent Amount") equal to 80% of the positive difference, if
any, between the "Equity Sale Value" and the "Applicable Value" (as such terms
are defined below).
For the purposes of this Agreement, the following terms shall have the following
meanings:
"Sale Transaction" means any of the following, whether in one transaction
or in a series of transactions: (A) Buyer, or any of its Affiliates, transfers
or disposes of, directly or indirectly, 49% or more of the capital stock of the
Company, (B) the Company transfers or disposes of, directly or indirectly, 49%
or more (by value) of its assets (excluding sales of inventory and other assets
in the ordinary course of business), (C) the Company issues or sells any of its
capital stock to, or consolidates with or merges with or into, another Person or
enters into any other significant corporate transaction pursuant to which,
directly or indirectly, 49% or more of the aggregate value of the interests of
the Buyer, or any of its Affiliates, in the Company are transferred or disposed
of or (D) the Company, the Buyer or any of its Affiliates enters into a binding
agreement to consummate any such transaction, provided that (x) transfers or
dispositions to the present shareholders of Buyer, or any of its Affiliates, or
an entity of which more than 80% of the equity and voting power are owned
directly or indirectly by one or more of such Persons, shall not be deemed to be
transfers or dispositions constituting part of a Sale Transaction so long as the
provisions of the last sentence of paragraph (b) below are complied with and (y)
a merger, consolidation or business combination with an entity engaged in the
same business as the Company or a business related thereto, in which Buyer
receives equity in the surviving entity but not cash or securities of a class
registered under the Securities Exchange Act of 1934, as amended (or securities
or interests convertible into such securities), shall not be deemed a Sale
Transaction.
"Equity Sale Value" means the total value of the consideration paid or
distributed to the Company or to the Persons who are directly or indirectly
owners of the Company in the Sale Transaction in respect of the Company or its
assets, including, without limitation, cash consideration and in-kind
consideration, less fees and expenses attributable to the Sale Transaction
payable from the Company or such owners, as the case may be, to Persons that are
not Affiliates of Buyer or the Company, provided that in the case of a
transaction in which the consideration is paid to the Company, in order to
clarify the intent of the foregoing definition the parties agree that the value
of extraordinary distributions paid to direct or indirect owners of the Company
that have been financed by the incurrence of debt shall be considered to be
value paid or distributed in a Sale Transaction.
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"Applicable Value" means, with respect to a particular Sale Transaction
the product of (i) the Purchase Price plus the aggregate amount of all dividends
or other distributions (other than those in the form of additional capital stock
of the Company) made by the Company in respect of any shares of any class of
capital stock of the Company, whether in cash or property or obligations of the
Company and (ii) the percentage interest in the Company or the Company's assets
being transferred or disposed of directly or indirectly in such Sale
Transaction.
(b) Contemporaneously with the execution of a binding agreement with
respect to any Sale Transaction, Buyer and the Company shall notify Sellers
thereof, and shall furnish together with such notice a complete and correct copy
of such binding agreement, and Buyer and the Company shall promptly provide such
other information with respect thereto as may reasonably be requested by
Sellers. The Contingent Amount shall be payable to Sellers at the same time as
the consideration in the Sale Transaction is payable to the Company or the
Buyer, as the case may be, and in the same form or (at the option of the Buyer
or its Affiliates or the Company, as the case may be, upon at least thirty days'
prior notice to Sellers) in cash or equivalent value as determined in accordance
with paragraph (c) below, provided that payment of the Contingent Amount as
provided herein shall be made on the closing date of the Sale Transaction and as
a condition to the consummation thereof. In the event of any transfer or
disposition of all or a substantial portion of the assets held directly or
indirectly by the Company, or by Buyer or any of its Affiliates holding an
interest in the Company, that does not constitute a Sale Transaction (whether in
one transaction or a series of transactions), as a condition to such transfer or
disposition such transferee shall assume the obligations of the Company or Buyer
hereunder, as the case may be, and shall agree in writing to be bound by the
terms of this Section 8.4, such writing to be in form and substance satisfactory
to AWS.
(c) In the event that any Sale Transaction provides for the payment of
any non-cash consideration (including, without limitation, any deferred or
contingent consideration) then, for the purposes of determining the Contingent
Amount (if any) payable to Sellers pursuant to this Section 8.4, the amount of
such non-cash consideration shall be deemed equal to the fair market value of
such non-cash consideration as determined at least five (5) Business Days prior
to the closing date of such Sale Transaction by an investment banking firm of
recognized national standing (the "Appraiser") selected by Buyer (and having no
material relationship with Buyer) and reasonably satisfactory to AWS. If any
property (the "Other Assets") other than ownership in, or assets of, the
Company, are proposed to be transferred in connection with any Sale Transaction,
then, for purposes of determining the Contingent Amount (if any) payable to
Sellers pursuant to this Section 8.4 the consideration in the Sale Transaction
shall be deemed not to include any portion thereof allocable to such Other
Assets, such allocation to be determined (and delivered to the Company and the
Sellers) at least ten (10) Business Days prior to the closing date by the
Appraiser. All fees, costs and other expenses of the Appraiser pursuant to this
Section 8.4 shall be borne equally by Buyer and AWS.
8.5 Maintenance of Corporate Existence. Each of Buyer and Iridium agrees,
for a period of nine months after the Closing Date, it shall preserve the
corporate existence of Buyer, and
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shall not transfer any of the Shares or all or substantially all the assets of
the Company (by sale, merger or otherwise) (i) to a non-corporate entity or (ii)
any entity which does not agree to be bound by the restrictions applicable to
Buyer under this Section 8.5.
8.6 Confidentiality. Each of the Seller Parties agrees that following the
Closing Date it and its Affiliates shall and shall cause its respective officers
and directors and shall use reasonable efforts to cause all its other employees,
auditors, attorneys, consultants, advisers and agents to, hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law and after prior written notice to Buyer, all
confidential information of the Company in its respective possession and shall
not release or disclose such confidential information of the Company in its
respective possession to any other Person, except to its auditors, attorneys,
financial advisors and other consultants, agents and advisors in connection with
post-Closing matters hereunder or other matters as to which the Seller Parties
have retained obligations or liabilities hereunder; provided that the foregoing
obligations shall not apply to any such information which otherwise comes into
the public domain.
8.7 Further Assurances. Following the Closing, the Seller Parties and the
Buyer Parties shall, and shall cause each of their Affiliates to, from time to
time, execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by the other party, to confirm and assure the rights and
obligations provided for in this Agreement and render effective the consummation
of the Transactions.
ARTICLE 9
CONDITIONS PRECEDENT OF SELLER PARTIES
The obligation of the Seller Parties to consummate the Transactions is
subject to the fulfillment of each of the following conditions prior to or at
the Closing:
9.1 Representations and Warranties. The representations and warranties of
the Buyer Parties contained in Article 6 shall be true in all material respects
at and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes expressly contemplated by this
Agreement, and except to the extent that any representation or warranty is made
as of a specified date, in which case such representation or warranty shall be
true in all material respects as of such date.
9.2 Agreements. The Buyer Parties shall have performed and complied in
all material respects with all their undertakings and agreements required by
this Agreement to be performed or complied with by the Buyer Parties prior to or
at the Closing.
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9.3 Buyer Certificate. Sellers shall have been furnished with a
certificate of an authorized officer of each of the Buyer Parties, dated the
Closing Date, certifying to the effect that the conditions contained in Sections
9.1 and 9.2 have been fulfilled.
9.4 Compliance with Law. No Law, and no order or injunction of any
Governmental Body, shall be in effect which prohibits the consummation of the
Transactions.
9.5 Consents. All governmental authorizations, consents, approvals,
exemptions, or other actions required to consummate the Transactions (including,
without limitation, as required under the HSR Act) shall have been obtained and
shall be in full force and effect, without the imposition of any conditions not
reasonably acceptable to the Seller Parties. With respect to approval of the
FCC, the FCC Consent shall have become a Final Order and shall not contain any
Adverse Conditions with respect to the Company or the AWS Parties.
9.6 Opinion of Counsel to Buyer Parties. Sellers shall have received an
opinion or opinions from counsel to the Buyer Parties reasonably satisfactory to
AWS, dated the Closing Date and to the effect set forth in Exhibit F.
9.7 Release of Guarantees. AWS and its Affiliates (other than the
Company) shall have been released from their obligations or liabilities under
any Guarantees pursuant to documentation reasonably satisfactory in form and
substance to AWS.
9.8 Notes. The Notes shall have been executed and delivered to AWS by the
Company and the Notes and all of the Company's obligations thereunder shall be
in full force and effect. The Notes shall be dated the FCC Consent Date unless
the Closing occurs within fifteen days after the FCC Consent Date, in which case
the Notes shall be dated the Closing Date.
9.9 AirOne Canada Documentation. Cantel and Iridium shall have executed
and delivered the definitive documentation contemplated in that certain letter
agreement by and between Iridium and Cantel, dated as of December 22, 1998 (the
"AirOne Canada Letter Agreement").
ARTICLE 10
CONDITIONS PRECEDENT OF BUYER PARTIES
The obligation of the Buyer Parties to consummate the Transactions is
subject to the fulfillment of each of the following conditions prior to or at
the Closing:
10.1 Representations and Warranties. The representations and warranties
of the Seller Parties contained in Article 4 and Article 5 shall be true in all
material respects at and as of the Closing Date, with the same force and effect
as though made at and as of the Closing Date, except for changes expressly
contemplated by this Agreement, and except to the extent that any
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representation or warranty is made as of a specified date, in which case such
representation or warranty shall be true in all material respects as of such
date.
10.2 Agreements. Each of the AWS Parties shall have performed and
complied in all material respects with all of its undertakings and agreements
required by this Agreement to be performed or complied with by it prior to or at
the Closing. Cantel shall have performed and complied in all material respects
with all of its undertakings and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing.
10.3 No Material Adverse Change. There shall not have occurred and be
continuing any event, condition, situation or circumstance of any nature
whatsoever (other than changes of a general economic nature) that has or is
likely to have a Material Adverse Effect on the Company.
10.4 Sellers' Certificates. Buyer shall have been furnished with a
certificate of an authorized officer of (i) each of the AWS Parties dated the
Closing Date, certifying to the effect that the conditions contained in Sections
10.1, 10.2 and 10.3 have been fulfilled, and (ii) Cantel, certifying to the
effect that the conditions contained in Sections 10.1 and 10.2 have been
fulfilled.
10.5 Compliance with Law. No Law, and no order or injunction of any
Governmental Body, shall be in effect which prohibits the consummation of the
Transactions.
10.6 Consents. All governmental authorizations, consents, approvals,
exemptions, or other actions required to consummate the Transactions (including,
without limitation, as required under the HSR Act) shall have been obtained and
shall be in full force and effect, without the imposition of any conditions not
reasonably acceptable to Buyer. With respect to approval of the Federal
Communications Commission, the FCC Consent shall have become a Final Order and
shall not contain any Adverse Conditions with respect to the Company or the
Buyer Parties.
10.7 Opinions of Counsel to Seller Parties. Buyer shall have received
opinions from counsel reasonably satisfactory to Buyer, dated the Closing Date
and to the effect set forth in Exhibits G-1 to G-4.
10.8 FIRPTA Certificates.
(a) Buyer shall have received from ATG a certificate described in
Treasury Regulations Section 1.1445-2(b)(2)(iii)(B); and
(b) Cantel, within 30 days of the Closing Date, shall have procured from
the Company a statement described in Treasury Regulations Section 1.897-2(h) to
the effect that stock of the Company does not constitute a U.S. real property
interest under Section 897 of the Code, and shall have delivered such statement
to Buyer.
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10.9 AirOne Canada Documentation. Cantel and Iridium shall have executed
and delivered the definitive documentation contemplated in that certain letter
agreement by and between Iridium and Cantel, dated as of December 22, 1998 (the
"AirOne Canada Letter Agreement").
ARTICLE 11
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES
11.1 Survival of Representations and Warranties. All representations and
warranties of the Seller Parties and the Buyer Parties included in this
Agreement shall survive until the first March 31 occurring after the one-year
anniversary of the Closing Date and shall thereafter expire except with respect
to breaches and violations theretofore specified in reasonable detail to the
Seller Parties by the Buyer Parties or to the Buyer Parties by the Seller
Parties, as the case may be, and except for the representations and warranties
contained in Sections 4.12 relating to Taxes and the first two sentences of
Section 4.13 relating to Litigation, which shall survive for the applicable
statute of limitations and the representations in Sections 4.5 and 5.3 which
shall survive indefinitely.
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification of Buyer Parties. Subject to the terms and
conditions of this Article 12, each of AWS and ATG agrees to indemnify and hold
harmless the Buyer Parties and their successors and permitted assigns, the
Company and their respective Affiliates, on an after-tax basis, against and in
respect of any and all claims, demands, losses, damages, costs and reasonable
expenses, including, without limitation, reasonable legal fees and expenses
("Damages"), resulting or arising from (a) any failure by any Seller Party to
perform or otherwise fulfill or comply with any provision of this Agreement or
any Related Agreement, and (b) any breach or violation of any representation or
warranty of any Seller Party hereunder or under any Related Agreement (subject
to Section 11.1). AWS agrees to indemnify and hold harmless the Buyer Parties
and their successors and permitted assigns, the Company and their respective
Affiliates, on an after-tax basis, against and in respect of any and all Damages
resulting or arising from (x) any Taxes payable by the Company in respect of
periods ending on or prior to the Closing Date and (y) the pending litigation
described on Schedule 4.13. AWS shall be entitled to any recoveries whatsoever,
including, but not limited to damages, attorneys' fees and costs obtained by or
on behalf of the Company, in any order or judgment in or settlement of such
litigation, whether pursuant to counterclaims asserted by the Company or
otherwise. For greater certainty, the AWS Parties shall not be entitled to any
contribution from Cantel in respect of any amount the AWS Parties are required
to pay pursuant to this Section 12.1.
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12.2 Indemnification of Seller Parties. Subject to the terms and
conditions of this Article 12, each of the Buyer Parties agrees to indemnify and
hold harmless the Seller Parties and their respective successors and permitted
assigns and their respective Affiliates, on an after-tax basis, against and in
respect of any and all Damages resulting or arising from any of the following,
whether pursuant to a guarantee made to a Significant Party by a Seller or AWS
or otherwise: (a) any failure by any Buyer Party to perform or otherwise fulfill
or comply with any provision of this Agreement or any Related Agreement, (b) any
breach or violation of any representation or warranty of a Buyer Party hereunder
or under any Related Agreement and (c) all liabilities arising out of or
relating to the Company (except for such matters as Sellers are required to
indemnify the Buyer Parties pursuant to Section 12.1).
12.3 Claims. Any claim for indemnity under Section 12.1 or 12.2 shall be
made by written notice from the party seeking to be indemnified (the
"Indemnitee") to the party from which indemnification is sought (the
"Indemnifying Party") specifying in reasonable detail the basis of the claim.
When an Indemnitee seeking indemnification under Section 12.1 or 12.2 receives
notice of any claims made by third parties ("Third Party Claims") which is to be
the basis for a claim for indemnification hereunder, the Indemnitee shall give
written notice within a reasonable period thereof to the Indemnifying Party
reasonably indicating the nature of such claims and the basis thereof. Upon
notice from the Indemnitee, the Indemnifying Party may, but shall not be
required to, assume the defense of any such Third Party Claim, including its
compromise or settlement, and the Indemnifying Party shall pay all reasonable
costs and expenses thereof and shall be fully responsible for the outcome
thereof, provided, however, that (i) the Indemnifying Party shall not settle any
such claim without the Indemnitee's prior written consent (which consent shall
not be unreasonably withheld) unless the only remedy for such claim is monetary
damages which are paid in full by the Indemnifying Party and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnitee,
settle or compromise any claim which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to Indemnitee, a release
from all liability in respect to such claim. In connection with any claim
involving any remedy other than monetary damages, the Indemnitee shall have the
right to be kept informed and be consulted in connection with the resolution of
such claim. Other than with respect to claims listed on Schedule 4.13 the
defense of which AWS has assumed, the Indemnifying Party shall give notice to
the Indemnitee as to its intention to assume the defense of any such Third Party
Claim within twenty (20) days after the date of receipt of the Indemnitee's
notice in respect of such Third Party Claim. If an Indemnifying Party does not,
within twenty (20) days after the Indemnitee's notice is given, give notice to
the Indemnitee of its assumption of the defense of the Third Party Claim, the
Indemnifying Party shall be deemed to have waived its rights to control the
defense thereof. If the Indemnitee assumes the defense of any Third Party Claim
because of the failure of the Indemnifying Party to do so in accordance with
this Section 12.3, the Indemnifying Party shall pay all reasonable costs and
expenses of such defense and shall be fully responsible for the outcome thereof.
The Indemnifying Party shall have no liability with respect to any compromise or
settlement thereof effected without its prior written consent, which consent
shall not be unreasonably withheld.
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12.4 Limitation of Liability. Each party to this Agreement shall have as
its sole and exclusive remedy resulting from the breach of any representation or
warranty made by the other party to this Agreement a claim for indemnity under
Sections 12.1 or 12.2 of this Agreement. Any claims by any Buyer Party or any
Seller Party for breach of any representation or warranty made hereunder shall
be subject to the following:
(a) with respect to Sections 12.1(b) and 12.2(b), the provisions for
indemnity shall be effective only to the extent that the aggregate amount of all
such claims for which a party is liable hereunder exceeds 0.50% of the
Transaction Consideration, in which case the Buyer Party, ATG or AWS, as the
case may be, shall be liable for all such amounts in excess thereof; provided,
that in no event shall Buyer, ATG or AWS, as the case may be, be liable for more
than an amount in the aggregate equal to 10.00% of the Transaction
Consideration; provided, further, that the foregoing limitations shall not apply
to the breach of any representation or warranty contained in Section 4.5 or
Section 5.3;
(b) In determining the amount of an indemnity on an after-tax basis, the
amount of any claim for indemnity hereunder shall be reduced to reflect any
actual tax savings received by the Indemnitee within three (3) years from the
Closing Date that result from the liability that gave rise to such indemnity;
and
(c) the amount of any claim for indemnity hereunder shall be reduced to
reflect any insurance proceeds recoverable by and paid to the Indemnitee
relating to such claim, provided that the foregoing reduction shall not be
applied if to do so would excuse any insurer from any obligation to cover any
loss.
12.5 Manner of Payment. In the discretion of Buyer, up to 60% of the
amount of any indemnification payment to be made hereunder by ATG or AWS may be
made by reduction in the outstanding principal amount of the Notes.
ARTICLE 13
TERMINATION
13.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by written agreement of Buyer and AWS;
(b) by AWS at any time during the 30 day period following February 28,
1999, unless the conditions contained in Sections 9.9 and 10.9 have been
satisfied or irrevocably waived by Cantel and the Buyer Parties;
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(c) by AWS, if the FCC Consent is not a Final Order, at any time after
the date that is 41 days after the FCC Consent Date until the date that is 70
days after the FCC Consent Date; and
(d) by either Buyer or AWS in writing without liability to the
terminating party or parties on account of such termination (provided the
terminating party is not otherwise in material default or breach of this
Agreement) if the Closing shall not have occurred on or prior to December 31,
1999.
13.2 Effect of Termination. Termination of this Agreement pursuant to
this Article 13 shall terminate all obligations of the parties hereto except as
provided below in this Section 13.2; provided, however, that (a) termination
pursuant to Section 13.1(d) shall not relieve a defaulting or breaching party
hereunder from any liability to the other party hereto resulting from the
default or breach hereunder of such defaulting or breaching party occurring
prior to the date of termination, and (b) the provisions of this Article 13, the
provisions set forth in Sections 7.8, 13.2, 14.1, 14.2, 14.3 and 14.9, and the
last sentence of Section 7.1(a), shall survive any such termination.
ARTICLE 14
MISCELLANEOUS
14.1 GOVERNING LAW. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW THEREOF.
14.2 Notices. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when received if delivered by hand, facsimile transmission or by
United States mail (registered, return receipt requested), properly addressed
and postage prepaid:
If to ATG, to:
Aviation Communications Division
AT&T Wireless Services, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
AT&T Wireless Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to AWS, to:
AT&T Wireless Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Cantel, to:
Rogers Cantel, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer, to:
Iridium Aero Acquisition Sub, Inc.
c/o Iridium LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Iridium, to:
Iridium LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Such names and addresses may be changed by such notice.
14.3 Entire Agreement. This Agreement, the Related Agreements, the AirOne
Canada Letter Agreement and the Nondisclosure Agreements contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein, and supersedes and cancels all prior agreements,
negotiations, correspondences, undertakings and communications of the parties,
oral or written, regarding such subject matter.
14.4 Amendments. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or permitted
assigns, provided that any amendment that does not reduce the amount of the
Purchase Price payable to Cantel and does not materially adversely affect the
rights of Cantel under this Agreement, may be executed by the parties other than
Cantel and shall thereupon become effective and be binding on all the parties.
14.5 Headings; References. The article, section and paragraph headings
and table of contents contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All references herein to "Articles", "Sections", or "Schedules" shall
be deemed to be references to Articles or Sections hereof and Schedules hereto
unless otherwise indicated.
14.6 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original.
14.7 Parties in Interest; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
permitted assigns. Nothing in this
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Agreement, express or implied, is intended to confer upon any Person not a party
to this Agreement any rights or remedies under or by reason of this Agreement.
No party to this Agreement may assign or delegate all or any portion of its
rights, obligations or liabilities under this Agreement without the prior
written consent of the other parties to this Agreement; except that ATG and AWS
may assign any of their rights hereunder to an affiliate of either of them.
14.8 Severability: Enforcement. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law or rule in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
14.9 Jurisdiction; Venue; Waiver of Jury Trial. Each party hereby
irrevocably and unconditionally submit to the exclusive jurisdiction of the
state and federal courts located in the Borough of Manhattan, The City of New
York, for any actions, suits, or proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby (and Buyer and Seller agree
not to commence any action, suit or proceeding relating thereto except in such
courts), and further agree that service of any process, summons, notice or
document by U.S. registered mail to its address set forth above shall be
effective service of process of any action, suit or proceeding brought against
it in any such court. Buyers and Sellers hereby irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in such
state or federal courts as aforesaid and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. SELLER AND BUYER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL.
14.10 Waiver. Any of the conditions to Closing set forth in this
Agreement may be waived in writing at any time prior to or at the Closing
hereunder by the party entitled to the benefit thereof. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall in
no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part hereof or the right of such
party thereafter to enforce each and every such provisions. No waiver of any
breach of or noncompliance with this Agreement shall be held to be a waiver of
any other or subsequent breach or noncompliance.
14.11 Disclosure Schedules. The information contained in the Schedules
hereto shall not be deemed to constitute an admission by Sellers or Buyer or
otherwise imply that any such information is material for purposes of this
Agreement or otherwise. Sellers and Buyer shall have the right at any time prior
to the Closing to supplement or amend in writing the Schedules hereto with
respect to any matter required to be set forth or described in such Schedules;
provided, however, that such supplement or amendment shall not be deemed to cure
a breach of a representation or warranty or satisfy a condition unless waived by
the party for whose benefit the representation or warranty is made. For purposes
of the rights and obligations of the parties hereunder, upon the
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occurrence of the Closing, any such supplemental or amended disclosure shall be
deemed to have been disclosed as of the date of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
ATG I, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice-President
AT&T WIRELESS SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice-President
▇▇▇▇▇▇ CANTEL INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Associate
General Counsel
By: /s/ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President, Finance
IRIDIUM LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
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IRIDIUM AERO ACQUISITION SUB, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
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