<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDED AND RESTATED
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)*
American Mobile Satellite Corporation
-----------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
-----------------------------------------
(Title of Class of Securities)
02755R 10 3
-----------------------------------------
(CUSIP Number)
Scott B. Tollefsen, Hughes Communications Satellite Services, Inc.;
1500 Hughes Way, Long Beach, CA 90810; (310) 525-5150
------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 1, 1996
-----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [_]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 02755R 10 3 SCHEDULE 13D PAGE 2 OF 29 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
I.R.S. I.D. NO. 95-3881942
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
5 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
CA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 6,691,622
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 6,691,622
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
6,691,622
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
See Item 5 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.73%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 02755R 10 3 SCHEDULE 13D PAGE 3 OF 29 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HUGHES COMMUNICATIONS, INC.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
5 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
CA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
6,691,622
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
6,691,622
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
6,691,622
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
See Item 5 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.73%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 02755R 10 3 SCHEDULE 13D PAGE 4 OF 29 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HUGHES AIRCRAFT COMPANY
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
5 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
6,691,622
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
6,691,622
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
6,691,622
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
See Item 5 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.73%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 02755R 10 3 SCHEDULE 13D PAGE 5 OF 29 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HUGHES ELECTRONICS CORPORATION
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
5 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 2,437,500 (if the Warrants dated June 28, 1996 were
exercisable in full: 3,750,000)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
6,691,622
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,437,500 (if the Warrants dated June 28, 1996 were
exercisable in full: 3,750,000)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
6,691,622
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
9,129,122 (if the Warrants dated June 28, 1996 were exercisable in full:
10,441,622)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
See Item 5 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
33.25% (if the Warrants dated June 28, 1996 were exercisable in full:
36.30%)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 02755R 10 3 SCHEDULE 13D PAGE 6 OF 29 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GENERAL MOTORS CORPORATION
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
5 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
9,129,122 (if the Warrants dated June 28, 1996 were
OWNED BY exercisable in full: 10,441,622)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
9,129,122 (if the Warrants dated June 28, 1996 were
exercisable in full: 10,441,622)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
9,129,122 (if the Warrants dated June 28, 1996 were exercisable in full:
10,441,622)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
12
See Item 5 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
33.25% (if the Warrants dated June 28, 1996 were exercisable in full:
36.30%)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
Page 7 of 29 Pages
ITEM 1. SECURITY AND ISSUER
- ------ -------------------
This Amended and Restated Schedule 13D (the "Schedule 13D")
relates to shares of Common Stock, $.01 par value ("Common Stock"), of American
Mobile Satellite Corporation, a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 10802 Parkridge
Boulevard, Reston, Virginia 22091.
ITEM 2. IDENTITY AND BACKGROUND
- ------ -----------------------
This Schedule 13D is being filed by Hughes Communications
Satellite Services, Inc. ("HCSS"), a California corporation, Hughes
Communications, Inc. ("HCI"), a California corporation, Hughes Aircraft Company
("HAC"), a Delaware corporation, Hughes Electronics Corporation ("HE"), a
Delaware corporation, and General Motors Corporation ("GM"), a Delaware
corporation (GM, HE, HAC, HCI and HCSS being collectively referred to herein as
the "Reporting Persons"). HCSS is a direct wholly owned subsidiary of HCI; HCI
is a direct wholly owned subsidiary of HAC; HAC is a direct wholly owned
subsidiary of HE; and HE is a direct wholly owned subsidiary of GM. This
Schedule 13D amends and restates the Schedule 13D originally filed by the
Reporting Persons on December 29, 1993, as amended on December 23, 1994 and
December 22, 1995.
HCSS is principally engaged in the business of providing
communications satellite services. The address of its principal business and
principal office is 1500 Hughes Way, Long Beach, California 90810.
HCI is principally engaged in the business of owning and
operating satellites. The address of its principal business and principal office
is 1500 Hughes Way, Long Beach, California 90810.
HAC is principally engaged in the business of designing,
manufacturing and marketing commercial and defense electronics systems as well
as satellites. The address of its principal business and principal office is
7200 Hughes Terrace, Los Angeles, California 90045.
HE is principally engaged in the business of designing,
manufacturing and marketing advanced electronics systems for automotive,
telecommunications and defense applications and of manufacturing, owning and
operating commercial communications satellites. The address of its principal
business and principal office is 7200 Hughes Terrace, Los Angeles, California
90045.
GM is principally engaged in the automotive products industry
business, consisting of the design, manufacture, assembly and sale of
automobiles, trucks and related parts and accessories. It also has financing,
insurance, defense and electronic data processing operations. The address of its
principal business is 3044 West Grand Boulevard, Detroit, Michigan 43202-3091
and the addresses of its principal offices are 3044 West Grand Boulevard,
Detroit, Michigan 43202-3091 and 767 Fifth Avenue, New York, New York 10153-
0075.
Schedules I and II hereto list each executive officer and
director of HCSS and GM, respectively, and the business address, present
principal occupation or employment and citizenship of each such executive
officer and director, as well as the name, principal business and address of any
corporation or other organization in which such employment is conducted.
<PAGE>
Page 8 of 29 Pages
During the last five years, none of the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any of the other persons named in
this Item 2 has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), except as set forth in Schedule III hereto.
During the last five years, none of the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any of the other persons named in
this Item 2 was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws, except as set forth in
Schedule IV hereto.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
- ------ -------------------------------------------------
Of Common Stock owned by each of the Reporting Persons: (i)
2,790,905 shares were purchased by HCSS from the Issuer prior to April 9, 1992
for an aggregate cash purchase price of $40,933,616.65; (ii) 2,558,257 shares
were purchased by HCSS from the Issuer on December 20, 1993 for a cash purchase
price of $50,500,000; and (iii) 1,317,460 shares were issued to HCSS by the
Issuer on December 20, 1993 upon conversion by HCSS of $27,666,667 principal
amount of convertible subordinated notes (collectively, the "Note") previously
issued by the Issuer to HCSS.
The funds used to purchase these 6,666,622 shares of Common Stock
and Note described above were loaned to HCSS by HE. The funds received by HCSS
from HE for the purchase of the Common Stock and Note were part of the working
capital of HE.
On January 19, 1996, as partial consideration in connection with
an interim financing provided to AMSC Subsidiary Corporation (a subsidiary of
the Issuer) ("AMSC Subsidiary") by HCSS and certain other parties, HCSS received
from the Issuer a warrant entitling it to purchase 25,000 shares of Common Stock
at a purchase price per share of $0.01 (the "HCSS Warrant"). The HCSS Warrant is
exercisable at any time prior to January 19, 2001.
On June 28, 1996, upon the closing of a set of agreements
providing long-term bank financing for AMSC Subsidiary, HE received a warrant
from the Issuer entitling it to purchase 3,750,000 shares of Common Stock at a
purchase price per share of $24 (the "HE Warrant"). The HE Warrant was received
as a part of the consideration for HE's guaranty of up to $150 million in
principal amount of such long-term financing. The number of shares of Common
Stock for which the HE Warrant may be exercised is limited to the extent that
certain financial performance tests restrict the Issuer's ability to borrow
fully under the long-term loan agreements (as described under Item 6 below). As
of June 28, 1996, the HE Warrant is exercisable for only 2,437,500 shares of
Common Stock.
ITEM 4. PURPOSE OF TRANSACTION
- ------ ----------------------
The shares of Common Stock held by the Reporting Persons were
acquired by them for investment purposes and continue to be held for such
purposes.
The ability of the Reporting Persons to acquire or dispose of
shares of Common Stock is limited to some degree by certain agreements, as
described under Item 6 below. Subject to such agreements, the Reporting Persons
may, from time to time, make additional purchases of Common Stock
<PAGE>
Page 9 of 29 Pages
of the Issuer either in the open market or in private transactions, depending
upon the Reporting Persons' evaluation of the Issuer's business, prospects and
financial condition, the market for the Common Stock of the Issuer, other
opportunities available to the Reporting Persons, general economic conditions,
money and stock market conditions, regulatory approvals and other future
developments. In particular, the Reporting Persons may purchase Common Stock
pursuant to the Right of First Offer Agreement identified in Item 6, or in
response to purchases of, tender offers for, or any contractual arrangements to
purchase, Common Stock by or among other holders of Common Stock or other third
parties. Depending upon the factors set forth in the second sentence of this
Item 4, and subject to certain agreements described in Item 6 below, the
Reporting Persons may decide to hold or dispose of all or part of their
investment in the Common Stock of the Issuer. The Reporting Persons may
formulate proposals, and take action, as they may deem appropriate in the
circumstances, to cause any or all of the existing vacancies on the board of
directors of the Issuer or certain corporate officer positions of the Issuer to
be filled.
Except as described herein, the Reporting Persons have no present
plan or proposal which relates to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or
corporate structure;
(g) changes in the Issuer's charter or bylaws or other actions
which may impede the acquisition of control of the Issuer by any person;
(h) any act or course of conduct causing the Common Stock of the
Issuer to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association;
(i) any act or course of conduct causing the Common Stock of the
Issuer to become eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934 (the "Act"); or
(j) any action similar to any of those enumerated above.
The Reporting Persons reserve the right to formulate such plans or proposals,
and to take such action, with respect to any or all of the foregoing matters and
any other matters as they may determine.
<PAGE>
Page 10 of 29 Pages
To the best knowledge of the Reporting Persons, all shares
identified in Item 5 below as beneficially owned by persons listed in Schedules
I and II were acquired by such persons for investment purposes. Such persons may
buy or sell shares of Common Stock in the future as they deem appropriate, but,
to the best knowledge of the Reporting Persons, and except as otherwise
indicated herein, such persons have no present plan or proposal that relates to
or would result in the actions or events specified in (a) through (j) above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
- ------ ------------------------------------
(a) HCSS owns of record and beneficially 6,691,622 shares of
Common Stock of the Issuer (which includes 25,000 shares issuable upon exercise
of the warrants dated January 19, 1996 described in Item 3 above). HCI, HAC, HE
and GM are the beneficial owners of such shares. Such shares constitute
approximately 26.73% of the Common Stock of the Issuer outstanding as of March
31, 1996/1/ (based upon the information set forth in the Issuer's Form 10-Q
dated May 14, 1996.
In addition, HE owns of record and beneficially the HE Warrant
which is presently exercisable for 2,437,500 shares. HE's beneficial ownership
of an aggregate of 9,129,122 shares represents approximately 33.25% of the
Common Stock outstanding as of March 31, 1996. If the HE Warrant were presently
exercisable in full, HE would be able to obtain 3,750,000 shares of Common Stock
upon exercise, and HE's total beneficial ownership would be 10,441,622 shares of
Common Stock, which would represent approximately 36.30% of the Common Stock
outstanding as of March 31, 1996./2/ (The restrictions upon exercise of the HE
Warrant are described in Item 6 below.) By reason of its ownership stake in HE,
GM may be deemed to be the beneficial owner of any shares of Common Stock
beneficially owned by HE upon exercise of the HE Warrant.
To the best knowledge of the Reporting Persons, as of July 1,
1996, none of the persons (other than the Reporting Persons) named in Item 2
beneficially owned, or had the right to acquire, shares of Common Stock of the
Issuer, except as set forth in Item 5(c) below.
The Reporting Persons may be deemed to comprise a group (within
the meaning of Section 13(d)(3) of the Act) with the following entities by
virtue of the agreements described in Item 6 below: (1) Space Technologies
Investments ("Investments") and the following affiliates of Investments: Transit
Communications, Inc., Satellite Mobile Telephone Company, L.P. and Satellite
Communications Investments Corporation (collectively, the "Investments
Entities"); (2) Mtel Space Technologies, L.P. ("Mtel L.P."), its general
partner, Mtel Space Technologies Corporation ("Mtel Corp.") and Mtel
Technologies, Inc. (collectively, the "Mtel Group"); and (3) Singapore
Telecommunications Ltd. ("Singapore Telecom"). Due to certain transactions
between Mtel Corp., Mtel, L.P. and Singapore Telecom in December 1995, including
the transfer of certain shares of Common Stock from Mtel, L.P. to Singapore
Telecom, the Mtel Group might no longer be deemed to be part of such group.
- -----------------------
1. For the purpose of computing this percentage, the HCSS Warrant was deemed to
be exercised in full, and the shares of Common Stock issuable upon such exercise
were deemed to be outstanding.
2. For the purpose of computing this percentage, the HE Warrant was deemed to
be fully exercisable and exercised in full, and the shares of Common Stock
issuable upon such exercise were deemed to be outstanding.
<PAGE>
Page 11 of 29 Pages
The Reporting Persons expressly disclaim any beneficial interest
in the shares of Common Stock of the Issuer held by the Investments Entities,
the Mtel Group and Singapore Telecom, and the filing of this statement by the
Reporting Persons shall not be construed as an admission by the Reporting
Persons that any of them is, for purposes of Section 13(d) of the Act, the
beneficial owner of any of the shares of Common Stock held by any of the
Investments Entities, the Mtel Group and Singapore Telecom.
Based solely upon the information set forth in the Issuer's Proxy
Statement dated April 1, 1996 and the Issuer's Form 10-Q dated May 14, 1996, and
upon additional information received from the Issuer, the Reporting Persons
believe that the Investments Entities and Singapore Telecom beneficially owned
the number of shares of Common Stock of the Issuer set forth in the table below,
constituting in each case that percentage of the outstanding Common Stock of the
Issuer set forth in the table below:
<TABLE>
<CAPTION>
Name of Beneficial Owner Number of Shares Percentage/(1)/
- ------------------------ ---------------- --------------
<S> <C> <C>
Space Technologies
Investments, Inc./(2)/ 1,855,539 7.23%
Transit Communications, Inc. 681,818 2.73
Satellite Communications
Investments Corporation/(2)/ 1,344,067 5.32
--------- -----
As a Group 3,881,424 14.99%
Singapore Telecommunications Ltd./(3)/ 4,731,546 18.50%
</TABLE>
(1) For the purpose of computing the percentage of the Common Stock of the
Issuer beneficially owned by the entities listed here, warrants held by
such entities were deemed to be exercised to the extent presently
exercisable, and the shares of Common Stock issuable upon such exercise
were deemed to be outstanding.
(2) Includes 649,347 shares of Common Stock issuable to Investments and 230,932
shares of Common Stock issuable to Satellite Communications Investments
Corporation ("SCIC"), respectively, upon the exercise of certain warrants
previously issued by the Issuer. These warrants are currently exercisable
through December 20, 1998 at an exercise price of $21 per share of Common
Stock. The shares of Common Stock issuable upon exercise of the warrants
were deemed to be outstanding for the purpose of computing the percentage
of the Common Stock of the Issuer owned by Investments and SCIC,
respectively, but not for the purpose of computing the percentage of the
Common Stock owned by any other person.
(3) Consists of 4,512,796 shares of Common Stock held of record and
beneficially by Singapore Telecom and 406,250 shares of Common Stock
issuable to Singapore Telecom upon the exercise of a warrant that Singapore
Telecom received (the "ST Warrant") as part of the consideration for a
guaranty that it provided in connection with long-term financing for the
Issuer. Like the HE Warrant received by HE in connection with such long-
term financing, the ST Warrant is only exercisable in full upon the
fulfillment of certain conditions tied to the Issuer's ability to borrow
fully under the long-term loan agreements. If such conditions are met, the
ST Warrant is ultimately exercisable for 625,000 shares of Common Stock.
The ST Warrant is exercisable through June 28, 2001 at an exercise price of
$24 per share of Common Stock.
(b) HCSS has sole power to vote or to direct the vote, and sole
power to dispose or to direct the disposition of, the shares of Common Stock of
the Issuer owned by it of record and
<PAGE>
Page 12 of 29 Pages
beneficially, subject to the effect of the agreements referred to in Item 6.
Each of HCI, HAC, HE and GM has the power to vote or to direct the vote, and the
power to dispose or to direct the disposition of, the shares of the Common Stock
of the Issuer beneficially owned by it, subject to the effect of the agreements
referred to in Item 6.
To the best knowledge of the Reporting Persons, each of the
persons named in Item 2 and specifically identified in the table in Item 5(c)
below has sole power to vote and to direct the vote, and sole power to dispose
and direct the disposition of, the Common Stock of the Issuer owned by such
person.
(c) On December 20, 1993, HCSS acquired from the Issuer in a
private placement: (i) 2,558,257 shares of Common Stock for an aggregate cash
purchase price of $50,500,000, or $19.74 per share, pursuant to the Letter
Agreement referred to in Item 6, and (ii) 1,317,460 shares of Common Stock upon
conversion by HCSS of $27,666,667 principal amount of the Note, representing a
$21.00 conversion price per share.
As noted under Item 3 above, on January 19, 1996, HCSS received
the HCSS Warrant from the Issuer which is exercisable for 25,000 shares of
Common Stock. Such warrants are exercisable through January 19, 2001 at an
exercise price of $.01 per share of Common Stock.
As noted under Item 3 above, on July 1, 1996, upon the closing
of a set of agreements providing long-term bank financing for AMSC Subsidiary,
HE received the HE Warrant from the Issuer, which entitled it to purchase
3,750,000 shares of Common Stock at a purchase price per share of $24. The HE
Warrant was received as part of the consideration for HE's guaranty of up to
$150 million in principal amount of such long-term financing. The number of
shares of Common Stock for which the HE Warrant may be exercised is limited to
the extent that certain financial performance tests restrict AMSC Subsidiary's
ability to borrow fully under the long-term loan agreements. As of July 1,
1996, the HE Warrant is exercisable for only 2,437,500 shares of Common Stock.
The Reporting Persons understand that certain officers or
directors of the Reporting Persons own approximately 6,591 shares of Common
Stock of the Issuer in the aggregate. To the best knowledge of the Reporting
Persons, all such transactions were effected as part of the initial public
offering of the Issuer's Common Stock which closed on December 20, 1993 and in
subsequent transactions on the open market, utilizing personal savings of the
buyers. To the best knowledge of the Reporting Persons, the persons named in
Item 2 (other than the Reporting Persons) did not effect any transactions in
shares of Common Stock of the Issuer during the past 60 days. There is no
agreement, arrangement or understanding between such persons and the Reporting
Persons with respect to any securities of the Issuer.
The Reporting Persons have no beneficial interest in the shares
of Common Stock of the Issuer as owned by the persons described in the
immediately preceding paragraph.
As noted under Item 5(a) above, on July 1, 1996, upon the
closing of a set of agreements providing long-term bank financing for the
Issuer, Singapore Telecom received the ST Warrant from the Issuer, which
entitled it to purchase 625,000 shares of Common Stock at a purchase price per
share of $24. The ST Warrant was received as part of the consideration for
Singapore Telecom's guaranty of up to $25 million in principal amount of such
long-term financing. The number of shares of Common Stock for which the ST
Warrant may be exercised is limited to the extent that
<PAGE>
Page 13 of 29 Pages
certain financial performance tests restrict the Issuer's ability to borrow
fully under the long-term loan agreements. As of July 1, 1996, the ST Warrant
is exercisable for only 406,250 shares of Common Stock.
The Reporting Persons are not aware of any transactions in shares
of Common Stock that were effected by the Investments Entities during the past
60 days.
(d) The Reporting Persons do not know of any other person having
the right to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of, the shares of Common Stock of the Issuer owned by
the Reporting Persons.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
- ------ --------------------------------------------------------
WITH RESPECT TO SECURITIES OF THE ISSUER
----------------------------------------
The following descriptions are qualified in their entirety by
reference to the agreements attached as exhibits hereto and incorporated herein
by reference.
The Stockholders Agreement
- --------------------------
The Issuer, HCSS, the Investments Entities, the Mtel Group,
Singapore Telecom and all other holders of Common Stock of the Issuer as of
December 1, 1993 are parties to an Amended and Restated Stockholders' Agreement
dated as of December 1, 1993 (the "Stockholders Agreement"), which amends and
restates an amended and restated stockholders' agreement dated as of August 14,
1992 among the Issuer and its then stockholders. The Stockholders Agreement
became effective on December 20, 1993.
The Stockholders Agreement defines as a "Specified Stockholder"
any stockholder of the Issuer who is a party to the Stockholders Agreement and,
together with its affiliates, owns five percent or more of the outstanding
Common Stock of the Issuer. Based upon the information set forth in Item 5, at
March 31, 1996, each of HCSS, the Investments Entities and Singapore Telecom was
a "Specified Stockholder."
In the Stockholders Agreement, each Specified Stockholder agrees
(a) not to vote to remove directors of the Issuer except for cause (as defined),
(b) not to elect a director of the Issuer who is not a citizen of the United
States without first permitting Singapore Telecom to elect a director of the
Issuer who is not a citizen of the United States, provided that at the time
Singapore Telecom can cast sufficient cumulative votes to elect one director of
the Issuer, and (c) to cause its representatives on the board of directors of
the Issuer to appoint to the executive committee of the board of directors of
the Issuer (i) two directors nominated by each of the two Specified
Stockholders, or groups of Specified Stockholders consisting of affiliates of
one another, holding of record at the time of determination the greatest number
of shares of Common Stock and (ii) one director nominated by the Specified
Stockholder, or group of Specified Stockholders consisting of affiliates of one
another, holding of record at the time of determination the third greatest
number of shares of Common Stock, provided that (x) the Specified Stockholder,
or group of Specified Stockholders, making such nomination holds of record at
least twelve percent of the issued and outstanding Common Stock until the
occurrence of certain events, and thereafter fifteen percent of the issued and
outstanding Common Stock, and (y) each Specified Stockholder agrees,
<PAGE>
Page 14 of 29 Pages
during the period that any single Specified Stockholder, or group of Specified
Stockholders consisting of affiliates of one another, holds of record more than
fifty percent of the issued and outstanding Common Stock, to cause its
representatives on the board of directors of the Issuer to appoint to the
executive committee of the board of directors of the Issuer those directors
nominated by such Specified Stockholder or group of Specified Stockholders.
The Stockholders Agreement requires each Specified Stockholder to
dispose of its shares of Common Stock of the Issuer if the continued holding of
such shares by such Specified Stockholder would prevent the Issuer from engaging
in any material part of the business of providing mobile satellite services or
digital audio radio services and, if such sale does not occur, the Issuer has
the option to purchase shares of Common Stock from such Specified Stockholder
for one dollar per share. (Article Seven) A Specified Stockholder may also be
required to dispose of shares of Common Stock of the Issuer in certain
circumstances relating to (i) an increase in the level of alien ownership in
such Specified Stockholder or (ii) an increase in the level of alien ownership
in the Issuer as a result of certain actions taken by such Specified
Stockholder, which increase would cause a violation by the Issuer of the laws
(including the Communications Act of 1934, as amended) restricting the grant of
licenses by the Federal Communications Commission ("FCC") to, or holding of FCC
licenses by, corporations directly or indirectly owned or controlled by aliens.
If divestiture does not occur, and such action is necessary to prevent a
material adverse effect on the Issuer (e.g. revocation of the Issuer's FCC
---
license), the Issuer has the option, to the extent necessary to establish
compliance, to purchase shares of Common Stock from such Specified Stockholder
for one dollar per share. (Article Eight)
The shares of Common Stock shown as owned by HCSS, the
Investments Entities and Singapore Telecom in Item 5 were issued to them in
private placements and may not be offered for sale, sold or otherwise
transferred other than pursuant to a registration statement or unless an
exemption from the registration requirements of the Securities Act of 1933, as
amended, is then available. (Section 2.3)
The Stockholders Agreement provides that shares of Common Stock
of the Issuer now or hereafter held by any Specified Stockholder (other than
shares that may be purchased by it in the open market) may not be transferred by
it to any person that would, after giving effect to the transfer, together with
its affiliates, own in excess of five percent of the Common Stock, unless such
transferee first becomes a party to the Stockholders Agreement and makes certain
representations and warranties to the Issuer and the other Specified
Stockholders. (Articles Five and Six)
The Stockholders Agreement grants each of the holders of the
Common Stock of the Issuer party thereto certain demand and piggy-back
registration rights. (Article Ten)
Each Specified Stockholder has agreed in the Stockholders
Agreement to vote all of the shares of Common Stock held by it in a manner not
inconsistent with the terms and provisions of the Stockholders Agreement.
(Section 2.1)
The Stockholders Agreement may be terminated by the affirmative
vote of the holders of three-fourths of the issued and outstanding Common Stock
of the Issuer held by holders of Common Stock party to the agreement. (Section
2.1)
On June 27, 1996, in connection with certain long-term financing
provided to AMSC Subsidiary, the parties to the Stockholders Agreement entered
into a letter agreement waiving their
<PAGE>
Page 15 of 29 Pages
registration rights under the Stockholders Agreement to the extent necessary to
full effect to the Registration Rights Agreement dated June 28, 1996 described
below.
Right of First Offer Agreement
- ------------------------------
The Issuer, HCSS, the Investments Entities, the Mtel Group and
Singapore Telecom are parties to a Right of First Offer Agreement ("ROFA")
entered into as of November 30, 1993 pursuant to which each party thereto (other
than the Issuer) (a) grants to each of the other parties (other than the
Issuer), until September 30, 2003, a right of first offer with respect to the
shares of Common Stock, and securities exercisable or convertible into shares of
Common Stock, now or hereafter held by such party (excluding shares of Common
Stock acquired by such party in the open market, and subject to certain other
exceptions), and (b) agrees to terminate that certain Investment Agreement dated
as of January 21, 1991 among the holders of Common Stock party to the ROFA (or
their predecessors in interest), pursuant to which the parties had granted each
other certain rights of first refusal in certain circumstances with respect to
the shares of Common Stock held by them.
On June 28, 1996, in connection with the execution of
documentation for the Issuer's long-term financing, the ROFA was amended so as
to limit its application solely to transfers of shares of Common Stock (and
securities exercisable or convertible into shares of Common Stock) between and
among HCSS, Singapore Telecom and the Investment Entities.
Letter Agreement
- ----------------
The Issuer, HCSS, Investments, Mtel Corp. and Singapore Telecom
are parties to a letter agreement dated October 11, 1993 (the "Letter
Agreement").
Pursuant to the Letter Agreement, each of HCSS, Investments, Mtel
Corp. and Singapore Telecom (each, a "Party") was given the opportunity by the
Issuer to purchase shares of Common Stock from the Issuer, on a pro rata basis
(based upon the number of shares of Common Stock held by such Party and its
affiliates collectively), concurrent with and conditioned upon the consummation
of the registered initial public offering by the Issuer of shares of its Common
Stock (the "IPO") pursuant to the Registration Statement and the Prospectus, at
a per share price equal to 94% of the per share price to the public (before
deducting underwriting discounts and commissions). (Paragraph 2)
The Issuer agreed in the Letter Agreement not to, prior to the
third anniversary of the consummation of the IPO, (a) amend Article Fifth or
Sixth of its Certificate of Incorporation or include any provision inconsistent
therewith in such Certificate of Incorporation or the Issuer's by-laws, (b)
amend its Certificate of Incorporation or by-laws to include any provisions, or
otherwise enter into any contractual arrangement with any person or entity,
which are "anti-takeover" in nature or which otherwise limit or impair the
ability of any person or entity to acquire shares of Common Stock, the rights of
any stockholder (except as specifically contemplated by the Letter Agreement) or
the ability of a majority stockholder to control the Issuer, (c) delete any
provision of the Issuer's Certificate of Incorporation or by-laws if such
deletion would have such effect or (d) enter into any agreement to do any of the
foregoing. (Paragraph 6)
The Issuer also agreed in the Letter Agreement to obtain an
agreement from the underwriters for the IPO not to give to any Party or its
affiliates (as defined) the opportunity to purchase shares of Common Stock from
the underwriters in the IPO unless the same opportunity was given to all
<PAGE>
Page 16 of 29 Pages
other Parties (and their affiliates), on a pro rata basis. Each Party agreed not
to purchase shares of Common Stock from the underwriters in violation of the
foregoing provisions. (Paragraph 4)
The Company also agreed to cause the underwriters for the IPO to
agree not to knowingly sell to any one person or entity and its affiliates or
any group (as used in Section 13(d)(3) of the Act) (other than brokers and
dealers) in the initial offering of the shares of Common Stock a number of
shares of Common Stock that exceeds 15% of the aggregate number of shares sold
in the IPO. (Paragraph 5)
Each Party agreed in the Letter Agreement to vote its shares of
Common Stock in favor of increasing the authorized share capital of the Issuer
to permit the sale of shares of Common Stock in the IPO, subject to compliance
in all material respects by the Issuer and the other Parties with the provisions
of the Letter Agreement. (Paragraph 7)
Securities Purchase Agreement
- -----------------------------
On January 19, 1996, the Issuer, AMSC Subsidiary, HCSS, Toronto
Dominion Investments, Inc. ("TD Investments"), Morgan Guaranty Trust Company of
New York ("Morgan") and The Toronto Dominion Bank, as Payment Agent, entered
into a Securities Purchase Agreement (as amended, the "Securities Purchase
Agreement") pursuant to which Morgan, TD Investments and HCSS (the "Purchasers")
purchased from AMSC Subsidiary Senior Secured Increasing Rate Exchangeable Notes
(the "Bridge Notes") in the aggregate principal amount of $40 million. Pursuant
to the terms of the Securities Purchase Agreement, such Bridge Notes were
exchangeable for shares of the Issuer's Increasing Rate Cumulative Convertible
Preferred Stock (the "Preferred Stock"). Under certain circumstances, the Bridge
Notes were exchangeable for, and the Preferred Stock was convertible into,
shares of the Company's Common Stock. HCSS purchased $10 million aggregate
principal amount of the Bridge Notes.
On April 19, 1996, the Securities Purchase Agreement was amended,
among other things, to eliminate the conversion feature of the Notes for
Preferred Stock. Currently, AMSC Subsidiary issued an additional $20 million
aggregate principal amount of notes (the "Interim Notes") to Morgan and Toronto
Dominion (Texas) Inc., which were guaranteed by HE pursuant to the Guaranty
Issuance Agreement dated April 19, 1996 described below. On June 12, 1996, AMSC
Subsidiary issued an additional $10 million aggregate principal amount of
Interim Notes, which were guaranteed by HE and Singapore Telecom.
All of the Bridge Notes and the Interim Notes were repaid on July
1, 1996 following the consummation of the long-term financing described below.
HCSS Warrant and Registration Rights Agreement
- ----------------------------------------------
Pursuant to the terms of the Securities Purchase Agreement, the
Issuer issued to HCSS the HCSS Warrant dated January 19, 1996. The HCSS Warrant
entitles HCSS to purchase from the Issuer 25,000 shares of Common Stock at a
purchase price of $0.01 per share. The HCSS Warrant is presently exercisable and
expires on January 18, 2001. (Paragraph (b) of the HCSS Warrant)
The exercise of the HCSS Warrant is restricted where (a) such
exercise would cause the Issuer's Alien Ownership Percentage to exceed the
Accepted Alien Ownership Percentage Limitation (which is derived from alien
ownership restrictions under Section 310(b) of the Communications Act),
<PAGE>
Page 17 of 29 Pages
or (b) such exercise would require the Issuer to issue Common Stock without
first having the stockholder approval necessary under Rule 4460(i)(1)(D) of the
National Association of Securities Dealers, Inc. Under specified circumstances
where exercise of the HCSS Warrant is prevented in whole or in part for either
of the foregoing reasons, the Issuer is required to provide the holder of the
HCSS Warrant with a payment of funds in lieu of the shares of Common Stock that
are not issuable to such holder. (Paragraphs (c) and (d) of the HCSS Warrant)
The number of shares of Common Stock issuable upon exercise of
the HCSS Warrant and the exercise price are subject to adjustment under certain
conditions, including stock splits, combinations or reclassifications, asset
distributions to holders of Common Stock, subsequent issuances of Common Stock
or options, warrants or other securities exercisable or convertible into Common
Stock at below-market prices and certain other dilutive events. (Paragraph (j)
of the HCSS Warrant)
HCSS, TD Investments, Morgan and the Issuer are parties to the
Registration Rights Agreement dated as of January 19, 1996, as amended and
restated as of April 19, 1996. The Registration Rights Agreement provides a
holder of the HCSS Warrant (or Common Stock issuable upon exercise thereof) with
certain demand and piggyback registration rights. The same registration rights
are provided to the holders of the warrants issued to the other parties to the
Securities Purchase Agreement (i.e., TD Investments and Morgan).
Guaranty Issuance Agreement (April 1996)
- ----------------------------------------
HE, the Issuer and AMSC Subsidiary are parties to a Guaranty
Issuance Agreement dated April 19, 1996 (the "Interim Guaranty Issuance
Agreement"). Pursuant to the Interim Guaranty Issuance Agreement, HE guaranteed
(the "Interim Guaranties") the performance of AMSC Subsidiary's obligations
under the Bridge Notes and the Interim Notes (collectively, the "Short-Term
Financing"). When the Interim Guaranty Issuance Agreement was entered into, the
parties contemplated that the Short-Term Financing would be repaid with the
proceeds of long-term financing arrangements being negotiated by the Issuer and
AMSC Subsidiary. Such long-term financing transactions were expected to be
consummated prior to June 30, 1996.
Under the Interim Guaranty Issuance Agreement, the Issuer and
AMSC Subsidiary agreed to pay to HE consideration for the issuance of the
Interim Guarantees consisting of cash fees and the issuance of certain warrants
exercisable for the Company's Common Stock. The amount of such fees and the
number of such warrants was contingent on the timing of the repayment of the
Short-Term Financing and whether HE guaranteed the long-term financing used to
repay such Short-Term Financing. Because, as of June 30, 1996, the Issuer and
AMSC Subsidiary fully repaid the Short-Term Financing with proceeds from the
long-term financing, the Interim Guaranties were fully released and HE had
provided a guaranty in connection with the long-term financing, HE did not
receive any consideration with respect to the issuance of the Interim Guaranties
under the Interim Guaranty Issuance Agreement.
The Standstill Agreement
- ------------------------
The Issuer, AMSC Subsidiary, HE and HCSS are parties to a
Standstill Agreement dated as of June 28, 1996 (the "Standstill Agreement"). The
Standstill Agreement restricts certain actions of the parties thereto, as
described below, unless such actions are approved by the Issuer's independent
directors.
<PAGE>
Page 18 of 29 Pages
The Standstill Agreement restricts the actions of HE, HCSS, the
Issuer and AMSC Subsidiary during the Standstill Period. The Standstill Period
is defined as the period from June 28, 1996 until: (a) such time as HE and its
affiliates beneficially own less than 32% of the voting securities of the Issuer
(the "Threshold Level") and do not intend to acquire additional voting
securities sufficient to bring their ownership above the Threshold Level; (b) HE
delivers to the Issuer the HE Warrant for cancellation without having acquired
shares of Common Stock sufficient to increase the beneficial ownership of HE and
its affiliates above the Threshold Level; (c) any (i) event of default under
certain provisions of certain long-term financing, (ii) purchase of indebtedness
by HE pursuant to certain provisions of certain long-term financing, or (iii)
failure to repay certain long-term financing at final maturity; (d) the
occurrence, prior to the Release Date (as defined), of specified events of
default under certain long-term financing where (i) any portion of such long-
term financing has become due and payable prior to the date on which it
otherwise would have become due and payable, or (ii) such specified event of
default is neither waived by both HE and the lenders under such long-term
financing nor cured within 60 days after the occurrence thereof; or (e) June 28,
2001. (Section 1)
In the Standstill Agreement, HE and HCSS agree that neither of
them, nor any of their affiliates will: (a) acquire or agree to acquire, as part
of a group or otherwise, any voting securities, if after such acquisition HE and
its affiliates would beneficially own more than 49.9% of the Issuer's
outstanding voting securities; (b) act to influence voting with respect to the
election of directors with the purpose of circumventing limitations on the
number of directors designated by HE that may serve on the Issuer's board of
directors or on the executive committee of the Issuer's board of directors; or
(c) seek or propose certain mergers, business combinations, transfers of assets
or securities or similar transactions between HE or any of its affiliates and
the Issuer or any of its affiliates. During the Standstill Period but after
exercise of HE Warrants sufficient to cause HE and its affiliates to
beneficially own securities in excess of the Threshold Level, HE, HCSS and their
affiliates will vote the securities acquired upon exercise of the HE Warrant, to
the extent such securities cause HE to exceed the Threshold Level, pro rata in
accordance with the vote of all voting securities other than such excess
securities. (Section 2)
The restrictions contained in the Standstill Agreement are not
deemed to limit the activities of directors properly designated by HE in their
capacity as directors. Similarly the Standstill Agreement does not limit the
activities of HE, HCSS or any of their affiliates: (a) in connection with their
rights as creditors of the Issuer or AMSC Subsidiary; (b) in connection with
ongoing or prospective business relationships among the parties to the
Standstill Agreement and their affiliates; (c) or exercising their rights as
shareholders of the Issuer except as specifically provided in the Standstill
Agreement (the rights described in this sentence and the preceding sentence are
collectively referred to as the "Hughes Rights"). In addition, HE and HCSS will
not be in breach of the restrictions described above, and will not be required
to act or refrain from acting due to such restrictions, if (i) the actions at
issue are taken in direct competition with certain bona fide offers by third
parties or (ii) the acquisition of voting securities at issue relates either to
a transaction approved by the Issuer's independent directors or to an action by
a third party. (Section 2)
In the Standstill Agreement, HE and HCSS agree that, in addition
to the restrictions described above, they will not appoint to, or allow to serve
on, the Issuer's board of directors or executive committee of the board of
directors any directors designated by HE, if the number of directors designated
by HE would be more than one less than a majority of the directors on the board
of directors or executive committee of the board of directors, as applicable. If
the restrictions described in this paragraph are breached, HE and HCSS will
cause to resign from the applicable body an appropriate number of directors
designated by HE. (Section 3)
<PAGE>
Page 19 of 29 Pages
The Standstill Agreement contains certain transfer restrictions
in addition to those contained in the Stockholders' Agreement and the Right of
First Offer Agreement. Pursuant to the Standstill Agreement, HE, HCSS and each
of their affiliates shall not transfer any of their voting securities of the
Issuer to any person who, as a result of such, transfer would beneficially own
or have the right to acquire more than 30% of the outstanding voting securities
of the Issuer, unless such person agrees to assume the obligations and
restrictions placed on HE and HCSS by the Standstill Agreement. (Section 4)
The Standstill Agreement prohibits HE and its affiliates from
entering into "material transactions" (as defined) with the Issuer. Material
transactions include: (a) the amendment or termination of the Standstill
Agreement; (b) transactions between the Issuer or its subsidiaries and HE or its
affiliates; and (c) transactions between stockholders of the Issuer, in their
capacity as stockholders, and HE or any of its affiliates. However, the
Standstill Agreement does not prohibit material transactions involving an
aggregate value of less than $5 million in any calendar year. Furthermore, the
provision described in this paragraph does not prohibit transactions that are
essentially general business concepts (e.g., whether to buy an additional
satellite) as opposed to specific transactions with HE or its affiliates (e.g.,
whether to buy a satellite from HE) or limit the Hughes Rights. (Section 5)
The Standstill Agreement prohibits the Issuer from issuing,
during the Standstill Period, any class of voting securities with voting rights
different from those of the Common Stock without the consent of HE and HCSS.
Guaranty Issuance Agreement (June 1996)
- ---------------------------------------
Singapore Telecom, HE, Baron Capital Partners, L.P. (a
stockholder of the Issuer) ("Baron," and collectively with Singapore Telecom and
HE, the "Guarantors"), the Issuer, and AMSC Subsidiary are parties to the
Guaranty Issuance Agreement dated June 28, 1996. The Guaranty Issuance Agreement
specifies the compensation to be provided by the Issuer and AMSC Subsidiary to
Singapore Telecom, HE and Baron for the issuance by the Guarantors of guaranties
of the obligations of AMSC Subsidiary under the long-term loan agreements that
closed on July 1, 1996.
Under the Guaranty Issuance Agreement, AMSC Subsidiary agreed
that the aggregate outstanding principal amount of the loans under the long-term
loan agreements, plus any amounts paid by the Guarantors with respect to
principal, would not exceed the Borrowing Limit specified in the Performance
Schedule. The Borrowing Limit is $130,000,000 during the period June 28, 1996
through November 15, 1996, and moves up on a quarterly basis thereafter provided
that (a) AMSC Subsidiary has met certain Performance Tests specified in the
Performance Schedule, or (b) Guarantors having a Pro Rata Share greater than 50%
have waived compliance with the Performance Tests and consented to increased
borrowings by AMSC Subsidiary. (Section 3)
The Guaranty Issuance Agreement also contains a limited
intercreditor arrangement among the Guarantors. If any Guarantor makes any
payment under its guaranty or acquires any notes or obligations under the long-
term loan agreements, thereafter all decisions to act or refrain from acting
with respect to the enforcement of such notes or obligations against AMSC
Subsidiary or the Issuer (including enforcement with respect to any collateral
security therefor) must be approved by Guarantors having Pro Rata Shares equal
to at least 80% of the outstanding obligations so paid or purchased. In
addition, if any Guarantor does not make a required payment under its guaranty,
and such payment is made by any other Guarantor, then the defaulting Guarantor
shall be liable to reimburse the paying Guarantor for such
<PAGE>
Page 20 of 29 Pages
payment on demand, and any amounts which would otherwise be payable to the
defaulting Guarantor by AMSC Subsidiary or the Issuer or with respect to any
collateral shall first be paid to the paying Guarantor until such payment has
been fully reimbursed. (Section 13)
The HE Warrant and Registration Rights Agreement
- ------------------------------------------------
Pursuant to the terms of the Guaranty Issuance Agreement, the
Issuer issued to HE the HE Warrant dated June 28, 1996. The HE Warrant entitles
HE to purchase from the Issuer 3,750,000 shares of Common Stock (the "Warrant
Share Amount") at a purchase price per share of $24 (the "Exercise Price"). The
HE Warrant is exercisable as of July 1, 1996, subject to certain restrictions,
and expires on June 28, 2001. (Section 1 of the HE Warrant)
The exercise of the HE Warrant is restricted where (a) such
exercise would cause the Issuer's Alien Ownership Percentage to exceed the
Accepted Alien Ownership Percentage Limitation (which is derived from alien
ownership restrictions under Section 310(b) of the Communications Act), or (b)
such exercise would require the Issuer to issue Common Stock without first
having the stockholder approval necessary under Rule 4460(i)(1)(D) of the
National Association of Securities Dealers, Inc. Under specified circumstances
where exercise of the HE Warrant is prevented in whole or in part for either of
the foregoing reasons, the Issuer is required to provide the holder of the HE
Warrant with a payment of funds in lieu of the shares of Common Stock that are
not issuable to such holder. (Sections 3 and 4 of the HE Warrant)
The Warrant Share Amount and the Exercise Price are to be
adjusted under certain conditions, including stock splits and asset
distributions to holders of Common Stock. (Section 10 of the HE Warrant)
In addition to the restrictions upon exercise of the HE Warrant
described above, the number of shares of Common Stock for which the HE Warrant
may be exercised is limited to the extent that certain financial performance
tests restrict the Issuer's ability to borrow fully under the long-term loan
agreements. Specifically, the HE Warrant provides that it can be exercised at
any given time only for the number of shares of Common Stock which is equal to
the applicable Warrant Share Amount as in effect from time to time, minus the
Warrant Share Amount multiplied by a fraction, the numerator of which is the
amount which, due solely to the applicable Borrowing Limit (as defined in the
Guaranty Issuance Agreement) in effect at such time, is not available to AMSC
Subsidiary under the long term loan agreements, and the denominator of which is
$200,000,000. (Section 15 of the HE Warrant)
The HE Warrant provides that the holder of the HE Warrant is
entitled to certain registration rights under the Registration Rights Agreement
dated June 28, 1996 with respect to the shares of Common Stock for which the HE
Warrant may be exercised (the "Warrant Shares"). (Section 16 of the HE Warrant)
Singapore Telecom, HE, Baron, and the Issuer are parties to the
Registration Rights Agreement dated June 28, 1996. The Agreement provides a
holder of the HE Warrant or Warrant Shares with certain demand and piggyback
registration rights. The same registration rights are provided to the holders of
the warrants issued to the other Guarantors (i.e., Singapore Telecom and Baron).
<PAGE>
Page 21 of 29 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
- ------ --------------------------------
Exhibit I -- Joint Filing Agreement dated December 29, 1993.
Exhibit II -- Amended and Restated Stockholders' Agreement dated
as of December 1, 1993.
Exhibit III -- Right of First Offer Agreement dated as of
November 30, 1993.
Exhibit IV -- Letter Agreement dated October 11, 1993.
Exhibit V -- Securities Purchase Agreement dated as of January
19, 1996 and amended and restated as of April 19, 1996.
Exhibit VI -- Guaranty Issuance Agreement dated April 19, 1996.
Exhibit VII -- First Amendment to Guaranty Issuance Agreement
dated as of June 7, 1996.
Exhibit VIII -- Warrant dated January 19, 1996.
Exhibit IX -- Registration Rights Agreement dated January 19,
1996, as amended and restated as of April 19, 1996.
Exhibit X -- Standstill Agreement dated June 28, 1996.
Exhibit XI -- Amendment No. 1 to Right of First Offer Agreement
dated June 28, 1996.
Exhibit XII -- Guaranty Issuance Agreement dated June 28, 1996.
Exhibit XIII -- Warrant dated June 28, 1996.
Exhibit XIV -- Registration Rights Agreement dated June 28, 1996.
Exhibit XV -- Waiver of Registration Rights dated June 27, 1996.
<PAGE>
Page 22 of 29 Pages
Signature
- ---------
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: July 17, 1996 HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
/s/ Arlene C. Kahng
-----------------------------
Arlene C. Kahng
Assistant Secretary
Dated: July 17, 1996 HUGHES COMMUNICATIONS, INC.
/s/ Arlene C. Kahng
-----------------------------
Arlene C. Kahng
Assistant Secretary
Dated: July 17, 1996 HUGHES AIRCRAFT COMPANY
/s/ Roxanne S. Austin
-----------------------------
Roxanne S. Austin
Vice President and Controller
Dated: July 17, 1996 HUGHES ELECTRONICS CORPORATION
/s/ Roxanne S. Austin
-----------------------------
Roxanne S. Austin
Vice President and Controller
Dated: July 17, 1996 GENERAL MOTORS CORPORATION
/s/ Martin S. Darvick
-----------------------------
Martin S. Darvick
Assistant Secretary
<PAGE>
Page 23 of 29 Pages
SCHEDULE I TO SCHEDULE 13D
PAGE 1 OF 1
Hughes Communications Satellite Services, Inc. ("HCSS")
-------------------------------------------------------
Executive Officers and Directors
--------------------------------
All directors and executive officers of HCSS are citizens of the
United States. Unless otherwise specified, the business address of each person
listed below is 1500 Hughes Way, Long Beach, California 90810.
<TABLE>
<CAPTION>
Name and Address Position with HCSS Principal Occupation or
- ---------------- ------------------- -----------------------
Employment
----------
<S> <C> <C>
Carl A. Brown Senior Vice President Senior Vice President of HCSS
Jerald F. Farrell President President of Hughes
Communications, Inc.
Edward J. Fitzpatrick Vice President Vice President of HCSS
Arlene C. Kahng Assistant Secretary Associate General Counsel
and Assistant Secretary of
Hughes Communications, Inc.
Harold E. McDonnell Executive Vice President Executive Vice President
and Chief Operating Officer of HCSS
Elizabeth S.C.S Murray Vice President and Chief Vice President and Chief
Financial Officer Financial Officer of Hughes
Communications, Inc.
John S. Perkins Vice President Vice President of HCSS
Craig A. Stephens Vice President Vice President of HCSS
Floyd R. Stuart Vice President Vice President of HCSS
Daniel P. Sullivan Vice President Vice President of HCSS
Scott B. Tollefsen Vice President, General Vice President,
Counsel and Secretary General Counsel and
Secretary of Hughes
Communications, Inc.
</TABLE>
<PAGE>
Page 24 of 29 Pages
SCHEDULE II TO SCHEDULE 13D
PAGE 1 OF 3
General Motors Corporation ("GM")
---------------------------------
Executive Officers and Directors
--------------------------------
All directors and executive officers of GM are citizens of the United
States.
John G. Smale, Chairman of the GM Board of Directors and a Director of
GM was born in Listowel, Ontario, Canada, and is a naturalized U.S. citizen.
Dennis Weatherstone, a member of the GM Board of Directors, was born
in London, England, and is a citizen of both the United States and Great
Britain.
Mr. Smale and Mr. Weatherstone are not aliens, therefore, disclosure
is not required. In exercising an abundance of caution, their birth places and
citizenship are provided.
Unless otherwise specified, the business address of each person listed
below is 3044 West Grand Boulevard, Detroit, Michigan 48202.
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ----------------- ----------
<S> <C> <C>
Anne L. Armstrong Director Chairman of the Board of
P.O. Box 1358 Trustees, Center for Strategic
Kingsville, TX 78364 and International Studies
J.T. Battenberg III Executive Vice President and GM Executive Vice President
President of Delphi and President of Delphi
Automotive Systems Automotive Systems
John H. Bryan Director Chairman and Chief Executive
Three First National Plaza Officer, Sara Lee Corp.
Chicago, IL 60602
Thomas E. Everhart Director President, California Institute
Parsons-Gates Hall of of Technology
Administration
1201 East California
Boulevard, Rm. 204
Pasadena, CA 91125
Charles T. Fisher, III Director Former Chairman and
P.O. Box 116 President, NBD Bancorp Inc.
Detroit, MI 48232
Thomas A. Gottschalk Senior Vice President and Senior Vice President and
General Counsel General Counsel of GM
</TABLE>
<PAGE>
Page 25 of 29 Pages
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ---------------- ----------
<S> <C> <C>
Louis R. Hughes Executive Vice President GM Executive Vice President
and President of International
Operations
J. M. Losh Executive Vice President and Executive Vice President and
Chief Financial Officer Chief Financial Officer of GM
J. Willard Marriott, Jr. Director Chairman of the Board, CEO,
One Marriott Drive and President, Marriott
Washington, D.C. 20058 Corporation
Ann D. McLaughlin Director Former U.S. Secretary of
4320 Garfield Street, N.W. Labor; President, Federal City
Washington, D.C. 20007 Council; Vice Chairman, The
Aspen Institute
Harry J. Pearce Executive Vice President Executive Vice President of
GM
Eckhard Pfeiffer Director Chief Executive Officer and
Director of Compaq Computer
Corporation
Edmund T. Pratt, Jr. Director Chairman Emeritus,
235 East 42nd Street, Pfizer, Inc.
23rd Floor
New York, NY 10017
John G. Smale Chairman of the Board of Chairman of the Executive
P.O. Box 599 Directors and Director Committee and Chairman of
Cincinnati, OH 45201-0599 the Board, The Proctor &
Gamble Company
John F. Smith, Jr. Chief Executive Officer, GM Chief Executive Officer,
President, and Director and President
Louis W. Sullivan Director President, Morehouse School
720 Westview Drive, S.W. of Medicine; Former U.S.
Atlanta, GA 30310-1495 Secretary of Health and Human
Services
G. Richard Waggoner, Jr. Executive Vice President and GM Executive Vice President
President of North American and President of North
Operations American Operations
Dennis Weatherstone Director Retired Chairman and Current
60 Wall Street, Director, J.P. Morgan & Co.
20th Floor Inc.; Member of Board of
New York, NY 10260 Banking Supervision, Bank of
England
</TABLE>
<PAGE>
Page 26 of 29 Pages
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ---------------- ----------
<S> <C> <C>
Thomas H. Wyman Director Former Chairman of the
The Equitable Center Board, CBS, Inc.; Chairman,
787 Seventh Avenue S.G. Warburg & Co., Inc.
New York, NY 10019
</TABLE>
<PAGE>
Page 27 of 29 Pages
SCHEDULE III OF SCHEDULE 13D
PAGE 1 OF 1
A. On June 15, 1992, a jury in Los Angeles, California, announced a verdict of
guilty against Hughes Aircraft Company on one count of conspiracy to
defraud the government in violation of 18 U.S.C. (S)371. The jury also
found Hughes not guilty on two counts of making false statements. Hughes'
co-defendant, a former environmental test shop foreman, was found not
guilty by the same jury on all three counts. Judgment was entered on
November 2, 1992, with a sentence of $3.5 million imposed. Hughes appealed
and on March 24, 1994 the U.S. Court of Appeals for the Ninth Circuit
denied the appeal. Hughes subsequently paid the $3.5 million fine but also
asked the U.S Supreme Court to review the conviction. On November 7, 1994,
the Supreme Court declined to review the case.
<PAGE>
Page 28 of 29 Pages
SCHEDULE IV TO SCHEDULE 13D
PAGE 1 OF 2
Following the announcement by Marriott Corporation ("Marriott") on
October 5, 1992 that it intended to declare a special dividend to its common
stockholders of the stock of an existing subsidiary of Marriott constituted to
conduct much of Marriott's management businesses, several suits were commenced
by Marriott bondholders challenging the special dividend transaction and
alleging that Marriott had failed to make timely disclosure of its consideration
of the special dividend transaction. In addition to Marriott, these lawsuits
named J. W. Marriott, Jr. and other directors and officers of Marriott as
defendants.
All of the defendants, including Mr. Marriott, vigorously denied the
allegations raised in the complaints filed by the bondholders. Eventually, all
of the cases (excluding one case filed in state court) were consolidated before
Judge Alexander Harvey of the United States District Court for the District of
Maryland. After a period of negotiations between Marriott and various groups of
bondholders, a settlement was reached between the defendants and the majority of
Marriott's bondholders, including certain defined classes of Marriott
bondholders and former bondholders. The class settlement was approved by Judge
Harvey and has been completed.
Following the class settlement, two sets of bondholders opted out of
the settlement and continued to pursue claims for securities fraud. First, the
State Board of Administration of the State of Florida, which held approximately
$4 million of relevant bonds, continued to pursue its securities fraud claims.
The State Board later reached a settlement with all defendants. Second, a group
of former bondholders led by PPM America, Inc. continued to pursue its claims.
As a group, they held approximately $135 million of Marriott bonds. The claims
of a number of those bondholders, holding approximately $45 million of bonds,
settled shortly before trial. The remaining claims proceeded to a jury trial
before Judge Harvey. That trial completed with a mistrial on October 19, 1994.
Following the mistrial, the defendants filed a motion asking the court
to enter judgment in favor of the defendants on all remaining claims in the
remaining litigation. That motion was granted. Plaintiffs have appealed that
ruling.
Edmund T. Pratt, Jr. a GM Director, is a defendant in a consolidated
class action on behalf of persons who allegedly purchased Pfizer common stock
during the March 24, 1989 through February 26, 1990 period pending in the United
States District Court for the Southern District of New York. This lawsuit, which
commenced on July 13, 1990, alleges that Pfizer and certain officers and former
directors and officers violated federal securities law by failing to disclose
potential liability arising out of personal injury suits involving Shiley heart
valves and seeks damages in an unspecified amount. The defendants in this action
believe that the suit is without merit and are vigorously defending it.
Mr. Pratt is also a defendant in a derivative action commenced on
April 2, 1990 against certain directors and officers and former directors and
officers alleging breaches of fiduciary duty and other common law violations in
connection with the manufacture and distribution of Shiley heart valves, pending
in the Superior Court, Orange County, California. The complaint seeks, among
other forms of relief, damages in an unspecified amount. The defendants in the
action believe that the suit is without merit and are vigorously defending it.
<PAGE>
Page 29 of 29 Pages
EXHIBIT INDEX
Exhibit I -- Joint Filing Agreement dated December 29, 1993. (P)
Exhibit II -- Amended and Restated Stockholders' Agreement dated as of December
1, 1993. (P)
Exhibit III -- Right of First Offer Agreement dated as of November 30, 1993. (P)
Exhibit IV -- Letter Agreement dated October 11, 1993. (P)
Exhibit V -- Securities Purchase Agreement dated as of January 19, 1996 and
amended and restated as of April 19, 1996.
Exhibit VI -- Guaranty Issuance Agreement dated April 19, 1996.
Exhibit VII -- First Amendment to Guaranty Issuance Agreement dated as of June
7, 1996.
Exhibit VIII -- Warrant dated January 19, 1996.
Exhibit IX -- Registration Rights Agreement dated January 19, 1996, as amended
and restated as of April 19, 1996.
Exhibit X -- Standstill Agreement dated June 28, 1996.
Exhibit XI -- Amendment No. 1 to Right of First Offer Agreement dated June 28,
1996.
Exhibit XII -- Guaranty Issuance Agreement dated June 28, 1996.
Exhibit XIII -- Warrant dated June 28, 1996.
Exhibit XIV -- Registration Rights Agreement dated June 28, 1996.
Exhibit XV -- Waiver of Registration Rights dated June 27, 1996.
<PAGE>
EXHIBIT A
(Face of Note)
_____% Senior Subordinated Notes due 2005 [, Series] (no series designation)
No. $__________
THE SELMER COMPANY, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on ________ __, 2005.
Interest Payment Dates: ________ __, and ________ __
Record Dates: ________ __, and ________ __
Dated: _____________ __, 199__
The Selmer Company, Inc.
By: __________________________
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By: _______________________________
Name:
Title:
==============================================================================
A-1
<PAGE>
(Back of Note)
_____% Senior Subordinated Notes due 2005 (no series designation) [, Series A]
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]/1/
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE Company SO REQUESTS), (2)
TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Selmer Company, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
_____% per annum from
- ------------------------
/1/ This paragraph should be included only if the Note is issued in global
form.
A-2
<PAGE>
___________, 1995 until maturity and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages semi-annually on ________
__ and ________ __ of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of issuance; provided that if
there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be __________, 1995. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1.0% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the ________ __ or ________ __ next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium, interest and Liquidated Damages at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, American Bank National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of _________, 1995 (the "Indenture") between the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. The Notes are secured obligations of the Company limited to $105.0
million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this paragraph 5, the
Company shall not have the option to redeem the Notes pursuant to this
paragraph 5 prior to ________ __, 2000. Thereafter, the Company shall have the
option to redeem the Notes, in whole or in part, at the redemption prices
A-3
<PAGE>
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on ___ of
the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000.......................... _______%
2001.......................... _______%
2002.......................... _______%
2003 and thereafter........... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this paragraph 5, at any
time prior to ____ __, 1998, the Company may redeem up to 35.0% of the original
aggregate principal amount of Notes with the net proceeds of an initial public
offering of the common stock of the Company or the Parent Company at a
redemption price equal to ___% of the principal amount thereof, in each case
plus accrued and unpaid interest and Liquidated Damages thereon to the
redemption date, if any; provided that at least 65.0% in aggregate principal
amount of the Notes originally issued remain outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 60 days of
the date of the closing of such initial public offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101.0% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase on a date that is not more than 90 days after the occurrence of such
Change of Control. Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer to all
Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100.0% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer, in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency
for general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date
A-4
<PAGE>
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages, if any, on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company for 30 days after notice to the Company by the Trustee or the
Holders of at least 25.0% in principal amount of the Notes then outstanding to
comply with Section 4.07, 4.09, 4.14 or 5.01 of the Indenture; (iv) failure by
the Company for 45 days after notice to the Company by the Trustee or the
Holders of at least 25.0% in principal amount of the Notes then outstanding to
comply with certain other agreements in the Indenture and the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company which
default results in the acceleration of such Indebtedness prior to its express
maturity; (vi) the findings of any Guarantee to be unenforceable or invalid the
default on any Guarantee or the disaffirmation by any Guarantee of in any
judicial proceeding, its Guarantee; (vii) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (viii)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Material
A-5
<PAGE>
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25.0% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company and the Guarantors are
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
12. TRUSTEE DEALING WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
13. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
14. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of NOtes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set forth
in the, the Guarantors Exchange Registration Rights Agreement dated as of
______, __, 1995, between the Company and the parties named on the signature
pages thereof (the "Registration Rights Agreement").
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
A-6
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
The Selmer Company, Inc.
600 Industrial Parkway
Post Office Box 310
Elkhart, Indiana 46515
Attention: Michael R. Vickrey
Telecopier No.: (219) 522-0334
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date: __________________
Your Signature:
------------------------------
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$___________
Date:_______________ Your Signature:
-------------------------------
(Sign exactly as your name appears
on the Note)
Tax Identification No.:
-----------------------
Signature Guarantee.
A-8
<PAGE>
EXHIBIT 5
SECURITIES PURCHASE AGREEMENT
dated as of
January 19, 1996
and amended and restated as of
April 19, 1996
among
AMSC Subsidiary Corporation
American Mobile Satellite Corporation
The Purchasers listed on the
signature page hereof
and
The Toronto-Dominion Bank, as
Payment Agent for such Purchasers
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ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.............................................. 1
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1. Commitments to Purchase.................................. 11
SECTION 2.2. Closings................................................. 12
SECTION 2.3. Warrants................................................. 12
SECTION 2.4. Fees..................................................... 13
SECTION 2.5. Reduction of Commitments................................. 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Corporate Existence and Power............................ 13
SECTION 3.2. Corporate Authorization; No Contravention................ 13
SECTION 3.3. Government Approvals..................................... 13
SECTION 3.4. Binding Effect........................................... 14
SECTION 3.5. Litigation............................................... 14
SECTION 3.6. No Default............................................... 14
SECTION 3.7. Capitalization........................................... 14
SECTION 3.8. Investment Company....................................... 15
SECTION 3.9. Disclosure............................................... 15
SECTION 3.10. Solicitation; Access to Information...................... 15
SECTION 3.11. Additional Representations and Warranties................ 16
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
SECTION 4.1. Private Placement........................................ 16
SECTION 4.2. Authority; No Other Action............................... 17
SECTION 4.3. Margin Compliance........................................ 17
ARTICLE V
CONDITIONS
SECTION 5.1. Conditions to Purchasers' Obligations at Initial Closing. 17
SECTION 5.2. Conditions to Purchasers' Obligations at Each Closing.... 20
SECTION 5.3. Conditions to Issuer's Obligations....................... 21
ARTICLE VI
COVENANTS
SECTION 6.1. Information.............................................. 21
SECTION 6.2. Certificates; Other Information.......................... 22
SECTION 6.3. Notices.................................................. 23
SECTION 6.5. Maintenance of Property.................................. 24
SECTION 6.6. Maintenance of Insurance................................. 24
SECTION 6.7. Payment of Obligations................................... 27
SECTION 6.8. Compliance with Laws..................................... 27
SECTION 6.9. Inspection of Property and Books and Records............. 27
SECTION 6.10. Environmental Laws....................................... 27
SECTION 6.11. Use of Proceeds.......................................... 28
SECTION 6.12. Common Collateral Documents and Guaranties............... 28
SECTION 6.13. No Subsidiaries.......................................... 28
SECTION 6.14. FCC Approval............................................. 28
SECTION 6.15. Government Approvals..................................... 29
SECTION 6.16. Further Assurances....................................... 29
SECTION 6.17. Limitation on Liens...................................... 30
SECTION 6.18. Disposition of Assets, Consolidations and Mergers........ 31
SECTION 6.19. Employee Contracts and Arrangements...................... 32
SECTION 6.20. Loans and Investments.................................... 32
SECTION 6.21. Limitation on Indebtedness............................... 33
SECTION 6.22. Transactions with Affiliates............................. 33
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SECTION 6.23. Compliance with ERISA.................................... 34
SECTION 6.24. Project Documents........................................ 34
SECTION 6.25. Lease Obligations........................................ 34
SECTION 6.26. Restricted Payments...................................... 34
SECTION 6.27. Accounting Changes....................................... 35
SECTION 6.28. Reservation of Shares.................................... 35
SECTION 6.29. Transfer Agency Agreement................................ 35
ARTICLE VII
EXCHANGE OF NOTES
SECTION 7.1. Exchange of Notes for Common Stock at Holder's Option.... 35
SECTION 7.2. Partial Exchange; Fractional Shares...................... 37
ARTICLE VIII
SUBSTITUTION; LIMITATION ON TRANSFERS
SECTION 8.1. Substitution of Purchasers Prior to Closing Date......... 38
SECTION 8.2. Restrictions on Transfer................................. 38
SECTION 8.3. Restrictive Legends...................................... 38
SECTION 8.4. Notice of Proposed Transfers............................. 39
ARTICLE IX
GUARANTY
SECTION 9.1. The Guaranty............................................. 39
SECTION 9.2. Guaranty Unconditional................................... 39
SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances.................................. 40
SECTION 9.4. Waiver by Parent......................................... 40
SECTION 9.5. Subrogation.............................................. 40
SECTION 9.6. Stay of Acceleration..................................... 40
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices.................................................. 41
SECTION 10.2. Confidentiality.......................................... 42
SECTION 10.3. No Waivers; Amendments................................... 43
SECTION 10.4. Expenses; Documentary Taxes.............................. 43
SECTION 10.5. Payment.................................................. 43
SECTION 10.6. Termination.............................................. 43
SECTION 10.7. Successors and Assigns................................... 44
SECTION 10.8. New York Law............................................. 44
SECTION 10.9. Counterparts; Effectiveness.............................. 44
SECTION 10.10. Entire Agreement......................................... 44
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Attachment A - Closing Notice
Schedule I - Common Collateral Documents
Schedule II - FCC License
Schedule III - Project Documents
Exhibit A - Form of Senior Secured Increasing Rate Exchangeable Note, as
Amended
Exhibit B - Form of Warrant, as Amended
Exhibit C - Form of Registration Rights Agreement, as Amended
Exhibit D - Opinions of Counsel to the Issuer and Parent
Exhibit E - Notice of Amount of Secured Obligations
Exhibit F - Notice of New Secured Party
Exhibit G - Form of Term Loan Agreement
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SECURITIES PURCHASE AGREEMENT
AGREEMENT among AMSC Subsidiary Corporation, a Delaware corporation
dually incorporated as a Virginia public service corporation (the "Issuer"),
American Mobile Satellite Corporation, a Delaware corporation ("Parent"), the
Purchasers listed on the signature pages hereof (the "Purchasers") and The
Toronto-Dominion Bank, as Payment Agent for the Purchasers, amends and restates,
effective as of April 19, 1996, that certain Securities Purchase Agreement dated
as of January 19, 1996, among the Issuer, Parent, the Purchasers and the Payment
Agent.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have
-----------
the following meanings:
"Accepted Alien Ownership Percentage Limitation" means 24.99% or, in
the event of a modification of the Alien Ownership Restrictions subsequent to
the date hereof, such percentage limitation upon Parent's Alien ownership as may
be in effect from time to time as a result of such modification, less 0.01 %.
"Affected Exchanging Holder" has the meaning set forth in Section
7.1(c).
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of 30% or more
of the equity of a Person shall, for the purposes of this Agreement, be deemed
to control the other Person.
"Agreement" means this Agreement, as the same may be amended from time
to time.
"Alien" means any alien or a representative thereof, or a foreign
government or a representative thereof, or a corporation or other entity
organized under the laws of any foreign government.
"Alien Ownership Percentage" means, with respect to any Person, the
percentage of total ownership in such Person owned of record, as well as the
percentage of total ownership such Person voted, by Aliens; provided, that if
--------
under the Alien Ownership Restrictions such person would be deemed to have a
percentage of total ownership owned of record or voted by Aliens other than the
actual percentage so owned or voted, then such Person's Alien Ownership
Percentage shall be such deemed percentage.
<PAGE>
"Alien Ownership Restrictions" means Section 310(b) of the
Communications Act, as modified by any FCC interpretation, ruling or order
applicable to Parent or any of its Subsidiaries.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by Parent or any of
its Subsidiaries of any asset, including without limitation any sale-leaseback
transaction, whether or not involving a capital lease, but excluding (i)
dispositions of inventory, cash, cash equivalents and other cash management
investments and obsolete, unused or unnecessary equipment and undeveloped real
estate, in each case in the ordinary course of business, (ii) dispositions to
the Issuer and (iii) Permitted Dispositions.
"Bridge Documents" means this Agreement, the Notes, the Common
Collateral Documents, the Warrants and the Registration Rights Agreement.
"Bridge Obligations" means all Indebtedness, advances, debts,
liabilities, and obligations, owing by the Issuer or Parent to any Purchaser,
Permitted Transferee, or any other Person required to be indemnified under any
Bridge Document, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, arising under this
Agreement or under any other Bridge Document, whether or not for the payment of
money, whether arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired.
"Bridge Securities" means the Notes, the Warrants and the Common Stock
issuable upon exchange of the Notes or exercise of the Warrants.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Capital Lease Obligations" means all monetary obligations of a Person
under any leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by the United
States Government or any agency thereof and backed by the full faith and credit
of the United States having maturities of not more than twelve months from the
date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time deposits,
or bankers' acceptances having in each case a tenor of not more than six months,
issued by any U.S. commercial bank having combined capital and surplus of not
less than $500,000,000 whose short term securities are rated both A-1 or higher
by Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. ("S&P") and
P-1 or higher by Moody's Investors Services, Inc. ("Moody's");
(c) commercial paper of an issuer rated either at least A-l by S&P
and/or P-l by Moody's and in either case having a tenor of not more than three
months;
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(d) repurchase agreements fully collateralized by securities issued by
United States Government agencies; and
(e) money market mutual funds invested in the instruments permitted by
clauses (a), (b), (c) and (d) above.
"CGS" means the communications ground segment designed, developed and
manufactured for the Issuer pursuant to the Contract for Communications Ground
Segment (Contract Number AMSC-CGS-001) between the Issuer and Westinghouse
Electric Corporation dated as of May 1, 1992, as amended.
"Closing" and "Closing Date" have the meanings set forth in Section
2.2(a).
"Closing Price" on any Trading Day means (i) if the Common Stock is
listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing
price on such day as reported on the NYSE Composite Transactions Tape; (ii) if
the Common Stock is not listed and traded on the NYSE, the closing price on such
day as reported by the principal national securities exchange on which the
Common Stock is listed and traded; (iii) if the Common Stock is not listed and
traded on any such securities exchange, the last reported sale price on such day
on the National Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"); or (iv) if the Common Stock is not traded
on the NASDAQ National Market, the average of the highest reported bid and
lowest reported asked price on such day as reported by NASDAQ.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to each Purchaser, the amount set
forth opposite the name of such Purchaser on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.5.
"Common Collateral" means all property as to which Liens are granted
from time to time to the Common Collateral Agent under the Common Collateral
Documents.
"Common Collateral Agent" means Bank of America National Trust and
Savings Association, in its capacity as collateral agent for the Common
Collateral Parties under the Intercreditor Agreement, and any successor
collateral agent thereunder.
"Common Collateral Documents" means, collectively, (i) the Security
Agreement and the Parent Pledge Agreement described on Schedule I, the
Intercreditor Agreement, all intercreditor agreements, security agreements,
mortgages, deeds of trust, pledge agreements, patent and trademark assignments,
lease assignments, guarantees and other similar agreements among Parent, the
Issuer, their respective Subsidiaries and the Common Collateral Agent for the
benefit of the Common Collateral Parties, and all financing statements (or
comparable documents) now or hereafter filed in connection therewith, (ii) the
Notice of Amount of Secured Obligations and the Notice of New Secured Party and
(iii) any amendments, supplements, modifications, substitutions and extensions
of any of the foregoing, in each case in form and substance satisfactory to the
Purchasers.
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"Common Collateral Parties" means the "Secured Parties" as defined in
the Intercreditor Agreement.
"Common Stock" means the common stock, $0.01 par value, of Parent.
"Communications Act" means the Communications Act of 1934, as amended,
or any successor statute.
"Competitor of the Issuer" means any Person who (i) has made
application to the FCC to provide services which are similar to those provided
by the Issuer (the "Services") or to obtain a license with respect to bandwidth
used by the Issuer or for which the Issuer has made application and who, in the
reasonable opinion of the Issuer, competes, or would, if such application were
approved, compete with the Issuer to provide Services or to obtain such
bandwidth, or (ii) becomes engaged in the business of providing Services, or
producing, or providing vendor financing with respect to, a significant
component of a communications system that provides or will provide services
which are similar to the Services.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including, without limitation, any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof, or
(e) to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of any Indebtedness. For purposes of this definition, the
amount of any Contingent Obligation shall be deemed to be an amount equal to the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means Parent, the Issuer and all Persons (whether
or not incorporated) under common control or treated as a single employer with
Parent, the Issuer or any other Subsidiary of Parent pursuant to Section 414(b),
(c), (m) or (o) of the Code.
"Default" means any condition or event that constitutes an Event of
Default or that with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith and attached hereto and hereby made part of this Agreement.
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"Effective Date" means the date this Agreement becomes effective in
accordance with Section 10.9.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for injury to the
environment or threat to public health, personal injury (including sickness,
disease or death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or criminal
penalties, injunctive relief, or other type relief, resulting from or based upon
(a) the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or non-sudden
accidental or non-accidental placements, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in or from property, whether or not
owned by the Issuer, or (b) any other circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, common law duties, judicial decisions, rules,
regulations, ordinances, judgements and codes, together with all administrative
orders, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authorities, in each case relating to the environment, health
and safety or to emissions, discharges or releases, or the manufacture,
distribution, use, treatment, storage, disposal, transport or handling, of
pollutants, contaminants, wastes or toxic hazardous substances; including, as
they may be amended from time to time, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act
and the Emergency Planning and the Community Right-to-Know Act of 1986.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the Controlled
Group from a Qualified Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by any member of the Controlled
Group from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any member of the
Controlled Group; (h) an application for a funding waiver or any extension of
any amortization period pursuant to Section 412 of the Code with respect to any
Qualified Plan; or (i) any member of the Controlled Group engages in or
otherwise becomes liable for a non-exempt prohibited transaction.
"Event of Default" has the meaning set forth in the Notes.
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"Event of Loss" means, with respect to any Common Collateral, any of
the following:
(a) any loss, destruction or damage of or to any such property or
asset, any condemnation, seizure or taking, by exercise of the power or eminent
domain, thereof or the requisition of the use thereof; or
(b) any institution of any proceedings for the condemnation or seizure
of such property or asset for the exercise of any right of eminent domain.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notice" has the meaning set forth in Section 7.1(a).
"Exchange Price" on any date means (i) with respect to shares of
Common Stock that are to be sold pursuant to an effective registration statement
or valid exemption from the registration requirements of the Securities Act, the
price per share to be paid by the purchaser hereof and (ii) with respect to any
other shares of Common Stock, 95% of the lesser of (x) the average of the
Closing Prices on each of the 20 Trading Days immediately preceding such date
and (y) the Closing Price on the Trading Day two Trading Days prior to such
date.
"Exchanging Holder" has the meaning set forth in Section 7.1(c).
"FCC" means the Federal Communications Commission or any other federal
agency that succeeds in whole or in part to its jurisdiction.
"FCC License" means the orders from the FCC listed on Schedule II.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Government Approvals" means any authorizations, consents, approvals,
licenses (including FCC licenses), leases, rulings, permits, tariffs, rates,
certifications, exemptions, filings or registrations by or with any Governmental
Authority required to be obtained or held by the Issuer and related to the
Project, the execution, delivery and performance of the Project Documents or the
creation, perfection and enforcement of the Liens contemplated by the Common
Collateral Documents.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) hereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means Hughes Electronics Corporation.
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"Guaranty" means the Bridge Loan Guaranty, dated April 19, 1996, among
the Guarantor, Morgan Guaranty Trust Company of New York and Toronto Dominion
(Texas), Inc.
"Guaranty Issuance Agreement" means the Guaranty Issuance Agreement
dated April 19, 1996 among Hughes Electronics Corporation, the Issuer and
Parent.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, waste, solid waste, hazardous material, hazardous substance or
toxic substance, including petroleum or any petroleum derived substance or
byproduct.
"Holder" means a holder of any Notes.
"Indebtedness" of any Person means without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of capital assets; (c) all reimbursement
obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar instruments (in each case, whether or not matured),
excluding performance bonds, letters of credit and similar undertakings in
connection with the construction, development or operation of the Project or any
other business of the Issuer, to the extent that such undertakings do not secure
an obligation for borrowed money or the deferred purchase price of a capital
asset; (d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, excluding performance bonds,
letters of credit and similar undertakings in connection with the construction,
development or operation of the Project or any other business of the Issuer, to
the extent that such undertakings do not secure an obligation for borrowed money
or the deferred purchase price of a capital asset; (e) all indebtedness created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
property); (f) all Capital Lease Obligations; (g) all net obligations with
respect to Rate Contracts; (h) sale-leaseback financings; (i) all Contingent
Obligations; and (j) all Indebtedness referred to in paragraphs (a) through (i)
above secured by any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness. For purposes this definition, (i)
any Indebtedness of the Issuer to the Parent which is subordinated to the Bridge
Obligations on terms and conditions satisfactory to the Purchasers, (ii) any
Indebtedness of the Issuer to a Subsidiary of the Issuer, (iii) any Indebtedness
of a Subsidiary of the Issuer to or from the Issuer or another Subsidiary of the
Issuer and (iv) any Indebtedness of Skycell to Parent or the Issuer consisting
of loans of amounts that would otherwise have been spent by the Issuer in
connection with its sales and marketing activities shall be excluded.
"Information Memorandum" means the confidential descriptive memorandum
dated April 10, 1995 furnished to each Purchaser prior to the Effective Date, as
amended by the revised business plan dated April 3, 1996, furnished to each
Purchaser prior to April 19, 1996.
"In-Orbit Insurance" has the meaning set forth in Section 6.6(b).
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"Intercreditor Agreement" means the AMSC Subsidiary Corporation
Intercreditor and Collateral Agency Agreement dated as of March 15, 1995 by and
among the secured parties from time to time party thereto and Bank of America
National Trust and Savings Association, as Collateral Agent, as the same,
subject to Section 6.24, may be amended, supplemented, restated or otherwise
modified from time to time.
"Interim Notes" means the notes of the Issuer proposed to be issued to
Morgan Guaranty Trust Company of New York and Toronto Dominion (Texas), Inc.
pursuant to which loans may be made to the Issuer.
"Interim Financing Obligations" means all Indebtedness of, and any
other amounts owed by, the Issuer under the Interim Notes.
"Issuer" has the meaning set forth in the first paragraph of this
Agreement.
"Launch Services Contract" means the Contract for Launch Services
between General Dynamics Launch Services, Inc. and the Issuer, dated as of May
12, 1992, as the same, subject to Section 5.25, may be amended, supplemented,
restated or otherwise modified from time to time.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under such Mandatory
Prepayment Event is an Asset Sale, (I) the amount of any Indebtedness secured a
Permitted Lien on any asset disposed of in such Asset Sale and discharged from
the proceeds thereof and (II) any taxes actually paid or to be payable by such
Person (as estimated by a senior financial or accounting officer of Parent,
giving effect to the overall tax position of Parent) in respect of such Asset
Sale.
"Non-Paying Purchaser" has the meaning set forth in Section 2.2(b).
"Notes" means the Issuer's Senior Secured Increasing Rate Exchangeable
Notes substantially in the form set forth as Exhibit A hereto.
"Notice of Amount of Secured Obligations" means the Notice of Amount
of Secured Obligations pursuant to the Intercreditor Agreement, in the form of
Exhibit E hereto.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed recorded with any court, registry, recorder's office,
central filing office or Governmental Authority for the purpose of evidencing,
creating, perfecting or preserving the priority of a Lien securing obligations
owing to a Governmental Authority.
"Notice of New Secured Party" means a Notice of New Secured Party
pursuant to the Intercreditor Agreement, in the form of Exhibit E hereto.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
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"Payment Agent" means The Toronto-Dominion Bank, as Payment Agent for
the Purchasers.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Capital Lease" means a capital lease permitted pursuant to
Section 6.25.
"Permitted Disposition" has the meaning set forth in Section 6.18.
"Permitted Lien" has the meaning set forth in Section 6.17.
"Permitted Transferee" means any bank, underwriter or other financial
institution that is neither a Competitor of the Issuer nor an Affiliate of a
Competitor of the Issuer.
"Person" means an individual, a corporation, partnership, limited
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Pre-Exchange Notice" has the meaning set forth in Section 7.1(a).
"Principal Subsidiary" means at any time any Subsidiary of Parent
other than Subsidiaries which at such time have been designated by Parent (by
notice to each Purchaser, which may be amended from time to time) as nonmaterial
and which, if aggregated and considered as a single subsidiary, would not meet
the definition of a "significant subsidiary" contained as of the date hereof in
Regulation S-X of the Commission.
"Project" means, collectively, the construction, acquisition,
financing and operation, as contemplated by the Information Memorandum, of the
Satellite and the CGS, all data and documentation and all ancillary structures,
equipment and systems related thereto or which is realty, fixtures or personal
property owned or leased by the Issuer in respect of the Satellite and the CGS.
"Project Documents" means, as of any date, collectively, subject to
Section 6.24, (i) the Bridge Documents, (ii) the agreements set forth on
Schedule III, and (iii) any other agreement or instrument entered into from time
to time after the date hereof materially affecting the financing and operation
of the Satellite or the CGS.
"Proof of Loss Statement" means the Proof of Loss Statement dated
April 10, 1996, copy of which has been delivered to each Purchaser.
"Public Market Equity Value" of Parent on any date means the product
of (x) the number of issued and outstanding shares of Common Stock on such date
multiplied by (y) the Closing Price on such date (or on the immediately
preceding Trading Day if such date is not a Trading Day).
"Purchaser" means the Purchasers listed on the signature pages hereto
together with any Permitted Transferee.
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"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions or has made contributions at any time during
the immediately preceding period covering at least five (5) plan years, but
excluding any Multiemployer Plan.
"Rate Contracts" means interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates;
provided, that such agreements or arrangements are documented under master
- --------
netting agreements.
"Registration Rights Agreement" means the Registration Rights
Agreement in the form set forth as Exhibit C hereto.
"Regulation D" means Regulation D promulgated by the Commission under
the Securities Act.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject; in
any case, non-compliance with which by either of Parent or the Issuer or their
Subsidiaries could reasonably be expected to have a Material Adverse Effect.
"Responsible Officer" means, with respect to any Person, the Chief
Executive Officer, the President or a duly authorized Vice President or, with
respect to financial matters, the Chief Financial Officer or the Treasurer, of
such Person.
"Sales Co." means AMSC Sales Corporation, Ltd., a U.S. Virgin Islands
corporation.
"Satellite" means the AMSC MSAT Satellite launched April 7, 1995.
"Securities Act" means the Securities Act of 1933, as amended.
"Skycell" means AMSC Skycell, Inc., a Delaware corporation.
"Special Counsel" means Davis Polk & Wardwell, special counsel to
Morgan Guaranty Trust Company of New York and Toronto Dominion Investments, Inc.
in connection with the transactions contemplated by this Agreement.
"Subscribers" means, as of any date, the sum of (i) the number of
mobile communication terminals (x) which are regularly billed subscribers to one
of the Issuer's mobile communications services as of such date, (y) invoices
from the Issuer with respect to which have been outstanding no more than 60 days
(measured from the date of original issuance thereof) as of such date and are
billed at the rate normally billed as of such date for the Issuer's mobile
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communication services to which such mobile communication terminals are
subscribed and (z) which are not test units and (ii) Equivalent Qualifying
Subscribers as of such date. For purposes of this definition, "Equivalent
Qualifying Subscribers" means, in the case of bulk capacity sales of the
Issuer's services, the sum of each number obtained by dividing the aggregate
annual revenue from each sale, as reasonably determined by the Issuer, by the
Average Annual Revenue Per Subscriber, and "Average Annual Revenue Per
Subscriber" means, (x) in the case of sales of satellite telephone services,
$1,850, (y) in the case of sales of private voice network services, $750, and
(z) in the case of sales of mobile message services, $600.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are generally not traded on the
applicable securities exchange or in the applicable securities market.
"Transfer" means any disposition of Bridge Securities that would
constitute a sale thereof under the Securities Act.
"Transfer Agent" means First Chicago Trust Company of New York, as
transfer agent for Parent.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Vendor Debt" means all Indebtedness of the Issuer under (i) the
Credit Agreement dated as of August 31, 1992, by and among the Issuer, the banks
signatory thereto, and Bank of America National Trust and Savings Association,
as agent for such banks, as amended through the date hereof, (ii) the Deferred
Payment Agreement between the Issuer and Westinghouse Electric Corporation dated
as of September 15, 1992, as amended through the date hereof, and (iii) the Term
Loan Agreement between the Issuer and Northern Telecom Finance Corporation dated
as of May 28, 1993, as amended through the date hereof.
"Warrant" means a warrant to purchase Common Stock in the form of
Exhibit B hereto.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1. Commitments to Purchase. (a) Upon the basis of the
-----------------------
representations and warranties herein contained of each Purchaser, the Issuer
agrees to issue and sell to each Purchaser and each Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the terms
and conditions hereinafter stated, agrees severally but not jointly to purchase
from the Issuer, Notes at a price equal to 100% of the principal amount of Notes
purchased.
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(b) The obligation of the Purchasers to purchase Notes will expire on
the earlier of (i) an Event of Default, (ii) any Purchaser shall have failed to
purchase the Notes required to be purchased by such Purchaser on any Closing
Date other than as a result of administrative error or delay (provided that any
--------
termination of Commitments pursuant to this clause (ii) shall not constitute a
waiver of any rights Parent or the Issuer may have against such Purchaser that
has defaulted in its obligations under this Agreement) and (iii) 5:00 p.m. (New
York City time) on April 15, 1996.
SECTION 2.2. Closings. (a) The purchases and sales of the Notes will
--------
take place at one or more closings (individually, a "Closing") at the offices of
Special Counsel in New York City, or at such other location as the Issuer and
the Purchasers shall agree. The Issuer shall deliver a Closing Notice in the
form of Attachment A hereto to each Purchaser and the Payment Agent not less
than three Business Days prior to each Closing (or within such other time period
as the Issuer, the Purchasers and the Payment Agent shall agree), and each
Closing shall occur on such date or such other date as the Issuer, the
Purchasers and the Payment Agent shall agree. The principal amount of Notes to
be purchased by each Purchaser hereunder at any Closing, together with the
principal amount of Notes purchased by such Purchaser at all prior Closings,
shall not exceed such Purchaser's Commitment. If at any Closing the Issuer
shall not issue the entire amount of the Notes that the Purchasers have agreed
to purchase under this Agreement, then Notes shall be issued and sold by the
Issuer at such Closing to each of the Purchasers pro rata to the respective
Commitments of each such Purchaser. The date and time of each Closing is
referred to herein as the "Closing Date."
(b) Not later than 12:00 Noon (New York City time) on each Closing
Date, each Purchaser shall deliver to the Payment Agent, by wire transfer to the
account number of the Payment Agent listed in Section 10.1 in immediately
available funds or by federal funds check, an amount equal to the aggregate
purchase price of the Notes being purchased by such Purchaser from the Issuer on
such Closing Date. If by 12:00 Noon (New York City time) on any Closing Date
any Purchaser (a "Non-Paying Purchaser") shall have failed to deliver to the
Payment Agent the entire amounts due from such Purchaser as set forth in the
preceding sentence, (i) the Payment Agent shall promptly reimburse to each
Purchaser other than the Non-Paying Purchaser the amount received from such
other Purchaser on such Closing Date pursuant to the foregoing sentence and (ii)
the Payment Agent shall not deliver any amounts to the Issuer on such Closing
Date.
(c) Subject to the foregoing paragraph (b), at each Closing, (i) the
Payment Agent shall deliver to the Issuer the amount received from each
Purchaser pursuant to the foregoing paragraph (b), by wire transfer to the
account number of the Issuer set forth in the relevant Closing Notice in
immediately available funds or by federal funds check and (ii) the Issuer shall
deliver to each Purchaser, against payment of the purchase price therefor, one
or more Notes in definitive form and registered in such name or names, and in
such denominations, as such Purchaser shall request (provided that any Person so
named must be a Purchaser or eligible to be a Permitted Transferee) not later
than one Business Day prior to such Closing Date. The authorized minimum
denomination for the Notes upon original issuance thereof is $1,000,000 and any
larger multiple of $100,000.
SECTION 2.3. Warrants. On the Effective Date, Parent shall issue to
--------
the Purchasers Warrants for an aggregate of 100,000 shares of Common Stock,
which Warrants shall be issued to each Purchaser pro rata to the respective
Commitments of each such
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Purchaser. Such Warrants shall be fully earned on the Effective Date and shall
expire on the date five years following the Effective Date.
SECTION 2.4. Fees. The Issuer shall pay the Purchasers such fees as
----
have been agreed among the Issuer, Parent and the Purchasers.
SECTION 2.5. Reduction of Commitments. If at any time, or from time
------------------------
to time, Parent or any of its Subsidiaries shall receive Net Cash Proceeds of
any Mandatory Prepayment Event and at such time the amount of such Net Cash
Proceeds exceeds the aggregate principal amount of Notes outstanding (prior to
giving effect to the redemption of Notes pursuant to Section 4(b) thereof),
together with accrued and unpaid interest thereon, then on the date of such
receipt the Commitments shall be reduced ratably by the amount of such excess.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Issuer and Parent represents and warrants that, except as
set forth in the section (if any) of the Disclosure Schedule corresponding to
the Section heading below:
SECTION 3.1. Corporate Existence and Power. Each of the Issuer,
-----------------------------
Parent and each of its Principal Subsidiaries (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has the power and authority and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted; (c) is duly qualified as a foreign
corporation, licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification; and (d) is in compliance with all
Requirements of Law except, in the case of clauses (c) and (d), where the
failure to be so qualified or in compliance could not reasonably be expected to
have a Material Adverse Effect.
SECTION 3.2. Corporate Authorization; No Contravention. The
-----------------------------------------
execution, delivery and performance by each of Parent and the Issuer of any
Bridge Document to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) contravene the terms of
such Person's certificate of incorporation, bylaws or other organization
document; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any indenture, agreement, lease, instrument,
Contractual Obligation, injunction, order, decree or undertaking to which such
Person is a party (other than Liens under the Common Collateral Documents); or
(c) violate any Requirement of Law.
SECTION 3.3. Government Approvals. All Government Approvals which
--------------------
are necessary under applicable laws and regulations in connection with the grant
of the Liens created by the Common Collateral Documents and the validity,
enforceability and perfection thereof and the exercise by the Purchasers or the
Common Collateral Agent of their rights and remedies thereunder have been
obtained. All such Government Approvals heretofore required to be obtained have
been duly obtained, were validly issued, are in full force and effect, are not
subject to appeal and are held in the name of, or for the benefit of, the
appropriate Persons. There is no proceeding pending or, to the best knowledge of
Parent or the Issuer, threatened
13
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against Parent or any of its Subsidiaries, or any property of Parent or any of
its Subsidiaries, which seeks, or may reasonably be expected, to rescind,
terminate, modify or suspend the FCC License. There has not occurred any event
that would make unlikely the delivery or issuance as anticipated of, and when
and as needed all such Government Approvals. No such Government Approval already
obtained is subject to any restriction, condition, limitation or other provision
that would have a Material Adverse Effect. The information set forth in each
application submitted by Parent or any of its Subsidiaries in connection with
each such Government Approval is accurate and complete in all material respects
taken as a whole, except for statements or omissions which could not reasonably
be expected to affect adversely the validity of such Government Approvals. No
other material consent, approval or authorization of, or declaration or filing
with, any other Person is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or any other Project
Document.
SECTION 3.4. Binding Effect. This Agreement and each other Bridge
--------------
Document to which Parent or the Issuer is a party constitute the legal, valid
and binding obligations of such Person, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 3.5. Litigation. Except for matters arising after the
----------
Effective Date which could not reasonably be expected to have a Material Adverse
Effect, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of Parent or the Issuer, threatened or contemplated at
law, in equity, in arbitration or before any Governmental Authority, against
Parent or any of its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement, any other Bridge Document or
any of the transactions contemplated hereby or thereby; or (b) if determined
adversely to Parent or any of its Subsidiaries, could have a Material Adverse
Effect. No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery and performance of this Agreement
or any other Bridge Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
SECTION 3.6. No Default. No Default or Event of Default exists or
----------
would result from the incurring of Bridge Obligations by Parent or the Issuer.
Neither Parent nor any of its Subsidiaries is in default under or with respect
to any Contractual Obligation in any respect which, individually or together
with all such defaults, could have a Material Adverse Effect.
SECTION 3.7. Capitalization. (a) The authorized capital stock of the
--------------
Issuer consists of 3,000 shares of common stock, $0.01 par value, of which, at
the date hereof and on each Closing Date, there are and will be issued and
outstanding 100 shares of such common stock. All of the issued and outstanding
shares of common stock of the Issuer are owned by Parent, are validly issued,
fully paid and nonassessable and free and clear of any Lien or other right or
claim (except to the extent described in or contemplated by the Common
Collateral Documents) and the holders thereof are not entitled to any preemptive
or other similar rights. There are outstanding no other securities of the Issuer
and no securities convertible into or exchangeable for, or options or other
rights to acquire from the Issuer, or other obligations of the Issuer to issue,
directly or indirectly, any shares of capital stock of the Issuer.
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(b) The authorized capital stock of Parent consists of 33,409,040
shares of Common Stock and 200,000 shares of preferred stock. At the date
hereof and on each Closing Date, there are and will be issued and outstanding no
more than 27,587,875 and no less than 24,941,917 shares of Common Stock and no
shares of preferred stock. All of the issued and outstanding shares of Common
Stock are validly issued, fully paid and nonassessable, and the holders of such
shares are not entitled to any preemptive or similar rights. Except as set
forth in Section 3.7 of the Disclosure Schedule and except for arrangements
under the Guaranty Issuance Agreement, there are outstanding no other shares of
capital stock of Parent, and no securities convertible into or exchangeable for,
or options or other rights to acquire from Parent, or other obligations of
Parent to issue, directly or indirectly, any shares of capital stock of Parent
other than pursuant to this Agreement, the other Bridge Documents or the
Warrants issued hereunder.
(c) The shares of the Common Stock to be issued upon exchange of Notes
in accordance with Article VII or upon exercise of the Warrants have been duly
authorized and, when issued and delivered in accordance with the terms of this
Agreement and the other Bridge Documents will have been validly issued and will
be fully paid and nonassessable, and free and clear of any Lien or other right
or claim. The issuance of such shares of Common Stock is not subject to any
preemptive or similar rights and holders of such shares of Common Stock will not
be entitled to any preemptive or similar rights.
SECTION 3.8. Investment Company. (a) The Issuer is not, and after
------------------
giving effect to any sale and issuance of the Notes pursuant to this Agreement
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(b) Parent is not, and after giving effect to the issuance of the
Warrants and any Common Stock pursuant to any Bridge Document will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.9. Disclosure. The information (including, without
----------
limitation, the information in the Information Memorandum) furnished in writing
at or prior to the Effective Date by Parent or the Issuer to any Purchaser in
connection with this Agreement and the transactions contemplated hereby is true,
complete and accurate in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified and is not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading in light of the circumstances
under which such information was made available. The pro forma financial
projections contained in the Information Memorandum were made in good faith and
the assumptions on the basis of which such projections were made were (when
made) and are (as of the date of this Agreement) reasonable. There is no fact
known to Parent or the Issuer on the date as of which this representation and
warranty is made or deemed made that has not been disclosed in writing to the
Purchasers which could reasonably be expected to have a Material Adverse Effect.
SECTION 3.10. Solicitation; Access to Information. (a) No form of
-----------------------------------
general solicitation or general advertising was used by Parent or the Issuer or,
to the best of their knowledge, any other Person acting on their behalf, in
respect of the Bridge Securities or in connection with the offer and sale of the
Bridge Securities. Neither Parent, the Issuer nor any Person acting on their
behalf has, either directly or indirectly, sold or offered for sale to any
Person any of the Bridge Securities (other than Common Stock) or any other
similar security of the Issuer or Parent except as contemplated by this
Agreement.
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(b) Parent or the Issuer has heretofore given each Purchaser or its
agents a copy of the Information Memorandum and full access to all material
information held by the Issuer or Parent regarding the condition, property,
operations and prospects of Parent and its Subsidiaries.
(c) Neither Parent nor the Issuer has offered any Bridge Securities to
any Person unless such offer was made pursuant to either (i) a registration
statement effective at the time of such offer in compliance with the Securities
Act or (ii) a valid exemption from the registration requirements of the
Securities Act.
SECTION 3.11. Additional Representations and Warranties. The
-----------------------------------------
representations and warranties of the Issuer and Parent set forth in Sections
4.7 through 4.19 and Section 4.21 of Exhibit G are hereby incorporated by
reference in this Agreement as if set forth herein, and are hereby made by the
Issuer and Parent for the benefit of the Purchasers. Defined terms used in
Exhibit G shall have the respective meanings given therein, except that (i)
"Guarantor" shall mean Parent, (ii) "Borrower" shall mean the Issuer, (iii)
"Principal Subsidiary" shall have the meaning set forth herein, (iv) "Closing
Date" shall mean the Effective Date, (v) both "Agent" and "Required Banks" shall
mean the Purchasers and (vi) references to Sections of the "Disclosure Schedule"
shall refer to the like numbered subsection of Section 3.11 of the Disclosure
Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser severally, and not jointly, hereby represents and
warrants to the Issuer and Parent as follows:
SECTION 4.1. Private Placement. (a) Such Purchaser understands that
-----------------
(i) the offering and sale of the Bridge Securities is intended to be exempt from
registration under the Securities Act by virtue of the provisions of Section
4(2) thereof or Rule 506 of Regulation D; (ii) the offering itself will be
reported to the Commission to the extent required by Regulation D and to various
state securities or blue sky commissioners to the extent required by applicable
state law; and (iii) there is no existing public or other market for the Bridge
Securities and there can be no assurance that any Purchaser will be able to sell
or dispose of such Purchaser's Bridge Securities.
(b) The Bridge Securities to be acquired by such Purchaser pursuant to
this Agreement are being acquired for its own account and without a view to the
public distribution of such Bridge Securities or any interest therein; provided
--------
that each Purchaser shall have the right at all times to sell or otherwise
dispose of all or any part of the Bridge Securities so acquired by such
Purchaser pursuant to a registration, or, subject to the provisions of Article
VIII hereof, exemption therefrom, under the Securities Act.
(c) Such Purchaser is an "Accredited investor" as such term is defined
in Regulation D.
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(d) Such Purchaser is not a broker-dealer subject to Regulation T of
the Federal Reserve Board.
(e) Such Purchaser has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Bridge Securities and such Purchaser is capable
of bearing the economic risks of such investment, including a complete loss of
its investment in the Bridge Securities.
(f) Such Purchaser has been given the opportunity to ask questions of,
and receive answers from the Issuer and Parent concerning the terms and
conditions of the Bridge Securities and other related matters. Each Purchaser
further represents and warrants to the Issuer and Parent that the Issuer and
Parent have made available to such Purchaser or its agents all documents and
information relating to an investment in the Bridge Securities requested by or
on behalf of such Purchaser. In evaluating the suitability of an investment in
the Bridge Securities, such Purchaser has not relied upon any other
representations or other information (whether oral or written) made by or on
behalf of the Issuer or Parent other than as set forth in the Information
Memorandum or as contemplated by the two preceding sentences.
SECTION 4.2. Authority; No Other Action. (a) The execution, delivery
--------------------------
and performance of this Agreement are within such Purchaser's powers (corporate
or otherwise) and have been duly authorized on its part by all requisite action
(corporate or otherwise).
(b) No action by or in respect of, or filing with, any governmental
authority, agency or official is required for the execution, delivery and
performance of this Agreement by such Purchaser.
SECTION 4.3. Margin Compliance. Such Purchaser is not relying,
-----------------
directly or indirectly, on any "margin stock" (as defined in Regulation G of the
Federal Reserve Board) as collateral for the Bridge Securities.
ARTICLE V
CONDITIONS
SECTION 5.1. Conditions to Purchasers' Obligations at Initial
------------------------------------------------
Closing. The obligation of each Purchaser to purchase the Notes to be purchased
- -------
by such Purchaser hereunder on the initial Closing Date is subject to the
satisfaction, at or prior to such initial Closing Date, of the following
conditions:
(a) such Purchaser shall have received all of the following, in form
and substance satisfactory to such Purchaser:
(i) the articles or certificate of incorporation of each of Parent and
the Issuer as in effect on such Closing Date, certified by the Secretary of
State of the jurisdiction of incorporation of such Person as of a recent date
and by the Secretary or Assistant Secretary of such Person as of such Closing
Date, and the bylaws of such Person as in effect on such Closing Date, certified
by the Secretary or Assistant Secretary of such Person as of such Closing Date;
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(ii) a good standing certificate for each of Parent and the Issuer
from the Secretary of State of its state of incorporation and each state where
the Issuer is qualified to do business as a foreign corporation, as of a recent
date, together with a bring-down certificate by telex or telecopy, dated such
Closing Date;
(iii) copies of the resolutions of the board of directors of (x) the
Issuer approving and authorizing the execution, delivery and performance by the
Issuer of this Agreement and the other Bridge Documents to be delivered by it
and authorizing the issuance and sale of the Notes, certified as of the Closing
Date by the Secretary or an Assistant Secretary of the Issuer, and (y) Parent
approving and authorizing the execution, delivery and performance by Parent of
this Agreement and the other Bridge Documents to be delivered by it and
authorizing the issuance of the Warrants and the Common Stock in accordance with
the terms of this Agreement and the other Bridge Documents, certified as of such
Closing Date by the Secretary or an Assistant Secretary of Parent;
(iv) a certificate of the Secretary or an Assistant Secretary of each
of Parent and the Issuer certifying the names and true signatures of the
officers of Parent and the Issuer, respectively, authorized to execute, deliver
and perform, as applicable, all Bridge Documents to be delivered by it
hereunder;
(v) a certificate signed by a Responsible Officer of each of Parent
and the Issuer, dated as of such Closing Date, stating that each of the
conditions set forth in Sections 5.1(c),(d) and (e) is satisfied as of such
Closing Date;
(vi) a copy of each of the Common Collateral Documents (other than the
Notice of Amount of Secured Obligations, and Notice of New Secured Party),
certified as of such Closing Date by the Secretary or an Assistant Secretary of
the Issuer;
(vii) written advice relating to such Lien and judgment searches as
any Purchaser or the Common Collateral Agent shall have requested of Parent and
the Issuer, and such termination statements or other documents as may be
necessary to release any Lien in favor of any third party not otherwise
permitted by Section 6.17;
(viii) evidence (A) that all filings, recordations, registrations and
other actions necessary or, in the opinion of any Purchaser or the Common
Collateral Agent, desirable to perfect and protect a first priority (except for
Permitted Liens arising by operation of law) security interest in and Lien on
the Common Collateral (other than the Satellite and the proceeds of the FCC
License) in favor of the Common Collateral Agent have been duly effected or
taken; (B) that each Lien created by the Common Collateral Documents in such
Common Collateral constitutes a perfected Lien on or in all right, title, estate
and interest of Parent or the Issuer in such Common Collateral prior and
superior to all Liens other than Permitted Liens arising by operation of law;
and (C) that all necessary and appropriate consents to the creation and
perfection of such Liens of each of the parties to the Project Documents will
have been obtained;
(ix) evidence (A) that all filings, recordations, registrations and
other actions necessary or, in the opinion of any Purchaser or the Common
Collateral Agent, desirable to perfect and protect a first priority security
interest in and Lien on the proceeds of the FCC License have been duly effected
or taken; (B) that each Lien created by the Common Collateral Documents in the
proceeds of the FCC License constitutes a perfected Lien on or in all right,
title, estate and interest of Parent and the Issuer in such Common Collateral to
the fullest extent
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such a Lien may be legal, valid and enforceable under applicable law; and (C)
that all necessary and appropriate consents to the creation of such Liens of
each of the parties to the Project Documents has been obtained;
(x) evidence (A) with respect to the Satellite, that all filings,
recordations, registrations and other actions as are consistent with the present
practices of third-party creditors intending to create perfected security
interests in satellites owned by U.S. persons launched from the United States
have been duly effected or taken; (B) that each Lien created by the Common
Collateral Documents in the Satellite constitutes a perfected Lien on or in all
right, title, estate and interest of Parent or the Issuer in the Satellite, to
the extent normally constituted by the present practices of third-party
creditors intending to create perfected security interests in satellites owned
by U.S. persons launched from the United States; and (C) that all necessary and
appropriate consents to the creation and perfection of such Liens of each of the
parties to the Project Documents has been obtained;
(xi) evidence that the Common Collateral Agent or each Purchaser, as
applicable, has been named as loss payee under all policies of casualty
insurance (including, without limitation, the Launch Insurance and the In-Orbit
Insurance) and business interruption insurance required by Section 6.6, and as
additional insured under all policies of liability insurance:
(xii) the Notice of New Secured Party and Notice of Amount of Secured
Obligations, duly executed by each of the signatories thereto;
(xiii) an opinion of (x) Randy S. Segal, counsel to Parent and the
Issuer, substantially in the form of Exhibit D-1 hereto and (y) Fisher, Wayland,
Cooper, Leader & Zaragoza, special FCC counsel to Parent and the Issuer,
substantially in the form of Exhibit D-2 hereto;
(xiv) a copy of (x) the financial statements of Parent referred to in
Section 4.10(a) of Exhibit G, certified by a Responsible Officer of Parent; and
(y) each Project Document which is in effect (including all exhibits, schedules
and documents referred to therein or delivered pursuant thereto, if any),
together with any amendments thereto;
(xv) an appraisal by Ascent Communications Advisers, L.P., dated as
of a recent date, showing that the Satellite has an expected life of not less
than eight years and an appraised value of not less than $425,000,000;
(xvi) In Orbit Test Reports (collectively, the "IOT") on the
Satellite prepared by Hughes Space and Communications, Inc., dated as of May 10,
1995 and August 8, 1995;
(xvii) a certificate signed by a Responsible Officer of the Issuer,
dated as of such Closing Date, stating that such Person has reviewed the IOT and
that based upon such review and such other investigations of tact as such Person
deems relevant, there is no basis for any claim against the Launch Insurance in
respect of any damage to or the condition of the Satellite;
(xviii) a certificate signed by a Responsible Officer of the Issuer,
dated as of such Closing Date, stating that the Satellite is capable of
providing the frequency and geographic coverage at the power levels for which it
is designed over (i) the continental United States, (ii)
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all areas within 200 miles of the shoreline of the continental United States,
(iii) the U.S. Virgin Islands, (iv) Hawaii and (v) Alaska;
(xix) evidence that the insurance required by Section 6.6(b) is in
effect and has been in effect since the expiration of the Launch Insurance; and
(xx) the Registration Rights Agreement, duly executed by Parent.
(b) the Purchasers shall have received a report from Telesat Canada
as to the condition of the Satellite, in form and substance satisfactory to the
Purchasers; provided that the Purchasers acknowledge that the report of Telesat
Canada dated January 7, 1996, is satisfactory as of such date with respect to
the matters set forth therein;
(c) all costs, accrued and unpaid fees and expenses (including,
without limitation, participation fees and legal fees and expenses) to the
extent then due and payable on such Closing Date by the Issuer hereunder shall
have been so paid;
(d) the fact that the FCC License is held by the Issuer and is in
full force and effect; and
(e) the fact that Warrants have been issued and delivered to the
Purchasers as required under Section 2.3.
SECTION 5.2. Conditions to Purchasers' Obligations at Each Closing.
-----------------------------------------------------
The obligation of each Purchaser to purchase the Notes to be purchased by it
hereunder on any Closing Date (including the initial Closing Date) is subject to
the satisfaction, at or prior to such Closing Date, of the following conditions:
(a) receipt by such Purchaser of a Closing Notice as required by
Section 2.2(a);
(b) immediately after such Closing, the aggregate principal amount
of all Notes purchased by such Purchaser hereunder shall not exceed such
Purchaser's Commitment;
(c) such Purchaser shall have received a duly executed Note or
Notes dated on or before such Closing Date complying with the provisions of
Section 2.2(c);
(d) immediately before and after such Closing, no Default shall
have occurred and be continuing;
(e) the representations and warranties of Parent and the Issuer
contained in this Agreement and the Common Collateral Documents shall be
true on and as of such Closing Date;
(f) such Purchaser's purchase of and payment for the Notes to be
purchased by such Purchaser pursuant hereto on such Closing Date shall not
be prohibited by any applicable law, court order or governmental
regulation;
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(g) (1) Since the Effective Date (A) trading generally shall not
have been suspended or materially limited on or by, as the case may be, any
of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade,
(B) a general moratorium on commercial banking activities in New York shall
not have been declared by either Federal or New York state authorities or
(C) there shall not have occurred any outbreak or escalation of hostilities
or any change in financial markets or any calamity or crisis that in any
Purchaser' s judgment is material and adverse and (2) in the case of any of
the events specified in clauses (1)(A) through (C) such event singly or
together with any other such event, shall not have made it, in any
Purchaser's judgment, impracticable to proceed with the purchase of the
Notes; and
(h) each other Purchaser shall have delivered to the Payment Agent
the entire amount due from such Purchaser in accordance with Section
2.2(b).
Each Closing hereunder shall be deemed to be a representation and
warranty by Parent and the Issuer on such Closing Date as to the facts specified
in clauses (d) and (e) of this Section 5.2.
SECTION 5.3. Conditions to Issuer's Obligations. The obligation of
----------------------------------
the Issuer to issue and sell the Notes pursuant to this Agreement on each
Closing Date to any Purchaser is subject to the satisfaction, at or prior to
such Closing Date, of the following conditions:
(a) the representations and warranties of such Purchaser contained
herein shall be true and correct in all material respects on and as of such
Closing Date as if made on and as of such date;
(b) such Purchaser shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by such Purchaser at or prior to such Closing
Date; and
(c) the issue and sale of the Notes by the Issuer shall not be
prohibited by any applicable law, court order or governmental regulation.
ARTICLE VI
COVENANTS
Each of Parent and the Issuer agrees that from the Effective Date
through the earlier of (i) the first date following the first Closing Date on
which no Purchaser owns any Notes and (ii) if no Notes are then outstanding,
termination of the Purchasers' Commitments in accordance with Section 2.1(b):
SECTION 6.1. Information. The Issuer will deliver to each Purchaser:
-----------
(a) as soon as available, but not later than 90 days after the end
of each fiscal year of the Issuer and Parent, respectively, commencing with the
fiscal year ending December
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31, 1995, a copy of the audited consolidated and unaudited consolidating balance
sheets of the Issuer and Parent as at the end of such year and the related
audited consolidated and unaudited consolidating statements of income,
stockholders' equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, and accompanied by
the opinion of Arthur Andersen LLP or another nationally-recognized independent
public accounting firm which report shall state that such consolidated financial
statements present fairly, in all material respects, the financial position,
results of operations and cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years;
(b) as soon as available, but not later than 45 days after the end of
each of the first three fiscal quarters of each year, commencing with the first
such fiscal quarter to end after the Effective Date, a copy of the unaudited
consolidated and consolidating balance sheets of the Issuer and Parent as of the
end of such quarter and the related consolidated and consolidating statements of
income, stockholders' equity and cash flows for the period commencing on the
first day and ending on the last day of such quarter, and certified by an
appropriate Responsible Officer as fairly presenting, in all material respects,
in accordance with GAAP (except for the absence of footnote disclosure), the
financial position and the results of operations of the Issuer and Parent; and
(c) as soon as available, any other interim financial statements of
Parent and its Subsidiaries (including the Issuer) reasonably requested by any
Purchaser.
SECTION 6.2. Certificates; Other Information. The Issuer will
-------------------------------
deliver to each Purchaser.
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.1 (a) or 6.1 (b) above, a certificate of a
Responsible Officer of each of Parent and the Issuer (i) stating that, to
the best of such officers' knowledge, Parent and the Issuer, during such
period, have observed or performed all of their respective covenants and
other agreements, and satisfied every condition contained in this Agreement
to be observed, performed or satisfied by them, and that such officers have
obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) showing in detail the calculations
supporting such statement in respect of Section 6.27;
(c) promptly after the same are filed, copies of (if, in the case of
reports to the FCC, such reports are material) all financial statements and
regular, periodical or special reports which the Issuer or Parent may make
to, or file with, the Commission, the FCC or any successor or similar
Governmental Authorities; and
(d) promptly, such additional financial and other information as any
Purchaser may from time to time reasonably request.
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SECTION 6.3. Notices. The Issuer shall promptly notify each
-------
Purchaser of:
(a) the occurrence of any Default or Event of Default and of the
occurrence or existence of any event or circumstance that could reasonably
be expected to become a Default or Event of Default;
(b) any (i) breach or non-performance of, or any default under any
Contractual Obligation which could reasonably be expected to result in a
Material Adverse Effect; or (ii) dispute, litigation, investigation,
proceeding or suspension which may exist at any time between Parent or any
of its Subsidiaries and any Governmental Authority and which, if determined
adversely to Parent or any of its Subsidiaries, could reasonably be
expected to result in a Material Adverse Effect;
(c) the commencement of, or any material development in, any
litigation or proceeding affecting Parent or any of its Subsidiaries (i) in
which the amount of damages claimed is $5,000,000 (or its equivalent in
another currency or currencies) or more, (ii) in which injunctive or
similar relief is sought and which, if adversely determined, could have a
Material Adverse Effect, or (iii) in which the relief sought is an
injunction or other stay of the performance of any Bridge Document or the
operations of Parent or any of its Subsidiaries;
(d) upon, but in no event later than ten days after, becoming aware of
(i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted. completed or threatened against Parent or
any of its Subsidiaries or any of their respective properties pursuant to
any applicable Environmental Laws, (ii) all other Environmental Claims, or
(iii) any environmental or similar condition on any real property adjoining
or in the vicinity of the property of Parent or any of its Subsidiaries
that could reasonably be anticipated to cause such property or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental Laws;
(e) any other litigation or proceeding affecting Parent or any of its
Subsidiaries which Parent would be required to report to the Commission
pursuant to the Exchange Act within four days after reporting the same to
the Commission;
(f) any ERISA Event affecting the Issuer or any member of its
Controlled Group (but in no event more than ten days after such ERISA
Event) together with (i) a copy of any notice with respect to such ERISA
Event filed with the PBGC and (ii) any notice delivered by the PBGC to the
Issuer or any member or its Controlled Group with respect to such ERISA
Event;
(g) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements of the Issuer delivered to the
Purchasers pursuant to Section 6.1 (a);
(h) any material change in accounting policies or financial reporting
practices;
(i) any labor controversy resulting in or threatening to result in any
strike, work stoppage, boycott, shutdown or other labor disruption against
or involving Parent or any of its Subsidiaries;
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(j) any material revision of the Issuer's business plan;
(k) the adoption of each capital expenditures budget by the Issuer;
(l) any Event of Loss with respect to Common Collateral having a book
value or fair market value of $500,000 or more; and
(m) the delivery of, or receipt of, any notice of (i) a reduction in
coverage of any insurance required to be maintained by Section 6.6 or
otherwise procured by the Issuer covering loss or damage to any material
property of the Issuer (other than a reduction in coverage or amount
resulting from a payment thereunder) or (ii) the cancellation or non-
renewal of any such insurance policy.
Each notice pursuant to this Section shall be delivered promptly after
a Responsible Officer becomes aware of the subject matter of such notice and
shall be accompanied by a written statement by a Responsible Officer of Parent
or the Issuer setting forth details and effective date of the occurrence
referred to therein and stating what action Parent or the Issuer, as the case
may be, proposes to take with respect thereto.
SECTION 6.4. Conduct of Business; Preservation of Corporate
----------------------------------------------
Existence. Each of Parent and the Issuer shall, and Parent shall cause each of
- ---------
its Principal Subsidiaries: (a) to engage in business of the same general type
as now conducted by Parent and its Subsidiaries; (b) to preserve and maintain in
full force and effect its corporate existence and good standing under the laws
of its State or jurisdiction of incorporation; (c) to preserve and maintain in
full force and effect all rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its business; (d)
to use its reasonable efforts, in the ordinary course and consistent with past
practice, to preserve its business organization and preserve the goodwill and
business of the customers, suppliers and others having business relations with
it; and (e) to preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation of which could have a Material Adverse
Effect.
SECTION 6.5. Maintenance of Property. Each of the Issuer and Parent
-----------------------
shall maintain and preserve, and Parent shall cause each of its Principal
Subsidiaries, to maintain and preserve, all its property which is used or useful
in its business in good working order and condition, ordinary wear and tear
excepted.
SECTION 6.6. Maintenance of Insurance.
------------------------
(a) The Issuer shall procure at its own expense and maintain in full
force and effect at all times on and after the Effective Date with responsible
insurance carriers with a Best's rating of A/VII or better (except for policies
underwritten by Lloyds of London and companies acceptable to the Purchasers),
the following insurance:
(i) Workers' Compensation Insurance: Except as to exposures in those
jurisdictions in which the state government is the sole source of such
insurance, as required by applicable state laws including, without
limitation, employer's liability insurance with the following limits:
bodily injury by accident: $100,000 each accident; bodily injury by
disease: $100,000 each employee; and bodily injury by disease: $500,000
policy limit (the policies with respect to which shall include an all
states' endorsement).
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(ii) Commercial General Liability: Against claims for personal injury
(including bodily injury and death) and property damage in such amounts as
are customarily carried by companies of established repute engaged in the
same or a similar business but not to exceed $5,000,000 in the aggregate.
Such insurance shall provide coverage for products/completed operations,
blanket contractual, explosion, collapse and underground coverage, broad
form property damage and personal injury insurance with $1,000,000 each
occurrence, $1,000,000 general aggregate (other than products/completed
operations), $1,000,000 personal and advertising limit, and $1,000,000
products/completed operations aggregate Limit.
(iii) Business Automobile Liability: Against claims for personal
injury (including bodily injury and death) and property damage covering all
owned, leased, non-owned and hired motor vehicles (to the extent there are
any thereof), with a $2,000,000 minimum limit per occurrence for combined
bodily injury and property damage and in the aggregate where applicable.
(iv) Business Interruption Insurance: To the extent reasonably
obtainable on customary terms and conditions and with customary exclusions,
with respect to any risk of loss in respect of which the Issuer in its
judgment does not then have adequate redundant or replacement property or
assets available which would prevent any loss or interruption of any cash
flow if such loss occurred, business interruption insurance with a
$2,000,000 minimum limit per occurrence.
(v) Property Damage Insurance: Property damage insurance on an "all
risk" basis (with customary conditions and exclusions) including coverage
against damage or loss caused by earth movement and flood and providing
coverage for the Project, including without limitation, launch insurance
(the "Launch Insurance") with respect to the Satellite (the "Covered
Property"), in a minimum aggregate amount equal to the lesser of (1) the
"full insurable value" of the Covered Property and (2) 110% of all Bridge
Obligations, Interim Financing Obligations and Vendor Debt. For purposes
of this clause (v) "full insurable value" shall mean the full replacement
value of the Covered Property, including any improvements and equipment and
supplies, without deduction for physical depreciation and/or obsolescence;
all such policies may have deductibles of not greater than $250,000, except
for earth movement insurance which will have the lowest deductible as shall
(in the opinion of the Purchasers) be available on commercially reasonable
terms in the insurance market place. Such insurance shall include an
"agreed amount" clause. The Purchasers hereby irrevocably approve the
Mission Risk Guarantee provided in Article 8 of the Launch Services
Contract in lieu of any other Launch Insurance.
(b) On or prior to the expiration of the Launch Insurance, the Issuer
shall procure at its own expense, with insurance carriers acceptable to the
Purchasers, in-orbit insurance in a minimum aggregate amount equal to the lesser
of (a) $250,000,000 and (b) 110% of all Bridge Obligations, Interim Financing
Obligations and Vendor Debt, covering all fixed expenses and the obligations
(including, without limitation, any termination liability arising by reason of
the early termination of a Rate Contract) relating thereto and having
deductibles and other terms and conditions as are reasonably available in the
market at reasonable cost and are acceptable to the Purchasers (the "In-Orbit
Insurance"), and unless the Purchasers shall otherwise agree, the Issuer shall
renew and maintain such In-Orbit Insurance in full force and effect at all times
thereafter.
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(c) All policies of insurance required to be maintained pursuant to
Sections 6.6(a)(iv), 6.6(a)(v) and 6.6(b) or otherwise procured by the Issuer
covering loss or damage to any of the Issuer's property shall provide that (i)
there shall be no recourse against any Purchaser or the Common Collateral for
payment of premiums or other amounts with respect thereto, (ii) to the extent
available, the insurer is required to provide the Purchasers with at least 30
days (or ten days, in the case of nonpayment of premiums) prior written notice
of reduction in coverage or amount (other than a reduction in coverage or amount
resulting from a payment thereunder), cancellation or non-renewal of any policy
and (iii) the proceeds of all policies (other than in respect of comprehensive
general liability, workers' compensation and comprehensive automobile liability
insurance) shall be payable to the Purchasers or the Common Collateral Agent, as
applicable, pursuant to standard first mortgagee endorsement, without
contribution, substantially equivalent to the New York standard mortgagee
endorsement. If the Issuer fails or may fail to timely file any proof of loss,
any Purchaser or the Common Collateral Agent, as applicable, shall have the
right to join the Issuer in submitting a proof of any loss in excess of
$250,000. All such policies (other than in respect of workers' compensation
insurance) shall insure the interests of the Purchasers, as their interest may
appear, and shall further provide, to the extent such insurance is available at
a commercially reasonable rate, that payments shall be made thereunder
regardless of any breach or violation by the Issuer of warranties, declarations
or conditions not contained in such policies, any action or inaction of the
Issuer (other than nonpayment of premiums) or others, or any foreclosure
relating to the Project or any other business of the Issuer or any change in
ownership of all or any portion of the Project or any other business of the
Issuer. Each such policy shall (i) except in the case of insurance required to
be maintained pursuant to Sections 6.6(a)(iv), 6.6(a)(v) and 6.6(b), waive any
right of subrogation against the Purchasers or Common Collateral Companies (and
their respective officers, employees and agents), (ii) except in the case of
insurance required to be maintained pursuant to Sections 6.6(a)(iv), 6.6(a)(v)
and 6.6(b), include a severability of interest or cross liability clause, (iii)
provide that the insurance be primary and not excess of or contributory to any
insurance or self-insurance maintained by the Issuer or the Purchasers, (iv)
contain a breach of warranty clause in favor of the Purchasers, the Common
Collateral Parties, and/or the Common Collateral Agent, as applicable, and (v)
except in the case of workers' compensation insurance, name the Purchasers as
their interests may appear, as additional insureds or loss payees.
(d) The Issuer shall deliver to the Purchasers, within 30 days after
the close of each fiscal year, commencing with the fiscal year ending December
31, 1995, a certificate of Marsh & McLennan, International Space Brokers, Inc.,
or other recognized independent insurance brokers, reasonably acceptable to the
Purchasers, (i) confirming that all insurance policies required pursuant to this
Section 6.6 are in force on the date thereof, (ii) confirming the names of the
companies issuing such policies, (iii) confirming the amounts and expiration
date or dates of such policies, (iv) including certificates evidencing such
policies marked "premium paid" for the prior year and (v) stating that in such
broker's opinion after due investigation, such policies substantially comply
with the requirements of this Section 6.6.
(e) In the event the Issuer fails to take out or maintain, or fails to
cause to be taken out or maintained, the full insurance coverage required by
this Section 6.6, any Purchaser, upon 30 days' prior notice (unless the
aforementioned insurance would lapse within such period, in which event notice
should be given as soon as reasonably possible) to the Issuer of any such
failure, may (but shall not be obligated to) take out the required policies of
insurance and pay the premiums on the same. All amounts so advanced therefor by
any Purchaser shall be immediately reimbursed by the Issuer to such Purchaser,
and the Issuer shall forthwith pay such
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amounts to such Purchaser, together with interest thereon at the sum of 2% plus
the rate of interest then in effect under the Notes.
SECTION 6.7. Payment of Obligations. Each of Parent and the Issuer
----------------------
shall, and Parent shall cause each of its Principal Subsidiaries to, pay and
discharge as the same shall become due and payable, all its obligations and
liabilities, including: (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by such Person; (b) all lawful claims
which, if unpaid, might by law become a Lien upon its property (excluding claims
being contested in good faith by the Issuer, and for which adequate reserves
have been made or as to which the corresponding liens have been bonded); and (c)
all Indebtedness as and when due and payable but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
SECTION 6.8. Compliance with Laws. Each of Parent and the Issuer
--------------------
shall comply, and Parent shall cause each of its Subsidiaries to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act and ERISA), except such as may be contested in good faith or as to
which a bona fide dispute may exist.
SECTION 6.9. Inspection of Property and Books and Records. Each of
--------------------------------------------
Parent and the Issuer shall maintain, and Parent shall cause each of its
Principal Subsidiaries to maintain, proper books of record and account, if,
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of Parent and the Issuer and such Subsidiaries. Each of
Parent and the Issuer will permit, and Parent will cause each of its
Subsidiaries to permit, representatives of any Purchaser to visit and inspect
any of its properties, to examine its corporate, financial and operating records
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, employees and independent
public accountants at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to Parent or
the Issuer, as the case may be; provided that when an Event of Default exists
--------
representatives from the United States offices of any Purchaser may visit and
inspect at the expense of the Issuer such properties at any time during business
hours and without advance notice. The Issuer shall reimburse the Purchasers for
their reasonable expenses incurred in conducting such visits and examinations
when an Event of Default exists.
SECTION 6.10. Environmental Laws.
------------------
(a) Each of Parent and the Issuer shall, and Parent shall cause each
of its Subsidiaries to, conduct its operations and keep and maintain its
property in compliance with all Environmental Laws.
(b) Upon written request of any Purchaser, the Issuer shall submit to
such Purchaser, at the Issuer's sole cost and expense at reasonable intervals, a
report providing an update of the status of and any environmental, health or
safety compliance obligation, remedial obligation or liability, that could,
individually or in the aggregate, result in liability in excess of $5,000,000.
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SECTION 6.11. Use of Proceeds. The Issuer shall use the proceeds of
---------------
the Notes only for general corporate purposes, including capital expenditures
and the payment of fees under this Agreement. No portion of the proceeds of the
Notes will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any margin stock." within the
meaning of Regulation U of the Federal Reserve Board. No proceeds of any notes
will be used to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
SECTION 6.12. Common Collateral Documents and Guaranties. (a) If at
------------------------------------------
any time and from time to time the Issuer grants a security interest in any
Common Collateral or collateral which should be Common Collateral to any Common
Collateral Party, such Person shall also execute and deliver such Common
Collateral Documents as the Common Collateral Agent may request having terms and
conditions satisfactory to the Common Collateral Agent granting to the Common
Collateral Agent for the ratable benefit of the Common Collateral Parties a
security interest in such collateral on a pari passu basis among the Common
Collateral Parties.
(b) If at any time and from time to time Parent, the Issuer or any
other Subsidiary of Parent executes any guaranty in favor of any Common
Collateral Party, such Person shall also execute and deliver a guaranty having
terms and conditions satisfactory to the Common Collateral Agent evidencing a
Contingent Obligation to the Common Collateral Agent for the ratable benefit of
the Common Collateral Parties.
(c) Except to the extent that any lien on, security interest or other
right in, or pledge or other encumbrance of the FCC License or any other
Government Approval may not be legal valid, enforceable or effective, the Issuer
shall at all times ensure that (i) the Common Collateral Documents executed and
delivered from time to time pursuant to this Agreement create in favor of the
Common Collateral Agent, for the equal and ratable benefit of the Common
Collateral Parties, legal, valid and enforceable Liens on or in all Common
Collateral (or in the case of Liens on the Satellite, as are consistent with
present practices of third-party creditors intending to create perfected
security interests in satellites owned by U.S. persons launched from the United
States); (ii) all filings, recordations, registrations and other actions
necessary or desirable to perfect the Liens created or purported to be created
by the Common Collateral Documents have been duly effected; (iii) each Lien
created by the Common Collateral Documents constitutes a perfected Lien on or in
all right, title, estate and interest of the Issuer, as applicable, in the
Common Collateral, prior and superior to all Liens other than Permitted Liens
arising by operation of law; and (iv) all necessary and appropriate consents to
the creation and perfection of the Liens created or purported to be created by
the Common Collateral Documents have been obtained.
SECTION 6.13. No Subsidiaries. The Issuer shall not have any
---------------
Subsidiaries or equity investments in any other corporation or entity.
SECTION 6.14. FCC Approval. The Issuer shall take any action that
------------
any Purchaser may reasonably request in order to obtain from the FCC such
approval (other than relief from the FCC's alien ownership restrictions) as may
be necessary to enable such Purchaser and the Common Collateral Agent to
exercise and enjoy the full rights and benefits granted to such Purchaser or the
Common Collateral Agent by the Common Collateral Documents and each other
agreement, instrument and document delivered to such Purchaser or the Common
Collateral Agent in connection therewith. The Issuer shall, without limitation,
also use diligent
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efforts, at the expense of the Issuer, (a) to assist any Purchaser or the Common
Collateral Agent in obtaining approval of the FCC for any action or transaction
contemplated by the Issuer's business plan included in the Information
Memorandum for which such approval is or shall be required by law, and (b) upon
request of any Purchaser or the Common Collateral Agent, to prepare, sign and
file with the FCC the assignor's or transferor's portion of any application or
applications for consent to the assignment of any license or transfer or control
necessary or appropriate under the FCC's rules and regulations for approval of
any sale or sales of any Collateral or any assumption by the Purchasers or the
Common Collateral Agent of voting rights relating thereto effected in accordance
with the terms of the Common Collateral Documents.
SECTION 6.15. Government Approvals. The Issuer shall comply with the
--------------------
terms of and maintain in full force and effect the FCC License, and all
amendments thereto, and shall obtain, maintain and comply with the terms of all
other Government Approvals which are necessary under applicable laws and
regulations in connection with (a) the due execution, delivery and performance
by the Issuer or any of its Subsidiaries of its obligations, and the exercise
from time to time of its rights, under the Project Documents then in effect, and
(b) the operation of the Satellite and related equipment. No such Government
Approval shall be subject to any restriction, condition, limitation or other
provision that would have a Material Adverse Effect.
SECTION 6.16. Further Assurances.
------------------
(a) Each of the Issuer and Parent shall ensure that all written
information. exhibits and reports furnished to the Purchasers do not and will
not contain any untrue statement of a material fact and do not and will not omit
to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Purchasers and correct any defect or error
that may be discovered therein or in any Bridge Document or in the execution,
acknowledgement or recordation thereof.
(b) Promptly upon written request by any Purchaser, each of Parent and
the Issuer shall do, execute, acknowledge, deliver, record, re-record, file, re-
file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements, notices
of assignment, transfers, certificates, assurances and other instruments as such
Purchaser may reasonably require from time to time in order (i) to carry out
more effectively the purposes of this Agreement or any other Bridge Document,
(iv) to subject to the Liens created by any of the Common Collateral Documents
any of the properties, rights or interests covered by any of the Common
Collateral Documents, (iii) to perfect and maintain the validity, effectiveness
and priority of any of the Common Collateral Documents and the Liens intended to
be created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Purchasers the rights granted or now or
hereafter intended to be granted to the Purchasers under any Bridge Document or
under any other instrument executed in connection therewith.
(c) Each of Parent and the Issuer agrees to cooperate in good faith
with and assist, at its own expense, any Purchaser or any of such Purchaser's
Affiliates as such Purchaser may reasonably request in connection with any
United States regulatory issues that may arise with respect to Parent or any of
its Subsidiaries. Anything herein or in any other Bridge Document to the
contrary notwithstanding, in the event that any Purchaser or any of such
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Purchaser's Affiliates shall deliver to Parent or the Issuer an opinion of
counsel to such Purchaser or such Affiliate, as the case may be, to the effect
that if such Purchaser or such Affiliate, as the case may be, shall continue to
hold some or all of such Purchaser's Bridge Securities, such ownership may
result, or that there is a reasonable possibility that such ownership may
result, in the violation of any statute, regulation or rule of any governmental
authority (including, without limitation, Regulation Y of the Federal Reserve
Board), such Purchaser or such Affiliate, as the case may be, may, subject to
Sections 8.2 and 8.3, sell or otherwise dispose of its Bridge Securities to any
Person eligible to be a Permitted Transferee in as prompt and orderly a manner
as is reasonably necessary. Each of Parent and the Issuer shall, at its own
expense, cooperate with such Purchaser or such Affiliate, as the case may be, in
disposing of its Bridge Securities, and (without limiting the foregoing) at the
request of such Purchaser or such Affiliate, as the case may be, Parent and the
Issuer shall provide (and authorize such Purchaser or such Affiliate, as the
case may be, to provide) financial and other information concerning Parent and
its Subsidiaries to any prospective purchaser of the Bridge Securities owned by
such Purchaser or such Affiliate, as the case may be, subject to appropriate
confidentiality arrangements equivalent to those set forth in Section 10.2. The
provisions of this paragraph (c) shall inure solely to the benefit of any
Purchaser and its Affiliates that are subject to the provisions of the Bank
Holding Company Act of 1956, as amended (including Regulation Y promulgated
thereunder).
(d) As promptly as practicable following the Effective Date, Parent
shall take such corporate action as may be necessary, in the opinion of its
counsel, to obtain not later than April 25, 1996, any approval of Parent's
shareholders necessary to permit the exchange of Notes for Common Stock without
any limitation pursuant to Section 7.1(d) on the number of shares of Common
Stock issuable in such exchange or conversion; provided that such corporate
--------
action shall in any event include the filing of a proxy statement
with the Commission with respect to such shareholder approval no later than
March 31, 1996; provided, further, that Parent shall not be required to obtain
-------- -------
such approval if Parent receives on or before March 30, 1996, a letter from the
National Association of Securities Dealers, Inc. (the "NASD") stating that the
NASD will take no action if such approval is not obtained by Parent.
SECTION 6.17. Limitation on Liens. Neither Parent nor the Issuer
-------------------
shall, nor shall Parent permit any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property or assets, whether now owned or hereafter
acquired, or offer or agree to do so, other than the following ("Permitted
Liens"):
(a) any Lien in favor of the Purchasers created under any Bridge
Document;
(b) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.7, provided that
no Notice of Lien has been filed or recorded;
(c) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of
business which do not secure Indebtedness and are not delinquent or remain
payable without penalty;
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(d) Liens (other than any Lien imposed by ERISA) on the property of
Parent or any of its Subsidiaries incurred, or pledges or deposits
required, in connection with workmen's compensation, unemployment insurance
and other social security legislation;
(e) Liens on the property of Parent or any of its Subsidiaries
securing (i) the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, and (ii) obligations on
surety and appeal bonds, and (iii) other obligations of a like nature
incurred in the ordinary course of business which do not secure
Indebtedness, provided that all such Liens in the aggregate could not cause
a Material Adverse Effect;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of Parent or any of
its Subsidiaries;
(g) Liens on any asset which is the subject of a capital lease
securing Indebtedness incurred or assumed for the purpose of financing all
or any part of the cost of acquiring such asset, provided that (x) such
Lien attaches concurrently with or within 30 days after the acquisition
thereof, and (y) the sum of the aggregate principal amount of such
Indebtedness secured by such Liens shall not exceed $15,000,000;
(h) Liens on any Common Collateral in favor of Common Collateral
Parties; provided that such Liens equally and ratably secure the Bridge
Obligations on a pari passu basis, except as otherwise provided in the
Common Collateral Documents;
(i) Liens on contract rights under subscriber equipment leases sold,
pledged or otherwise transferred pursuant to any bona fide financing of
such leases; and
(j) purchase money security interests provided for in agreements in
existence on the Effective Date in favor of (A) Northern Telecom Finance
Corporation and (B) Trimble Navigation Limited, in each case on property
acquired by the Issuer in the ordinary course of business securing
Indebtedness incurred or assumed for the purpose of financing all or part
of the cost of acquiring such asset, provided that (x) such Liens attached
concurrently with or within 30 days after the acquisition thereof, (y) the
aggregate amount of Indebtedness secured by such Liens in favor of Northern
Telecom Finance Corporation shall not exceed $7,500,000 and (z) the
aggregate amount of Indebtedness secured by such Liens in favor of Trimble
Navigation Limited Shall not exceed $1,730,000.
SECTION 6.18. Disposition of Assets, Consolidations and Mergers.
-------------------------------------------------
Neither Parent nor the Issuer shall, nor shall Parent permit any of its
Subsidiaries to, directly or indirectly, (i) sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any of its assets, business or property (including accounts and notes receivable
(with or without recourse) and equipment sale-leaseback transactions) or (ii)
merge or consolidate with any other Person, or enter into any agreement to do
any of the foregoing described in clauses (i) or (ii) except, so long as if
immediately after giving effect thereto, no Default or Event of Default would
exist (each of the following, a "Permitted Disposition"):
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(a) sales, transfers, or other dispositions of inventory, or used,
worn-out or surplus property, or property of no further use to the Project,
all in the ordinary course of business;
(b) sales, transfers, or other dispositions of equipment in the
ordinary course of business to the extent that such equipment is exchanged
for credit against the purchase price of similar replacement equipment or
the proceeds of such sale are reasonably promptly applied to the purchase
price of such replacement equipment;
(c) sales, transfers, or other dispositions of communications
services, capacity or equipment pursuant to the customer contracts
providing for the sale of communications services, capacity or equipment in
the ordinary course of business;
(d) sales, transfers or other dispositions pursuant to bona fide sale-
leaseback financings in which the lease (i) gives rise solely to Capital
Lease Obligations and (ii) is a Permitted Capital Lease; provided, however,
--------
that any such sales, transfers or other dispositions are not permitted with
any assets of the communications network;
(e) sales, transfers, or other dispositions of assets in the ordinary
course of business having a fair market value not exceeding $500,000 per
item or $1,000,000 in the aggregate in any fiscal year (excluding sales,
transfers and dispositions theretofore approved in accordance with the
terms hereof in such fiscal year);
(f) sales, transfers or other dispositions of assets to Skycell to be
used in connection with the sales and marketing of services of the Issuer
and having a fair market value not exceeding $1,000,000 in the aggregate
during the term of this Agreement;
(g) sales, transfers or other dispositions of contract rights under
subscriber equipment leases pursuant to any bona fide financing of such
leases;
(h) non-exclusive licenses of technology and other intangible assets;
(i) sales of mobile earth terminals and related equipment, and other
inventory; and
(j) the Issuer may merge, consolidate or combine with another entity
if the Issuer is the corporation surviving the merger.
SECTION 6.19. Employee Contracts and Arrangements. Neither Parent
-----------------------------------
nor the Issuer shall, nor shall Parent permit any of its Subsidiaries to, enter
into any employment contracts or arrangements whose terms, including salaries,
benefits and other compensation, are not normal and customary and commercially
reasonable for companies of like size and circumstances.
SECTION 6.20. Loans and Investments. Neither Parent nor the Issuer
---------------------
shall, directly or indirectly, purchase or acquire, nor shall Parent permit any
of its Subsidiaries to purchase or acquire, or make any commitment therefor, any
capital stock, equity interest, obligations or other securities of or any
interest in, any Person, or make any advance, loan, extension of credit or
capital contribution to or any other investment in, any Person including,
without limitation any Affiliates of the Issuer, except for ("Permitted
Investments"):
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(a) investments in Cash Equivalents;
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business; and
(c) prudent extensions of credit not exceeding $500,000 in the
aggregate to officers and other key employees of the Issuer to retain them
in, or to induce them to enter into, the employ of the Issuer.
SECTION 6.21. Limitation on Indebtedness. Neither Parent nor the
--------------------------
Issuer shall, nor shall Parent permit any of its Subsidiaries to, create, incur,
assume, guaranty, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except for:
(a) accounts payable to trade creditors for goods and services and
current operating liabilities (not the result of the borrowing of money)
incurred in the ordinary course of Parent's, the Issuer's or the
Subsidiary's business, as the case may be, in accordance with customary
terms and paid within the specified time, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP;
(b) Indebtedness represented by Rate Contracts;
(c) income taxes payable and deferred taxes;
(d) accrued expenses and deferred income;
(e) Vendor Debt;
(f) Indebtedness under Permitted Capital Leases;
(g) Interim Financing Obligations;
(h) Contingent Obligations incurred in connection with any lease
financing of mobile communications terminals, not exceeding $5,000,000 in
the aggregate in principal amount;
(i) Indebtedness under the Financial Management Account Line of Credit
of the Issuer payable to the order of Wachovia Bank of North Carolina,
N.A., in an aggregate principal amount at any time not exceeding
$2,500,000; and
(j) obligations under the Guaranty Issuance Agreement or under any
similar agreement with any other Person that provides a guaranty of the
Interim Financing Obligations or the Bridge Obligations and any
reimbursement obligations of the Issuer with respect to any such
guaranties.
SECTION 6.22. Transactions with Affiliates. Neither Parent nor the
----------------------------
Issuer shall, nor shall Parent permit any of its Subsidiaries to, enter into any
transaction with any Affiliate of such Person except as contemplated by this
Agreement or in the ordinary course of business and pursuant to the reasonable
requirements of the business of such Person and upon fair and reasonable terms
no less favorable to such Person than would obtain in a comparable arm's
33
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length transaction with a Person not an Affiliate of such Person.
Notwithstanding the foregoing, the Issuer shall be permitted to enter into and
perform the transactions contemplated by (a) the Commission Sales Agency
Agreement dated July 1, 1995, between the Issuer and Skycell, as amended to the
date hereof, (b) the Intercorporate Services Agreement dated July 1, 1995,
between the Issuer and Skycell, as amended to the date hereof, (c) the
Commission Agreement dated July 1, 1995, between the Issuer and Sales Co., as
amended to the date hereof; and (d) the Guaranty Issuance Agreement or any
similar agreement with any other Person that provides a guaranty of the Interim
Financing Obligations or the Bridge Obligations.
SECTION 6.23. Compliance with ERISA. Neither Parent nor the Issuer
---------------------
shall directly or indirectly, and Parent shall not permit any member of the
Controlled Group directly or indirectly to, (i) terminate, any Qualified Plan
subject to Title IV of ERISA, so as to result in any material (in the opinion of
any Purchaser) liability to the Issuer or any member of the Controlled Group,
(ii) permit to exist any ERISA Event, which presents the risk of a material (in
the opinion of any Purchaser) liability to any member of the Controlled Group,
(iii) make a complete or partial withdrawal (within the meaning of ERISA Section
4201) from any Multiemployer Plan so as to result in any material (in the
opinion of any Purchaser) liability to any member of the Controlled Group or
(iv) permit the present value of all nonforfeitable accrued benefits under each
Qualified Plan (using the actuarial assumptions utilized by the PBGC upon
termination of a Qualified Plan) materially (in the opinion of the Purchasers)
to exceed the fair market value of Qualified Plan assets allocable to such
benefits, all determined as of the most recent valuation date for each such
Qualified Plan.
SECTION 6.24. Project Documents. Neither Parent nor the Issuer shall
-----------------
nor shall Parent permit any of its Subsidiaries to, modify or amend any of the
Project Documents in any respect, or waive any provision or condition contained
therein, except with the express written consent of the Purchasers.
SECTION 6.25. Lease Obligations. Neither Parent nor the Issuer
-----------------
shall, nor shall Parent permit any of its Subsidiaries to, create or suffer to
exist any obligations for the payment of rent for any property under lease or
agreement to lease, except for
(a) leases in existence on the Effective Date and any renewal,
extension or refinancing thereof;
(b) after the Effective Date, any leases (other than capital leases)
entered into in the ordinary course of business; and
(c) after the Effective Date, capital leases other than those
permitted under clause (a) of this Section 6.25 to finance the acquisition
of equipment, provided that the aggregate annual rental payments for all
such capital leases, together with the aggregate principal amount of
Indebtedness secured by Liens permitted under Section 6.17(g), shall not
exceed $15,000,000.
SECTION 6.26. Restricted Payments. Except as contemplated by this
-------------------
Agreement and the other Bridge Documents, neither Parent nor the Issuer shall
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of its capital stock or purchase, redeem or otherwise acquire for
value (or permit any of its Subsidiaries to do so) any shares of its capital
stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding, provided
--------
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that so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, Sales Co. may make distributions to Parent, provided
that Parent promptly contributes any assets so distributed to the Issuer.
SECTION 6.27. Accounting Changes. Neither the Issuer nor Parent
------------------
will, nor will Parent permit any of its Subsidiaries to, make any significant
change in accounting treatment and reporting practices, except as required by
GAAP, or change the fiscal year of Parent or any of its Subsidiaries.
SECTION 6.28. Reservation of Shares. Parent shall at all times
---------------------
reserve and keep available, solely for issuance upon exchange of the Notes, the
greater of (i) 4,000,000 shares of Common Stock and (ii) 200% of such number of
shares of Common Stock as would be required at such time for exchange of the
Notes for Common Stock at a price determined pursuant to clause (ii) of the
definition of Exchange Price.
SECTION 6.29. Transfer Agency Agreement. Not later than 10 Business
-------------------------
Days following the initial Closing Date, Parent and the Transfer Agent shall
enter into an agreement in form and substance satisfactory to the Purchasers
(and which shall in any event name the Purchasers and any holders of Notes as
third-party beneficiaries) to the effect that (a) within 1 Business Day
following receipt from any holder of Notes of a certification by such holder (i)
that such holder has tendered any such Notes to Parent for Common Stock pursuant
to Section 7.1 of this Agreement, (ii) that either (A) such holder has complied
with the requirements of Article VIlI with respect to issuance of Common Stock
in any name other than that of such holder or (B) such Common Stock is to be
sold pursuant to an effective registration statement and (iii) attaching a copy
of the Exchange Notice delivered to Parent in respect of such exchange, the
Transfer Agent shall issue to such holder without any further direction from
Parent certificates for Common Stock in such name or names and in such amounts
as are set forth in the relevant Exchange Notice and (b) if such holder provides
the certification set forth in clause (a)(ii)(B) above, the Transfer Agent shall
issue share certificates without any restrictive legend printed thereon.
ARTICLE VII
EXCHANGE OF NOTES
SECTION 7.1. Exchange of Notes for Common Stock at Holder's Option.
-----------------------------------------------------
(a) In case (1) one or more Events of Default shall have occurred and be
continuing or (2) Parent's Public Market Equity Value shall be less than
$300,000,000, any Holder of any Note is entitled, at its option, to deliver a
notice to Parent (a "Pre-Exchange Notice") indicating that such Holder intends
to exchange such Note for Common Stock. At any time from but not including the
date 15 days following delivery of any Pre-Exchange Notice to and including the
date twelve months following the delivery of such Pre-Exchange Notice, the
Holder delivering such Pre-Exchange Notice may, but shall not be required to,
exchange such Note (or any portion of the principal amount thereof at the
principal amount thereof plus accrued and unpaid interest thereon, for fully
paid and non-assessable shares (calculated as to each exchange to the nearest
1/100 of a share) of Common Stock at the Exchange Price on the date such Note
(or portion thereof) is deemed exchanged in accordance with the following
paragraph (b) by surrender of such Note, accompanied by written notice to Parent
in the form of Attachment A to the Note (an "Exchange
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<PAGE>
Notice"). No payment or adjustment shall be made upon exchange for dividends on
the Common Stock issued upon exchange.
(b) Notes shall be deemed to have been exchanged immediately prior to
the close of business on the day of surrender of such Notes for exchange in
accordance with the foregoing paragraph (a), and at such time the rights of the
Holders of such Notes surrendering such Notes for exchange as Holders thereof
shall cease, and the Person or Persons entitled to receive the Common Stock
issuable in exchange therefor shall be treated for all purposes as the record
holder or holders of such Common Stock as and after such time. On the first
Business Day following the exchange date, Parent shall issue and shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable in exchange, together with payment in lieu of any fraction of a share,
as provided in Section 7.2(b).
(c) If any exchange of Notes pursuant to this Section 7.1 would result
in Parent's Alien Ownership Percentage exceeding the Accepted Alien Ownership
Percentage Limitation, then in lieu of issuing shares of Common Stock pursuant
to Section 7.1(b):
(i) Parent shall issue to each Holder exchanging Notes at such
time (each an "Exchanging Holder") whose Alien Ownership Percentage is less
than or equal to the Accepted Alien Ownership Percentage Limitation the
number of shares of Common Stock; to which such Exchanging Holder is
entitled pursuant to the foregoing paragraphs (a) and (b);
(ii) Parent shall issue to each Exchanging Holder whose Alien
Ownership Percentage is greater than the Accepted Alien Ownership
Percentage Limitation (each, an "Affected Exchanging Holder") a number of
shares of Common Stock equal to the quotient of (x) the product of (A) the
number of shares of Common Stock that, immediately after giving effect to
any issuances of Common Stock pursuant to the foregoing clause (i), could
be issued to a Person with a 100% Alien Ownership Percentage without
causing Parent's Alien Ownership Percentage to exceed the Accepted Alien
Ownership Percentage Limitation, multiplied by (B) the number of shares of
Common Stock to which such Affected Exchanging Holder would be entitled
pursuant to the foregoing paragraphs (a) and (b) but for the application of
this paragraph (c), divided by (y) the product of (A) the aggregate number
of shares of Common Stock to which all Affected Exchanging Holders would be
entitled pursuant to the foregoing paragraphs (a) and (b) but for the
application of this paragraph (c), multiplied by (B) such Affected
Exchanging Holder's Alien Ownership Percentage; provided that in no event
--------
shall the number of shares of Common Stock issuable to any Affected
Exchanging Holder pursuant to this clause (ii) exceed the number of shares
of Common Stock to which such Affected Exchanging Holder would have been
entitled pursuant to the foregoing paragraphs (a) and (b) but for the
application of this paragraph (c); and
(iii) Parent shall deliver by wire transfer of immediately
available funds to the account of each Affected Exchanging Holder specified
in such Affected Exchanging Holder's Exchange Notice, an amount equal to
the product of (x) the number of shares of Common Stock to which such
Affected Exchanging Holder would have been entitled pursuant to the
foregoing paragraphs (a) and (b) that are not issuable to such Affected
Exchanging Holder pursuant to the foregoing clause (ii), multiplied by (y)
the appLicable Exchange Price;
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provided, however, that (A) if any shares of Common Stock to be issued in
- -------- -------
exchange for any Note are to be issued in the name of any Person other than the
Exchanging Holder of such Note, then the foregoing provisions of this paragraph
(c) shall be applied as though such Person were an Exchanging Holder entitled
(under Sections 7.1(a) and (b)) to the number of shares of Common Stock to be
issued in such Person's name, and (B) the foregoing provisions of this paragraph
(c) shall not apply if any Exchanging Holder delivers an opinion of counsel
reasonably acceptable to Parent that the exchange of Notes in question would not
result in Parent being in violation of the Alien Ownership Restrictions.
(d) Notwithstanding the foregoing provisions of this Section 7.1, in
no event shall Notes be exchangeable for an aggregate number of shares of Common
Stock in excess of such number of shares (taking into account any exercise of
Warrants prior to such exchange) as would require the approval of Parent's
shareholders pursuant to Section 6(i)(1)(d) of Schedule D to the Bylaws of the
National Association of Securities Dealers, Inc. (the "NASD Limit") unless
Parent's shareholders have, prior to any exchange of Notes that would require
the issuance of Common Stock in excess of the NASD Limit (taking into account
any exercise of Warrants prior to such exchange) approved the exchange of Notes
for an aggregate number of shares of Common Stock in excess of the NASD Limit.
If, upon any exchange of Notes, shares of Common Stock that would otherwise be
issuable in such exchange are not issuable due to the provisions of the
foregoing sentence, then in Lieu of issuing shares of Common Stock pursuant to
Section 7.(b) or (c):
(i) Parent shall issue the maximum number of shares of Common
Stock, if any, issuable up to the NASD Limit (taking into account any
exercise of Warrants prior to such exchange), pro rata in proportion to the
number of shares of Common Stock to which each Exchanging Holder would be
entitled but for the provisions of this paragraph (d); and
(ii) Parent shall deliver by wire transfer of immediately
available funds to the account of each Exchanging Holder specified in such
Exchanging Holder's Exchange Notice, an amount equal to the product of (x)
the number of shares of Common Stock to which such Exchanging Holder would
have been entitled pursuant to the foregoing paragraphs (a), (b) and (c)
that are not issuable to such Exchanging Holder pursuant to the foregoing
clause (i), multiplied by the applicable Exchange Price.
SECTION 7.2. Partial Exchange; Fractional Shares. (a) In the case of
-----------------------------------
any Note that is exchanged pursuant to Section 7.1 in part only, upon such
exchange the Issuer shall execute to the Holder thereof, at the expense of the
Issuer, a new Note or Notes in aggregate principal amount equal to the
unexchanged portion of the principal amount of such Note.
(b) No fractional shares of Common Stock shall be issued upon exchange
of Notes. If more than one Note shall be surrendered for exchange at one time
by the same Holder, the number of full shares of Common Stock, as the case may
be, which shall be issuable upon exchange of such Notes shall be computed on the
basis of the aggregate principal amount of the Notes (or specified portions
thereof) so surrendered. Instead of any fractional shares of Common Stock that
would otherwise be issuable upon exchange of any Note or Notes (or specified
portions thereof), Parent shall pay a cash adjustment equal to such fraction
multiplied by the Closing Price on the day of exchange (or, if such day is not a
Trading Day, on the Trading Day immediately preceding such day).
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ARTICLE VIII
SUBSTITUTION; LIMITATION ON TRANSFERS
SECTION 8.1. Substitution of Purchasers Prior to Closing Date. If
------------------------------------------------
(i) any Purchaser (a "Defaulting Purchaser") shall not purchase all or part of
the Notes such Defaulting Purchaser has agreed to purchase hereunder, and (ii)
one or more other Persons eligible to be a Permitted Transferee is willing to
assume the obligations of such Defaulting Purchaser under this Agreement, then
the obligations of such Defaulting Purchaser-to purchase Notes pursuant to this
Agreement may be assumed by such other Person by executing and delivering a copy
of this Agreement (or, if such other Person is already a Purchaser under this
Agreement, by executing and delivering an amended signature page of this
Agreement with the amount of Notes to be purchased hereunder appropriately
increased) and documents and representations satisfactory to Parent and the
Issuer for the purpose of assuring Parent and the Issuer that the purchase of
Notes hereunder by such Person hereunder will not result in a violation of any
provision of applicable law. The assumption by such other Person of the
obligations of a Defaulting Purchaser pursuant to this Section 8.1 shall not
constitute a waiver of any rights Parent or the Issuer may have against such
Defaulting Purchaser that has defaulted in its obligations under this Agreement.
Any Defaulting Purchaser shall pay to the Issuer, by wire transfer (to such
account as the Issuer shall have furnished to such Defaulting Purchaser), an
amount equal to any commitment fees paid to such Purchaser by the Issuer.
SECTION 8.2. Restrictions on Transfer. From and after the initial
------------------------
Closing Date and their respective dates of issuance, as the case may be, neither
the Bridge Securities nor any interest therein shall be transferable except upon
the conditions specified in Sections 8.3 and 8.4, which conditions are intended
to ensure compliance with the provisions of the Securities Act in respect of the
Transfer of any of the Bridge Securities, or any interest therein. Each
Purchaser will cause any proposed transferee of the Bridge Securities (or any
interest therein) held by it to agree to take and hold such Bridge Securities
(or any interest therein) subject to the provisions and upon the conditions
specified in Sections 8.3 and 8.4.
SECTION 8.3. Restrictive Legends. (a) Each certificate for Bridge
-------------------
Securities issued to a Purchaser or to a subsequent transferee shall (unless
otherwise permitted by the provisions of Section 8.3(b) or Section 8.4) include
a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY ALSO IS SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT DATED AS OF
JANUARY 19, 1996 AS AMENDED AND RESTATED AS OF APRIL 19, 1996, COPIES
OF WHICH MAY BE OBTAINED FROM AMERICAN MOBILE SATELLITE CORPORATION.
(b) Subject to Section 8.4, any holders of Bridge Securities
registered pursuant to the Securities Act and qualified under applicable
state securities laws may exchange such Bridge Securities on transfer for
new securities that shall not bear the legend set forth in paragraph (a) of
this Section 8.3.
38
<PAGE>
SECTION 8.4. Notice of Proposed Transfers. At least-two Business
----------------------------
Days prior to any proposed Transfer (other than Transfers of Bridge Securities
registered pursuant to the Registration Rights Agreement) of any Bridge
Securities, the holder thereof shall give written notice to Parent and the
Issuer of such holder's intention to effect such Transfer, setting forth the
manner and circumstances of the proposed Transfer in reasonable detail. Such
proposed Transfer (other than transfers to Permitted Transferees that are
Affiliates of any Purchaser) may be effected only if Parent and the Issuer shall
have received such notice of Transfer accompanied by (i) an opinion of counsel
reasonably satisfactory to Parent and the Issuer, addressed to Parent and the
Issuer, to the effect that the proposed Transfer of the Bridge Securities may be
effected without registration under the Securities Act, (ii) representation
letters in form and substance reasonably satisfactory to Parent and the Issuer
to ensure compliance with the provisions of the Securities Act and any
applicable state securities laws, (iii) letters in form and substance reasonably
satisfactory to Parent and the Issuer from each such transferee stating such
transferee's agreement to be bound by the terms of this Article VII and (iv) in
the case of Transfers of Common Stock issued in exchange for Notes or the
exercise of Warrants, an opinion of counsel reasonably acceptable to Parent and
the Issuer, addressed to Parent and the Issuer, to the effect that the proposed
Transfer complies with the applicable provisions of the Communications Act.
Each certificate evidencing the Bridge Securities transferred as above provided
shall bear the legend set forth in Section 8.3(a) except that such certificate
shall not bear such legend if the opinion of counsel referred to above is to the
further effect that neither such legend nor the restrictions on Transfer in
Sections 8.3 through 8.5 are required in order to ensure compliance with the
provisions of the Securities Act. In no event may any Bridge Securities be
transferred to any Person not eligible to be a Permitted Transferee except as
part of a Transfer of Bridge Securities registered under the Securities Act.
The foregoing shall not, however, apply to any Transfer of a Note to, or the
acquisition of any interest therein by, the Guarantor.
ARTICLE IX
GUARANTY
SECTION 9.1. The Guaranty. Parent hereby unconditionally guarantees
------------
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each Note issued by the Issuer
pursuant to this Agreement, and the full and punctual payment of all other
amounts payable by the Issuer under this Agreement. Upon failure by the Issuer
to pay punctually any such amount, Parent shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in this Agreement.
SECTION 9.2. Guaranty Unconditional. The obligations of Parent under
----------------------
this Article IX shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Issuer under this Agreement or
any Note, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note;
39
<PAGE>
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Issuer under this
Agreement or any Note;
(d) any change in the corporate existence, structure or ownership
of the Issuer, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Issuer or its assets or any resulting
release or discharge of any obligation of the Issuer contained in this
Agreement or any Note;
(e) the existence of any claim, set-off or other rights which
Parent may have at any time against any Purchaser or any other Person,
whether in connection herewith or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Issuer for any reason of this Agreement or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Issuer of the principal of or interest on any Note or any other amount
payable by the Issuer under this Agreement; or
(g) any other act or omission to act or delay of any kind by the
Issuer, any Purchaser or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of Parent's obligations under
this Article IX.
SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
-----------------------------------------------------
Certain Circumstances. Parent's obligations under this Article IX shall remain
- ---------------------
in full force and effect until the Commitments shall have terminated and the
principal of and interest on the Notes and all other amounts payable by the
Issuer under this Agreement shall have been paid in full. If at any time any
payment of the principal of or interest on any Note or any other amount payable
by the Issuer under this Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Issuer or
otherwise, Parent's obligations under this Article IX with respect to such
payment shall be reinstated at such time as though such payment had been due but
not made at such time.
SECTION 9.4. Waiver by Parent. Parent irrevocably waives acceptance
----------------
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Issuer or any other Person.
SECTION 9.5. Subrogation. Until such time as all principal of and
-----------
interest on each Note issued by the Issuer pursuant to this Agreement and all
other amounts payable by the Issuer under this Agreement have indefeasibly been
paid in full, Parent shall not assert any rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Issuer with respect to such
payment or against any direct or indirect security therefor, or otherwise to be
reimbursed, indemnified or exonerated by or for the account of the Issuer in
respect thereof.
SECTION 9.6. Stay of Acceleration. If acceleration of the time for
--------------------
payment of any amount payable by the Issuer under this Agreement or any Note is
stayed upon insolvency, bankruptcy or reorganization of the Issuer, all such
amounts otherwise subject to acceleration under the terms of this Agreement
shall nonetheless be payable by Parent under this Article IX forthwith on demand
by any Purchaser.
40
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. All notices, requests and other
-------
communications lo any party hereunder shall be in writing (including telex,
telecopier or similar writing) and shall be given to such party at its address,
telex or telecopier number set forth below, or such other address, telex or
telecopier number as such party may hereinafter specify for the purpose to the
company giving such notice.
If to the Issuer:
AMSC Subsidiary Corporation
10802 Parkridge Blvd.
Reston, VA 22091
Attention: Randy Segal,
General Counsel
Telecopier: (703) 758-6134
If to Parent:
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
Attention: Randy Segal,
General Counsel
Telecopier: (703) 758-6134
If to Toronto Dominion Investments, Inc.:
Toronto Dominion Investments, Inc.
909 Fannin St.
Houston, TX 77010
Attention: Martha Gariepy
Telecopier: (713) 652-2647
with a copy to:
Toronto Dominion Investments, Inc.:
31 West 52d St.
New York, NY 10019
Attention: Stephen Reinstadtler
Telecopier: (212) 974-8429
41
<PAGE>
If to Morgan Guaranty Trust Company of New York:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
Attention: Adam Silver
Telecopier: (212) 648-5013
If to Hughes Communications Satellite Services, Inc.:
Hughes Communications Satellite Services, Inc.
1990 East Grand Avenue
El Segundo, CA 90245
Attention: Craig Stephens
Telecopier: (310) 607-4008
If to the Payment Agent:
The Toronto-Dominion Bank
909 Fannin St.
Houston, TX 77010
Attention: Manager Agency
Telecopier: (713) 951-9921
Account: ABA No. 026003243
Account No. 215-9251
Each such notice, request or other communication shall be effective
(i) if given by telex or telecopy, when such telex or telecopy is transmitted to
the telex or telecopy number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in this Section 10.1.
SECTION 10.2. Confidentiality. Each Purchaser agrees to take normal
---------------
and reasonable precautions and exercise due care to maintain the confidentiality
of all non-public information provided to it by Parent or any of its
Subsidiaries in connection with this Agreement or any Common Collateral Document
and neither it nor any of its Affiliates shall use any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement, except to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by such
Purchaser, or (ii) was or becomes available on a non-confidential basis from a
source other than the Issuer or Parent, provided that such source is not bound
--------
by a confidentiality agreement with the Issuer or Parent known to such
Purchaser; provided, further, that any Purchaser may disclose such information
-------- -------
(A) to any other Purchaser or Permitted Transferee, (B) at the request of any
bank regulatory authority or in
42
<PAGE>
connection with an examination of such Purchaser by any such authority; (C)
pursuant to subpoena or other court process; (D) when required to do so in
accordance with the provisions of any applicable law; (E) at the express
direction of any other agency of any State of the United States of America or of
any other jurisdiction in which such Purchaser conducts its business; and (F) to
such Purchaser's independent auditors and legal counsel. Notwithstanding the
foregoing, Parent and the Issuer authorize each Purchaser to disclose to any
Permitted Transferee and any prospective Permitted Transferee such financial and
other information in such Purchaser's possession concerning Parent or any of its
Subsidiaries which has been delivered to the Purchasers pursuant to this
Agreement or which has been delivered to the Purchasers by Parent or any of its
Subsidiaries in connection with the Purchasers' credit evaluation of Parent and
its Subsidiaries prior to entering into this Agreement; provided that such
--------
Permitted Transferee agrees in writing to such Purchaser to keep such
information confidential to the same extent required of the Purchasers
hereunder.
SECTION 10.3. No Waivers; Amendments. (a) No failure or delay on the
----------------------
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by Parent, the
Issuer and the Purchasers.
SECTION 10.4. Expenses; Documentary Taxes. The Issuer shall pay (i)
---------------------------
all out-of-pocket expenses of the Purchasers, including reasonable fees and
disbursements of Special Counsel, in connection with the preparation and
administration of this Agreement and the other Bridge Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof and (ii) if
an Event of Default occurs, all out-of-pocket expenses incurred by each
Purchaser, including (without duplication) the reasonable fees and disbursements
of outside counsel and the allocated cost of inside counsel, in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom. In addition, the Issuer shall pay
any and all stamp, transfer and other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement or the
issuance of any Bridge Securities or the exchange of Notes for Common Stock.
SECTION 10.5. Payment. Each of Parent and the Issuer agrees that, so
-------
long as any Purchaser hereunder shall own any Bridge Securities purchased by it
from the Issuer hereunder, the Issuer or Parent, as the case may be, will make
payments to such Purchaser of all amounts due thereon by wire transfer by 11:00
a.m. Eastern Time, on the date of payment to such Purchaser's account as
specified beneath such Purchaser's name on the signature pages hereof or to such
other account or in such other similar manner as such Purchaser may designate to
the Issuer and Parent in writing.
SECTION 10.6. Termination. This Agreement may be terminated by the
-----------
Issuer and Parent at any time prior to the initial Closing Date. This Agreement
may be terminated by the Purchasers at 5:00 p.m. on January 31, 1996, unless
the conditions to the Purchasers obligations hereunder are satisfied or waived
by such date.
43
<PAGE>
SECTION 10.7. Successors and Assigns. (a) Except as expressly
----------------------
provided in this Agreement, the rights and obligations of any Purchaser under
this Agreement may not be assigned to any Person and this Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement, and their respective successors and assigns. This
Agreement shall be binding upon Parent, the Issuer and each Purchaser and their
respective successors and assigns.
(b) All provisions hereunder purporting to give rights to the
Purchasers shall extend to and include those entities receiving beneficial
interest of the Bridge Securities at any Closing Date.
SECTION 10.8. New York Law. This Agreement shall be construed in
------------
accordance with and governed by the laws of the State of New York. Each of the
parties hereto agrees to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Agreement.
SECTION 10.9. Counterparts; Effectiveness. This Agreement may be
---------------------------
executed in any number of counterparts each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when Parent and the Issuer
shall have executed counterparts hereof and received counterparts hereof signed
by all of the parties hereto.
SECTION 10.10. Entire Agreement. This Agreement constitutes the
----------------
entire agreement and understanding among the parties hereto and supersedes any
and all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
44
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers (or, in the case of
parties that are not corporations, other authorized persons), as of the date
first above written.
AMERICAN MOBILE SATELLITE
CORPORATION
By:
-----------------------------
Name:
Title:
AMSC SUBSIDIARY CORPORATION
By:
-----------------------------
Name:
Title:
TORONTO DOMINION INVESTMENTS, INC.
By:
-----------------------------
Name:
Title:
Commitment: $15,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
-----------------------------
Name:
Title:
Commitment: $15,000,000
45
<PAGE>
HUGHES COMMUNICATIONS SATELLITE
SERVICES, INC.
By:
-----------------------------
Name:
Title:
Commitment: $10,000,000
THE TORONTO-DOMINION BANK
as Payment Agent
By:
-----------------------------
Name:
Title:
46
<PAGE>
AMENDMENT NO. 1 TO SECURITIES
PURCHASE AGREEMENT, SENIOR SECURED INCREASING
RATE EXCHANGEABLE NOTES, WARRANTS AND REGISTRATION
RIGHTS AGREEMENT
AMENDMENT dated as of April 19, 1996 among AMSC SUBSIDIARY CORPORATION
(the "Issuer"), AMERICAN MOBILE SATELLITE CORPORATION ("Parent"), the PURCHASERS
listed on the signature pages hereof (the "Purchasers") and THE TORONTO-DOMINION
BANK, as Payment Agent for such Purchasers (the "Payment Agent").
W I T N E S S E T H
WHEREAS, the parties hereto have heretofore entered into a Securities
Purchase Agreement dated as of January 19, 1996 (the "Agreement") and a
Registration Rights Agreement dated as of January 19, 1996 (the "Registration
Rights Agreement");
WHEREAS, the Purchasers have purchased certain Notes (as defined in
the Agreement) and have received certain Warrants (as defined in the Agreement)
pursuant to the terms of the Agreement; and
WHEREAS, the parties hereto desire to amend the Agreement, the Notes,
the Warrants and the Registration Rights Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
-----------------------
defined herein, each term used herein which is otherwise defined in the
Agreement, the Notes or the Warrants shall have the meaning assigned to such
term therein. Each reference to "hereof," "hereunder," "herein" and "hereby"
and each other similar reference and each reference to "this Agreement," "this
Note" and "this Warrant" and each other similar reference contained in the
Agreement, each Note and each Warrant, respectively, shall from and after the
date hereof refer to the Agreement, such Note and such Warrant, respectively, as
amended hereby.
SECTION 2. Amendment of the Agreement. The Agreement is amended and
--------------------------
restated in its entirety to read as set forth in Exhibit A hereto.
SECTION 3. Amendment of Notes. Each Note is amended as follows:
------------------
(a) Amendment of First Paragraph. The first paragraph of each Note is
----------------------------
amended by replacing the words "September 30, 1996" with the words "June 30,
1996."
<PAGE>
(b) Amendment of Second Paragraph. The second paragraph of each Note
-----------------------------
is amended to read in its entirety as follows:
The interest rate shall be an increasing rate per annum (the "Interest
Rate") equal to (i) eleven percent (11%) from and including January 19,
1996 to and including February 29, 1996, (ii) thirteen percent (13%) from
and including March 1, 1996, to and including March 31, 1996, (iii) fifteen
percent (15%) from and including April 1, 1996, to and including April 18,
1996, and (iv) 5.75% at all times after April 18, 1996, or, in any case, if
less, the maximum amount permitted by applicable law, until the principal
amount hereof is paid in full. Furthermore, at any time that a Default
shall have occurred and be continuing, the interest rate shall be a rate
per annum equal to two percent (2%) plus the interest rate otherwise
applicable at such time pursuant to the foregoing sentence (or, if less,
the maximum amount permitted under applicable law).
(c) Addition of Paragraph. The following paragraph is added
---------------------
immediately prior to Section 1:
The Holder may, if it so elects in connection with any transfer or
enforcement of this Note, endorse on the schedule forming a part hereof
appropriate notations to evidence the date and amount of each payment of
principal made by the Issuer hereunder; provided that the failure of the
Holder to make any such recordation or endorsement shall not affect the
obligations of the Issuer hereunder. The Holder is hereby irrevocably
authorized by the Issuer so to endorse this Note and to attach to and make
a part of its Note a continuation of any such schedule as and when
required.
(d) Amendment of Section 1. (i) Section 1 of each Note is amended by
----------------------
deleting the definitions of "Revolving Credit Commitments" and "Term Loan
Commitments."
(ii) Section 1 of each Note is further amended by replacing the
definition of "Change of Control" in its entirety with the following:
"Change in Control" means (i) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) shall have beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of more shares of the outstanding capital
stock of Parent than Hughes Electronics Corporation or its Affiliates
("Hughes"), (ii) Hughes shall have beneficial ownership of less than
25% of the outstanding capital stock of Parent, (iii) during any
period of 24 consecutive calendar months, individuals who were
directors of Parent on the first day of such period shall cease to
constitute a majority of the board of directors of Parent (ignoring
for this purpose replacements of stockholder-designated directors by
successor directors designated by the same stockholder or group of
stockholders), or (iv) Parent shall cease to own all of the
outstanding capital stock of the Issuer.
2
<PAGE>
(iii) Section 1 of each Note is further amended by adding the
following at the end of the definition of "Majority Holders":
; provided that "Majority Holders" shall include each of Morgan
--------
Guaranty Trust Company of New York and Toronto Dominion Investments,
Inc. (or in the event such Person transfers any of its Notes to any
of its Affiliates, such Affiliate) for so long as such Person holds
any Notes.
(e) Amendment of Sections 3(a)(vii) through 3(a)(ix). Sections
------------------------------------------------
3(a)(vii) through 3(a)(ix) of each Note are amended to read as follows:
(vii) the Issuer, Parent, any of its Principal Subsidiaries or the
Guarantor shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action to authorize
any of the foregoing;
(viii) an involuntary case or other proceeding shall be commenced
against the Issuer, Parent, any of its Principal Subsidiaries or the
Guarantor seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;
or an order for relief shall be entered against Parent, any of its
Subsidiaries or the Guarantor under the federal bankruptcy laws as now or
hereafter in effect;
(ix) at any time the senior unsecured long-term debt securities of the
Guarantor shall be rated lower than BBB+ by S&P or Baa1 by Moody's;
(f) Amendment of Section 3(a)(xii). Section 3(a)(xii) of each Note is
------------------------------
amended by adding the words "(other than any Event of Loss with respect to which
an insurance claim has been made under the Proof of Loss Statement)" immediately
after the words "Effective Date" in clause (4).
(g) Amendment of Section 3(a)(xvi). Section 3(a)(xvi) of each Note is
------------------------------
amended by adding the words "or the Guaranty" after the words "Article IX of the
Agreement."
(h) Amendment of Sections 3(a)(xviii) through 3(a)(xx). Sections
--------------------------------------------------
3(a)(xviii) through 3(a)(xx) of each Note are deleted in their entirety and
replaced with the following:
3
<PAGE>
(xviii) the Guarantor shall fail to make any payment in respect of any
Indebtedness or Contingent Obligation having an aggregate principal or face
amount of more than $50,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
continues after the applicable grace period or notice period, if any,
specified in the document relating thereto; or
(xix) any event or condition shall occur which results in the
acceleration of the maturity of any Indebtedness or Contingent Obligation
of the Guarantor having an aggregate principal or face amount of more than
$50,000,000 or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Indebtedness or Contingent
Obligation or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(i) Amendment of Section 3(a)(xxi). Section 3(a)(xxi) of each Note is
------------------------------
amended by redesignating it as Section 3(a)(xx) and by deleting the words "or
paragraph (7)(f) of the Certificate of Designation."
(j) Amendment of Sections 4(c) through 4(e). Section 4(c) of each
---------------------------------------
Note is deleted in its entirety, Section 4(d) of each Note is redesignated as
Section 4(c) and Section 4(e) of each Note is redesignated as Section 4(d).
(k) Amendment of Section 4(f). Section 4(f) of each Note is
-------------------------
redesignated as Section 4(e) and is further amended by adding following at the
end thereof:
Notwithstanding the foregoing, in the event that prepayment is required
pursuant to Section 4(b) due to the receipt of Major Casualty Proceeds
received with respect to an Event of Loss with respect to the Satellite,
such prepayment shall first be applied to the Notes of Holders other than
Hughes Communications Satellite Services, Inc. ("Hughes") and any Net Cash
Proceeds remaining after the Notes of such Holders are prepaid in full
shall be applied to the prepayment of Notes held by Hughes.
(l) Amendment of Section 5. Section 5 of each Note is amended to read
----------------------
in its entirety "5. [OMITTED]."
SECTION 4. Agreement of Hughes. Hughes Communications Satellite
-------------------
Services, Inc. ("Hughes") hereby agrees for the benefit of the other Holders of
Notes that if, notwithstanding the provisions of Section 4(e) of the Notes,
Hughes receives any prepayment in respect of Major Casualty Proceeds received
with respect to an Event of Loss with respect to the Satellite, Hughes shall
purchase such participations in the Notes held by the other Holders, and such
other adjustments shall be made, as may be required, to give effect to the
provisions of the last sentence of Section 4(e) of the Notes.
SECTION 5. Amendment of Warrants. Each Warrant is amended as
---------------------
follows:
(a) Amendment of Section 1. (i) Section 1 of each Warrant is amended
----------------------
by deleting the definition of "Repurchase Warrant Share Amount."
4
<PAGE>
(ii) Section 1 of each Warrant is further amended by amending the
definition of "Securities Purchase Agreement" by adding the following
immediately after the words "such Purchasers":
, as amended and restated by Amendment No. 1 to Securities Purchase
Agreement, Senior Secured Increasing Rate Exchangeable Notes, Warrants
and Registration Rights Agreement, dated April 19, 1996
(b) Amendment of Section 2(a)(1). Section 2(a)(1) of each Warrant is
----------------------------
amended by deleting the words "provided, however, that until May 1, 1996, this
Warrant may be exercised only in part for a maximum number of shares equal to
the Warrant Share Amount less the Repurchase Warrant Share Amount."
(c) Amendment of Section 2(d). Section 2(d) of each Warrant is
-------------------------
amended to read in its entirety 8(d) [OMITTED]."
(d) Amendment of Section 2(i)(2). Section 2(j)(2) of each Warrant is
----------------------------
amended by deleting the words "or conversion of the Preferred Stock."
(e) Amendment of Section 2(j)(4). Section 2(j)(4) of each Warrant is
----------------------------
amended by deleting the words "and Preferred Stock)."
SECTION 6. Amendment of Registration Rights Agreement. The
------------------------------------------
Registration Rights Agreement is amended and restated in its entirety as set
forth in Exhibit B hereto.
SECTION 7. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts; Effectiveness. This Amendment may be signed
---------------------------
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective when each Purchaser shall have received
the following:
(a) duly executed counterparts hereof signed by each other party
hereto;
(b) the Guaranty, duly executed by the Guarantor;
(c) copies of the resolutions of the board of directors of the
Guarantor approving and authorizing the execution, delivery and performance
by the Guarantor of the Guaranty, certified as of the date hereof by the
Secretary or an Assistant Secretary of the Guarantor;
(d) a certificate of the Secretary or an Assistant Secretary of
the Guarantor certifying the names and the signatures of the officers of
the Guarantor authorized to execute and deliver the Guaranty; and
5
<PAGE>
(e) an opinion of counsel to the Guarantor, in form and substance
satisfactory to each Purchaser.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
AMSC SUBSIDIARY CORPORATION
By:
-----------------------------
Name: Brian B. Pemberton
Title: President & CEO
AMERICAN MOBILE SATELLITE
CORPORATION
By:
-----------------------------
Name: Brian B. Pemberton
Title: President & CEO
TORONTO DOMINION INVESTMENTS, INC.
By:
-----------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
-----------------------------
Name:
Title:
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
AMSC SUBSIDIARY CORPORATION
By:
-----------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE
CORPORATION
By:
-----------------------------
Name:
Title:
TORONTO DOMINION INVESTMENTS, INC.
By:
-----------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
-----------------------------
Name:
Title:
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
AMSC SUBSIDIARY CORPORATION
By:
-----------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE
CORPORATION
By:
-----------------------------
Name:
Title:
TORONTO DOMINION INVESTMENTS, INC.
By:
-----------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
-----------------------------
Name: Adam J. Silver
Title: Associate
HUGHES COMMUNICATIONS SATELLITE
SERVICES, INC.
By:
-----------------------------
Name: Harold E. M. Donnell
Title: Executive Vice President
9
<PAGE>
EXHIBIT 6
GUARANTY ISSUANCE AGREEMENT
---------------------------
THIS GUARANTY ISSUANCE AGREEMENT (this "Agreement") dated as of April
---------
19, 1996 is by and among Hughes Electronics Corporation, a Delaware corporation
("Hughes"), AMSC Subsidiary Corporation, a Delaware corporation dually
------
incorporated as a Virginia public service corporation ("AMSC"), and American
----
Mobile Satellite Corporation, a Delaware corporation ("AMSC Parent").
-----------
R E C I T A L S:
WHEREAS, Hughes Communications Satellite Services, Inc., a wholly-
owned subsidiary of Hughes ("Hughes Services"), is a shareholder of AMSC;
---------------
WHEREAS, AMSC and AMSC Parent have entered into that certain
Securities Purchase Agreement dated as of January 19, 1996 (the "Bridge Loan")
-----------
pursuant to which AMSC has issued notes (i) in the aggregate face amount of
$10,000,000 to Hughes Services and (ii) in the aggregate face amount of
$15,000,000 each (for an aggregate of $30,000,000) to each of Toronto Dominion
Investments, Inc. and Morgan Guaranty Trust Company of New York (individually
each an "Existing Lender" and collectively the "Existing Lenders") (such notes
--------------- ----------------
and the Bridge Loan are herein referred to as the "Documents");
---------
WHEREAS, the Existing Lenders, AMSC and AMSC Parent each have
requested that Hughes issue a guaranty substantially in the form set forth as
Exhibit A hereto (the "Bridge Loan Guaranty") as a condition to certain
--------------------
amendments to and waivers under the Documents (the "Bridge Loan Extension");
---------------------
WHEREAS, AMSC and AMSC Parent each have requested that Hughes issue a
guaranty (the "Interim Loan Guaranty") substantially in the form set forth as
---------------------
Exhibit B attached hereto in connection with a contemplated interim loan of up
to $20,000,000 to AMSC (the "Interim Loan") that will provide working capital to
------------
AMSC and without which AMSC will have no working capital with which to fund its
ongoing business and operations after April 19, 1996; and
WHEREAS, as a result of Hughes' issuance of the Bridge Loan Guaranty
and the Interim Loan Guaranty, AMSC will reduce its interest expense by an
amount equal to the difference between: the interest rate now payable by AMSC
under the Bridge Loan and the interest rate that
<PAGE>
will be payable by AMSC under the Bridge Loan Extension (the "Bridge Loan
-----------
Interest Rate Savings"); plus the interest rate that will be payable by AMSC
- ---------------------
under the Interim Loan and the interest rate that would be payable by AMSC under
the Interim Loan if AMSC had to obtain the Interim Loan without the Interim Loan
Guaranty (which interest rate is assumed to be the same interest rate that is
now payable by AMSC under the Bridge Loan) (the "Interim Loan Interest Rate
--------------------------
Savings").
- -------
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and the
issuance by Hughes of one or both of the guaranties described above, AMSC and
AMSC Parent hereby agree as follows:
1. The Longer-Term Financing. The parties are presently negotiating the terms
-------------------------
of a longer-term guaranteed debt financing of $150,000,000 or more for the
benefit of AMSC and AMSC Parent (the "Longer-Term Financing"). The parties
---------------------
contemplate that these negotiations will be completed and the Longer-Term
Financing will be consummated on or before May 31, 1996 or, if extended pursuant
to Section 2(d), June 30, 1996 (the "Completion Date"). Part of these
---------------
negotiations involves the consideration to be received by Hughes from AMSC and
AMSC Parent in connection with any guaranty Hughes may issue in connection with
the Longer-Term Financing. The Longer-Term Financing will involve the repayment
of the Bridge Loan and the Interim Loan. The terms of the Longer-Term Financing
must be satisfactory to each of AMSC, AMSC Parent and Hughes, each in its sole
discretion. Hughes will use its reasonable best efforts in good faith to cause
the Longer-Term Financing and the related guaranties to occur provided, however,
that Hughes cannot assure that the lenders will, and shall have no liability if
the lenders do not, provide any Longer-Term Financing on acceptable terms.
2. Consideration for the issuance by Hughes of the Bridge Loan Guaranty or the
---------------------------------------------------------------------------
Interim Loan Guaranty. The consideration that shall be delivered by AMSC and
- ---------------------
AMSC Parent hereunder will vary depending upon when and whether the repayment by
AMSC and AMSC Parent of the Bridge Loan and the Interim Loan occurs. The
consideration that shall be delivered to Hughes hereunder in various
circumstances is set out in the chart attached hereto as Exhibit C and is more
particularly described as follows:
(a) In the event that, as of the Completion Date, (i) the Bridge Loan
and the Interim Loan are fully repaid by AMSC and AMSC Parent from the Longer-
Term Financing, (ii)
2
<PAGE>
Hughes provides a guaranty for part or all of such Longer-Term Financing and
(iii) the Bridge Loan Guaranty and the Interim Loan Guaranty are fully released,
then no consideration for the Bridge Loan Guaranty and Interim Loan Guaranty
shall be delivered to Hughes by AMSC and AMSC Parent and the warrants to be
delivered to Hughes by AMSC and AMSC Parent for the issuance of the Longer-Term
Financing guaranty shall be as set forth in Exhibit D attached hereto.
(b) In the event that, as of the Completion Date, the Bridge Loan and
the Interim Loan are fully repaid by AMSC and AMSC Parent and the Bridge Loan
Guaranty and Interim Loan Guaranty are fully released ( the "Repayment
---------
Conditions") without the issuance by Hughes of any Longer-Term Financing
- ----------
guaranty, then the consideration delivered to Hughes by AMSC and AMSC Parent
shall be as follows: (i) AMSC shall pay to Hughes a fee (the "Ongoing Guaranty
----------------
Fee") calculated daily on the sum of (A) seventy-five percent (75%) of the
- ---
amounts outstanding under the Bridge Loan and (B) the amount outstanding under
the Interim Loan, at an annual rate equal to the difference between (x) the
interest rate actually paid on amounts outstanding under the Bridge Loan and the
Interim Loan, as the case may be, and (y) eleven percent (11%), calculated from
the date on which the Bridge Loan Guaranty was issued, and from the date on
which the Interim Loan Guaranty was issued, as the case may be, to the date the
Bridge Loan Guaranty and the Interim Loan Guaranty, as applicable, are released,
and shall be payable within seven (7) business days after the Completion Date;
and (ii) AMSC Parent shall issue to Hughes warrants for an aggregate of 125,000
shares of common stock of AMSC Parent (the "Common Stock"), at an exercise price
------------
equal to $ .01 per share and otherwise on the terms set forth in Exhibit E
attached hereto (the "Guaranty Warrants"). If, however, the Repayment
-----------------
Conditions occur on or prior to the Completion Date and insurance proceeds are
received by the Company and used to repay part or all of the Bridge Loan (a
"Repayment") on or before the Completion Date, then the following adjustments
- ----------
(the "Repayment Adjustments") shall be made to the Guaranty Warrants: (i) if a
---------------------
full Repayment occurs on or before May 1, 1996, then the 75,000 Guaranty
Warrants allocable to the Bridge Loan Guaranty shall be eliminated; (ii) if a
full Repayment occurs after May 1, 1996 but on or before May 15, 1996, then such
Guaranty Warrants shall be reduced by 37,500; and (iii) if a full Repayment
occurs after May 15, 1996 but on or before May 31, 1996, then such Guaranty
Warrants shall be reduced by 25,000. If a partial Repayment occurs, then the
reduction in Guaranty Warrants shall be determined by multiplying the applicable
Repayment Adjustment by a fraction, the numerator of which is the amount of the
Bridge Loan repaid and the denominator of which is $40,000,000. For example, if
$20,000,000 of the Bridge Loan were repaid with insurance proceeds after May 1
but before May 15, 1996, then the Guaranty Warrants would be reduced by 18,750
(37,500 x 20,000,000/40,000,000).
(c) In the event that, as of the Completion Date, through no Fault of
Hughes (as such term is defined in Section 2(f) below), the Bridge Loan and the
Interim Loan are not fully
3
<PAGE>
repaid by AMSC and AMSC Parent and the Bridge Loan Guaranty and Interim Loan
Guaranty are not fully released (collectively, a failure of the "Repayment
---------
Conditions"), then the consideration delivered to Hughes by AMSC and AMSC Parent
- ----------
shall be as follows: (i) AMSC shall pay to Hughes a fee in an amount equal to
one and one-half percent (1 1/2%) of the sum of the amount of the Bridge Loan
then outstanding and of the amount of the Interim Loan then outstanding, which
fee shall be payable within seven (7) business days after the Completion Date
(the "Upfront Repayment Failure Fee"); (ii) AMSC shall pay to Hughes a fee (the
-----------------------------
"Ongoing Repayment Failure Fee") calculated daily on the sum of (A) the amounts
outstanding under the Bridge Loan and (B) the amounts outstanding under the
Interim Loan, at an amount equal to the difference between (X) the interest rate
actually paid on amounts outstanding under the Bridge Loan and the Interim Loan,
as the case may be, and (Y) eleven percent (11%), and which amount shall be
payable from and calculated from and after June 1, 1996 to the end of each
calendar month or part thereof during which the Bridge Loan Guaranty and the
Interim Loan Guaranty, as applicable, are outstanding, and shall be payable
within seven (7) business days after the end of each such month; and (iii) AMSC
Parent shall issue to Hughes warrants for 2,000,000 shares of Common Stock, at
an exercise price equal to $24.00 per share and otherwise on the terms set forth
in Exhibit D attached hereto (the "Repayment Failure Warrants").
--------------------------
(d) If, as of May 31, 1996, AMSC, AMSC Parent and the lenders are
working in good faith to complete definitive documents for the Longer-Term
Financing which, if completed, will cause the Repayment Conditions to occur,
then (i) the Completion Date will be extended to June 30, 1996 and (ii) the
parties hereto will use their best reasonable efforts to complete such
documentation.
(e) In addition to the provisions of Section 2(c) above, if the
Repayment Conditions have not been met as of May 31, 1996 and, if applicable,
June 30, 1996 and AMSC and AMSC Parent are otherwise in compliance with their
obligations under this Agreement, then the following shall occur: (i) Hughes
shall seek to have the Bridge Loan and the Interim Loan lenders (the "Lenders")
-------
extend the due date of their respective loans to September 30, 1996 and shall
offer to extend the Bridge Loan Guaranty and the Interim Loan Guaranty through
such date; (ii) if the Lenders, or some of them, refuse to do so, Hughes shall
purchase any such Bridge Loans or Interim Loans from any such Lenders at par
plus any accrued but unpaid interest and shall then extend the terms of such
repurchased notes to September 30, 1996; (iii) while Hughes shall have all of
the rights and remedies of a Lender under any of such repurchased notes, it
agrees that it will waive any defaults arising under any such notes as a result
of such notes not being repaid on the due date otherwise provided for therein (a
"Term Default") until September 30, 1996; (iv) Hughes shall specifically have
------------
the right, prior to September 30, 1996, to declare a default under any of such
4
<PAGE>
repurchased notes and/or initiate or continue any foreclosure actions pursuant
to any clauses in any of such repurchased notes permitting it to do so if (A) a
default, other than a Term Default, occurs, (B) a default by AMSC and/or AMSC
Parent under any other loan or financing to which either of them is a party
occurs or (C) any action is taken by any Lender in pursuing its foreclosure or
similar remedies; and (v) Hughes will extend the due date of its portion of the
Bridge Loan to September 30, 1996, but the interest rate payable thereunder
shall be changed to eleven percent (11%) per annum, effective as of June 1,
1996; and in addition, as to any notes that Hughes has purchased as set forth in
this clause (e), the interest rate payable thereunder shall be changed to eleven
percent (11%) per annum, effective as of June 1, 1996.
(f) If the Repayment Conditions do not occur due to the Fault of
Hughes, the consequence of such failure is that no Repayment Failure Warrants
shall be issuable to Hughes. As used in this Section 2, the "Fault of Hughes"
---------------
shall mean the failure of Hughes to provide a guaranty, which together with the
guaranties provided by other parties, will, in the aggregate, guarantee
$150,000,000 of Longer-Term Financing, where each of AMSC, AMSC Parent and the
proposed lenders has acted in good faith and such financing is consistent with
the term sheet provided by Hughes to AMSC's Parent Board of Directors at its
April 18, 1996 meeting, and each of AMSC, AMSC Parent and the proposed lenders
is ready to proceed with the Longer-Term Financing on terms which are, or should
be, reasonably satisfactory to Hughes and which are consistent herewith.
3. Ability to Seek Alternatives. Hughes acknowledges and agrees that, upon
----------------------------
completion of the Interim Loan, AMSC and AMSC Parent have the right to, and
intend to, seek alternative methods of obtaining the Longer-Term Financing or
otherwise satisfying AMSC's financing needs and repaying the Bridge Loan and the
Interim Loan. Nothing contained herein or in the Bridge Loan Guaranty or the
Interim Loan Guaranty shall in any way restrict such rights.
4. Amendments, Etc. No amendment or waiver of any provision of this Agreement
---------------
shall in any event be effective unless the same shall be in writing and (a) with
respect to its enforcement against Hughes, signed by Hughes, (b) with respect to
its enforcement against AMSC, signed by AMSC or (c) with respect to its
enforcement against AMSC Parent, signed by AMSC Parent.
5. No Waiver; Remedies. No failure on the part of Hughes to exercise, and no
-------------------
delay in Hughes' exercise of, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder by
Hughes preclude any other or further exercise thereof or the exercise of any
other right by Hughes. Hughes may specifically waive any breach of this
Agreement by AMSC or AMSC Parent; provided that no such waiver shall be
effective or binding
5
<PAGE>
unless in writing, and that no such waiver shall constitute a continuing waiver
of similar or other breaches.
6. Notices, Etc. All notices, demands, requests, consents, approvals and
------------
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given as provided for in the Documents, and if to Hughes: 7200
Hughes Terrace, M/S CI/A 700, Los Angeles, California 90045-0066, Attention:
Treasurer.
7. Separability of This Agreement. In case any term or provision of this
------------------------------
Agreement or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
8. Further Assurances. AMSC and AMSC Parent hereby agree to execute and
------------------
deliver all such instruments and take all such action as Hughes may from time to
time reasonably request in order to fully effectuate the purposes of this
Agreement.
9. Headings. The headings contained in this Agreement are for convenience of
--------
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
10. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
11. Representations and Warranties of AMSC and AMSC Parent. Each of AMSC and
------------------------------------------------------
AMSC Parent represent and warrant to Hughes that:
(a) Each of AMSC and AMSC Parent is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement.
(b) This Agreement has been duly authorized by all necessary corporate
action on the part of, and has been duly executed and delivered by, each of AMSC
and AMSC Parent, and
6
<PAGE>
none of the execution and delivery hereof, the consummation of the transactions
contemplated hereby or compliance by AMSC and AMSC Parent with any of the terms
and provisions hereof (i) requires any approval of stockholders or approval or
consent of any trustee or holders of any indebtedness or obligations of AMSC or
AMSC Parent other than such approvals or consents as have been obtained, (ii)
contravenes any law, judgment, governmental rule or regulation or order
applicable to or binding on AMSC or AMSC Parent or any of their respective
properties, the contravention of which would have a material adverse effect on
the financial condition of AMSC and its subsidiaries taken as a whole or AMSC
Parent and its subsidiaries taken as a whole or on the ability of AMSC and AMSC
Parent to perform any of their obligations under this Agreement, (iii)
contravenes or results in any breach of or constitutes any default under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which AMSC or AMSC Parent is a party or by which AMSC
or AMSC Parent or any of their respective properties may be bound, the
contravention, breach or default of which would have a material adverse effect
on the financial condition of AMSC and its subsidiaries taken as a whole or AMSC
Parent and its subsidiaries taken as a whole or on the ability of AMSC and AMSC
Parent to perform any of their obligations under this Agreement, or (iv)
contravenes its corporate charter or by-laws.
(c) Neither the execution, delivery and performance by AMSC and AMSC
Parent of this Agreement nor the consummation of any of the transactions
contemplated hereby (including the issuance of stock upon the exercise of any
warrants issued hereunder) requires the consent, approval or authorization of,
the giving of notice to, or the registration, recording or filing of any
document with, or the taking of any other action in respect of, any governmental
agency or authority.
(d) This Agreement constitutes the legal, valid and binding obligation
of each of AMSC and AMSC Parent, enforceable against each of AMSC and AMSC
Parent in accordance with its terms, except as such enforcement may be subject
to bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally and to general principles of equity.
(e) AMSC Parent has delivered copies of the consolidated balance sheet
of AMSC Parent and its consolidated subsidiaries as of December 31, 1995, and
related statements of consolidated income and cash flow and stockholder's equity
for the fiscal year then ended, accompanied by the report of Arthur Andersen
LLP, independent accountants. Such statements fairly present, in accordance
with generally accepted accounting principles, the financial position of AMSC
Parent and its consolidated subsidiaries as of such date and the results of
their operations and cash flows for such fiscal year.
7
<PAGE>
12. Reimbursement Agreement. If Hughes makes any payments under the Bridge
------------------------
Loan Guaranty or the Interim Loan Guaranty, each of AMSC and AMSC Parent agrees
that it shall be jointly and severally liable to reimburse Hughes for such
payments, and that Hughes will be fully subrogated to the extent of such payment
to the rights and remedies (including any collateral security) of the lenders
under the Bridge Loan and the Interim Loan. If Hughes acquires any notes
evidencing the Bridge Loan or the Interim Loan, or any of such obligations, from
the lenders, then Hughes shall acquire all of the rights and remedies (including
any collateral security) of such lenders under the Bridge Loan and the Interim
Loan. Except as expressly provided herein, Hughes shall have no duties to AMSC
or AMSC Parent with respect to the exercise or non-exercise of any of such
rights and remedies.
[signature page follows]
8
<PAGE>
IN WITNESS WHEREOF, each of AMSC and AMSC Parent has caused this
Agreement to be executed by its duly authorized officer.
AMSC SUBSIDIARY CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
AMERICAN MOBILE SATELLITE CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
ACCEPTED AND AGREED:
HUGHES ELECTRONICS CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT A
BRIDGE LOAN
GUARANTY
--------
THIS GUARANTY (this "Guaranty") dated as of April 19, 1996, is made by
--------
Hughes Electronics Corporation, a Delaware corporation ("Guarantor"), to Toronto
---------
Dominion Investments, Inc. and Morgan Guaranty Trust Company of New York
(collectively, the "Guaranteed Parties" and individually, a "Guaranteed Party").
------------------ ----------------
R E C I T A L S:
WHEREAS, Hughes Communications Satellite Services, Inc., a wholly-
owned subsidiary of Guarantor is a shareholder of American Mobile Satellite
Corporation, a Delaware corporation ("AMSC"), which is the parent corporation of
----
AMSC Subsidiary Corporation, a Delaware corporation (the "Company");
-------
WHEREAS, AMSC and the Company have entered into that certain
Securities Purchase Agreement dated as of January 19, 1996, as amended and
restated concurrently herewith (the "Securities Purchase Agreement") pursuant to
-----------------------------
which the Company has issued to the Guaranteed Parties notes in the aggregate
face amount of $30,000,000 (such notes and the Securities Purchase Agreement are
herein referred to as the "Documents");
---------
WHEREAS, the Guaranteed Parties have requested Guarantor to enter into
this Guaranty as a condition to certain amendments to or waivers under the
Documents and it is in the best interest of Guarantor that the Guaranteed
Parties enter into such amendments or waivers;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, receipt of which is hereby acknowledged,
Guarantor hereby agrees with and for the benefit of each of the Guaranteed
Parties, as follows:
1. Guaranty.
--------
(a) Guarantor hereby guarantees to each Guaranteed Party (i) the
punctual payment when due of each and every obligation of the Company for the
payment of principal and
1
<PAGE>
interest owing by the Company to such Guaranteed Party under the Documents and
(ii) expenses owing by the Company under Section 10.4 of the Securities Purchase
Agreement (collectively, the "Guaranteed Obligations") and (iii) any and all
----------------------
reasonable fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred by each Guaranteed Party in successfully enforcing any
rights of each Guaranteed Party under this Guaranty; provided, however, that the
liability of Guarantor with respect to outstanding and unpaid principal amounts
under the Documents shall not exceed $30,000,000, less the amount of principal
----
repaid to Guaranteed Parties (including from proceeds of insurance). The
Guaranteed Parties may permit the Guaranteed Obligations to exceed Guarantor's
maximum liability hereunder without impairing the obligations of Guarantor
hereunder; provided, however, that if the Guaranteed Parties increase the
principal amount owed by the Company under the Documents or increase the
interest rate or fees payable by the Company under the Documents, such increased
amounts shall not be part of the Guaranteed Obligations without the prior
written consent of Guarantor, and all payments received by the Guaranteed
Parties with respect to the obligations of the Company under the Documents
(including any proceeds of insurance) shall be deemed to be first applied to the
guaranteed portion of such obligations, thereby reducing Guarantor's liability
hereunder. In the event that any of the foregoing obligations shall not be paid
when due, Guarantor will pay such obligations within five (5) Business Days
after Guarantor's receipt of demand therefor; provided that demand for payment
of any Guaranteed Obligations shall constitute demand for payment of all
interest under the Documents accrued and unpaid from the date of such demand
through the date of payment by the Guarantor; and provided further that
Guarantor may cause such obligation or liability to be paid on its behalf by any
corporation affiliated with it. The payments made by the Guarantor of any
Guaranteed Obligations, whether on behalf of the Company prior to a default or
after demand on Guarantor, shall be deemed to cure any related payment default
under the Documents and any such payments with respect to the principal portion
of the Guaranteed liability under this Section 1(a) with respect to principal.
(b) This Guaranty is a guaranty of payment and not of performance or
collection and is in no way conditioned or contingent upon any attempt to
collect from the Company.
(c) Guarantor shall be subrogated to all rights of the applicable
Guaranteed Party against the Company, and any collateral security or guarantees
therefor, in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guaranty; provided that Guarantor shall not exercise any rights of
subrogation, reimbursement or contribution from or against the Company with
respect to payments made under this Guaranty until Guarantor has satisfied its
obligations under this Guaranty or all of the Guaranteed Obligations have been
paid in full.
(d) Guarantor may, at its option, satisfy its obligations hereunder
with respect to principal and interest by purchasing the notes issued to
Guaranteed Parties by paying the outstanding principal balance plus accrued and
unpaid interest thereon. Upon such payment, each Guaranteed Party shall assign
to Guarantor its notes, and shall execute and deliver to Guarantor (at
Guarantor's
2
<PAGE>
expense) such other documents as Guarantor may reasonably request to assign the
notes, together with all collateral security therefor, and for Guarantor to
assume the rights and obligations of Guaranteed Parties under the Documents.
2. Guaranty Absolute. Except as otherwise provided in this Guaranty, the
-----------------
liability of Guarantor under this Guaranty with respect to each and all of the
Guaranteed Obligations shall be irrevocable and shall be absolute and
unconditional irrespective of, and shall not be released, discharged or in any
way affected by:
(a) any waiver, extension, renewal or modification of, or any consent
to departure from, any Document, including, without limitation, any waiver or
consent involving a change in the time, manner or place of payment of all or any
of the Guaranteed Obligations contained in any Document, but subject to the
provisions of Section 1 above;
(b) any extension of the time for payment by the Company or any other
Person of any Guaranteed Obligation under any Document;
(c) any failure, omission or delay by any Guaranteed Party to enforce,
assert or exercise any right, power or remedy conferred on or available to it,
including, without limitation, to enforce any guaranty by AMSC of the Company's
obligations or to exchange such Guaranteed Party's Notes for stock under the
Securities Purchase Agreement;
(d) the voluntary or involuntary liquidation, dissolution, sale of
assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting the Company, Guarantor, any Guaranteed Party or any other
person or any of their respective properties or creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, any Guaranteed Party or any
other corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim or right by separate suit or counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of any Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of any Guaranteed
Obligation; or
(g) any other act or omission to act or delay of any kind by the
Company, any Guaranteed Party or any other person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to the Guarantor's obligations
hereunder.
Notwithstanding the foregoing, the Guaranteed Parties shall not (i)
release the Company or any other guarantor from liability for the Guaranteed
Obligations, (ii) release or
3
<PAGE>
otherwise impair any collateral security at any time held for the Guaranteed
Obligations, (iii) waive any rights to receive proceeds of any insurance, (iv)
exchange any Notes for stock of the Company, or (v) extend the maturity date
under the Documents to a date later than September 30, 1996, except in each case
as consented to by Guarantor and if either Guaranteed Party does so release the
Company, any other guarantor or any collateral security, or waive any rights to
proceeds of insurance, or exchange any Notes, or extend the maturity date,
Guarantor shall be released and discharged from any liability under this
Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, with respect to any Guaranteed Party if at any time any payment of any of
the Guaranteed Obligations owed such Guaranteed Party is rescinded or must
otherwise be returned by such Guaranteed Party, as the case may be, upon the
insolvency, bankruptcy or reorganization of the Company, Guarantor (or any
corporation affiliated with Guarantor that makes a payment on Guarantor's behalf
pursuant to Section 1(a) hereof) or otherwise, all as though such payment had
not been made. If the payment of, or the acceleration of the time for payment
of, any sum required to be made by the Company under any Document shall at any
time be prevented by reason of a case or proceeding under bankruptcy, insolvency
or other similar law, Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, such sum shall be deemed to be payable in accordance
with the terms of such Document, and, subject to the limitations in Section 1
above, Guarantor shall pay such sum and any other amounts guaranteed hereunder
within five (5) Business Days after Guarantor's receipt of demand therefor.
3. Waiver. Except as otherwise provided in this Guaranty, Guarantor
------
hereby unconditionally waives, as to any Guaranteed Party, to the greatest
extent permitted by applicable law, (a) any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of
or proof of reliance by any Guaranteed Party upon this Guaranty, or acceptance
of this Guaranty, and the Guaranteed Obligations, (b) any requirement that any
Guaranteed Party exhaust any right or take any action against the Company, any
other guarantor or any other person or any collateral, (c) all notices which may
be required by statute, rule of law or otherwise to preserve any rights against
Guarantor hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under or in
respect of the Documents, and notice of any failure on the part of the Company
to perform and comply with any term or condition of any Document, (d) any rights
to the enforcement, assertion or exercise by any Guaranteed Party of any right,
remedy, power or privilege under or in respect of any of the Documents, (e) any
requirement of diligence and (f) notice of acceptance of this Guaranty. Any
Guaranteed Party that is entitled to receive payments required to be made by
Guarantor hereunder in respect of any Guaranteed Obligation shall have the right
to enforce this
4
<PAGE>
Guaranty (by bringing suit or otherwise) directly against Guarantor with respect
to such Guaranteed Obligations without bringing suit against the Company or any
other person, as the case may be.
4. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty shall in any event be effective unless the same shall be in writing and
(a) with its enforcement against any Guaranteed Party, signed by such Guaranteed
Party, or (b) with respect to its enforcement against Guarantor, signed by
Guarantor.
5. No Waiver; Remedies. No failure on the part of any Guaranteed Party
-------------------
to exercise, and no delay in any Guaranteed Party's exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder by any Guaranteed Party preclude any other or
further exercise thereof or the exercise of any other right by such Guaranteed
Party. Any Guaranteed Party may specifically waive any breach of this Guaranty
by Guarantor; provided that no such waiver shall be effective or binding unless
in writing, and that no such waiver shall constitute a continuing waiver of
similar or other breaches.
6. Continuing Guaranty. The effectiveness of this Guaranty and the
-------------------
obligations of Guarantor hereunder are subject to the condition precedent that
either (i) an Event of Default shall have occurred under (and as defined in) the
Documents after the date hereof or (ii) the Guaranteed Obligations shall not
have been paid in full, through the receipt of proceeds of insurance or
otherwise, on or before June 30, 1996. Upon satisfaction of such condition
precedent, this Guaranty shall become effective and remain in full force and
effect in accordance with the terms hereof until the earlier of (i) payment in
full of all of the Guaranteed Obligations and (ii) the date on which Guarantor
has satisfied all of its obligations under this Guaranty. The obligation of
Guarantor under Section 1(a)(iii) to pay any fees and expenses owing in
connection with this Guaranty shall survive such termination. This Guaranty
shall be binding upon Guarantor, its successors and assigns, and inure to the
benefit of and be enforceable by the successors, transferees and assigns of each
Guaranteed Party permitted under the Documents. Guarantor agrees that in the
discharge of its obligations hereunder no judgment, order, or exhaustion need be
obtained, and no action, suit or proceeding need be brought, and no other
remedies need be exhausted against the Company or any other Person for
performance by Guarantor of its obligations hereunder.
7. Notices, Etc. All notices, demands, requests, consents, approvals and
------------
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given as provided for in the Documents, and if to Guarantor,
sent to it at its address or fax number shown on the signature pages of this
Guaranty.
5
<PAGE>
8. Separability of This Guaranty. In case any term or provision of this
-----------------------------
Guaranty or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
9. Further Assurances. Guarantor hereby agrees to execute and deliver
------------------
all such instruments and take all such action as any Guaranteed Party may from
time to time reasonably request in order to fully effectuate the purposes of
this Guaranty.
10. Headings. The headings contained in this Guaranty are for convenience
--------
of reference only and shall not modify, define or limit any of the terms or
provisions hereof.
11. Governing Law. This Guaranty shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
12. Representations and Warranties of Guarantor. Guarantor represents and
-------------------------------------------
warrants to each Guaranteed Party that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority to enter into and perform its
obligations under this Guaranty.
(b) This Guaranty has been duly authorized by all necessary corporate
action on the part of, and has been duly executed and delivered by, Guarantor,
and none of the execution and delivery hereof, the consummation of the
transactions contemplated hereby or compliance by Guarantor with any of the
terms and provisions hereof (i) requires any approval of stockholders or
approval or consent of any trustee or holders of any indebtedness or obligations
of Guarantor other than such approvals or consents as have been obtained, (ii)
contravenes any law, judgment, governmental rule or regulation or order
applicable to or binding on Guarantor or any of its properties, the
contravention of which would have a material adverse effect on the financial
condition of Guarantor and its subsidiaries taken as a whole or on the ability
of Guarantor to perform any of its obligations under this Guaranty, (iii)
contravenes or results in any breach of or constitutes any default under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which Guarantor is a party or by which it or any of
its properties may be bound, the
6
<PAGE>
contravention, breach or default of which would have a material adverse effect
on the financial condition of Guarantor and its subsidiaries taken as a whole or
on the ability of Guarantor to perform any of its obligations under this
Guaranty, or (iv) contravenes its corporate charter or by-laws.
(c) Neither the execution, delivery and performance by Guarantor of
this Guaranty nor the consummation of any of the transactions contemplated
hereby requires the consent, approval or authorization of, the giving of prior
notice to, or the prior registration, recording or filing of any document with,
or the taking of any other action in respect of, any governmental agency or
authority.
(d) This Guaranty constitutes the legal, valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms, except
as such enforcement may be subject to bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally and to general
principles of equity.
(e) Guarantor has delivered copies of the consolidated balance sheet
of Guarantor and its consolidated subsidiaries as of the end of December 31,
1995, and related statements of consolidated income and cash flow and
stockholder's equity for the fiscal year then ended, accompanied by the report
of Deloitte & Touche, independent accountants. Such statements fairly present,
in accordance with generally accepted accounting principles, the financial
position of Guarantor and its consolidated subsidiaries as of such date and the
results of their operations and cash flows for such fiscal year.
[signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
by its duly authorized officer.
HUGHES ELECTRONICS CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
ADDRESS FOR NOTICES:
7200 Hughes Terrace
M/S CI/A 700
Los Angeles, California 90045-0066
Attention: Roderick Sherwood, III
ACCEPTED AND AGREED:
TORONTO DOMINION INVESTMENTS, INC.
By:______________________________
Name:____________________________
Title:___________________________
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT B
INTERIM LOAN
GUARANTY
--------
THIS GUARANTY (this "Guaranty") dated as of April 19, 1996, is made by
--------
Hughes Electronics Corporation, a Delaware corporation ("Guarantor"), to Toronto
---------
Dominion (Texas), Inc. and Morgan Guaranty Trust Company of New York
(collectively, the "Guaranteed Parties" and individually, a "Guaranteed Party").
------------------ ----------------
R E C I T A L S:
WHEREAS, Hughes Communications Satellite Services, Inc., a wholly-
owned subsidiary of Guarantor is a shareholder of American Mobile Satellite
Corporation, a Delaware corporation ("AMSC"), the parent corporation of AMSC
----
Subsidiary Corporation, a Delaware corporation (the "Company");
-------
WHEREAS, the Company proposes to issue to the Guaranteed Parties notes
in the aggregate amount of $20,000,000 (such promissory notes are collectively
herein referred to as the "Documents");
---------
WHEREAS, the Guaranteed Parties are unwilling to extend credit to the
Company under the Documents without credit support from shareholders of AMSC;
WHEREAS, it is in the best interests of Guarantor that Guaranteed
Parties extend credit to the Company, and therefore Guarantor has agreed to
enter into this Guaranty.
WHEREAS, certain other shareholders may also execute and deliver
guaranties on substantially the same terms as this Guaranty, but limited in
amount;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, receipt of which is hereby acknowledged,
Guarantor hereby agrees with and for the benefit of each of the Guaranteed
Parties, as follows:
<PAGE>
1. Guaranty.
--------
(a) Guarantor hereby guarantees to each Guaranteed Party (i) the
punctual payment when due of each and every obligation of the Company for the
payment of principal or interest owing by the Company to such Guaranteed Party
under the Documents and (ii) expenses owing by the Company under Section 6 of
the Documents (collectively, the "Guaranteed Obligations") and (iii) any and all
----------------------
reasonable fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred by each Guaranteed Party in successfully enforcing any
rights of each Guaranteed Party under this Guaranty; provided, however, that the
------------------
liability of Guarantor with respect to outstanding and unpaid principal amounts
under the Documents shall not exceed $20,000,000, less the amount of principal
repaid to Guaranteed Parties, and shall be reduced upon issuance of any Other
Guaranty, as provided in Section 1(d) below. The Guaranteed Parties may permit
the Guaranteed Obligations to exceed Guarantor's maximum liability hereunder
without impairing the obligations of Guarantor hereunder; provided, however,
------------------
that if the Guaranteed Parties increase the principal amount owed by the Company
under the Documents or increase the interest rate or fees payable by the Company
under the Documents, such increased amounts shall not be part of the Guaranteed
Obligations without the prior written consent of Guarantor, and all payments
received by the Guaranteed Parties with respect to the obligations of the
Company under the Documents (including any proceeds of insurance) shall be
deemed to be first applied to the guaranteed portion of such obligations,
thereby reducing Guarantor's liability hereunder (pro rata with the reduction of
liability under any Other Guaranty). In the event that any of the foregoing
obligations shall not be paid when due, Guarantor will pay such obligations
within five (5) Business Days after Guarantor's receipt of demand therefor;
provided that demand for payment of any Guaranteed Obligations shall constitute
demand for payment of all interest under the Documents accrued and unpaid from
the date of such demand through the date of payment by the Guarantor, and
provided further that Guarantor may cause such obligation or liability to be
paid on its behalf by any corporation affiliated with it. The payments made by
the Guarantor of any Guaranteed Obligations, whether on behalf of the Company
prior to a default or after demand on Guarantor, shall be deemed to cure any
related payment default under the Documents and any such payments with respect
to the principal portion of the Guaranteed Obligations shall reduce Guaranteed
liability under this Section 1(a) with respect to principal.
(b) This Guaranty is a guaranty of payment and not of performance or
collection and is in no way conditioned or contingent upon any attempt to
collect from the Company.
(c) Guarantor shall be subrogated to all rights of the applicable
Guaranteed Party against the Company, and any collateral security or guarantees
therefor, in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guaranty; provided that Guarantor shall not exercise any rights of
--------
subrogation, reimbursement or contribution from or against the Company with
2
<PAGE>
respect to payments made under this Guaranty until Guarantor has satisfied its
obligations under this Guaranty or all of the Guaranteed Obligations have been
paid in full.
(d) Upon the due execution and delivery of a guaranty on terms
identical to this Guaranty, mutatis mutandis, or otherwise acceptable to the
Guaranteed Parties, with respect to a portion of the Guaranteed Obligations (an
"Other Guaranty") by Singapore Telecommunications Ltd. (or by any other person
acceptable to the Guaranteed Parties), accompanied by delivery of evidence
reasonably satisfactory to the Guaranteed Parties of the due authorization,
execution and delivery of such Other Guaranty and an opinion of counsel, in form
and substance reasonably satisfactory to the Guaranteed Parties, as to the
enforceability of such Other Guaranty, the liability of Guarantor for the
principal portion of the Guaranteed Obligations under Section 1(a) above shall
automatically be reduced by the amount of the principal portion of the
Guaranteed Obligations subject to such Other Guaranty. The liability of
Guarantor and the liability of any other guarantor under any Other Guaranty
shall be independent and several obligations, and Guarantor shall have no
liability whatsoever with respect to the obligations under any Other Guaranty.
Any payments with respect to the principal portion of the Guaranteed Obligations
by the Company (whether paid by the Company or from insurance proceeds) shall be
applied ratably to reduce the liabilities of Guarantor and any guarantor under
any Other Guaranty with respect to such principal portion. The Guaranteed
Parties shall give prompt written notice to Guarantor of the delivery of any
Other Guaranty and the other requisite documents, which notice shall confirm the
reduction in Guarantor's liability required under this Section (d), but failure
of Guarantor to receive such notice shall not affect the automatic reduction in
Guarantor's maximum liability hereunder.
(e) Guarantor may, at its option, satisfy its obligations hereunder
with respect to principal and interest by purchasing the notes issued to
Guaranteed Parties by paying the outstanding principal balance plus accrued and
unpaid interest thereon. Upon such payment, each Guaranteed Party shall assign
to Guarantor its notes, and shall execute and deliver to Guarantor (at
Guarantor's expense) such other documents as Guarantor may reasonably request to
assign the notes, together with all collateral security therefor, and for
Guarantor to assume the rights and obligations of Guaranteed Parties under the
Documents.
2. Guaranty Absolute. Except as otherwise provided in this Guaranty, the
-----------------
liability of Guarantor under this Guaranty with respect to each and all of the
Guaranteed Obligations shall be irrevocable and shall be absolute and
unconditional irrespective of, and shall not be released, discharged or in any
way affected by:
(a) any waiver, extension, renewal or modification of, or any consent
to departure from, any Document, including, without limitation, any waiver or
consent involving a
3
<PAGE>
change in the time, manner or place of payment of all or any of the Guaranteed
Obligations contained in any Document, but subject to the provisions of Section
1 above;
(b) any extension of the time for payment by the Company or any other
Person of any Guaranteed Obligation under any Document;
(c) any failure, omission or delay by any Guaranteed Party to enforce,
assert or exercise any right, power or remedy conferred on or available to it
including, without limitation, to enforce any guaranty by AMSC of the Company's
obligations;
(d) the voluntary or involuntary liquidation, dissolution, sale of
assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting the Company, Guarantor, any Guaranteed Party or any other
person or any of their respective properties or creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, any Guaranteed Party or any
other corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim or right by separate suit or counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of any Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of any Guaranteed
Obligation; or
(g) any other act or omission to act or delay of any kind by the
Company, any Guaranteed Party or any other person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to the Guarantor's obligations
hereunder.
Notwithstanding the foregoing, the Guaranteed Parties shall not (i)
release the Company or any other guarantor from liability for the Guaranteed
Obligations, (ii) release or otherwise impair any collateral security at any
time held for the Guaranteed Obligations, or (iii) waive any rights to receive
proceeds of any insurance, or (iv) extend the maturity date under the Documents
to a date later than September 30, 1996, except in each case as consented to by
Guarantor and if either Guaranteed Party does so release the Company, any other
guarantor or any collateral security, or waive any rights to proceeds of
insurance, or extend the maturity date, Guarantor shall be released and
discharged from any liability under this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, with respect to any Guaranteed Party if at any time any payment of any of
the Guaranteed Obligations owed such
4
<PAGE>
Guaranteed Party is rescinded or must otherwise be returned by such Guaranteed
Party, as the case may be, upon the insolvency, bankruptcy or reorganization of
the Company, Guarantor (or any corporation affiliated with Guarantor that makes
a payment on Guarantor's behalf pursuant to Section 1(a) hereof) or otherwise,
-------
all as though such payment had not been made. If the payment of, or the
acceleration of the time for payment of, any sum required to be made by the
Company under any Document shall at any time be prevented by reason of a case or
proceeding under bankruptcy, insolvency or other similar law, Guarantor agrees
that, for purposes of this Guaranty and its obligations hereunder, such sum
shall be deemed to be payable in accordance with the terms of such Document,
and, subject to the limitations in Section 1 above, Guarantor shall pay such sum
and any other amounts guaranteed hereunder within five (5) Business Days after
Guarantor's receipt of demand therefor.
3. Waiver. Except as otherwise provided in this Guaranty, Guarantor
------
hereby unconditionally waives, as to any Guaranteed Party, to the greatest
extent permitted by applicable law, (a) any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of
or proof of reliance by any Guaranteed Party upon this Guaranty, or acceptance
of this Guaranty, and the Guaranteed Obligations, (b) any requirement that any
Guaranteed Party exhaust any right or take any action against the Company, any
other guarantor or any other person or any collateral, (c) all notices which may
be required by statute, rule of law or otherwise to preserve any rights against
Guarantor hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under or in
respect of the Documents, and notice of any failure on the part of the Company
to perform and comply with any term or condition of any Document, (d) any rights
to the enforcement, assertion or exercise by any Guaranteed Party of any right,
remedy, power or privilege under or in respect of any of the Documents, (e) any
requirement of diligence and (f) notice of acceptance of this Guaranty. Any
Guaranteed Party that is entitled to receive payments required to be made by
Guarantor hereunder in respect of any Guaranteed Obligation shall have the right
to enforce this Guaranty (by bringing suit or otherwise) directly against
Guarantor with respect to such Guaranteed Obligations without bringing suit
against the Company or any other person, as the case may be.
4. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty shall in any event be effective unless the same shall be in writing and
(a) with its enforcement against any Guaranteed Party, signed by such Guaranteed
Party, or (b) with respect to its enforcement against Guarantor, signed by
Guarantor.
5
<PAGE>
5. No Waiver; Remedies. No failure on the part of any Guaranteed Party
-------------------
to exercise, and no delay in any Guaranteed Party's exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder by any Guaranteed Party preclude any other or
further exercise thereof or the exercise of any other right by such Guaranteed
Party. Any Guaranteed Party may specifically waive any breach of this Guaranty
by Guarantor; provided that no such waiver shall be effective or binding unless
in writing, and that no such waiver shall constitute a continuing waiver of
similar or other breaches.
6. Continuing Guaranty. This Guaranty shall remain in full force and
-------------------
effect in accordance with the terms hereof until the earlier of (i) payment in
full of all of the Guaranteed Obligations and (ii) the date on which Guarantor
has satisfied all of its obligations under this Guaranty. The obligation of
Guarantor under Section 1(a)(iii) to pay any fees and expenses owing in
connection with the enforcement of this Guaranty shall survive such termination.
This Guaranty shall be binding upon Guarantor, its successors and assigns, and
inure to the benefit of and be enforceable by the successors, transferees and
assigns of each Guaranteed Party permitted under the Documents. Guarantor
agrees that in the discharge of its obligations hereunder no judgment, order, or
exhaustion need be obtained, and no action, suit or proceeding need be brought,
and no other remedies need be exhausted against the Company or any other Person
for performance by Guarantor of its obligations hereunder.
7. Notices, Etc. All notices, demands, requests, consents, approvals and
------------
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given as provided for in the Documents, and if to Guarantor,
sent to it at its address or fax number shown on the signature pages of this
Guaranty.
8. Separability of This Guaranty. In case any term or provision of this
-----------------------------
Guaranty or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
9. Further Assurances. Guarantor hereby agrees to execute and deliver
------------------
all such instruments and take all such action as any Guaranteed Party may from
time to time reasonably request in order to fully effectuate the purposes of
this Guaranty.
6
<PAGE>
10. Headings. The headings contained in this Guaranty are for convenience
--------
of reference only and shall not modify, define or limit any of the terms or
provisions hereof.
11. Governing Law. This Guaranty shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
12. Representations and Warranties of Guarantor. Guarantor represents and
-------------------------------------------
warrants to each Guaranteed Party that:
(a) It is a corporation duly organized, validly existing and (to the
extent applicable) in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to enter into
and perform its obligations under this Guaranty.
(b) This Guaranty has been duly authorized by all necessary corporate
action on the part of, and has been duly executed and delivered by, Guarantor,
and none of the execution and delivery hereof, the consummation of the
transactions contemplated hereby or compliance by Guarantor with any of the
terms and provisions hereof (i) requires any approval of stockholders or
approval or consent of any trustee or holders of any indebtedness or obligations
of Guarantor other than such approvals or consents as have been obtained, (ii)
contravenes any law, judgment, governmental rule or regulation or order
applicable to or binding on Guarantor or any of its properties, the
contravention of which would have a material adverse effect on the financial
condition of Guarantor and its subsidiaries taken as a whole or on the ability
of Guarantor to perform any of its obligations under this Guaranty, (iii)
contravenes or results in any breach of or constitutes any default under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which Guarantor is a party or by which it or any of
its properties may be bound, the contravention, breach or default of which would
have a material adverse effect on the financial condition of Guarantor and its
subsidiaries taken as a whole or on the ability of Guarantor to perform any of
its obligations under this Guaranty, or (iv) contravenes its corporate charter
or by-laws.
(c) Neither the execution, delivery and performance by Guarantor of
this Guaranty nor the consummation of any of the transactions contemplated
hereby requires the consent, approval or authorization of, the giving of prior
notice to, or the prior registration, recording or filing of any document with,
or the taking of any other action in respect of, any governmental agency or
authority.
(d) This Guaranty constitutes the legal, valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms, except
as such enforcement
7
<PAGE>
may be subject to bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity.
(e) Guarantor has delivered copies of the consolidated balance sheet
of Guarantor and its consolidated subsidiaries as of the end of its most recent
fiscal year, and related statements of consolidated income and cash flow and
stockholder's equity for the fiscal year then ended, accompanied by the report
of its independent accountants. Such statements fairly present, in accordance
with generally accepted accounting principles, the financial position of
Guarantor and its consolidated subsidiaries as of such date and the results of
their operations and cash flows for such fiscal year.
[signature page follows]
8
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
by its duly authorized officer.
HUGHES ELECTRONICS CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
ADDRESS FOR NOTICES:
7200 Hughes Terrace
M/S CI/A 700
Los Angeles, California 90045-0066
Attention: Roderick Sherwood, III
ACCEPTED AND AGREED:
TORONTO DOMINION (TEXAS), INC.
By:________________________________
Name:______________________________
Title:_____________________________
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT 7
FIRST AMENDMENT TO GUARANTY ISSUANCE AGREEMENT
----------------------------------------------
THIS FIRST AMENDMENT TO GUARANTY ISSUANCE AGREEMENT (the "First
-----
Amendment") is entered into as of June ___, 1996 by and among Hughes Electronics
- ---------
Corporation, a Delaware corporation ("Hughes"), AMSC Subsidiary Corporation, a
------
Delaware corporation dually incorporated as a Virginia public service
corporation ("AMSC") and American Mobile Satellite Corporation, a Delaware
----
corporation ("AMSC Parent"), and amends the Guaranty Issuance Agreement dated as
-----------
of April 19, 1996 among Hughes, AMSC and AMSC Parent (the "Agreement").
---------
R E C I T A L S:
Hughes, AMSC and AMSC Parent desire to amend the Agreement on the
terms and conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Recitals. The following additional recital is hereby added:
--------
"WHEREAS, subsequent to April 19, 1996 AMSC and AMSC Parent each have
requested that Hughes issue an additional guaranty (the "$10,000,000
-----------
Loan Guaranty") in connection with a contemplated additional interim
-------------
loan of $10,000,000 (the "$10,000,000 Loan") for $5,000,000 (50%) of
----------------
such $10,000,000 Loan."
3. Amendatory Provisions to Agreement. Hughes, AMSC and AMSC Parent agree
----------------------------------
that the Agreement is amended as follows:
<PAGE>
(a) Section 1 is amended by deleting the fourth sentence and inserting the
following sentence in lieu thereof: "The Longer-Term Financing will involve the
repayment of the Bridge Loan, the Interim Loan and the $10,000,0000 Loan."
(b) Section 2(b) is amended by adding the following sentence at the end of
Section 2(b):
In addition, if, as of the Completion Date, the $10,000,000 Loan
is fully repaid by AMSC and AMSC Parent and the $10,000,000 Loan
Guaranty is fully released without the issuance by Hughes of any
Longer-Term Financing guaranty, then the additional consideration
delivered to Hughes by AMSC and AMSC Parent shall be as follows: AMSC
shall pay to Hughes a fee (the "Ongoing $10,000,000 Loan Guaranty
---------------------------------
Fee") calculated daily on 50% of the amount outstanding under the
---
$10,000,000 Loan, at an annual rate equal to the difference between
(x) the interest rate actually paid on the amount outstanding under
the $10,000,000 Loan and (y) eleven percent (11%), calculated from the
date on which the $10,000,000 Loan Guaranty was issued to the date the
$10,000,000 Loan Guaranty is released, and shall be payable within
seven (7) business days after the Completion Date.
(c) Section 2(c) is amended by adding the following sentence at the end of
Section 2(c):
In addition, if, as of the Completion Date, through no Fault of
Hughes (as such term is defined in Section 2(f) below) the $10,000,000
Loan is not fully repaid by AMSC and AMSC Parent and the $10,000,000
Loan Guaranty is not fully released (collectively, a "$10,000,000 Loan
----------------
Repayment Failure") then the additional consideration to be delivered
-----------------
to Hughes by AMSC and AMSC Parent shall be as follows: (i) AMSC shall
pay to Hughes a fee in an amount equal to two and one quarter percent
(2 1/4%) of 50% of the amount of the $10,000,000 Loan then
outstanding, which fee shall be payable within seven (7) business days
after the Completion Date (the "Upfront $10,000,000 Loan Repayment
----------------------------------
Failure Fee"); and (ii) AMSC shall pay to Hughes a fee (the "Ongoing
----------- -------
$10,000,000 Loan Repayment Failure Fee") calculated daily on 50% of
--------------------------------------
the amount outstanding under the $10,000,000 Loan, at an amount equal
to the difference between (X) the interest rate actually paid on the
amount outstanding under the $10,000,000 Loan and (Y) eleven percent
(11%), and which amount shall be payable from and calculated from and
after the date the $10,000,000 Loan Guaranty is issued to the end of
each calendar month or part thereof during which the $10,000,000 Loan
Guaranty is outstanding,
2
<PAGE>
and shall be payable within seven (7) business days after the end of
each such month.
(d) Exhibit C is amended by adding the following chart:
<TABLE>
<CAPTION>
Upfront Fee Ongoing Fee
----------- -----------
<S> <C> <C>
If $10,000,000 50% of 11% - actual interest
Loan is repaid rate paid under $10,000,000
from Longer-Term - 0 - Loan from date of issuance of
Financing without $10,000,000 Loan Guaranty
Hughes Guaranty until full repayment
If $10,000,000 50% of 11% - actual interest
Loan is not repaid rate paid under $10,000,000
by 6/30/96 2 1/4% Loan from date of issuance of
$10,000,000 Loan Guaranty
until full repayment
</TABLE>
(e) Section 2(c) is amended by deleting "Exhibit D" in clause (iii)
thereof and inserting "Exhibit F" in lieu thereof.
(f) Section 10 is amended and restated in its entirety as follows:
"10. Governing Law and Damage Limitation. This Agreement shall be
-----------------------------------
governed by, and construed in accordance with, the laws of the State
of New York applicable to agreements made and to be performed
entirely within such State. The parties hereby irrevocably waive any
right to a jury trial with respect to any action or proceeding
arising out of or relating to this Agreement. The parties agree that
neither party shall be liable hereunder for any special, indirect,
consequential or incidental damages, including, without limitation,
damages for lost profits or business."
(g) Section 12 is amended and restated in its entirety as follows:
"12. Reimbursement Agreement. If Hughes makes any payments under the
-----------------------
Bridge Loan Guaranty, the Interim Loan Guaranty or the $10,000,000
Loan Guaranty, each of AMSC and AMSC Parent agrees that it shall be
jointly and
3
<PAGE>
severally liable to reimburse Hughes for such payments, and that
Hughes will be fully subrogated to the extent of such payment to the
rights and remedies (including any collateral security) of the lenders
under the Bridge Loan, the Interim Loan and the $10,000,0000 Loan. If
Hughes acquires any notes evidencing the Bridge Loan, the Interim Loan
or the $10,000,000 Loan, or any of such obligations, from the lenders,
then Hughes shall acquire all of the rights and remedies (including
any collateral security) of such lenders under the Bridge Loan, the
Interim Loan and the $10,000,000 Loan. Except as expressly provided
herein, Hughes shall have no duties to AMSC or AMSC Parent with
respect to the exercise or non-exercise of any of such rights and
remedies."
4. Effectiveness of the Agreement. Except as hereby amended, the Agreement
------------------------------
shall remain in full force and effect, and is hereby ratified and confirmed.
[signature page follows]
4
<PAGE>
IN WITNESS WHEREOF, each of AMSC and AMSC Parent has caused this First
Amendment to be executed by its duly authorized officer.
AMSC SUBSIDIARY CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
AMERICAN MOBILE SATELLITE CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
ACCEPTED AND AGREED:
HUGHES ELECTRONICS CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE>
AMENDED AND RESTATED
INTERIM LOAN
GUARANTY
--------
THIS AMENDED AND RESTATED INTERIM LOAN GUARANTY (this "Guaranty")
--------
dated as of June __, 1996, is made by Hughes Electronics Corporation, a Delaware
corporation ("Guarantor"), to Toronto Dominion (Texas), Inc. and Morgan Guaranty
---------
Trust Company of New York (collectively, the "Guaranteed Parties" and
------------------
individually, a "Guaranteed Party").
----------------
R E C I T A L S:
WHEREAS, Hughes Communications Satellite Services, Inc., a wholly-
owned subsidiary of Guarantor is a shareholder of American Mobile Satellite
Corporation, a Delaware corporation ("AMSC"), the parent corporation of AMSC
----
Subsidiary Corporation, a Delaware corporation (the "Company");
-------
WHEREAS, the Company issued to the Guaranteed Parties notes in the
aggregate amount of $20,000,000 (the "$20,000,000 Notes") and now proposes to
issue to the Guaranteed Parties additional notes in the aggregate amount of
$10,000,000 (the "$10,000,000 Notes") (such promissory notes are collectively
herein referred to as the "Documents");
---------
WHEREAS, the Guaranteed Parties are unwilling to extend credit to the
Company under the Documents without credit support from shareholders of AMSC;
WHEREAS, it is in the best interests of Guarantor that the Guaranteed
Parties extend credit to the Company, and therefore Guarantor entered into that
certain Interim Loan Guaranty dated as of April 19, 1996, which is being amended
and restated in its entirety by this Guaranty;
WHEREAS, concurrently with the execution of this Guaranty, Singapore
Telecommunications Ltd. (the "Other Guarantor") is executing and delivering to
the Guaranteed Parties its guaranty of the obligations of the Company (the
"Other Guaranty");
<PAGE>
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, receipt of which is hereby acknowledged,
Guarantor hereby agrees with and for the benefit of each of the Guaranteed
Parties, as follows:
1. Guaranty.
--------
(a) Guarantor hereby guarantees to each Guaranteed Party (i) the
punctual payment when due of each and every obligation of the Company for the
payment of principal or interest owing by the Company to such Guaranteed Party
under the Documents and (ii) expenses owing by the Company under Section 6 of
the Documents (collectively, the "Guaranteed Obligations") and (iii) any and all
----------------------
reasonable fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred by each Guaranteed Party in successfully enforcing any
rights of each Guaranteed Party under this Guaranty; provided, however, that the
------------------
liability of Guarantor with respect to outstanding and unpaid principal amounts
under the Documents shall not exceed $25,000,000, less 100% of any amounts
repaid to the Guaranteed Parties under the $20,000,000 Notes by the Company
(whether paid by the Company or from insurance proceeds) and less 50% of any
amounts repaid to the Guaranteed Parties under the $10,000,000 Notes by the
Company (whether paid by the Company or from insurance proceeds), plus any
amount that would otherwise be payable by the Other Guarantor but is not so
payable due to the application of Section 14 of the Other Guaranty. The
Guaranteed Parties may permit the Guaranteed Obligations to exceed Guarantor's
maximum liability hereunder without impairing the obligations of Guarantor
hereunder; provided, however, that if the Guaranteed Parties increase the
------------------
principal amount owed by the Company under the Documents or increase the
interest rate or fees payable by the Company under the Documents, such increased
amounts shall not be part of the Guaranteed Obligations without the prior
written consent of Guarantor, and all payments received by the Guaranteed
Parties with respect to the obligations of the Company under the Documents
(including any proceeds of insurance) shall be deemed to be first applied to the
guaranteed portion of such obligations, thereby reducing Guarantor's liability
hereunder (pro rata with the reduction of liability under the Other Guaranty).
In the event that any of the foregoing obligations shall not be paid when due,
Guarantor will pay such obligations within five (5) Business Days after
Guarantor's receipt of demand therefor; provided that demand for payment of any
Guaranteed Obligations shall constitute demand for payment of all interest under
the Documents accrued and unpaid from the date of such demand through the date
of payment by the Guarantor, and provided further that Guarantor may cause such
obligation or liability to be paid on its behalf by any corporation affiliated
with it. The payments made by the Guarantor of any Guaranteed Obligations,
whether on behalf of the Company prior to a
2
<PAGE>
default or after demand on Guarantor, shall be deemed to cure any related
payment default under the Documents and any such payments with respect to the
principal portion of the Guaranteed Obligations shall reduce Guarantor's
liability under this Section 1(a) with respect to principal.
(b) This Guaranty is a guaranty of payment and not of performance or
collection and is in no way conditioned or contingent upon any attempt to
collect from the Company.
(c) Guarantor shall be subrogated to all rights of the applicable
Guaranteed Party against the Company, and any collateral security or guarantees
therefor, in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guaranty; provided that Guarantor shall not exercise any rights of
--------
subrogation, reimbursement or contribution from or against the Company with
respect to payments made under this Guaranty until Guarantor has satisfied its
obligations under this Guaranty or all of the Guaranteed Obligations have been
paid in full.
(d) The liability of Guarantor and the liability of the Other
Guarantor under the Other Guaranty shall be independent and several obligations,
and Guarantor shall have no liability whatsoever with respect to the obligations
under the Other Guaranty. Any amounts of principal repaid to the Guaranteed
Parties by the Company (whether paid by the Company or from insurance proceeds)
under the $20,000,000 Notes or the $10,000,000 Notes shall be allocated 2/3 to
the $20,000,000 Notes and 1/3 to the $10,000,000 Notes for so long as principal
remains outstanding with respect to both the $20,000,000 Notes and the
$10,000,000 Notes.
(e) Guarantor may, at its option, satisfy its obligations hereunder
with respect to principal and interest by purchasing the notes issued to the
Guaranteed Parties in outstanding principal amounts equal to the amount of
Guarantor's maximum liability with respect to principal under Section 1(a)
above, together with accrued and unpaid interest thereon. Upon payment of such
amount, each Guaranteed Party shall assign to Guarantors notes in the aggregate
amount so purchased, and shall execute and deliver to Guarantor (at Guarantor's
expense) such other documents as Guarantor may reasonably request to assign the
notes, together with all collateral security therefor, and for Guarantor to
assume the rights and obligations of the Guaranteed Parties under the Documents
to the extent of the purchased notes.
2. Guaranty Absolute. Except as otherwise provided in this Guaranty,
-----------------
the liability of Guarantor under this Guaranty with respect to each and all of
the Guaranteed Obligations shall be irrevocable and shall be absolute and
unconditional irrespective of, and shall not be released, discharged or in any
way affected by:
(a) any waiver, extension, renewal or modification of, or any consent
to departure from, any Document, including, without limitation, any waiver or
consent involving a change in the time, manner or place of payment of all or any
of the Guaranteed Obligations contained in any Document, but subject to the
provisions of Section 1 above;
3
<PAGE>
(b) any extension of the time for payment by the Company or any other
Person of any Guaranteed Obligation under any Document;
(c) any failure, omission or delay by any Guaranteed Party to enforce,
assert or exercise any right, power or remedy conferred on or available to it
including, without limitation, to enforce any guaranty by AMSC of the Company's
obligations;
(d) the voluntary or involuntary liquidation, dissolution, sale of
assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting the Company, Guarantor, any Guaranteed Party or any other
person or any of their respective properties or creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, any Guaranteed Party or any
other corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim or right by separate suit or counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of any Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of any Guaranteed
Obligation; or
(g) any other act or omission to act or delay of any kind by the
Company, any Guaranteed Party or any other person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to the Guarantor's obligations
hereunder.
Notwithstanding the foregoing, the Guaranteed Parties shall not (i)
release the Company or any other guarantor from liability for the Guaranteed
Obligations, (ii) release or otherwise impair any collateral security at any
time held for the Guaranteed Obligations, or (iii) waive any rights to receive
proceeds of any insurance, or (iv) extend the maturity date under the Documents
to a date later than September 30, 1996, except in each case as consented to by
Guarantor and if either Guaranteed Party does so release the Company, any other
guarantor or any collateral security, or waive any rights to proceeds of
insurance, or extend the maturity date, Guarantor shall be released and
discharged from any liability under this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, with respect to any Guaranteed Party if at any time any payment of any of
the Guaranteed Obligations owed such Guaranteed Party is rescinded or must
otherwise be returned by such Guaranteed Party, as the case may be, upon the
insolvency, bankruptcy or reorganization of the Company, Guarantor (or any
4
<PAGE>
corporation affiliated with Guarantor that makes a payment on Guarantor's behalf
pursuant to Section 1(a) hereof) or otherwise, all as though such payment had
-------
not been made. If the payment of, or the acceleration of the time for payment
of, any sum required to be made by the Company under any Document shall at any
time be prevented by reason of a case or proceeding under bankruptcy, insolvency
or other similar law, Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, such sum shall be deemed to be payable in accordance
with the terms of such Document, and, subject to the limitations in Section 1
above, Guarantor shall pay such sum and any other amounts guaranteed hereunder
within five (5) Business Days after Guarantor's receipt of demand therefor.
3. Waiver. Except as otherwise provided in this Guaranty, Guarantor
------
hereby unconditionally waives, as to any Guaranteed Party, to the greatest
extent permitted by applicable law, (a) any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of
or proof of reliance by any Guaranteed Party upon this Guaranty, or acceptance
of this Guaranty, and the Guaranteed Obligations, (b) any requirement that any
Guaranteed Party exhaust any right or take any action against the Company, any
other guarantor or any other person or any collateral, (c) all notices which may
be required by statute, rule of law or otherwise to preserve any rights against
Guarantor hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under or in
respect of the Documents, and notice of any failure on the part of the Company
to perform and comply with any term or condition of any Document, (d) any rights
to the enforcement, assertion or exercise by any Guaranteed Party of any right,
remedy, power or privilege under or in respect of any of the Documents, (e) any
requirement of diligence and (f) notice of acceptance of this Guaranty. Any
Guaranteed Party that is entitled to receive payments required to be made by
Guarantor hereunder in respect of any Guaranteed Obligation shall have the right
to enforce this Guaranty (by bringing suit or otherwise) directly against
Guarantor with respect to such Guaranteed Obligations without bringing suit
against the Company or any other person, as the case may be.
4. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty shall in any event be effective unless the same shall be in writing and
(a) with its enforcement against any Guaranteed Party, signed by such Guaranteed
Party, or (b) with respect to its enforcement against Guarantor, signed by
Guarantor.
5. No Waiver; Remedies. No failure on the part of any Guaranteed
-------------------
Party to exercise, and no delay in any Guaranteed Party's exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder by any Guaranteed Party
5
<PAGE>
preclude any other or further exercise thereof or the exercise of any other
right by such Guaranteed Party. Any Guaranteed Party may specifically waive any
breach of this Guaranty by Guarantor; provided that no such waiver shall be
effective or binding unless in writing, and that no such waiver shall constitute
a continuing waiver of similar or other breaches.
6. Continuing Guaranty. This Guaranty shall remain in full force and
-------------------
effect in accordance with the terms hereof until the earlier of (i) payment in
full of all of the Guaranteed Obligations and (ii) the date on which Guarantor
has satisfied all of its obligations under this Guaranty. The obligation of
Guarantor under Section 1(a)(iii) to pay any fees and expenses owing in
connection with the enforcement of this Guaranty shall survive such termination.
This Guaranty shall be binding upon Guarantor, its successors and assigns, and
inure to the benefit of and be enforceable by the successors, transferees and
assigns of each Guaranteed Party permitted under the Documents. Guarantor
agrees that in the discharge of its obligations hereunder no judgment, order, or
exhaustion need be obtained, and no action, suit or proceeding need be brought,
and no other remedies need be exhausted against the Company or any other Person
for performance by Guarantor of its obligations hereunder.
7. Notices, Etc. All notices, demands, requests, consents, approvals
------------
and other instruments hereunder shall be in writing and shall be deemed to have
been properly given if given as provided for in the Documents, and if to
Guarantor, sent to it at its address or fax number shown on the signature pages
of this Guaranty.
8. Separability of This Guaranty. In case any term or provision of this
-----------------------------
Guaranty or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
9. Further Assurances. Guarantor hereby agrees to execute and deliver
------------------
all such instruments and take all such action as any Guaranteed Party may from
time to time reasonably request in order to fully effectuate the purposes of
this Guaranty.
10. Headings. The headings contained in this Guaranty are for convenience
--------
of reference only and shall not modify, define or limit any of the terms or
provisions hereof.
6
<PAGE>
11. Governing Law and Damage Limitation. This Guaranty shall be governed
-----------------------------------
by, and construed in accordance with, the laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
The parties hereby irrevocably waive any right to a jury trial with respect to
any action or proceeding arising out of or relating to this Agreement. The
parties agree that Guarantor shall not be liable hereunder for any special,
indirect, consequential or incidental damages, including, without limitation,
damages for lost profits or business.
12. Representations and Warranties of Guarantor. Guarantor represents
-------------------------------------------
and warrants to each Guaranteed Party that:
(a) It is a corporation duly organized, validly existing and (to the
extent applicable) in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to enter into
and perform its obligations under this Guaranty.
(b) This Guaranty has been duly authorized by all necessary corporate
action on the part of, and has been duly executed and delivered by, Guarantor,
and none of the execution and delivery hereof, the consummation of the
transactions contemplated hereby or compliance by Guarantor with any of the
terms and provisions hereof (i) requires any approval of stockholders or
approval or consent of any trustee or holders of any indebtedness or obligations
of Guarantor other than such approvals or consents as have been obtained, (ii)
contravenes any law, judgment, governmental rule or regulation or order
applicable to or binding on Guarantor or any of its properties, the
contravention of which would have a material adverse effect on the financial
condition of Guarantor and its subsidiaries taken as a whole or on the ability
of Guarantor to perform any of its obligations under this Guaranty, (iii)
contravenes or results in any breach of or constitutes any default under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which Guarantor is a party or by which it or any of
its properties may be bound, the contravention, breach or default of which would
have a material adverse effect on the financial condition of Guarantor and its
subsidiaries taken as a whole or on the ability of Guarantor to perform any of
its obligations under this Guaranty, or (iv) contravenes its corporate charter
or by-laws.
(c) Neither the execution, delivery and performance by Guarantor of
this Guaranty nor the consummation of any of the transactions contemplated
hereby requires the consent, approval or authorization of, the giving of prior
notice to, or the prior registration, recording or filing of any document with,
or the taking of any other action in respect of, any governmental agency or
authority.
(d) This Guaranty constitutes the legal, valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms, except
as such enforcement
7
<PAGE>
may be subject to bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity.
(e) Guarantor has delivered copies of the consolidated balance sheet
of Guarantor and its consolidated subsidiaries as of the end of its most recent
fiscal year, and related statements of consolidated income and cash flow and
stockholder's equity for the fiscal year then ended, accompanied by the report
of its independent accountants. Such statements fairly present, in accordance
with generally accepted accounting principles, the financial position of
Guarantor and its consolidated subsidiaries as of such date and the results of
their operations and cash flows for such fiscal year.
13. Effect of this Guaranty. This Guaranty amends and restates in its
-----------------------
entirety the Interim Loan Guaranty dated as of April 19, 1996 issued by
Guarantor for the benefit of the Guaranteed Parties.
[signature page follows]
8
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
by its duly authorized officer.
HUGHES ELECTRONICS CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
ADDRESS FOR NOTICES:
7200 Hughes Terrace
M/S CI/A 700
Los Angeles, California 90045-0066
Attention: Roderick Sherwood, III
ACCEPTED AND AGREED:
TORONTO DOMINION (TEXAS), INC.
By:__________________________________
Name:________________________________
Title:_______________________________
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE>
EXHIBIT 8
AMERICAN MOBILE SATELLITE CORPORATION
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF AMERICAN MOBILE SATELLITE CORPORATION
-----------------------------------------------------
NO. __ WARRANT TO PURCHASE
____________ SHARES
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT
IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND OTHER MATTERS AS SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH MAY BE OBTAINED
UPON REQUEST FROM THE COMPANY.
FOR VALUE RECEIVED, AMERICAN MOBILE SATELLITE CORPORATION, a Delaware
corporation (the "Company"), hereby certifies that [_____________], its
successor or permitted assigns (the "Holder"), is entitled, subject to the
provisions of this Warrant, to purchase from the Company, at the times specified
herein, _________________ (the "Warrant Share Amount") fully paid and non-
assessable shares of Common Stock of the Company, par value $.01 per share (the
"Common Stock"), at a purchase price per share equal to the Exercise Price (as
hereinafter defined). The Warrant Share Amount is subject to adjustment from
time to time as hereinafter set forth.
(A) DEFINITIONS. Terms defined in the Securities Purchase Agreement
(as herein defined) and not otherwise defined herein are used herein as therein
defined. The following additional terms, as used herein, have the following
meanings:
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CURRENT MARKET PRICE PER COMMON SHARE" has the meaning set forth in
paragraph (j)(6).
"DULY ENDORSED" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust
<PAGE>
company or a member of a national securities exchange or of the National
Association of Securities Dealers, Inc.
"EXERCISE PRICE" means $0.01 per Warrant Share.
"EXPIRATION DATE" means January 18, 2001, at 5:00 p.m. New York City
time.
"REPURCHASE WARRANT SHARE AMOUNT" means 25% of the Warrant Share
Amount, as adjusted from time to time.
"SECURITIES PURCHASE AGREEMENT" means the Securities Purchase
Agreement dated January 19, 1996, among the Company, AMSC Subsidiary
Corporation, the purchasers listed therein and The Toronto-Dominion Bank, as
Payment Agent for such Purchasers.
"WARRANT EXERCISE NOTICE" means the Warrant Exercise Notice forming a
part hereof.
"WARRANT MARGIN" means, on any date, the difference of (x) the greater
of (A) the average of the Closing Prices on each of the 20 Trading Days
immediately preceding such date and (B) the Closing Price on the Trading Day two
Trading Days prior to such date, minus (y) the Exercise Price.
"WARRANT SHARE AMOUNT" has the meaning set forth in the first
paragraph hereof.
"WARRANT SHARES" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time.
(b) EXERCISE OF WARRANT.
(1) The Holder is entitled to exercise this Warrant in whole or
in part at any time, or from time to time to and including the Expiration
Date or, if such day is not a Business Day, then on the next succeeding day
that shall be a Business Day; provided, however, that until May 1, 1996,
-------- -------
this Warrant may be exercised only in part for a maximum number of Warrant
Shares equal to the Warrant Share Amount less the Repurchase Warrant Share
Amount. To exercise this Warrant, the Holder shall execute and deliver to
the Company a Warrant Exercise Notice substantially in the form annexed
hereto and shall deliver to the Company this Warrant Certificate, including
the Warrant Exercise Subscription Form forming a part hereof duly executed
by the Holder, together with payment of the applicable Exercise Price.
Upon such delivery and payment, the Holder shall be deemed to be the holder
of record of the Warrant Shares subject to such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered to the Holder.
2
<PAGE>
(2) The Exercise Price may be paid in cash or by certified or
official bank check or bank cashier's check payable to the order of the
Company or by any combination of such cash or check. The Company shall pay
any and all documentary, stamp or similar issue or transfer taxes payable
in respect of the issue or delivery of the Warrant Shares.
(3) If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new
Warrant Certificate of the same tenor and for the unexercised number of
Warrant Shares shall be executed by the Company. The Company shall register
the new Warrant Certificate in the name of the Holder or in such name or
names of its transferee pursuant to paragraph (h) hereof as may be directed
in writing by the Holder and deliver the new Warrant Certificate to the
Person or Persons entitled to receive the same.
(4) Except as otherwise provided in paragraph (c), upon surrender
of this Warrant Certificate in conformity with the foregoing provisions,
the Company shall transfer to the Holder of this Warrant Certificate
appropriate evidence of ownership of the shares of Common Stock or other
securities or property (including any money) to which the Holder is
entitled, registered or otherwise placed in, or payable to the order of,
the name or names of the Holder or such Permitted Transferee as may be
directed in writing by the Holder, and shall deliver such evidence of
ownership and any other securities or property (including any money) to the
Person or Persons entitled to receive the same, together with an amount in
cash in lieu of any fraction of a share as provided in paragraph (g) below.
(c) If at any time the exercise of any Warrants pursuant to paragraph
(b) would cause the Company's Alien Ownership Percentage to exceed the Accepted
Alien Ownership Percentage Limitation, then in lieu of issuing shares of Common
Stock pursuant to paragraph (b):
(1) the Company shall issue to each Holder exercising Warrants at
such time (each an "Exercising Holder") whose Alien Ownership Percentage is
less than or equal to the Accepted Alien Ownership Percentage Limitation
the number of shares of Common Stock to which such Exchanging Holder is
entitled pursuant to paragraph (b);
(2) the Company shall issue to each Exercising Holder whose Alien
Ownership Percentage is greater than the Accepted Alien Ownership
Percentage Limitation (each, an "Affected Exercising Holder") a number of
shares of Common Stock equal to the quotient of (x) the product of (A) the
number of shares of Common Stock that, immediately after giving effect to
any issuances of Common Stock pursuant to the foregoing clause (1), could
be issued to a Person with a 100% Alien Ownership Percentage without
causing the Company's Alien Ownership Percentage to exceed the Accepted
Alien Ownership Percentage Limitation, multiplied by (B) the number of
shares of Common Stock to which such Affected Exercising Holder would be
entitled pursuant to paragraph (b) but for the application of this
paragraph (c), divided by (y) the product
3
<PAGE>
of (A) the aggregate number of shares of Common Stock to which all Affected
Exercising Holders would be entitled pursuant to paragraph (b) but for the
application of this paragraph (c), multiplied by (B) such Affected
Exercising Holder's Alien Ownership Percentage; provided that in no event
shall the number of shares--------of Common Stock issuable to any Affected
Exercising Holder pursuant to this clause (2) exceed the number of shares
of Common Stock to which such Affected Exercising Holder would have been
entitled pursuant to paragraph (b) but for the application of this
paragraph (c); and
(3) the Company shall deliver by wire transfer of immediately
available funds to the account of each Affected Exercising Holder specified
in such Affected Exercising Holder's Exercise Notice, an amount equal to
the product of (x) the number of shares of Common Stock to which such
Affected Exercising Holder would have been entitled pursuant to paragraph
(b) that are not issuable to such Affected Exercising Holder pursuant to
the foregoing clause (2), multiplied by (y) the Warrant Margin on the
exercise date.
(d) Notwithstanding the provisions of paragraphs (b) and (c), in no
event shall this Warrant be exercisable for an aggregate number of shares of
Common Stock in excess of such number of shares (taking into account any prior
exercises of Warrants, exchanges of Notes and conversions of Preferred Stock) as
would require the approval of the Company's shareholders pursuant to Section
6(i)(1)(d) of Schedule D to the Bylaws of the National Association of Securities
Dealers, Inc. (the "NASD Limit") unless the Company's shareholders have, prior
to any exercise of this Warrant that would require the issuance of Common Stock
in excess of the NASD Limit (taking into account any prior exercises of
Warrants, exchanges of Notes and conversions of Preferred Stock) approved the
exercise of Warrants for an aggregate number of shares of Common Stock in excess
of the NASD Limit. If, upon any exercise of this Warrant, shares of Common
Stock that would otherwise be issuable upon such exercise are not issuable due
to the provisions of the foregoing sentence, then in lieu of issuing shares of
Common Stock pursuant to paragraph (b) or (c):
(i) the Company shall issue the maximum number of shares of
Common Stock, if any, issuable up to the NASD Limit (taking into account
any prior exercises of Warrants, exchanges of Notes and conversions of
Preferred Stock), pro rata in proportion to the number of shares of Common
Stock to which each holder of Warrants exercising Warrants at such time
(each an "Exercising Holder") would be entitled but for the provisions of
this paragraph (d); and
(ii) the Company shall deliver by wire transfer of immediately
available funds to the account of each Exercising Holder specified in such
Exercising Holder's Exercise Notice, an amount equal to the product of (x)
the number of shares of Common Stock to which such Exercising Holder would
have been entitled pursuant to the foregoing paragraphs (b) and (c) that
are not issuable to such Exercising Holder pursuant to the foregoing clause
(i), multiplied by the Warrant Margin.
4
<PAGE>
(E) RESTRICTIVE LEGEND. Certificates representing shares of Common
Stock issued pursuant to this Warrant shall bear a legend substantially in the
form of the legend set forth on the first page of this Warrant Certificate to
the extent that and for so long as such legend is required pursuant to the
Securities Purchase Agreement.
(F) RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of its authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except to the extent set forth in the
Securities Purchase Agreement.
(G) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant and in lieu
of delivery of any such fractional share upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price Per Common Share (as defined in paragraph (j)(6)) at
the date of such exercise.
(H) EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.
(i) This Warrant Certificate and all rights hereunder are not
transferable by the registered holder hereof other than in accordance with
the Securities Purchase Agreement. Each taker and holder of this Warrant
Certificate by taking or holding the same, consents and agrees that the
registered holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof
for any purpose and as the person entitled to exercise the rights
represented hereby.
(ii) Subject to compliance with the Securities Purchase
Agreement, the Holder of this Warrant shall be entitled, without obtaining
the consent of the Company, to assign and transfer this Warrant, at any
time in whole or from time to time in part, to any Person or Persons.
Subject to the preceding sentence, upon surrender of this Warrant to the
Company, together with the attached Warrant Assignment Form duly executed,
the Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of
the Holder and this Warrant shall promptly be canceled.
(i) LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant Certificate, and (in
the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant
Certificate, if mutilated, the Company shall execute and deliver a new Warrant
Certificate of like tenor and date.
5
<PAGE>
(J) ANTI-DILUTION PROVISIONS.
(1) In case the Company shall at any time after the date hereof
(i) declare a dividend or make a distribution on Common Stock payable in
Common Stock, (ii) subdivide, split or reclassify the outstanding Common
Stock into a larger number of shares, (iii) combine or reclassify the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then in each
such case the Warrant Share Amount shall be adjusted to equal the number of
shares to which the holder of this Warrant would have been entitled upon
the occurrence of such event if this Warrant had been exercised immediately
prior to such time. Such adjustment shall be made successively whenever any
event listed above shall occur.
(2) In case the Company shall issue or sell any Common Stock
(other than Common Stock issued (I) upon exercise of the Warrants, exchange
of the Notes or conversion of the Preferred Stock, (II) pursuant to the
Company's Employee Stock Purchase Plan, Employee Stock Option Plan, Non-
Employee Director Stock Ownership Plan or 401(k) Plan or pursuant to any
similar Common Stock related employee compensation plan of the Company
approved by the Company's Board of Directors (III) upon exercise of any of
the warrants set forth in Section 3.7 of the Disclosure Schedule or (IV)
upon exercise or conversion of any security the issuance of which caused an
adjustment under paragraphs (j)(3) or (j)(4) hereof) without consideration
or for a consideration per share less than the Current Market Price Per
Common Share, the Warrant Share Amount to be in effect after such issuance
or sale shall be determined by multiplying the Warrant Share Amount in
effect immediately prior to such issuance or sale by a fraction, the
numerator of which shall be the product of the aggregate number of shares
of Common Stock outstanding immediately after such issuance or sale and the
Current Market Price Per Common Share immediately prior to such issuance or
sale, and the denominator of which shall be the sum of (x) the aggregate
consideration, if any, to be received by the Company upon such issuance or
sale and (y) the number of shares of Common Stock outstanding immediately
prior to the time of such issuance or sale multiplied by the Current Market
Price Per Common Share immediately prior to such issuance or sale. In case
any portion of the consideration to be received by the Company shall be in
a form other than cash, the fair market value of such noncash consideration
shall be utilized in the foregoing computation. Such fair market value
shall be determined by the Board of Directors of the Company; provided that
--------
if the Holder shall object to any such determination, the Board of
Directors shall retain an independent appraiser reasonably satisfactory to
the Holder to determine such fair market value. The Holder shall be
notified promptly of any consideration other than cash to be received by
the Company and furnished with a description of the consideration and the
fair market value thereof, as determined by the Board of Directors.
6
<PAGE>
(3) In case the Company shall fix a record date for the issuance
of rights, options or warrants to the holders of its Common Stock or other
securities entitling such holders to subscribe for or purchase for a period
expiring within 60 days of such record date shares of Common Stock (or
securities convertible into share of Common Stock) at a price per share of
Common Stock (or having a conversion price per share of Common Stock, if a
security convertible into shares of Common Stock) less than the Current
Market Price Per Common Share on such record date, the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants (or conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the Warrant
Share Amount shall be adjusted pursuant to paragraph (j)(2) hereof, as
though such maximum number of shares of Common Stock had been so issued for
an aggregate consideration payable by the holders of such rights, options,
warrants or convertible securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash consideration shall
be determined as set forth in paragraph (j)(2) hereof. Such adjustment
shall be made successively whenever such record date is fixed; and in the
event that such rights, options or warrants are not so issued or expire
unexercised, or in the event of a change in the number of shares of Common
Stock to which the holders of such rights, options or warrants are entitled
(other than pursuant to adjustment provisions therein comparable to those
contained in this paragraph (j)), the Warrant Share Amount shall again be
adjusted to be the Warrant Share Amount which would then be in effect if
such record date had not been fixed, in the former event, or the Warrant
Share Amount which would then be in effect if such holder had initially
been entitled to such changed number of shares of Common Stock, in the
latter event.
(4) In case the Company shall issue rights, options (other than
options issued pursuant to a plan described in clause I of paragraph
(j)(2)) or warrants entitling the holders thereof to subscribe for or
purchase Common Stock (or securities convertible into shares of Common
Stock) or shall issue convertible securities (other than the Notes and
Preferred Stock), and the price per share of Common Stock of such rights,
options, warrants or convertible securities (including, in the case of
rights, options or warrants, the price at which they may be exercised) is
less than the Current Market Price Per Common Share, the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants or upon conversion of such convertible securities shall be deemed
to have been issued and outstanding as of the date of such sale or
issuance, and the Warrant Share Amount shall be adjusted pursuant to
paragraph (j)(2) hereof as though such maximum number of shares of Common
Stock had been so issued for an aggregate consideration equal to the
aggregate consideration paid for such rights, options, warrants or
convertible securities and the aggregate consideration payable by the
holders of such rights, options, warrants or convertible securities prior
to their receipt of such shares of Common Stock. In case any portion of
such consideration shall be in a form other than cash, the fair market
value of such noncash consideration shall be determined as set forth in
paragraph (j)(2) hereof. Such adjustment shall be made successively
whenever such
7
<PAGE>
rights, options, warrants or convertible securities are issued; and in the
event that such rights, options or warrants expire unexercised, or in the
event of a change in the number of shares of Common Stock to which the
holders of such rights, options, warrants or convertible securities are
entitled (other than pursuant to adjustment provisions therein comparable
to those contained in this paragraph (j)), the Warrant Share Amount shall
again be adjusted to be the Warrant Share Amount which would then be in
effect if such rights, options, warrants or convertible securities had not
been issued, in the former event, or the Warrant Share Amount which would
then be in effect if such holders had initially been entitled to such
changed number of shares of Common Stock, in the latter event. No
adjustment of the Warrant Share Amount shall be made pursuant to this
paragraph (j)(4) to the extent that the Warrant Share Amount shall have
been adjusted pursuant to paragraph (j)(3) upon the setting of any record
date relating to such rights, options, warrants or convertible securities
and such adjustment fully reflects the number of shares of Common Stock to
which the holders of such rights, options, warrants or convertible
securities are entitled and the price payable therefor.
(5) In case the Company shall fix a record date for the making of
a distribution to holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is
the continuing corporation) of evidences of indebtedness, assets or other
property (other than dividends payable in Common Stock or rights, options
or warrants referred to in, and for which an adjustment is made pursuant
to, paragraph (j)(3) hereof), the Warrant Share Amount to be in effect
after such record date shall be determined by multiplying the Warrant Share
Amount in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price Per Common Share, and
the denominator of which shall be such Current Market Price Per Common
Share on such record date, less the fair market value (determined as set
forth in paragraph (j)(2) hereof) of the portion of the assets, other
property or evidence of indebtedness so to be distributed which is
applicable to one share of Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Share Amount shall again be
adjusted to be the Warrant Share Amount which would then be in effect if
such record date had not been fixed.
(6) For the purpose of any computation under paragraph (c) or
paragraph (j)(2), (3), (4) or (5) hereof, on any determination date the
Current Market Price Per Common Share shall be deemed to be the average
(weighted by daily trading volume) of the Daily Prices (as defined below)
per share of the applicable class of Common Stock for the 20 consecutive
trading days immediately prior to such date. "Daily Price" means (1) if
the shares of such class of Common Stock then are listed and traded on the
New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as
reported on the NYSE Composite Transactions Tape; (2) if the shares of such
class of Common Stock then are not listed and traded on the NYSE, the
closing price on such day as reported by the principal national securities
exchange on which the shares are listed and traded; (3) if the shares of
such class of Common Stock then are not listed and traded on any such
securities
8
<PAGE>
exchange, the last reported sale price on such day on the National Market
of the National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ"); or (4) if the shares of such class of Common Stock then
are not traded on the NASDAQ National Market, the average of the highest
reported bid and lowest reported asked price on such day as reported by
NASDAQ. If on any determination date the shares of such class of Common
Stock are not quoted by any such organization, the Current Market Price Per
Common Share shall be the fair market value of such shares on such
determination date as determined by the Board of Directors. If the Holder
shall object to any determination by the Board of Directors of the Current
Market Price Per Common Share, the Current Market Price Per Common Share
shall be the fair market value per share of the applicable class of Common
Stock as determined by an independent appraiser retained by the Company at
its expense and reasonably acceptable to the Holder. For purposes of any
computation under this paragraph (j), the number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company.
(7) No adjustment in the Warrant Share Amount shall be required
unless such adjustment would require an increase or decrease of at least
one percent of such amount; provided that any adjustments which by reason
--------
of this paragraph (j)(7) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (j) shall be made to the nearest one
tenth of a cent or to the nearest hundredth of a share, as the case may be.
(8) In the event that, at any time as a result of the provisions
of this paragraph (j), the holder of this Warrant upon subsequent exercise
shall become entitled to receive any shares of capital stock of the Company
other than Common Stock, the number of such other shares so receivable upon
exercise of this Warrant shall thereafter be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions contained herein.
(K) CONSOLIDATION, MERGER, OR SALE OF ASSETS. In case of any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any sale or transfer of all or
substantially all of the assets of the Company or of the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, the Holder shall have the right thereafter to exercise this
Warrant for the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock for which this Warrant may have been exercised
immediately prior to such consolidation, merger, sale or transfer, assuming (i)
such holder of Common Stock is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be ("constituent Person"), or an
Affiliate of a constituent Person and (ii) in the case of a consolidation
merger, sale or transfer which includes an election as to the
9
<PAGE>
consideration to be received by the holders, such holder of Common Stock failed
to exercise its rights of election, as to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer is not the same for
each share of Common Stock held immediately prior to such consolidation, merger,
sale or transfer by other than a constituent Person or an Affiliate thereof and
in respect of which such rights of election shall not have been exercised ("non-
electing share"), then for the purpose of this paragraph (k) the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). Adjustments for events subsequent to the effective date of such a
consolidation, merger and sale of assets shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. In any such event,
effective provisions shall be made in the certificate or articles of
incorporation of the resulting or surviving corporation, in any contract of
sale, conveyance, lease or transfer, or otherwise so that the provisions set
forth herein for the protection of the rights of the Holder shall thereafter
continue to be applicable; and any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon exercise, such shares of stock,
other securities, cash and property. The provisions of this paragraph (k) shall
similarly apply to successive consolidations, mergers, sales, leases or
transfers.
(L) NOTICES. Any notice, demand or delivery authorized by this
Warrant Certificate shall be in writing and shall be given to the Holder, the
Company or the Shareholder Representative, as the case may be, at its address
(or telecopier number) set forth below, or such other address (or telecopier
number) as shall have been furnished to the party giving or making such notice,
demand or delivery:
If to the Company: American Mobile Satellite
Corporation
10802 Parkridge Blvd.
Reston, VA 22091
Telecopy: (703) 758-6142
Attention: Randy Segal,
General Counsel
If to the Holder: [Holder]
[Address]
[Address]
Telecopy:
Attention:
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms
10
<PAGE>
the receipt of such telecopy or (ii) if given by any other means, when received
at the address specified herein.
(M) RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a shareholder
of the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, to exercise any preemptive right or to receive
any notice of meetings of shareholders or any notice of any proceedings of the
Company except as may be specifically provided for herein.
(N) GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING
HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND
ENFORCED IN ACCORDANCE WITH SUCH LAWS.
(O) AMENDMENTS; WAIVERS. Any provision of this Warrant Certificate
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the Holder and the Company, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed by its duly authorized officer and to be dated as of
January 19, 1996.
ISSUER
By ______________________________
Name:
Title:
Acknowledged and Agreed:
HOLDER
By ___________________________
Title:
11
<PAGE>
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant
by execution of the Warrant Exercise Subscription Form)
To: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $.01 per share, of
American Mobile Satellite Corporation. The undersigned intends to exercise the
Warrant to purchase _____________ shares (the "Shares") at $0.01 per Share. The
undersigned intends to pay the aggregate Exercise Price for the Shares in cash,
certified or official bank or bank cashier's check (or a combination of cash and
check) as indicated below.
The undersigned hereby certifies that to the best of its knowledge its
Alien Ownership Percentage as of the date hereof is ___________________.
Date:_______________, _____.
_______________________________________________
(Signature of Owner)
_______________________________________________
(Street Address)
_______________________________________________
(City) (State) (Zip Code)
Payment: $________________cash
$________________check
<PAGE>
WARRANT EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of the Warrant
after delivery of Warrant Exercise Notice)
To: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
The undersigned irrevocably exercises the Warrant for the purchase of
shares (the "Shares") of Common Stock, par value $.01 per share, of American
Mobile Satellite Corporation (the "Company") at $0.01 per Share and herewith
makes payment of $ (such payment being made in cash or by certified or
official bank or bank cashier's check payable to the order of the Company or by
any permitted combination of such cash or check), all on the terms and
conditions specified in the within Warrant Certificate, surrenders this Warrant
Certificate and all right, title and interest therein to the Company and directs
that the Shares deliverable upon the exercise of this Warrant be registered or
placed in the name and at the address specified below and delivered thereto.
Date:_________, ____.
___________________________________________
(Signature of Owner)
___________________________________________
(Street Address)
___________________________________________
(City) (State) (Zip Code)
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised portion of the Warrant evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
<PAGE>
WARRANT ASSIGNMENT FORM
-----------------------
Dated ____________, ___
FOR VALUE RECEIVED,___________________________________________________
hereby sells, assigns and transfers unto _______________________________________
______________________________________________________________ (the "Assignee"),
(please type or print in block letters)
________________________________________________________________________________
(insert address)
its right to purchase up to ________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
____________________________________________
Signature
<PAGE>
EXHIBIT 9
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT dated as of January 19, 1996 among
American Mobile Satellite Corporation, a Delaware Corporation (the "Company")
and the other persons listed on the signature pages hereof (the "Purchasers").
W I T N E S E T H
WHEREAS, the Company, AMSC Subsidiary Corporation, a Delaware
corporation dually incorporated as a Virginia public service corporation, the
Purchasers and The Toronto-Dominion Bank, as Payment Agent for such Purchasers
have entered into a Securities Purchase Agreement dated as of January 19, 1996
(the "Securities Purchase Agreement"); and
WHEREAS, in order to induce the Purchasers to enter into the
Securities Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Terms defined in the Securities Purchase
-----------
Agreement and not otherwise defined herein are used herein as therein defined.
In addition, the following terms, as used herein, have the following meanings:
"Bridge Shares" means the shares of Common Stock issued or issuable in
exchange for Notes, upon conversion of Preferred Stock or upon exercise of the
Warrants, in each case in accordance with the terms thereof and of the
Securities Purchase Agreement, and any Common Stock issued as or issuable upon
the conversion or exercise or any warrant, option, right, or other security
which is issued as a dividend or other distribution with respect to or in
exchange for or in replacement of the shares of Common Stock issued or issuable
in exchange for Notes, upon conversion of Preferred Stock or upon exercise of
the Warrants.
"Holder" means the holder of any Bridge Shares unless such Bridge
Shares are acquired in a public distribution pursuant to a registration
statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act where securities
<PAGE>
sold in such transaction may be resold without subsequent registration under the
Securities Act.
"Piggy-Back Registration" has the meaning set forth in Section 2.2.
"Registrable Securities" means the Bridge Shares until (i) a
registration statement covering such Bridge Shares has been declared effective
by the Commission and they have been disposed of pursuant to such effective
registration statement, (ii) they are sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or under which they may be sold pursuant to
Rule 144(k) or (iii) the Company has delivered a new certificate or other
evidence of ownership for them not bearing the legend required pursuant to the
Securities Purchase Agreement and they may be resold without subsequent
registration under the Securities Act.
"Registration Shares" has the meaning set forth in Section 2.1(a).
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Automatic Registration. (a) On the initial Closing Date
----------------------
the Company shall commence registration in accordance with Section 2.1(c) of an
indeterminate number of Registrable Securities, which Registrable Securities
shall have a proposed maximum aggregate offering price of at least $50,000,000
(the "Registration Shares").
(b) To facilitate the registration required under Section 2.1(a), the
Company shall cause the registration statement to be filed under this Section
2.1 to be a "shelf" registered offering pursuant to Rule 415 under the
Securities Act (unless such Rule shall be inapplicable to the proposed
registration) covering all of the Registration Shares, which registration
statement shall provide for the sale by the Holders, from time to time, of the
Registration Shares in brokers' transactions, block sales, fixed price offerings
or otherwise. In connection with any underwritten offering under such
registration statement, the Selling Holders shall designate an Underwriter to
act with respect to such offering; provided that any such Underwriter must be of
--------
nationally recognized standing.
(c) The Company shall file a registration statement covering the
Registration Shares as soon as practicable after the initial Closing Date, but
in no event later than 30 days thereafter, and shall use its best efforts to
cause such registration statement to be
2
<PAGE>
declared effective pursuant to the Securities Act as soon as practicable, but in
no event later than the date that is a number of days after the filing of such
registration statement equal to the lesser of (i) 30 plus the number of days
from the date on which such registration statement or any pre-effective
amendment of such registration statement is filed with the Commission to the
date on which the Commission delivers its written comments (or indicates that it
will not be commenting) with respect to the registration statement or such
amendment (as the case may be) and (ii) 90; provided that any delay in filing or
--------
effectiveness due to a Selling Holder's failure promptly to provide information
requested and required to be provided by such Selling Holder to the Company
pursuant to Section 3.1 shall not be counted toward any such period. The
Company shall use its best efforts to maintain the effectiveness of such
Registration Statement (or another Registration Statement covering the
Registration Shares) at all times from the effective date thereof until the
earlier of (i) the date three years following the effective date thereof and
(ii) the first date on which no Purchaser holds any Bridge Shares (other than
shares issuable upon the exercise of Warrants), Notes or Preferred Stock.
SECTION 2.2. Piggy-Back Registration. (a) If the Company proposes
-----------------------
to file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
respective securityholders of any class of equity security or security
convertible into or exchangeable for any class of equity security (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the Commission), or a registration filed in connection with an
exchange offer or offering of securities solely to the Company's existing
securityholders), then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than 10 days before the anticipated filing date), and such notice
shall offer such Holders the opportunity to register such number of shares of
Registrable Securities as each such Holder may request (a "Piggy-Back
Registration"). The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back Registration to
be included on the same terms and conditions as any similar Securities of the
Company included therein.
(b) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of an offering described in the foregoing paragraph
(a) deliver a written opinion to the Holders of the Registrable Securities
included in such offering that (i) the size of the offering that the Holders,
the Company and such other persons intend to make or (ii) the kind of securities
that the Holders, the Company and any other persons or entities intend to
include in such offering are such that the success of the offering would be
materially and adversely affected by inclusion of the Registrable Securities
requested to be included, then (A) if the size of the offering is the basis of
such Underwriter's opinion, the amount of securities to be offered for the
accounts of Holders shall not be reduced unless the amount of securities to be
offered for the account of the Company and any other persons or entities has
been reduced to zero; and (B) if the combination of securities to be offered is
the
3
<PAGE>
basis of such Underwriter's opinion, (x) the amount of securities to be offered
for the account of the Company or such other persons or entities shall be
reduced (including to zero) to the extent necessary, in the judgment of the
managing Underwriter, to substantially eliminate the adverse effect that
inclusion of the Registrable Securities requested to be included would have on
such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever Registrable Securities
--------------------
are to be registered pursuant to Section 2.1 hereof, the Company will use its
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible (and in any
event within the time period specified in Section 2.1(c)) prepare and file
with the Commission a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its best efforts to cause
such filed registration statement to become and remain effective in
accordance with Article II.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to each Selling Holder and each Underwriter, if any, of
the Registrable Securities covered by such registration statement copies of
such registration statement as proposed to be filed, and thereafter furnish
to such Selling Holder and Underwriter, if any, such number of copies of
such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such Selling
Holder or Underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Selling Holder.
(c) After the filing of the registration statement, the Company
will promptly notify each Selling Holder of Registrable Securities covered
by such registration statement of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions
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in the United States as any Selling Holder reasonably (in light of such
Selling Holder's intended plan of distribution) requests and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and
things that may be reasonably necessary or advisable to enable such Selling
Holder to consummate the disposition of the Registrable Securities owned by
such Selling Holder; provided that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject
itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Company will immediately notify each Selling Holder of
such Registrable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of
an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading and promptly file and make available to each Selling Holder any
such supplement or amendment.
(f) The Company will enter into customary agreements (including
an underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities.
(g) The Company will make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter
participating in any disposition pursuant to such registration statement
and any attorney, accountant or other professional retained by any such
Selling Holder or Underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties
of the Company (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Selling Holder of such Registrable Securities
agrees that information obtained by it as a result of such inspections
shall be deemed confidential and shall not be used by it as the basis for
any market transactions in the securities of the Company or its Affiliates
unless and until such is made generally available to the public. Each
Selling Holder of such Registrable
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<PAGE>
Securities further agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder
or Underwriters of (i) an opinion or opinions of counsel to the Company and
(ii) a comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may
be, as the Majority Holders of the issue of Registrable Securities included
in such offering or the managing Underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the commencement of any public offering of securities pursuant
to the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(j) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
The Company may require each Selling Holder of Registrable Securities
to promptly furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may from time to time
reasonably request and such other information as may be legally required in
connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.1(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(e) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 3.1(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 3.1(e) hereof to
the date when the Company shall make available to the Selling Holders of
Registrable Securities covered by such
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<PAGE>
registration statement a prospectus supplemented or amended to conform with the
requirements of Section 3.1(e) hereof.
SECTION 3.2. Expenses. (a) In connection with any registration
--------
statement required to be filed hereunder, the Company shall pay the following
Registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees, (ii) fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities, (iii) printing expenses, (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, (vi) reasonable fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 3.1(h) hereof),
(vii) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration and (viii) reasonable fees and
expenses of one counsel (who shall be reasonably acceptable to the Company) for
the Holders.
(b) In connection with any underwritten sale or proposed
underwritten sale of Registrable Securities hereunder, the Company shall pay (i)
any reasonable termination or similar fee payable as a result of AMSC Subsidiary
Corporation's redemption of Notes or the Company's redemption of Preferred Stock
after delivery of a Pre-Exchange Notice with respect to such Notes or Preferred
Stock and (ii) any reasonable underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company by such
Selling Holder or on such Selling Holder's behalf expressly for use therein;
7
<PAGE>
provided, however, that the foregoing indemnity agreement with respect to any
- -------- -------
preliminary prospectus shall not inure to the benefit of any Selling Holder from
whom the person asserting any such loss, claim, damage or liability purchased
the Registrable Securities if it is determined that it was the responsibility of
such Selling Holder to provide such person with a current copy of the prospectus
and such current copy of the prospectus would have cured the defect giving rise
to such loss, claim, damage or liability. The Company also agrees to indemnify
any Underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2. Indemnification by Holders of Registrable Securities.
----------------------------------------------------
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Selling Holder, but only with
reference to information related to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by the preceding paragraph. Each
Selling Holder also agrees to indemnify and hold harmless Underwriters of the
Registrable Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceedings. In case any
--------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at
8
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any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
business days after receipt by such Indemnifying Party of the aforesaid request
and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party
in accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
arising out of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
------------
this Article 4 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Company and
the Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the Underwriters on the
other from the offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things,
9
<PAGE>
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holder's obligations to contribute pursuant to
this Section 4.4 are several in proportion to the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
10
<PAGE>
documents reasonably required under the terms of such underwriting arrangements
and these Registration Rights.
SECTION 5.2. Rule 144. The Company covenants that it will file any
--------
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.3. Holdback Agreements. (a) Restrictions on Public Sale
------------------- ---------------------------
by Holder of Registrable Securities. To the extent not inconsistent with
- -----------------------------------
applicable law, each Holder whose securities are included in a registration
statement agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to,
and during the 90-day period beginning on, the commencement of a public
distribution of Registrable Securities, if and to the extent requested by the
managing Underwriter or Underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale by the Company and Others. The
-----------------------------------------------------
Company and its Affiliates agree (i) not to effect any public sale or
distribution of any securities similar to those being registered in accordance
with Section 2.1 or Section 2.2 hereof, or any securities convertible into or
exchangeable or exercisable for such securities, (in each case other than in
connection with the Company's Employee Stock Purchase Plan, Employee Stock
Option Plan, Non-Employee Director Stock Ownership Plan or 401(k) Plan) during
the 30 days prior to, and during the 180-day period beginning on, the
commencement of a public distribution of Registrable Securities (or such other
period of time as may be required by the Underwriter effecting such public
distribution); and (ii) that any agreement entered into after the date of the
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
securities agree not to effect any public sale or distribution of any such
securities during the periods described in (i) above, in each case including a
sale pursuant to Rule 144 under the Securities Act; provided, however, that the
-------- -------
provisions of this paragraph (b) shall not prevent the conversion or exchange of
any securities pursuant to their terms into or for other securities.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers, as of the date first
above written.
AMERICAN MOBILE SATELLITE CORPORATION
By: ___________________________________
Name:
Title:
TORONTO DOMINION INVESTMENTS, INC.
By: ___________________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: ___________________________________
Name:
Title:
HUGHES COMMUNICATIONS SATELLITE SERVICES,
INC.
By: ___________________________________
Name:
Title:
12
<PAGE>
EXHIBIT 10
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT, dated as of June 28, 1996 (this
"Agreement"), among American Mobile Satellite Corporation, a Delaware
corporation ("AMSC Parent"), AMSC Subsidiary Corporation, a Delaware corporation
dually incorporated as a Virginia public service corporation ("AMSC"), Hughes
Electronics Corporation, a Delaware corporation ("Hughes"), and Hughes
Communications Satellite Services, Inc., a wholly owned indirect subsidiary of
Hughes ("Hughes Services" and, together with Hughes, the "Hughes Shareholders").
R E C I T A L S:
WHEREAS, pursuant to an Amended and Restated Stockholders' Agreement,
dated as of December 1, 1994 (the "Stockholders' Agreement"), Hughes has the
right to have up to two Directors (each, a "Hughes Designee") appointed to the
Executive Committee of the Board of Directors (as defined in the Stockholders'
Agreement) of AMSC Parent;
WHEREAS, Hughes and its Affiliates (as defined herein) beneficially
own 6,691,622, or 26.73%, of the total outstanding Voting Securities (as defined
herein) of AMSC Parent;
WHEREAS, AMSC Parent, AMSC and Hughes have entered into that certain
Guaranty Issuance Agreement, dated as of April 19, 1996, as amended by the First
Amendment to Guaranty Issuance Agreement, dated as of June 7, 1996 (as amended,
the "Guarantee Issuance Agreement"), pursuant to which, among other things, AMSC
Parent agreed that in the event the Longer-Term Financing (as defined herein) is
consummated and Hughes provides a guaranty for part or all of such Longer-Term
Financing, AMSC Parent will issue to Hughes and other stockholders of AMSC
Parent warrants (the "Guarantee Warrants") exercisable for up to 5,000,000
shares of common stock of AMSC Parent ("Common Stock");
WHEREAS, in connection with the Guaranty Issuance Agreement, it was
contemplated that the parties thereto would enter into an agreement setting
forth certain standstill and corporate governance provisions in the event the
Longer-Term Financing is consummated and Guarantee Warrants are issued to
Hughes; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, AMSC Parent and AMSC have entered into a $150,000,000 Credit
Agreement and a $75,000,000 Credit Agreement, each dated as of June 28, 1996,
among AMSC Parent, AMSC, the banks listed therein, Morgan Guaranty Trust Company
of New York and Toronto Dominion (Texas), Inc. (together, the "Longer-Term
Financing") and a Guaranty Issuance Agreement, dated as of June 28, 1996, among
AMSC Parent, AMSC, Hughes and the other parties named therein, and has issued to
Hughes Guarantee Warrants exercisable for 3,750,000 shares of Common Stock.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and the
promises, covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and
1
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sufficiency of which are hereby acknowledged, AMSC Parent, AMSC, Hughes and
Hughes Services hereby agree as follows:
1. Standstill Period. (a) The restrictions contained in this Agreement shall
-----------------
commence on the date hereof and shall continue until the first date upon which
any one of the following events occurs (the "Standstill Period"):
(i) Hughes notifies AMSC Parent in writing that the beneficial
ownership of Hughes and its Affiliates is less than 32% of the total
outstanding Voting Securities of AMSC Parent (the "Threshold Level") and
that Hughes and its Affiliates do not have the intention at such time of
acquiring additional Voting Securities with the purpose of, or having the
effect of, increasing the beneficial ownership of Hughes and its Affiliates
above the Threshold Level;
(ii) Hughes delivers the Guarantee Warrants to AMSC Parent for
cancellation without having acquired any shares of Common Stock through the
exercise of such Guarantee Warrants sufficient to increase the beneficial
ownership of Hughes and its Affiliates above the Threshold Level;
(iii) (A) any Event of Default (as defined in the Longer-Term
Financing) specified in Section 6.1(a), 6.1(g) or 6.1(h) of the Longer-Term
Financing shall have occurred; (B) Hughes has purchased any indebtedness
under the Longer-Term Financing under Section 1(e) of the Hughes Guaranty
(as defined in the Longer-Term Financing); or (C) the indebtedness under
the Longer-Term Financing shall not have been repaid at final maturity;
(iv) prior to the Release Date (as defined in the Longer-Term
Financing), a Specified Event of Default shall have occurred and be
continuing and (A) all or any portion of the Longer-Term Financing shall
have been declared or become due and payable prior to the date on which it
would otherwise have become due and payable or (B) such Specified Event of
Default has not been waived in writing by both Hughes and the lenders under
the Longer-Term Financing or cured within 60 days after the occurrence
thereof; or
(v) June 28, 2001.
(b) For purposes of Section 1(a), a "Specified Event of Default"
means any Event of Default under the Longer-Term Financing other than pursuant
to: (i) Section 6.1(a), 6.1(g) or 6.1(h) of the Longer-Term Financing, (ii)
Section 6.1(q) of the Longer-Term Financing as a result of Hughes' action or
failure to act in violation of this Agreement; (iii) Section 6.1(r) or 6.1(s) of
the Longer-Term Financing (with respect to Hughes only); (iv) Section 6.1(t) of
the Longer-Term Financing (with respect to Hughes only) unless Hughes shall have
been entitled to take such action under the Guaranty Issuance Agreement; or (v)
Hughes' failure to perform under the Hughes Guaranty on the terms set forth
therein.
2. Ownership Limit. (a) The Hughes Shareholders agree that, during the
---------------
Standstill Period, without the prior written consent of the Board, specifically
expressed in a resolution adopted by a majority of the Independent Directors,
the Hughes Shareholders will not, and the Hughes Shareholders will cause each of
their Affiliates not to, directly or indirectly:
(i) acquire or agree to acquire, whether by purchase, tender or
exchange offer, through the acquisition or Control of another Person, by
joining a partnership, syndicate or other "group" (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
2
<PAGE>
Act") and the rules of the Securities and Exchange Commission thereunder)
(all such partnerships, syndicates or other groups being referred to as a
"Related Party") or otherwise, any Voting Securities such that after such
acquisition, Hughes and its Affiliates would beneficially own more than
49.9% of the total outstanding Voting Securities of AMSC Parent;
(ii) (A) make, or in any way participate in, any "solicitation" (as
such term is used in the proxy rules of the Securities and Exchange
Commission) of proxies or consents, (B) seek to advise, encourage or
influence any Person with respect to the voting of any Voting Securities,
(C) initiate, participate or otherwise "solicit" (as such term is used in
the proxy rules of the Securities and Exchange Commission) shareholders of
AMSC Parent, in any such case, for the election of any Director with the
purpose or effect of defeating or circumventing the limitation contained in
Section 3; or
(iii) seek, propose or make any statement with respect to any merger,
consolidation, business combination, tender or exchange offer, acquisition
or transfer of assets or securities (except as and to the extent expressly
permitted by this Agreement) or similar transactions between Hughes or any
of its Affiliates and AMSC Parent or any of its Affiliates.
(b) The Hughes Shareholders agree that, during the Standstill
Period but after Hughes has acquired shares of Common Stock through the exercise
of Guarantee Warrants (the "Acquired Securities") sufficient to cause the
beneficial ownership of Hughes and its Affiliates to exceed the Threshold Level,
the Hughes Shareholders will, and the Hughes Shareholders will cause each of
their Affiliates to, directly or indirectly, vote any Acquired Securities
beneficially owned by them above the Threshold Level (such shares, "Excess
Voting Securities") pro rata in accordance with the vote of all Voting
Securities of the Company, excluding such Excess Voting Securities, unless the
matter being voted on is approved by the Board, specifically expressed in a
resolution adopted by a majority of the Independent Directors.
(c) Nothing contained in this Section 2 shall be deemed in any
way to prohibit or limit the lawful activities of (i) any Hughes Designee acting
in his capacity as a Director, (ii) the Hughes Shareholders or any of their
Affiliates in connection with the exercise of any of their rights as a creditor
of AMSC Parent or AMSC, (iii) the Hughes Shareholders or any of their Affiliates
in connection with ongoing or prospective business relationships or arrangements
among AMSC Parent, AMSC, Hughes and Hughes Services or their respective
Affiliates or (iv) any Hughes Shareholder exercising its rights as a shareholder
of AMSC Parent except as provided in Sections 2(a), 2(b), 3, 4 and 5 of this
Agreement.
(d) The Hughes Shareholders will not be in breach of or in
default under the provisions of Section 2(a) or 2(b) hereof, and will not be
required to take or terminate any actions in order to comply with such Sections,
if:
(i) the Hughes Shareholders or an Affiliate of the Hughes
Shareholders take such action in direct competition with any bona fide
offer by Persons either alone or through or with an Affiliate or Related
Party (collectively, an "Acquiring Person") (other than Hughes or an
Affiliate of Hughes) for 15% or more of the outstanding Voting Securities
of AMSC Parent or for a number of Voting Securities that, together with
such Acquiring Person's existing or proposed other beneficial ownership,
would cause it to own or Control 25% or more of the outstanding Voting
Securities of AMSC Parent;
(ii) the Hughes Shareholders or an Affiliate of the Hughes
Shareholders make an offer to acquire all outstanding Voting Securities of
AMSC Parent at a price and on terms that shall have
3
<PAGE>
been approved by the Board, specifically expressed in a resolution adopted
by a majority of the Independent Directors; or
(iii) the aggregate Voting Securities beneficially owned by Hughes
and its Affiliates are increased to more than 49.9% of the total
outstanding Voting Securities of AMSC Parent as a result of a
recapitalization or reorganization of any type of AMSC Parent or a
repurchase of securities of AMSC Parent or any other action taken by AMSC
Parent approved by the Board, specifically expressed in a resolution
adopted by a majority of the Independent Directors, or as a result of any
other action by any third party not controlled by Hughes or any of its
Affiliates.
(e) Voting Securities. For purposes of this Agreement, (i)
"Voting Securities" shall mean Common Stock and any other securities of AMSC
Parent entitled to vote generally in the election of directors of AMSC Parent
and (ii) for the purpose of computing the "total outstanding Voting Securities"
of AMSC Parent or the related percentage: (x) beneficially owned by Hughes and
its Affiliates, any Voting Securities not outstanding which are subject to the
warrants issued under the Securities Purchase Agreement dated as of January 19,
1996, Guarantee Warrants or any other agreement or security, or right to acquire
a security, convertible into, exchangeable for or exercisable for such Voting
Securities, in each case to the extent beneficially owned by Hughes or an
Affiliate of, or Related Party to, Hughes, shall be deemed to be outstanding;
and (y) beneficially owned by an Acquiring Person, any Voting Securities not
outstanding which are subject to any warrants, options or any other agreement or
security, or right to acquire a security, convertible into, exchangeable for or
exercisable for such Voting Securities, in each case to the extent beneficially
owned by an Acquiring Person or an Affiliate of, or Related Party to, an
Acquiring Person, shall be deemed to be outstanding.
(f) Affiliate; Control; Person. For purposes of this Agreement,
(i) "Affiliate" shall mean, when used with reference to a specific Person, any
Person that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with such specific Person,
provided, however, that "Affiliate" shall include only entities owned or
controlled, directly or indirectly, by Hughes and shall not include General
Motors or any other corporation that owns or controls Hughes, (ii) "Control"
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise and (iii) "Person"
shall mean any general or limited partnership, corporation, joint venture,
trust, business trust, government agency, cooperative, association, individual
or other entity and heirs, executors, administrators, legal representatives,
successors and assigns of such person as the context may require.
3. Board Representation; Independent Directors.
-------------------------------------------
(a) Hughes Designees. The Hughes Shareholders agree that, during
the Standstill Period, they will not appoint any Hughes Designees to, or permit
any Hughes Designees to serve on, the Board or the Executive Committee of the
Board if the number of Hughes Designees thereon would be more than one less than
a majority of the members of the Board or the Executive Committee of the Board,
as applicable. If the number of Hughes Designees exceeds such number, the Hughes
Shareholders shall promptly take all appropriate action to cause to resign that
number of Hughes Directors as is required to make the remaining number of Hughes
Directors conform to this Section 3(a).
(b) Independent Directors. For purposes of this Agreement,
"Independent Director" shall mean a Director who (i) was not appointed in the
two years prior to the date of determination by Hughes or any Affiliate of
Hughes, (ii) is not currently (apart from being a Director), and has not been in
4
<PAGE>
the five years prior to the date of determination, an employee, officer,
director or Affiliate of Hughes or any Affiliate of Hughes and (iii) does not
have, in the good faith judgment of the then existing Independent Directors, any
other direct or indirect interest in or relationship with Hughes or any
Affiliate of Hughes so as to be reasonably likely to cause such Person to have
any interest in any transaction among AMSC Parent, AMSC, Hughes or any of their
respective Affiliates.
4. Transfer Restrictions.
---------------------
(a) Proposed Transferee. In addition to any applicable
requirements of Article Five of the Stockholders' Agreement and Article II of
the Right of First Offer Agreement, dated as of November 30, 1993 (the "Right of
First Offer Agreement"), the Hughes Shareholders agree that, during the
Standstill Period, without the prior written consent of the Board, specifically
expressed in a resolution adopted by a majority of the Independent Directors,
the Hughes Shareholders will not, and the Hughes Shareholders will cause each of
their Affiliates not to, transfer any Voting Securities beneficially owned by
them to any Person (a "Proposed Transferee") who, as a result of such
transaction and any series of connected transactions, would beneficially own or
have the right to acquire in excess of 30% of the total outstanding Voting
Securities of AMSC Parent, unless such Proposed Transferee shall agree to assume
the obligations of and restrictions placed on the Hughes Shareholders under this
Agreement.
(b) Notice of Acquisition or Transfer. Not later than the tenth
day following the end of any calendar quarter during the Standstill Period in
which one or more acquisitions or transfers by the Hughes Shareholders or any of
their Affiliates of Voting Securities shall have occurred, the Hughes
Shareholders shall give written notice to AMSC Parent of all such acquisitions
or transfers unless such acquisitions or transfers have been reflected in a
filing on Schedule 13D under the Exchange Act or an amendment thereto that was
delivered to AMSC Parent on or in advance of the date on which notice thereof
under this Section 4(b) would have been due. Such notice shall state the date
upon which each such acquisition or transfer was effected, the number and type
of Voting Securities involved in each such acquisition or transfer, the means by
which such acquisition or transfer was effected, and in the case of each
acquisition by a Hughes Shareholder or any of its Affiliates, the identity of
the Person acquiring beneficial ownership of such Voting Securities and in the
case of each transfer, to the extent known, the identity of the Persons
acquiring Voting Securities.
5. Transactions with Hughes. AMSC Parent will not, during the Standstill
------------------------
Period, enter into any material transaction with Hughes or any Affiliate of
Hughes without the prior written consent of the Board, specifically expressed in
a resolution adopted by a majority of the Independent Directors. For purposes
of this Section 5, "material transaction" shall mean (a) any amendment to, or
termination of, this Agreement and (b) any transaction between AMSC Parent or
any of its subsidiaries and Hughes or any Affiliate of Hughes, or any
transaction between the stockholders of the Company, in their capacity as
stockholders, and Hughes or any Affiliate of Hughes; provided, that "material
transaction" shall not include any transaction or series of connected
transactions involving payments by or obligations or transfers of property of
AMSC Parent or any of its subsidiaries with an aggregate value in any calendar
year of less than $5 million; provided, further, that nothing contained in this
Section 5 shall (i) require such a resolution adopted by a majority of the
Independent Directors if the issues being voted on are general or business
concepts, such as whether to build an additional satellite, as compared to
whether to purchase a satellite from Hughes, or (ii) limit Hughes' rights as set
forth in Section 2(c).
6. Voting Securities. AMSC Parent will not, during the Standstill Period,
-----------------
issue any class of Voting Securities with voting rights that are different from
the voting rights of the Common Stock without the prior written consent of the
Hughes Shareholders.
5
<PAGE>
7. Amendments, Etc. No amendment or waiver of any provision of this Agreement
---------------
shall in any event be effective unless the same shall be in writing and (a) with
respect to its enforcement against AMSC Parent, signed by AMSC Parent pursuant
to a resolution adopted by a majority of the Independent Directors, (b) with
respect to its enforcement against AMSC, signed by AMSC, (c) with respect to its
enforcement against Hughes, signed by Hughes, or (d) with respect to its
enforcement against Hughes Services, signed by Hughes Services.
8. No Waiver; Remedies. No failure on the part of any party hereto to
-------------------
exercise, and no delay in its exercise of, any right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right
hereunder by any party hereto preclude any other or future exercise thereof or
the exercise of any other right by such party. Any party to this Agreement may
specifically waive any breach of this Agreement by any other party; provided
that no such waiver shall be effective or binding unless in writing, and that no
such waiver shall constitute a continuing waiver of similar or other breaches.
9. Notices, Etc. All notices, demands, requests, consents, approvals and
------------
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given as provided for in the Longer-Term Financing (as defined
in the Guaranty Issuance Agreement), and if to Hughes: 7200 Hughes Terrace, M/S
C1/A 700, Los Angeles, California 90045-0066, Attention: Treasurer.
10. Separability of this Agreement. In case any term or provision of this
------------------------------
Agreement or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
11. Further Assurances. Each of Hughes and Hughes Services hereby agrees to
------------------
vote all the Voting Securities beneficially owned by it, to direct the Hughes
Designees to vote, to execute and deliver all such instruments and to take all
such actions as AMSC Parent or AMSC may from time to time reasonably request and
which are necessary in order to fully effectuate the purposes of this Agreement.
12. Headings. The headings contained in this Agreement are for convenience of
--------
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
13. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
14. Representations and Warranties of Hughes. Each of Hughes and Hughes
----------------------------------------
Services, on the one hand, and AMSC and AMSC Parent, on the other hand,
represent and warrant to the other that:
(a) Each such party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement.
(b) This Agreement has been duly authorized by all necessary
corporate action on the part of, and has been duly executed and delivered by,
each such party, and none of the execution and delivery hereof, the consummation
of the transaction contemplated hereby or compliance by such party with any of
the terms and provisions hereof (i) requires any approval of stockholders or
approval or consent of any trustee or holders of any indebtedness or obligations
of such party other than such approvals
6
<PAGE>
or consents as have been obtained, (ii) contravenes any law, judgment,
governmental rule or regulation or order applicable to or binding on such party
or any of its properties, the contravention of which would have a material
adverse effect on the financial condition of such party and its subsidiaries
taken as a whole or on the ability of such party to perform any of its
obligations under this Agreement, (iii) contravenes or results in any breach of
or constitutes any default under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement for
borrowed money, contract or other agreement or instrument to which such party is
a party or by which such party or any of its properties may be bound, the
contravention, breach or default of which would have a material adverse effect
on the financial condition of such party and its subsidiaries taken as a whole
or on the ability of such party to perform any of its obligations under this
Agreement, or (iv) contravenes its corporate charter or by-laws.
(c) Neither the execution, delivery and performance by such
party of this Agreement nor the consummation of any of the transactions
contemplated hereby requires the consent, approval or authorization of, the
giving of notice to, or the registration, recording or filing of any document
with, or the taking of any other action in respect of, any governmental agency
or authority.
(d) This Agreement constitutes the legal, valid and binding
obligation of each such party, enforceable against each such party in accordance
with its terms, except as such enforcement may be subject to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally and to general principles of equity.
15. Specific Performance. (a) The Hughes Shareholders acknowledge and agree
--------------------
that if a Hughes Shareholder fails to perform any of its obligations under this
Agreement immediate and irreparable harm or injury would be caused to AMSC
Parent and AMSC for which monetary damages would not be an adequate remedy. In
such event, the Hughes Shareholders agree that AMSC Parent and AMSC shall have
the right, in addition to any other rights it may have, to specific performance
of this Agreement. Accordingly, if AMSC Parent or AMSC should institute an
action or proceeding seeking specific performance of the provisions hereof, the
Hughes Shareholders hereby waive the claim or defense that AMSC Parent or AMSC
have an adequate remedy at law and hereby agree not to assert in any such action
or proceeding the claim or defense that such a remedy at law exists; (b) AMSC
and AMSC Parent acknowledge and agree that if either of them fails to perform
any of its obligations under this Agreement immediate and irreparable harm or
injury would be caused to Hughes for which monetary damages would not be an
adequate remedy. In such event, AMSC and AMSC Parent agree that Hughes shall
have the right, in addition to any other rights it may have, to specific
performance of this Agreement. Accordingly, if Hughes should institute an
action or proceeding seeking specific performance of the provisions hereof, AMSC
and AMSC Parent hereby waive the claim or defense that Hughes has an adequate
remedy at law and hereby agree not to assert in any such action or proceeding
the claim or defense that such a remedy at law exists.
16. Conflict with Agreements. In the event any term or provision of this
------------------------
Agreement shall conflict with any term or provision of the Stockholders'
Agreement or the Right of First Offer Agreement, the term or provision of this
Agreement shall control. This Agreement shall not affect the rights or
obligations of any party to the Stockholders' Agreement or the Right of First
Offer Agreement other than AMSC Parent and Hughes Services.
17. Other Agreements. On or prior to the execution of this Agreement, any
----------------
other agreements between Hughes and its Affiliates, on the one hand, and AMSC,
AMSC Parent and/or any other AMSC stockholders, on the other hand, that are
inconsistent with the provisions hereof shall be amended to permit the
execution, delivery and performance of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, Hughes and Hughes Services have caused this
Agreement to be executed by their duly authorized officers.
HUGHES ELECTRONICS CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
AMERICAN MOBILE SATELLITE CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
AMSC SUBSIDIARY CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
8
<PAGE>
EXHIBIT 11
AMENDMENT NO. 1 TO RIGHT OF FIRST OFFER AGREEMENT
This Amendment No. 1 (the "Amendment") to this Right of First Offer
Agreement (the "Agreement"), made and entered into as of the 30th day of
November, 1993, by and among AMSC, Hughes, ST, the Investments Entities
(including SMT), and the MTel Group, is entered into as of the 28th day of June,
1996, by the requisite Partes to such Amendment. Capitalized terms used herein
without definition shall have the respective meanings attributed thereto in the
Agreement.
WHEREAS, the Parties desire to limit the scope of the restrictions
contained in the Agreement;
NOW, THEREFORE, in consideration of the Parties' mutual promises and
agreements set forth herein and other good and valuable consideration, receipt
of which is hereby acknowledged, the Parties agree as follows:
1. The Parties agree that the Agreement is amended to apply only to Transfers
between and among Hughes, ST and Investments Entities. The Parties agree that,
except as provided in the foregoing sentence, the Parties may transfer their
shares without restriction under the Agreement.
2. AMSC further agrees that, upon request and tender of a stock certificate(s)
by any Party to the Agreement, AMSC will cause any restrictive legend relating
to the Agreement to be removed.
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the 28th
day of June 1996.
AMERICAN MOBILE SATELLITE CORPORATION
By:____________________________________
Name:
Title:
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
By:____________________________________
Name:
Title:
<PAGE>
SINGAPORE TELECOMMUNICATIONS LTD.
By:____________________________________
Name:
Title:
SATELLITE COMMUNICATIONS
INVESTMENTS CORPORATION
By:____________________________________
Name:
Title:
SPACE TECHNOLOGIES INVESTMENTS, INC.
By:____________________________________
Name:
Title:
SATELLITE MOBILE TELEPHONE COMPANY, L.P.
By Satellite Communications Investments
Corporation its General Partner
By:____________________________________
Name:
Title:
TRANSIT COMMUNICATIONS, INC.
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT 12
GUARANTY ISSUANCE AGREEMENT
---------------------------
(Longer-Term Financing)
THIS GUARANTY ISSUANCE AGREEMENT (this "Agreement") dated as of June
---------
28, 1996 is by and among HUGHES ELECTRONICS CORPORATION, a Delaware corporation
("Hughes"), SINGAPORE TELECOMMUNICATIONS LTD., a Singapore corporation
------
("SingTel"), BARON CAPITAL PARTNERS, L.P., a Delaware limited partnership
-------
("Baron"), AMSC SUBSIDIARY CORPORATION, a Delaware corporation dually
-----
incorporated as a Virginia public service corporation ("AMSC"), and AMERICAN
----
MOBILE SATELLITE CORPORATION, a Delaware corporation ("AMSC Parent").
-----------
R E C I T A L S:
WHEREAS, each of Hughes, SingTel and Baron is, directly or indirectly,
a shareholder of AMSC Parent;
WHEREAS, AMSC and AMSC Parent have entered into that certain
Securities Purchase Agreement dated as of January 19, 1996 (the "Bridge Loan")
-----------
pursuant to which AMSC has issued notes (i) in the aggregate face amount of
$10,000,000 to Hughes Communications Satellite Services, Inc., and (ii) in the
aggregate face amount of $15,000,000 each (for an aggregate of $30,000,000) to
each of Toronto Dominion Investments, Inc. and Morgan Guaranty Trust Company of
New York;
WHEREAS, on April 19, 1996 AMSC borrowed $20,000,000 from Toronto
Dominion (Texas), Inc. and Morgan Guaranty Trust Company of New York and issued
its promissory notes in the aggregate face amount of $20,000,000 to evidence
such loan and on June 7, 1996 borrowed an additional $10,000,000 (collectively,
the "Interim Loan," and the additional $10,000,000 loan individually, the
------------
"$10,000,000 Loan");
----------------
<PAGE>
WHEREAS, at the request of AMSC and AMSC Parent, Hughes issued its
guaranty of the Bridge Loan (the "Bridge Loan Guaranty") and of the Interim Loan
--------------------
(as amended or amended and restated from time to time, the "Hughes Interim Loan
-------------------
Guaranty"), and Hughes, AMSC and AMSC Parent entered into a Guaranty Issuance
- --------
Agreement dated as of April 19, 1996, as amended by the First Amendment to
Guaranty Issuance Agreement dated as of June ___, 1996 (the "Hughes Guaranty
---------------
Issuance Agreement") providing for certain compensation to be paid to Hughes in
- ------------------
connection with such transactions;
WHEREAS, at the request of Hughes, AMSC and AMSC Parent, SingTel
issued a guaranty of $5,000,000 in principal amount of the $10,000,000 Loan (the
"SingTel Interim Loan Guaranty") and SingTel, AMSC and AMSC Parent entered into
-----------------------------
a Guaranty Issuance Agreement dated as of June 7, 1996 (the "SingTel Guaranty
----------------
Issuance Agreement") providing for certain compensation to be paid to SingTel in
- ------------------
connection with such transaction;
WHEREAS, AMSC now proposes to enter into that certain $150,000,000
Credit Agreement providing for up to $150,000,000 of term loans (the "Term Loan
---------
Agreement") and that certain $75,000,000 Credit Agreement providing for up to
- ---------
$75,000,000 of revolving loans (the "Revolving Credit Agreement" and together
--------------------------
with the Term Loan Agreement, the "Credit Agreements");
-----------------
WHEREAS, in order to obtain the financing under the Credit Agreements,
AMSC and AMSC Parent have requested that each of Hughes, SingTel and Baron issue
a guaranty of a portion of the obligations of AMSC under the Credit Agreements
in substantially the form attached hereto as Exhibit A (each, a "Guaranty" and
--------
collectively, the "Guaranties"); and
----------
WHEREAS, each of Hughes, SingTel and Baron is willing to issue a
Guaranty on the terms, and subject to the conditions, set forth herein (the
parties which issue Guaranties hereunder are hereafter referred to as
"Guarantors").
----------
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals, the
parties hereto hereby agree as follows:
2
<PAGE>
1. Consideration for the Issuance of the Guaranties. In consideration of the
------------------------------------------------
issuance of the respective Guaranties, and concurrently with (and conditioned
upon) the issuance of its Guaranty, (a) AMSC Parent shall issue to each
Guarantor warrants to purchase its "Pro Rata Share" (as defined below) of
5,000,000 shares of the Common Stock, par value $.01 per share, of AMSC Parent
at an exercise price of $24.00 per share, on the terms described in the form of
warrant attached hereto as Exhibit B (collectively, the "Warrants"); and (b)
--------
AMSC shall pay to each Guarantor a fee equal to one and one half percent (1.5%)
of the principal amount of its Guaranty. For purposes of this Agreement, the
"Pro Rata Share" of a Guarantor shall be calculated by dividing the principal
amount of its Guaranty by $200,000,000.
2. Conditions to the Issuance of the Guaranties. (a) The obligation of
--------------------------------------------
Hughes to issue its Guaranty is subject to the concurrent repayment in full of
the Bridge Loan and the Interim Loan, and the concurrent release of the Bridge
Loan Guaranty and the Hughes Interim Loan Guaranty.
(b) The obligation of SingTel to issue its Guaranty is subject to the
concurrent repayment in full of the $10,000,000 Loan and the concurrent release
of the SingTel Interim Loan Guaranty.
(c) The obligations of each Guarantor are severally subject to the
following conditions:
(1) AMSC Parent shall have executed and delivered to the respective
Guarantor the Warrants and a Registration Rights Agreement in the form attached
hereto as Exhibit C (the "Registration Rights Agreement"), and AMSC shall have
-----------------------------
paid to the respective party its fee, all as set forth in Paragraph 1;
(2) AMSC and AMSC Parent shall have received all consents and
approvals (including from shareholders) required for each of them to enter into
this Agreement, the Warrants and the Registration Rights Agreement and to
perform its obligations thereunder, and shall have delivered copies of all such
consents and approvals to each Guarantor;
(3) Each Guarantor shall have approved the form and substance of the
Credit Agreements and all documents and instruments delivered in connection
therewith, and shall have received evidence satisfactory to it that the liens
and security interests of the lenders under the Credit Agreements have been duly
perfected;
(4) Each Guarantor shall have received copies, certified by the
Secretary of each of AMSC and AMSC Parent, of resolutions duly adopted by the
Board of Directors of the applicable party
3
<PAGE>
approving the Credit Agreements and the transactions contemplated thereby,
this Agreement, the Warrants and the Registration Rights Agreement;
(5) Each Guarantor shall have received the written opinions of
counsel to AMSC and AMSC Parent as to the due authorization, execution and
enforceability of this Agreement, the Warrants and the Registration Rights
Agreement, in form and substance satisfactory to each Guarantor;
(6) Each Other Guarantor shall have issued its Guaranty and, in the
case of Hughes and SingTel, Baron shall have obtained the letter of credit
required under the Credit Agreements; and
(7) The Board of Directors of AMSC Parent shall have received an
opinion from Donaldson, Lufkin & Jenrette Securities Corporation to the effect
that the compensation provided to Guarantors pursuant to this Agreement is fair
to AMSC and AMSC Parent from a financial point of view.
3. Limitations on Amounts of Guaranties.
------------------------------------
AMSC and AMSC Parent have delivered to Guarantors AMSC's business plan for
the next three fiscal years, including its projected borrowing needs (the
"Plan"), which has formed the basis for the agreement of Guarantors to deliver
----
their respective Guaranties. In consideration of the agreements of Guarantors
to issue such Guaranties to support the extensions of credit under the Credit
Agreements, AMSC agrees that the outstanding principal amount of the loans which
are guaranteed (such outstanding amount and any payments made by Guarantors with
respect to principal under the Credit Agreement, the "Guaranteed Amount") shall
---------- ------
be subject to its ability to meet certain quarterly performance tests based on
such Plan (the "Performance Tests"), as set forth on the schedule attached
-----------------
hereto as Exhibit D (the "Performance Schedule"). Within 45 days after the end
--------------------
of each fiscal quarter beginning with the third quarter of 1996, AMSC shall
deliver to each Guarantor a compliance certificate, duly executed by its chief
financial officer, certifying as to AMSC's compliance with each of the four
Performance Tests specified for such fiscal quarter on the Performance Schedule,
and showing in detail the calculation of such compliance. Such certificate
shall be accompanied by the unaudited consolidated and consolidating balance
sheets of AMSC and AMSC Parent as of the end of such quarter and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flows, and certified by the chief financial officer as fairly presenting,
in all material respects, in accordance with generally accepted accounting
principles (except for the absence of footnote disclosure), the financial
position and the results of operations of AMSC and AMSC Parent.
4
<PAGE>
AMSC and AMSC Parent agree that the aggregate outstanding principal amount
of the loans under the Credit Agreements plus any amounts paid by Guarantors
with respect to principal shall not exceed the Guaranteed Amount and the
Guaranteed Amount during each applicable period shall not exceed the "Borrowing
Limit" specified in the Performance Schedule. If as of the end of any fiscal
quarter AMSC has met each of the four Performance Tests specified for such
fiscal quarter on the Performance Schedule, on the forty-sixth day after the end
of the fiscal quarter the Guaranteed Amount shall automatically increase to the
"Borrowing Limit" on such Performance Schedule for the next period (each, an
"Increased Level"). If AMSC has failed to meet any of the four Performance
---------------
Tests specified on the Performance Schedule for that fiscal quarter, the
Borrowing Limit shall remain at its then current level, and shall not increase
to the next Increased Level; provided, however, that Guarantors having Pro Rata
-----------------
Shares greater than 50% ("Requisite Guarantors") may, by written notice
--------------------
delivered to AMSC, waive compliance with such Performance Tests and consent to
borrowings by AMSC which would increase the Guaranteed Amount up to the
"Borrowing Limit" specified in such waiver. A waiver granted hereunder shall be
effective only as to the compliance with the Performance Tests for the specific
period and shall not obligate Guarantors to grant a waiver for any subsequent
period or consent to any additional increase in the applicable Borrowing Limit.
If AMSC has failed to meet any of the four Performance Tests specified in
the Performance Schedule for any fiscal quarter, and compliance with such tests
has not been waived by Requisite Guarantors, or if any borrowing causes or would
cause the Guaranteed Amount to exceed the then applicable Borrowing Limit, then
Requisite Guarantors may, by a written notice delivered to AMSC (a "Guarantor's
-----------
Notice"), decline to increase the Guaranteed Amount to cover any increased
- ------
borrowings. Under the terms of the Guaranties, Guarantors will be required to
purchase the outstanding notes upon the occurrence of a "Guarantor Event" under
the Credit Agreements, and the commitments to extend further financing under the
Credit Agreements will terminate. In addition, the provisions of Section 15 of
the Warrants concerning cancellation of warrants will be applicable.
Under the terms of the Credit Agreements, at the time of each borrowing,
AMSC will be required to certify that it is in compliance with the provisions of
this Agreement. AMSC or AMSC Parent can so certify if the outstanding amount of
the loans after such borrowing will be less than the then applicable "Borrowing
Limit" or if, and to the extent that, Requisite Guarantors shall have modified
such Borrowing Limit or waived AMSC's noncompliance with the Performance Tests
set forth on the Performance Schedule. At the request of AMSC and AMSC Parent,
any "Borrowing Limit" as specified in the Performance Schedule or any of the
Performance Tests specified thereon may be modified with the written consent of
Requisite Guarantors. If Requisite Guarantors propose to increase the applicable
"Borrowing Limit" for any period to an amount in excess of that set forth on the
Performance Schedule
5
<PAGE>
(except as to the adjustments provided on such schedule with respect to the
receipt of insurance proceeds), such proposal shall be discussed with the other
Guarantors prior to granting such consent.
Any action by Requisite Guarantors in accordance with this Section 3 shall
bind all Guarantors. Any notice delivered under this Section shall be delivered
to all Guarantors, but failure of all Guarantors to receive such notice shall
not affect the validity of such notice.
Nothing in this Section shall limit the enforceability by the "Guaranteed
Parties" of any Guaranty in accordance with its terms.
4. Amendments, Etc. No amendment or waiver of any provision of this Agreement
---------------
shall in any event be effective unless the same shall be in writing and with
respect to its enforcement against any party, signed by such party except as
specifically provided in Section 3 with respect to actions by Requisite
Guarantors.
5. No Waiver; Remedies. No failure on the part of any Guarantor to exercise,
-------------------
and no delay in it's exercise of, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder by any
Guarantor preclude any other or further exercise thereof or the exercise of any
other right by such party. Any Guarantor may specifically waive any breach of
this Agreement by AMSC or AMSC Parent; provided that (x) no such waiver shall be
effective or binding unless in writing, (y) no such waiver shall be effective as
to any Guarantor that has not provided a waiver with respect to such breach, and
(z) no such waiver shall constitute a continuing waiver of similar or other
breaches. Any party may specifically waive any condition to its own obligations
hereunder, and such waiver shall not affect the obligations of any other party.
6. Notices, Etc. All notices, demands, requests, consents, approvals and
------------
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given to the parties hereto at the addresses or facsimile
number set forth on Exhibit E hereto, or such other address or facsimile number
as may be notified to the other parties hereto in a written notice. Notices,
demands and requests shall be effective if given by facsimile to the number
specified in this Section when confirmation of receipt is received; or if given
by any other means, when delivered.
7. Separability of This Agreement. In case any term or provision of this
------------------------------
Agreement or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability,
without invalidating or rendering unenforceable
6
<PAGE>
any remaining terms and provisions hereof or the application of such term or
provision to circumstances or jurisdictions other than those as to which it is
held invalid, illegal or unenforceable.
8. Further Assurances. AMSC and AMSC Parent hereby agree to execute and
------------------
deliver all such instruments and take all such action as Hughes, SingTel or
Baron may from time to time reasonably request in order to fully effectuate the
purposes of this Agreement.
9. Headings. The headings contained in this Agreement are for convenience of
--------
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
10. GOVERNING LAW AND DAMAGE LIMITATION. THIS AGREEMENT SHALL BE GOVERNED BY,
-----------------------------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. THE PARTIES
HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES AGREE THAT
NO PARTY SHALL BE LIABLE HEREUNDER FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS OR
BUSINESS.
11. Representations and Warranties of AMSC and AMSC Parent. Each of AMSC and
------------------------------------------------------
AMSC Parent represent and warrant to each Guarantor that:
(a) Each of AMSC and AMSC Parent is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement.
(b) This Agreement has been duly authorized by all necessary
corporate action on the part of, and has been duly executed and delivered by,
each of AMSC and AMSC Parent, and none of the execution and delivery hereof, the
consummation of the transactions contemplated hereby (including the issuance of
the Warrants and the issuance of the common stock of AMSC Parent upon exercise
of the Warrants and the registration of such stock pursuant to the Registration
Rights Agreement) or compliance by AMSC and AMSC Parent with any of the terms
and provisions hereof or of the Warrants or the Registration Rights Agreement
(i) requires any approval of stockholders (including any consent under the rules
of the National Association of Securities Dealers, Inc.) or approval or consent
of any trustee or holders of any indebtedness or obligations of AMSC or AMSC
Parent other than such approvals or consents as have been obtained, (ii)
contravenes any law, judgment, governmental rule or
7
<PAGE>
regulation or order applicable to or binding on AMSC or AMSC Parent or any of
their respective properties, the contravention of which would have a material
adverse effect on the financial condition of AMSC and its subsidiaries taken as
a whole or AMSC Parent and its subsidiaries taken as a whole or on the ability
of AMSC and AMSC Parent to perform any of their obligations under this
Agreement, the Warrants or the Registration Rights Agreement, (iii) contravenes
or results in any breach of or constitutes any default under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement for borrowed money, contract or other agreement or
instrument to which AMSC or AMSC Parent is a party or by which AMSC or AMSC
Parent or any of their respective properties may be bound, the contravention,
breach or default of which would have a material adverse effect on the financial
condition of AMSC and its subsidiaries taken as a whole or AMSC Parent and its
subsidiaries taken as a whole or on the ability of AMSC and AMSC Parent to
perform any of their obligations under this Agreement, the Warrants or the
Registration Rights Agreement or (iv) contravenes its corporate charter or by-
laws.
(c) Neither the execution, delivery and performance by AMSC and AMSC
Parent of this Agreement nor the consummation of any of the transactions
contemplated hereby (including the issuance of the Warrants and the issuance of
the common stock of AMSC Parent upon the exercise of any Warrants) requires the
consent, approval or authorization of, the giving of notice to, or the
registration, recording or filing of any document with, or the taking of any
other action in respect of, any governmental agency or authority, other than any
registration or other action required under the Registration Rights Agreement.
(d) This Agreement constitutes, and the Warrants and the Registration
Rights Agreement will, upon execution thereof, constitute, the legal, valid and
binding obligation of each of AMSC and AMSC Parent, enforceable against each of
AMSC and AMSC Parent in accordance with their terms, except as such enforcement
may be subject to bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity.
(e) AMSC Parent has delivered copies of the consolidated balance
sheet of AMSC Parent and its consolidated subsidiaries as of December 31, 1995,
and related statements of consolidated income and cash flow and stockholder's
equity for the fiscal year then ended, accompanied by the report of Arthur
Andersen LLP, independent accountants. Such statements fairly present, in
accordance with generally accepted accounting principles, the financial position
of AMSC Parent and its consolidated subsidiaries as of such date and the results
of their operations and cash flows for such fiscal year.
(f) AMSC Parent has duly reserved shares of its Common Stock for
issuance upon exercise of the Warrants.
8
<PAGE>
12. Reimbursement Agreement. If Hughes, SingTel or Baron makes any payments
-----------------------
under its Guaranty, each of AMSC and AMSC Parent agrees that it shall be jointly
and severally liable to reimburse such Guarantor for such payments, and that
such Guarantor will be fully subrogated to the extent of such payment to the
rights and remedies (including any collateral security) of the lenders under the
Credit Agreements. If Hughes, SingTel or Baron acquires any notes evidencing
the loans under either Credit Agreement, or any of such obligations, from the
lenders, then such Guarantor shall acquire all of the rights and remedies
(including any collateral security) of such lenders under the applicable Credit
Agreement. Neither Hughes, SingTel nor Baron shall have any duties to AMSC or
AMSC Parent with respect to the exercise or non-exercise of any of such rights
and remedies.
13. Intercreditor Agreements. (a) If Hughes, SingTel or Baron makes any
------------------------
payments under its Guaranty or acquires any notes or obligations under either
Credit Agreement, thereafter all decisions to act or refrain from acting with
respect to the enforcement of such notes or obligations against AMSC or AMSC
Parent (including enforcement with respect to any collateral security therefor)
shall be approved by Guarantors having Pro Rata Shares equal to at least 80% of
the outstanding obligations so paid or purchased. Prior to taking any such
action, each Guarantor shall discuss with each other Guarantor the actions
proposed to be taken.
(b) If any Guarantor does not make any required payment under its Guaranty
(a "defaulting Guarantor"), and such payment is made by any other Guarantor (a
"funding Guarantor"), then the defaulting Guarantor shall be liable to reimburse
the funding Guarantor for such payments on demand, and any amounts which would
otherwise be payable to the defaulting Guarantor by AMSC or AMSC Parent or with
respect to any collateral shall first be paid to the funding Guarantor until
such payment has been fully reimbursed. For purposes of this Section 13, any
payment made by a funding Guarantor shall be added to the Pro Rata Share of the
funding Guarantor and subtracted from the Pro Rata Share of the defaulting
Guarantor. The funding Guarantor shall be subrogated to the rights of the
lenders to enforce the Guaranty of the defaulting Guarantor.
9
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
AMSC SUBSIDIARY CORPORATION SINGAPORE TELECOMMUNICATIONS
LTD.
By:____________________ By:____________________
Name:__________________ Name:__________________
Title:_________________ Title:_________________
AMERICAN MOBILE SATELLITE
CORPORATION BARON CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
By:____________________ By: Baron Capital Management, Inc.,
Name:__________________ a General Partner
Title:_________________
By:____________________
Name:__________________
Title:_________________
HUGHES ELECTRONICS
CORPORATION
By:____________________
Name:__________________
Title:_________________
<PAGE>
EXHIBIT A
GUARANTY
--------
THIS GUARANTY (this "Guaranty") dated as of June 28, 1996, is made by
--------
_________________________ (Guarantor"), to Toronto Dominion (Texas), Inc., as
---------
Administrative Agent (in such capacity, the "Agent") for the financial
institutions ("Lenders") parties to the Revolving Credit Agreement and the Term
Loan Agreement (each as defined below), for its own benefit and for the benefit
of the Lenders (collectively, the "Guaranteed Parties" and individually, a
------------------
"Guaranteed Party").
----------------
R E C I T A L S:
WHEREAS, Guarantor is, directly or indirectly, a shareholder of
American Mobile Satellite Corporation, a Delaware corporation ("AMSC"), the
----
parent corporation of AMSC Subsidiary Corporation, a Delaware corporation (the
"Company");
-------
WHEREAS, the Company proposes to enter into that certain $150,000,000
Credit Agreement (the "Term Loan Agreement") and that certain $75,000,000
Revolving Credit Agreement (the "Revolving Credit Agreement'), each among the
Company, the Lenders, Morgan Guaranty Trust Company of New York as Documentation
Agent and the Agent (such agreements, together with the related promissory
notes, are collectively referred to herein as the "Documents");
WHEREAS, the Guaranteed Parties are unwilling to extend credit to the
Company under the Documents without credit support from shareholders of AMSC;
WHEREAS, it is in the best interests of Guarantor that Guaranteed
Parties extend credit to the Company, and therefore Guarantor has agreed to
enter into this Guaranty.
WHEREAS, concurrently herewith, certain other shareholders of AMSC
(each, an "Other Guarantor") are executing and delivering guaranties on
substantially the same terms (other than amounts) as this Guaranty (each, an
"Other Guaranty");
<PAGE>
WHEREAS, Guarantor, the Other Guarantors, AMSC and the Company have
entered into that certain Guaranty Issuance Agreement dated of even date
herewith (as amended, waived, supplemented or otherwise modified from time to
time, the "Guaranty Issuance Agreement");
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, receipt of which is hereby acknowledged,
Guarantor hereby agrees with Agent for the benefit of each of the Guaranteed
Parties, as follows:
1. Guaranty.
--------
(a) Guarantor hereby guarantees to each Guaranteed Party (i) the
punctual payment when due of each and every obligation of the Company for the
payment of principal, interest or fees owing by the Company to such Guaranteed
Party under the Documents and (ii) expenses and fees owing by the Company under
Section 10.3(a) of the Term Loan Agreement and Section 10.3(a) of the Revolving
Credit Agreement (together with the amounts due under clause (i), the
"Guaranteed Obligations") and (iii) any and all reasonable fees and expenses
- -----------------------
(including, without limitation, reasonable attorneys' fees) incurred by Agent in
successfully enforcing any rights of the Guaranteed Parties under this Guaranty;
provided, however, that (x) the liability of Guarantor on any day with respect
- ------------------
to outstanding and unpaid principal amounts under the Documents shall not exceed
$150,000,000, less __________ percent (__%) of the amount of principal repaid to
----
Guaranteed Parties under the Term Loan Agreement and __________ percent (__%) of
any reduction of the commitments under the Revolving Credit Agreement prior to
such day pursuant to Sections 2.7 or 2.9(b) of the Revolving Credit Agreement
(provided that such reduction shall not reduce the liability of Guarantor to the
extent the principal amount of loans outstanding under the Revolving Credit
Agreement exceeds the amount of the commitments under the Revolving Credit
Agreement as so reduced), and (y) the liability of Guarantor under clauses (i)
and (ii) hereof shall not exceed __________ percent (__%) of the outstanding
principal amount of loans made under the Documents plus interest accrued thereon
plus __________ percent (__%) of the fees owing under the Documents plus
- ---- ----
__________ percent (__%) of the expenses owing by the Company under Section
10.3(a) of the Term Loan Agreement and Section 10.3(a) of the Revolving Credit
Agreement (the "Maximum Amount"). The Guaranteed Parties may permit the
Guaranteed Obligations to exceed the Maximum Amount without impairing the
obligations of Guarantor hereunder; provided, however, that if the Guaranteed
------------------
Parties make loans under the Term Loan Agreement in principal amounts greater
than $150,000,000 (whether by waiving a required payment or prepayment or making
additional loans) or increase the commitments under the Revolving Credit
Agreement (including any waiver of the condition in Section 3.3(c) of the
Revolving Credit Agreement), or
2
<PAGE>
increase the interest rate or fees payable by the Company under the Documents,
such increased amounts shall not be part of the Guaranteed Obligations without
the prior written consent of Guarantor, and all payments received by the
Guaranteed Parties with respect to the obligations of the Company under the
Documents (including any proceeds of insurance) shall be deemed to be first
applied to the guaranteed portion of such obligations, thereby reducing
Guarantor's liability hereunder (pro rata with the reduction of liability under
any Other Guaranty). In the event that any of the foregoing obligations shall
not be paid when due or if a "Guarantor Event" (as defined in the Credit
Agreements) occurs, Guarantor will pay such obligations within five (5) Business
Days after Guarantor's receipt of demand therefor; provided that demand for
payment of any Guaranteed Obligations shall constitute demand for payment of all
interest under the Documents accrued and unpaid from the date of such demand
through the date of payment by Guarantor, and provided further that Guarantor
may cause such obligation or liability to be paid on its behalf by any
corporation affiliated with it. The payments made by Guarantor of any
Guaranteed Obligations, whether on behalf of the Company prior to a default or
after demand on Guarantor, shall be deemed to cure any related payment default
under the Documents and any such payments of principal of the Guaranteed
Obligations shall reduce Guarantor's liability under this Section 1(a) with
respect to principal.
(b) This Guaranty is a guaranty of payment and not of performance or
collection and is in no way conditioned or contingent upon any attempt to
collect from the Company.
(c) Guarantor shall be subrogated to all rights of the applicable
Guaranteed Party against the Company, and any collateral security or guarantees
therefor, in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guaranty; provided that Guarantor shall not exercise any rights of
--------
subrogation, reimbursement or contribution from or against the Company with
respect to payments made under this Guaranty until Guarantor has satisfied its
obligations under this Guaranty or all of the Guaranteed Obligations have been
paid in full.
(d) The liability of Guarantor and the liability of any Other
Guarantor under any Other Guaranty shall be independent and several obligations,
and Guarantor shall have no liability whatsoever with respect to the obligations
under any Other Guaranty. Any payments with respect to the principal portion of
the Guaranteed Obligations by the Company (whether paid by the Company or from
insurance proceeds) shall be applied ratably to reduce the liabilities of
Guarantor and any Other Guarantor under any Other Guaranty with respect to such
principal portion.
(e) Guarantor may, at its option, satisfy its obligations hereunder
with respect to principal, interest and fees by purchasing notes issued to the
Lenders under the Documents in amounts up to the limits of Guarantor's liability
under Section 1(a) above with respect to the principal portion of the Maximum
Amount. Upon payment of such principal portion as provided under either of the
preceding sentences, together with accrued and unpaid interest thereon, each
Lender shall assign to Guarantor the notes so purchased, and shall execute and
deliver to Guarantor (at Guarantor's expense) such other documents as Guarantor
may reasonably request to assign the
3
<PAGE>
purchased notes, together with all collateral security therefor and any
guaranties, and for Guarantor to assume the rights and obligations of Lenders
under the Documents to the extent of the notes so purchased.
2. Guaranty Absolute. Except as otherwise provided in this Guaranty,
-----------------
the liability of Guarantor under this Guaranty with respect to each and all of
the Guaranteed Obligations shall be irrevocable and shall be absolute and
unconditional irrespective of, and shall not be released, discharged or in any
way affected by:
(a) any waiver, extension, renewal or modification of, or any consent
to departure from, any Document, including, without limitation, any waiver or
consent involving a change in the time, manner or place of payment of all or any
of the Guaranteed Obligations contained in any Document, but subject to the
provisions of Section 1 above;
(b) any extension of the time for payment by the Company or any other
Person of any Guaranteed Obligation under any Document;
(c) any failure, omission or delay by any Guaranteed Party to enforce,
assert or exercise any right, power or remedy conferred on or available to it
including, without limitation, to enforce any guaranty by AMSC of the Company's
obligations;
(d) the voluntary or involuntary liquidation, dissolution, sale of
assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting the Company, Guarantor, any Guaranteed Party or any other
person or any of their respective properties or creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding;
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, any Guaranteed Party or any
other corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim or right by separate suit or counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of any Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of any Guaranteed
Obligation; or
(g) any other act or omission to act or delay of any kind by the
Company, any Guaranteed Party or any other person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to the Guarantor's obligations
hereunder.
Notwithstanding the foregoing, the Guaranteed Parties shall not (i)
release the Company or any Other Guarantor from liability for the Guaranteed
Obligations, or (ii) release or otherwise impair any collateral security at any
time held for the Guaranteed Obligations, or (iii)
4
<PAGE>
waive any rights to receive proceeds of any insurance, or (iv) extend the
maturity date under the Documents to a date later than June 30, 2001, or (v)
amend or in any way extend the Release Date (as defined in each of the Term Loan
Agreement and Revolving Credit Agreement as of the date hereof), except in each
case as consented to by Guarantor and if any Guaranteed Party does so release
the Company, any Other Guarantor or any collateral security, or waive any rights
to proceeds of insurance, or extend the maturity date or amend or extend the
Release Date, Guarantor shall be released and discharged from any liability
under this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, with respect to any Guaranteed Party if at any time any payment of any of
the Guaranteed Obligations owed such Guaranteed Party is rescinded or must
otherwise be returned by such Guaranteed Party, as the case may be, upon the
insolvency, bankruptcy or reorganization of the Company, Guarantor (or any
corporation affiliated with Guarantor that makes a payment on Guarantor's behalf
pursuant to Section 1(a) hereof) or otherwise, all as though such payment had
-------
not been made. If the payment of, or the acceleration of the time for payment
of, any sum required to be made by the Company under any Document shall at any
time be prevented by reason of a case or proceeding under bankruptcy, insolvency
or other similar law, Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, such sum shall be deemed to be payable in accordance
with the terms of such Document, and, subject to the limitations in Section 1
above, Guarantor shall pay such sum and any other amounts guaranteed hereunder
within five (5) Business Days after Guarantor's receipt of demand therefor.
3. Waiver. Except as otherwise provided in this Guaranty, Guarantor
------
hereby unconditionally waives, as to any Guaranteed Party, to the greatest
extent permitted by applicable law, (a) any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of
or proof of reliance by any Guaranteed Party upon this Guaranty, or acceptance
of this Guaranty, and the Guaranteed Obligations, (b) any requirement that any
Guaranteed Party exhaust any right or take any action against the Company, any
other guarantor or any other person or any collateral, (c) all notices which may
be required by statute, rule of law or otherwise to preserve any rights against
Guarantor hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under or in
respect of the Documents, and notice of any failure on the part of the Company
to perform and comply with any term or condition of any Document, (d) any rights
to the enforcement, assertion or exercise by any Guaranteed Party of any right,
remedy, power or privilege under or in respect of any of the Documents, (e) any
requirement of diligence and (f) notice of acceptance of this Guaranty. Any
Guaranteed Party that is entitled to receive payments required to be made by
Guarantor hereunder in respect of any Guaranteed Obligation shall have the right
to enforce this
5
<PAGE>
Guaranty (by bringing suit or otherwise) directly against Guarantor with respect
to such Guaranteed Obligations without bringing suit against the Company or any
other person, as the case may be.
4. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty shall in any event be effective unless the same shall be in writing and
(a) with respect to its enforcement against any Guaranteed Party, signed by
Agent, or (b) with respect to its enforcement against Guarantor, signed by
Guarantor.
5. No Waiver; Remedies. No failure on the part of any Guaranteed Party
-------------------
to exercise, and no delay in any Guaranteed Party's exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder by any Guaranteed Party preclude any other or
further exercise thereof or the exercise of any other right by such Guaranteed
Party. Agent (on behalf of Guaranteed Parties) may specifically waive any
breach of this Guaranty by Guarantor; provided that no such waiver shall be
effective or binding unless in writing, and that no such waiver shall constitute
a continuing waiver of similar or other breaches.
6. Duration of Guaranty. (a) This Guaranty shall remain in full force
--------------------
and effect in accordance with the terms hereof until the earliest of (i) payment
in full of all of the Guaranteed Obligations and termination of the commitments
of the lenders to extend financing under the Term Loan Agreement and the
Revolving Credit Agreement, (ii) the date on which Guarantor has satisfied all
of its obligations under this Guaranty, and (iii) the Release Date (as defined
in the Documents). The termination of this Guaranty on the Release Date or
otherwise shall not require any action on the part of Agent or any Guaranteed
Party, but at the request of Guarantor, Agent will execute and deliver to
Guarantor such documents as Guarantor may reasonably request confirming the
termination of this Guaranty. The obligation of Guarantor under Section
1(a)(iii) to pay any fees and expenses owing in connection with the enforcement
of this Guaranty shall survive such termination.
(b) This Guaranty shall be binding upon Guarantor and its successors,
and inure to the benefit of and be enforceable by the successors, transferees
and assigns of each Guaranteed Party permitted under the Documents. Guarantor
agrees that in the discharge of its obligations hereunder no judgment, order, or
exhaustion need be obtained, and no action, suit or proceeding need be brought,
and no other remedies need be exhausted against the Company or any other person
for performance by Guarantor of its obligations hereunder.
7. Notices, Etc. All notices, demands, requests, consents, approvals
------------
and other instruments hereunder shall be in writing and shall be deemed to have
been properly given if given
6
<PAGE>
as provided for in the Documents, and if to Guarantor, sent to it at its address
or fax number shown on the signature pages of this Guaranty.
8. Separability of This Guaranty. In case any term or provision of this
-----------------------------
Guaranty or any application thereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable.
9. Further Assurances. Guarantor hereby agrees to execute and deliver
------------------
all such instruments and take all such action as any Guaranteed Party may from
time to time reasonably request in order to fully effectuate the purposes of
this Guaranty.
10. Headings. The headings contained in this Guaranty are for
--------
convenience of reference only and shall not modify, define or limit any of the
terms or provisions hereof.
11. GOVERNING LAW AND DAMAGE LIMITATION. THIS GUARANTY SHALL BE GOVERNED
-----------------------------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE
PARTIES AGREE THAT GUARANTOR SHALL NOT BE LIABLE HEREUNDER FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOST PROFITS OR BUSINESS.
12. Representations and Warranties of Guarantor. Guarantor represents
-------------------------------------------
and warrants to each Guaranteed Party that:
(a) It is duly organized, validly existing and (to the extent
applicable) in good standing under the laws of the jurisdiction of its
organization, and has all requisite corporate or partnership power and authority
to enter into and perform its obligations under this Guaranty.
(b) This Guaranty has been duly authorized by all necessary corporate
or partnership action on the part of, and has been duly executed and delivered
by, Guarantor, and none of the execution and delivery hereof, the consummation
of the transactions contemplated hereby or compliance by Guarantor with any of
the terms and provisions hereof (i) requires any approval of
7
<PAGE>
stockholders or partners or approval or consent of any trustee or holders of any
indebtedness or obligations of Guarantor other than such approvals or consents
as have been obtained, (ii) contravenes any law, judgment, governmental rule or
regulation or order applicable to or binding on Guarantor or any of its
properties, the contravention of which would have a material adverse effect on
the financial condition of Guarantor and its subsidiaries taken as a whole or on
the ability of Guarantor to perform any of its obligations under this Guaranty,
(iii) contravenes or results in any breach of or constitutes any default under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which Guarantor is a party or by which it or any of
its properties may be bound, the contravention, breach or default of which would
have a material adverse effect on the financial condition of Guarantor and its
subsidiaries taken as a whole or on the ability of Guarantor to perform any of
its obligations under this Guaranty, or (iv) contravenes its corporate charter
or by-laws or other organizational documents.
(c) Neither the execution, delivery and performance by Guarantor of
this Guaranty nor the consummation of any of the transactions contemplated
hereby requires the consent, approval or authorization of, the giving of prior
notice to, or the prior registration, recording or filing of any document with,
or the taking of any other action in respect of, any governmental agency or
authority.
(d) This Guaranty constitutes the legal, valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms, except
as such enforcement may be subject to bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally and to general
principles of equity.
(e) Guarantor has delivered copies of the consolidated balance sheet
of Guarantor and its consolidated subsidiaries as of the end of its most recent
fiscal year for which its financial statements are available, and related
statements of consolidated income and cash flow and stockholder's equity for the
fiscal year then ended, accompanied by the report of its independent
accountants. Such statements fairly present, in accordance with generally
accepted accounting principles, the financial position of Guarantor and its
consolidated subsidiaries as of such date and the results of their operations
and cash flows for such fiscal year.
13. Taxes.
-----
(a) For the purposes of this Section 13, the following terms have the
following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment to a
Guaranteed Party by Guarantor pursuant to this Guaranty, and all liabilities
with respect thereto, excluding (i) taxes imposed on its income, and franchise
or similar taxes imposed on it, by a jurisdiction under the laws of which such
Guaranteed Party is organized or in which its principal executive office is
located and
8
<PAGE>
(ii) any United States withholding tax imposed on such payments but only to the
extent that such Guaranteed Party is subject to United States withholding tax at
the time such Guaranteed Party first becomes a party to the Documents.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made to a Guaranteed Party pursuant to this Guaranty or
from the execution or delivery of, or otherwise with respect to, this Guaranty.
(b) Any and all payments by the Guarantor to or for the account of any
Guaranteed Party hereunder shall be made without deduction for any Taxes or
Other Taxes; provided that, if Guarantor shall be required by law to deduct any
--------
Taxes or Other Taxes from any such payments, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such
Guaranteed Party receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Guarantor shall make such deductions, (iii)
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) Guarantor shall
furnish to the Guaranteed Party the original or a certified copy of a receipt
evidencing payment thereof.
(c) Guarantor agrees to indemnify each Guaranteed Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Guaranteed Party and any liability (including
penalties, interest and expenses, other than those resulting from any act or
failure to act by such Guaranteed Party) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such
Guaranteed Party (as the case may be) makes demand therefor.
(d) For any period with respect to which a Guaranteed Party has failed
to provide Guarantor with the appropriate form evidencing its complete exemption
from United States withholding taxes (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on which such form
originally was required to be provided), such Guaranteed Party shall not be
entitled to indemnification under Section 13(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Guaranteed Party which is
--------
otherwise exempt from or subject to a reduced rate of withholding tax becomes
subject to Taxes because of its failure to deliver a form required hereunder,
Guarantor shall take such steps as such Guaranteed Party shall reasonably
request to assist such Guaranteed Party to recover such Taxes.
[signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
by its duly authorized officer.
[GUARANTOR]
By:_________________________________
Name:_______________________________
Title:______________________________
ADDRESS FOR NOTICES:
ACCEPTED AND AGREED
on behalf of Guaranteed Parties:
TORONTO DOMINION (TEXAS), INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
10
<PAGE>
AMERICAN MOBILE SATELLITE CORPORATION
GUARANTEE ISSUANCE AGREEMENT
PERFORMANCE SCHEDULE
($000'S)
EXHIBIT D
<TABLE>
7/1/96 11/16/96 2/16/97 5/16/97 8/16/97 After
-11/15/96 -2/15/97 -5/15/97 -8/15/97 -11/15/97 11/15/94
--------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
BORROWING LIMIT* 130,000 155,000 170,000 180,000 190,000 200,000
- ---------------
3Q96 4Q96 1Q97 2Q97 3Q97 4Q97
--------- -------- -------- -------- --------- --------
COVENANTS
- ---------
Subscribers 12,224 19,809 27,336 35,969 45,514 55,058
Net Revenue 2,861 6,628 10,083 13,347 17,090 21,072
EBITDA bef. Capitalized Exp (19,907) (17,949) (14,697) (11,500) (8,782) (5,657)
Operating Cash Flow (30,618) (19,539) (10,260) (2,639) (1,264) (12,529)
</TABLE>
*Assumes receipt of $60 million of insurance proceeds in 3Q96. If $60 million
is not received until 4Q96, the Borrowing Limit increases by $60M in 3Q96 to
$190M availability. When proceeds are received in 4Q96, they must be applied to
reduce the debt and the Borrowing Limit is reduced to $155M.
<PAGE>
EXHIBIT E
NOTICE ADDRESSES
AMERICAN MOBILE SATELLITE CORPORATION
AMSC SUBSIDIARY CORPORATION
10802 Parkridge Blvd.
Reston, Virginia 22091
Attention: Chief Financial Officer
Fax: (703) 758-6142
HUGHES ELECTRONICS CORPORATION
7200 Hughes Terrace
M/S CI/A 700
Los Angeles, California 90045-0066
Attention: Treasurer
Fax: (310) 568-7834
SINGAPORE TELECOMMUNICATIONS LTD.
31 Exeter Road, Comcentre
Singapore 239732
Republic of Singapore
Attention: Dr. Chia Choon Wei
Fax: 011-65-732-0673
BARON CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
450 Park Avenue
Suite 2800
New York, NY 10022
Attention: Linda S. Martinson
Fax: (212) 759-7579
AFTER August 2, 1996:
767 Fifth Avenue
24th Floor
New York, New York 10153
<PAGE>
EXHIBIT 13
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH OR PURSUANT TO AN EXEMPTION THEREFROM.
AMERICAN MOBILE SATELLITE CORPORATION
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF AMERICAN MOBILE SATELLITE CORPORATION
-----------------------------------------------------
NO. ___ WARRANT TO PURCHASE
3,750,000 SHARES
FOR VALUE RECEIVED, AMERICAN MOBILE SATELLITE CORPORATION, a Delaware
corporation (the "Company"), hereby certifies that HUGHES ELECTRONICS
-------
CORPORATION, its successor or permitted assigns (the "Holder"), is entitled,
------
subject to the provisions of this Warrant, to purchase from the Company, at the
times specified herein, Three Million Seven Hundred Fifty Thousand (3,750,000)
(the "Warrant Share Amount") fully paid and non-assessable shares of Common
--------------------
Stock of the Company, par value $.01 per share (the "Common Stock"), at a
------------
purchase price per share equal to the Exercise Price (as hereinafter defined).
The Warrant Share Amount and the Exercise Price are subject to adjustment from
time to time as hereinafter set forth.
1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Accepted Alien Ownership Percentage Limitation" means 24.99% or, in
----------------------------------------------
the event of a modification of the Alien Ownership Restrictions subsequent to
the date hereof, such percentage limitation upon the Company's Alien ownership
as may be in effect from time to time as a result of such modification, less
0.01%.
"Alien" means any alien or a representative thereof, or a foreign
-----
government or a representative thereof, or a corporation or other entity
organized under the laws of any foreign government.
"Alien Ownership Percentage" means, with respect to any Person, the
--------------------------
percentage of total ownership in such Person owned of record, as well as the
percentage of total ownership in such Person voted, by Aliens; provided, that if
--------
under the Alien Ownership Restrictions such Person would be deemed to have a
percentage of total ownership owned of record or voted by Aliens other than the
actual percentage so owned or voted, then such Person's Alien Ownership
Percentage shall be such deemed percentage.
"Alien Ownership Restrictions" means Section 310(b) of the
----------------------------
Communications Act, as modified by any interpretation, ruling or order of the
Federal Communications Commission (or any successor agency) applicable to the
Company or any of its subsidiaries.
<PAGE>
"AMSC" means AMSC Subsidiary Corporation, a Delaware corporation
----
dually incorporated as a Virginia public service corporation.
"Board of Directors" means the Board of Directors of the Company.
------------------
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which commercial banks in the City of New York are authorized by law to close.
"Communications Act" means the Communications Act of 1934, as amended,
------------------
or any successor statute.
"Credit Agreements" means, collectively, that certain Term Loan
-----------------
Agreement providing for up to $150,000,000 of term loans and that certain
Revolving Credit Facility Agreement providing for up to $75,000,000 of revolving
loans, in each case as described in the Guaranty Issuance Agreement.
"Current Market Price Per Common Share" has the meaning set forth in
-------------------------------------
Section 10.D.
"Exercise Date" means the applicable date of exercise of this Warrant,
-------------
as indicated on the Warrant Exercise Notice delivered by the Holder.
"Exercise Price" means initially $24.00 per Warrant Share, as adjusted
--------------
from time to time.
"Expiration Date" means June 28, 2001, at 5:00 p.m. New York City
---------------
time.
"Guaranty Issuance Agreement" means that certain Guaranty Issuance
---------------------------
Agreement dated as of June 28, 1996 by and among the Company, AMSC, Hughes
Electronics Corporation, Singapore Telecommunications Ltd. and Baron Capital
Partners, L.P.
"Holder's Guaranty" means the guaranty by the Holder of a specified
-----------------
portion (as it may be adjusted from time to time) of the obligations of AMSC
under the Credit Agreements.
"Person" means an individual, corporation, partnership, limited
------
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Warrant Exercise Notice" means the Warrant Exercise Notice forming a
-----------------------
part hereof.
"Warrant Margin" means, on any date, the difference of (x) the greater
--------------
of (A) the average of the Closing Prices (as defined in Section 10.D) on each of
the 20 trading days immediately preceding such date and (B) the Closing Price on
the trading day two trading days prior to such date, minus (y) the Exercise
Price.
"Warrant Share Amount" has the meaning set forth in the preamble
--------------------
hereof.
"Warrant Shares" means the shares of Common Stock deliverable upon
--------------
exercise of this Warrant, as adjusted from time to time.
2
<PAGE>
2. EXERCISE Of WARRANT.
A. Subject to Section 15 hereof, the Holder is entitled to
exercise this Warrant in whole or in part at any time, or from time to time, to
and including the Expiration Date or, if such day is not a Business Day, then on
the next succeeding day that shall be a Business Day. To exercise this Warrant,
the Holder shall execute and deliver to the Company at its address set forth in
Section 12 hereof a Warrant Exercise Notice substantially in the form annexed
hereto and shall deliver to the Company (x) this Warrant Certificate, including
the Warrant Exercise Subscription Form forming a part hereof duly executed by
the Holder, and (y) subject to Section 2.B, payment of the Exercise Price then
in effect for such Warrant Shares. Upon such delivery and payment, the Holder
shall be deemed to be the holder of record of the Warrant Shares subject to such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Warrant Shares shall not
then be actually delivered to the Holder.
B. The Exercise Price may be paid in cash or by certified or
official bank check or bank cashier's check payable to the order of the Company
or by wire transfer of immediately available funds to an account designated by
the Company or by cancellation of indebtedness owed to the Holder or by any
combination of such methods. In the alternative, the Holder may exercise its
right to receive Warrant Shares on a net basis, such that, without the exchange
of any funds, the Holder will receive that number of Warrant Shares (and such
other consideration) otherwise issuable (or payable) upon exercise of this
Warrant less that number of Warrant Shares having an aggregate Current Market
Price Per Common Share on the Exercise Date equal to the aggregate Exercise
Price that would otherwise have been paid by the Holder for the Warrant Shares.
The Company shall pay any and all documentary, stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of this Warrant and
the issue and delivery of the Warrant Shares.
C. If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new Warrant
Certificate of the same tenor and for the unexercised number of Warrant Shares
shall be executed by the Company. The Company shall register the new Warrant
Certificate in the name of the Holder or in such name or names of its
transferee(s) pursuant to Section 8 hereof as may be directed in writing by the
Holder and deliver the new Warrant Certificate to the Person or Persons entitled
to receive the same.
D. Except as otherwise provided in Section 3, upon surrender of
this Warrant Certificate in conformity with the foregoing provisions, the
Company shall transfer to the Holder of this Warrant Certificate appropriate
evidence of ownership of the shares of Common Stock or other securities or
property (including any money) to which the Holder is entitled, registered or
otherwise placed in, or payable to the order of, the name or names of the Holder
or its transferee(s) as may be directed in writing by the Holder, and shall
deliver such evidence of ownership and any other securities or property
(including any money) to the Person or Persons entitled to receive the same,
together with an amount in cash in lieu of any fraction of a share as provided
in Section 7 below.
3. OWNERSHIP LIMITATION. If at any time the exercise of any
Warrants pursuant to Section 2 would cause the Company's Alien Ownership
Percentage to exceed the Accepted Alien Ownership Percentage Limitation, then in
lieu of issuing shares of Common Stock pursuant to Section 2:
A. the Company shall issue to each Holder exercising Warrants at
such time (each an "Exercising Holder") whose Alien Ownership Percentage is
-----------------
less than or equal to the
3
<PAGE>
Accepted Alien Ownership Percentage Limitation the number of shares of
Common Stock to which such Exercising Holder is entitled pursuant to
Section 2;
B. the Company shall issue to each Exercising Holder whose Alien
Ownership Percentage is greater than the Accepted Alien Ownership
Percentage Limitation (each, an "Affected Exercising Holder") a number of
--------------------------
shares of Common Stock equal to the quotient of (x) the product of (A) the
number of shares of Common Stock that, immediately after giving effect to
any issuances of Common Stock pursuant to the foregoing Section 3.A, could
be issued to a Person with a 100% Alien Ownership Percentage without
causing the Company's Alien Ownership Percentage to exceed the Accepted
Alien Ownership Percentage Limitation, multiplied by (B) the number of
shares of Common Stock to which such Affected Exercising Holder would be
entitled pursuant to Section 2 but for the application of this Section 3,
divided by (y) the product of (A) the aggregate number of shares of Common
Stock to which all Affected Exercising Holders would be entitled pursuant
to Section 2 but for the application of this Section 3, multiplied by (B)
such Affected Exercising Holder's Alien Ownership Percentage; provided that
--------
in no event shall the number of shares of Common Stock issuable to any
Affected Exercising Holder pursuant to this Section 3.B exceed the number
of shares of Common Stock to which such Affected Exercising Holder would
have been entitled pursuant to Section 2 but for the application of this
Section 3; and
C. the Company shall deliver by wire transfer of immediately
available funds to the account of each Affected Exercising Holder specified
in such Affected Exercising Holder's Warrant Exercise Notice, an amount
equal to the product of (x) the number of shares of Common Stock to which
such Affected Exercising Holder would have been entitled pursuant to
Section 2 that are not issuable to such Affected Exercising Holder pursuant
to the foregoing Section 3.B, multiplied by (y) the Warrant Margin on the
Exercise Date.
4. NASD LIMIT. Notwithstanding the provisions of Sections 2 and 3,
in no event shall this Warrant be exercisable for an aggregate number of shares
of Common Stock equal to or greater than such number of shares as would require
the approval of the Company's stockholders pursuant to Rule 4460(i)(1)(D) of the
National Association of Securities Dealers, Inc. (the "NASD Limit") unless the
----------
Company's stockholders have, prior to any exercise of this Warrant that would
require the issuance of Common Stock equal to or greater than the NASD Limit,
approved the exercise of Warrants for an aggregate number of shares of Common
Stock equal to or greater than the NASD Limit. If, upon any exercise of this
Warrant, shares of Common Stock that would otherwise be issuable upon such
exercise are not issuable due to the provisions of the foregoing sentence, then
in lieu of issuing shares of Common Stock pursuant to Sections 2 or 3:
(i) the Company shall issue the maximum number of shares of
Common Stock, if any, issuable up to the NASD Limit; provided, that if more
than one holder of Warrants is exercising Warrants at such time, such
issuance shall be prorated in proportion to the number of shares of Common
Stock to which each holder of Warrants exercising Warrants at such time
would be entitled but for the provisions of this Section 4; and
(ii) the Company shall deliver by wire transfer of immediately
available funds to the account of each Exercising Holder specified in such
Exercising Holder's Warrant Exercise Notice, an amount equal to the product
of (x) the number of shares of Common Stock to which such Exercising Holder
would have been entitled pursuant to the foregoing Sections 2 and 3 that
are not issuable to such Exercising Holder pursuant to the foregoing clause
(i), multiplied by the Warrant Margin on the Exercise Date.
4
<PAGE>
5. RESTRICTIVE LEGEND. Upon original issuance thereof, and until
such time as the same shall have been registered under the Securities Act or
sold pursuant to Rule 144 promulgated thereunder (or any similar rule or
regulation), each Warrant Certificate and any certificates evidencing Warrant
Shares shall bear a legend substantially in the form of the legend set forth on
the first page hereof, unless in the opinion of counsel reasonably satisfactory
to the Company, such legend is no longer required by the Securities Act.
6. RESERVATION OF SHARES. The Company hereby agrees that at all
times it shall reserve for issuance and delivery upon exercise of this Warrant
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant. All such shares
shall be duly authorized and, when issued upon such exercise, shall be validly
issued, fully paid and non-assessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale and free and
clear of all preemptive rights.
7. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant and in lieu
of delivery of any such fractional share upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price Per Common Share on the Exercise Date.
8. EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.
A. The Company shall from time to time register the exchange or
transfer of any outstanding Warrant Certificates in a Warrant register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Each taker and
holder of this Warrant Certificate by taking or holding the same, consents and
agrees that the registered holder hereof may be treated by the Company and all
other Persons dealing with this Warrant Certificate as the absolute owner hereof
for any purpose and as the Person entitled to exercise the rights represented
hereby.
B. Prior to any proposed transfer of the Warrants or the Warrant
Shares, unless such transfer is made pursuant to an effective registration
statement under the Securities Act, the Holder will deliver to the Company, if
so requested by the Company, an opinion of counsel reasonably satisfactory in
form and substance to the Company, to the effect that the Warrants or Warrant
Shares, as applicable, may be sold or otherwise transferred without registration
under the Securities Act. Subject to the preceding sentence, the Holder of this
Warrant shall be entitled, without obtaining the consent of the Company, to
assign and transfer this Warrant, at any time in whole or from time to time in
part, to any Person or Persons. Subject to the foregoing, upon surrender of this
Warrant to the Company, together with the attached Warrant Assignment Form duly
executed, the Company shall, without charge, execute and deliver a new Warrant
in the name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of the
Holder, and this Warrant shall promptly be cancelled.
9. LOSS OR DESTRUCTION OF WARRANT CERTIFICATE. Upon receipt by the
Company of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (if requested by the Company in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the Company shall
execute and deliver a new Warrant Certificate of like tenor and date
representing the right to purchase an equivalent number of Warrant Shares.
5
<PAGE>
10. ANTI-DILUTION PROVISIONS.
A. In case the Company shall at any time after the date hereof
(i) declare a dividend or make a distribution on Common Stock payable in Common
Stock or other shares of the Company's capital stock, (ii) subdivide, split or
reclassify the outstanding Common Stock into a larger number of shares, (iii)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then in each such case the Warrant Share Amount shall be adjusted to equal the
number of shares to which the holder of this Warrant would have been entitled
upon the occurrence of such event if this Warrant had been exercised immediately
prior to such time. Such adjustment shall be made successively whenever any
event listed above shall occur.
B. In case the Company shall fix a record date for the making of
a distribution to holders of Common Stock (including any such distribution made
in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, assets or other property
(excluding cash dividends, other cash distributions from current or retained
earnings or dividends payable in Common Stock for which an adjustment has been
made pursuant to Section 10.A), the Warrant Share Amount to be in effect after
such record date shall be determined by multiplying the Warrant Share Amount in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price Per Common Share, and the denominator of
which shall be such Current Market Price Per Common Share on such record date,
less the fair market value (determined by the Board of Directors of the Company;
provided that if the Holder shall object to any such determination, the Board of
- --------
Directors shall retain an independent appraiser reasonably satisfactory to the
Holder to determine such fair market value) of the portion of the assets, other
property or evidence of indebtedness so to be distributed which is applicable to
one share of Common Stock. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Warrant Share Amount shall again be adjusted to be the Warrant Share
Amount which would then be in effect if such record date had not been fixed.
C. If as a result of any event or for any other reason, any
adjustment is made which increases the number of shares of Common Stock issuable
upon conversion, exercise or exchange of, or in the conversion or exercise price
or exchange ratio applicable to, any outstanding securities of the Company that
are convertible into, or exercisable or exchangeable for, Common Stock of the
Company, then a corresponding adjustment shall be made hereunder to increase the
Warrant Share Amount, but only to the extent that no such adjustment has been
made pursuant to Sections 10.A or B hereof with respect to such event or for
such other reason.
D. For the purpose of any computation under Section 3 or Section
10.B hereof, on any determination date the "Current Market Price Per Common
-------------------------------
Share" shall be deemed to be the average (weighted by daily trading volume) of
- -----
the Closing Prices (as defined below) per share of Common Stock for the 20
consecutive trading days immediately prior to such date. "Closing Price" means
-------------
(1) if shares of Common Stock then are listed and traded on the New York Stock
Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE
Composite Transactions Tape; (2) if shares of Common Stock then are not listed
and traded on the NYSE, the closing price on such day as reported by the
----
principal national securities exchange on which the shares are listed and
traded; (3) if shares of Common Stock then are not listed and traded on any such
securities exchange, the last reported sale price on such day on the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"); or (4) if shares of Common Stock then are not
------
traded on the
6
<PAGE>
NASDAQ National Market, the average of the highest reported bid and lowest
reported asked price on such day as reported by NASDAQ. If on any determination
date shares of Common Stock are not quoted by any such organization, the Current
Market Price Per Common Share shall be the fair market value of such shares on
such determination date as reasonably determined by the Board of Directors. If
the Holder shall object to any determination by the Board of Directors of the
Current Market Price Per Common Share, the Current Market Price Per Common Share
shall be the fair market value per share of Common Stock as determined by an
independent appraiser retained by the Company at its expense and reasonably
acceptable to the Holder. For purposes of any computation under this Section 10,
the number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company.
E. Upon each adjustment of the Warrant Share Amount pursuant to
this Section 10, the Exercise Price applicable to each Warrant outstanding prior
to the making of the adjustment in the Warrant Share Amount shall thereafter be
adjusted to reflect an adjusted Exercise Price (calculated to the nearest tenth
of a cent) obtained from the following formula:
E' = E x W
---
W'
where:
E' = the adjusted Exercise Price per share following the adjustment
of the Warrant Share Amount.
E = the Exercise Price prior to adjustment.
W' = the adjusted Warrant Share Amount.
W = the Warrant Share Amount prior to adjustment.
F. No adjustment in the Warrant Share Amount or the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent of such amount; provided that any adjustments
--------
which by reason of this Section 10.F are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 10 shall be made to the nearest one tenth of a
cent or to the nearest hundredth of a share, as the case may be.
G. In the event that, at any time as a result of the provisions
of this Section 10, the holder of this Warrant upon subsequent exercise shall
become entitled to receive any shares of capital stock of the Company other than
Common Stock, the number of such other shares so receivable upon exercise of
this Warrant shall thereafter be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
contained herein.
H. Upon any adjustment pursuant to this Section 10, the Company
shall promptly thereafter (i) cause to be filed with the Company a certificate
of an officer of the Company setting forth the Warrant Share Amount and Exercise
Price after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based, and (ii) cause
to be given to each registered Holder of this Warrant Certificate at the address
as set forth in Section 12 written
7
<PAGE>
notice of such adjustments. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be delivered pursuant
to Section 13.B.
11. REORGANIZATION, CONSOLIDATION, MERGER, OR SALE OF ASSETS. In
case of any reclassification, redesignation, reorganization or recapitalization
by the Company (other than as set forth in Section 10) or consolidation of the
Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation of outstanding shares
of Common Stock) or any sale or transfer of all or substantially all of the
assets of the Company or of the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be, the Holder
shall have the right thereafter to exercise this Warrant for the kind and amount
of securities, cash and other property receivable upon such reclassification,
redesignation, reorganization, recapitalization, consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock for which this
Warrant may have been exercised in full immediately prior to such
reclassification, redesignation, reorganization, recapitalization,
consolidation, merger, sale or transfer, assuming (i) such holder of Common
Stock is not a Person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be ("constituent Person"), or an Affiliate of
------------------
a constituent Person and (ii) in the case of a consolidation, merger, sale or
transfer which includes an election as to the consideration to be received by
the holders, such holder of Common Stock failed to exercise its rights of
election, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer (provided that if
--------
the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock held immediately prior to such consolidation, merger, sale or transfer by
other than a constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised ("non-electing share"),
------------------
then for the purpose of this Section 11 the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Adjustments
for events subsequent to the effective date of such reclassification,
redesignation, reorganization, recapitalization, consolidation, merger and sale
of assets shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. In any such event, effective provisions shall be
made in the certificate or articles of incorporation of the resulting or
surviving corporation, in any contract of sale, conveyance, lease or transfer,
or otherwise so that the provisions set forth herein for the protection of the
rights of the Holder shall thereafter continue to be applicable; and any such
resulting or surviving corporation shall expressly assume the obligation to
deliver, upon exercise, such shares of stock, other securities, cash and
property. The provisions of this Section 11 shall similarly apply to successive
consolidations, mergers, sales, leases or transfers.
12. NOTICES. Any notice, demand or delivery authorized or required
by this Warrant Certificate shall be in writing and shall be given to the Holder
or the Company, as the case may be, at its address (or telecopier number) set
forth below, or such other address (or telecopier number) as shall have been
furnished to the party giving or making such notice, demand or delivery:
If to the Company: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
Telecopy: (703) 758-6134
Attention: Randy Segal, General Counsel
8
<PAGE>
If to the Holder: Hughes Electronics Corporation
7200 Hughes Terrace,
M/S CI/A 700
Los Angeles, California 90045-0066
Telecopy: (310) 568-7834
Attention: Treasurer
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
13. NOTICES TO WARRANT HOLDERS.
A. The Company shall provide to each Holder, at its address and
in the manner set forth in Section 12, a notice of expiration of this Warrant
not less than 90 nor more than 120 days prior to the Expiration Date.
B. In the event:
(a) the Company shall authorize the issuance to holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to holders
of shares of Common Stock of assets, including cash, evidences of its
indebtedness, or other securities; or
(c) of any reorganization, consolidation or merger to which
the Company is a party and for which approval of any shareholders of
the Company is required, or of the conveyance or transfer of the
properties and assets of the Company substantially as an entirety, or
of any reclassification or change of Common Stock issuable upon
exercise of the Warrants, or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would
require an adjustment to the Warrant Share Amount or the Exercise
Price pursuant to Section 10 hereof;
then the Company shall cause to be given to each registered Holder of this
Warrant Certificate, at least 20 days prior to the applicable record date
hereinafter specified, or 20 days prior to the date of the event in the case of
events for which there is no record date a written notice stating (i) the date
as of which the holders of record of shares of Common Stock entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such reorganization,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of
9
<PAGE>
Common Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 13.B or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
14. RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, to exercise any preemptive right or to receive
any notice of meetings of stockholders or any notice of any proceedings of the
Company except as may be specifically provided for herein. Nothing contained
herein shall impose any obligation on the Holder to purchase any securities or
impose any liabilities on such Holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by creditors of
the Company.
15. LIMITATION ON EXERCISE OF WARRANT; CANCELLATION OF WARRANTS.
Notwithstanding anything to the contrary in this Warrant, this Warrant shall be
exercisable at any given time only for the number of Warrant Shares which is
equal to the applicable Warrant Share Amount as in effect from time to time,
minus the Warrant Share Number multiplied by a fraction, the numerator of which
is the amount which due solely to the applicable Borrowing Limit (as defined in
the Guaranty Issuance Agreement) in effect at such time is not available to AMSC
under the Credit Agreements and the denominator of which is $200,000,000
(provided, that if the numerator of such fraction is zero, there shall be no
- ---------
limitation on the exercise of this Warrant). In the event that AMSC receives a
Guarantor's Notice (as defined in the Guaranty Issuance Agreement), the Company
shall be entitled, upon written notice to the Holder, to cancel a portion of
this Warrant such that the applicable Warrant Share Amount in effect at the time
of delivery of the Guarantor's Notice shall equal the number of Warrant Shares
determined in accordance with the preceding sentence.
16. REGISTRATION RIGHTS. The Holder of this Warrant is entitled to
certain registration rights with respect to the Warrant Shares issuable upon the
exercise thereof. Said registration rights are set forth in a Registration
Rights Agreement dated as of June 28, 1996, by and among the Company and certain
holders of warrants of the Company named therein (the "Registration Rights
-------------------
Agreement"). By acceptance of this Warrant Certificate, the Holder hereof
- ---------
agrees that upon exercise of this Warrant, in whole or in part, such Holder will
be bound by the Registration Rights Agreement as a holder of Registrable
Securities thereunder. The Company agrees that upon transfer of this Warrant,
in whole or in part, pursuant to Section 8 hereof, the transferee shall be
entitled to become a party to the Registration Rights Agreement if not already a
party thereto. A copy of the Registration Rights Agreement may be obtained by
the Holder hereof upon written request to the Company.
17. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS WARRANT CERTIFICATE
AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND THE PERFORMANCE THEREOF
SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HERETO
IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
18. AMENDMENTS; WAIVERS. Any provision of this Warrant Certificate
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of
10
<PAGE>
an amendment, by the Holder and the Company, or in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
19. COUNTERPARTS. This Warrant Certificate may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same instrument.
(signature page follows)
11
<PAGE>
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed by its duly authorized officer and to be dated as of
June 28, 1996.
AMERICAN MOBILE SATELLITE CORPORATION
By:__________________________________
Name:
Title:
Acknowledged and Agreed:
HUGHES ELECTRONICS CORPORATION
By:___________________________
Name: Charles H. Noski
Title: Senior Vice President and
Chief Financial Officer
S-1
<PAGE>
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant
by execution of the Warrant Exercise Subscription Form)
To: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $.01 per share, of
American Mobile Satellite Corporation. The undersigned intends to exercise the
Warrant to purchase _____________ shares (the "Shares") [at $_______ per Share
------
(the "Exercise Price")] [pursuant to the net exercise provisions of Section 2.B
--------------
of the Warrant]. [The undersigned intends to pay the aggregate Exercise Price
for the Shares in cash, certified or official bank or bank cashier's check or by
wire transfer of immediately available funds to an account to designated by the
Company or by cancellation of indebtedness owed to the Holder (or a combination
of such methods) as indicated below.]
The undersigned hereby certifies that to the best of its knowledge its
Alien Ownership Percentage as of the date hereof is ________________.
Date:____________,_____.
__________________________________
(Signature of Owner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Payment: $________________cash
$________________check
$________________wire transfer
$________________cancellation of indebtedness
[Wire Transfer Instructions, if required pursuant to Section 3 or 4 of the
Warrant:__________________________________________________________________
__________________________________________________________________________]
<PAGE>
WARRANT EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of the Warrant
after delivery of Warrant Exercise Notice)
To: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
The undersigned irrevocably exercises the Warrant for the purchase of
_______________shares (the "Shares") of Common Stock, par value $.01 per share,
------
of American Mobile Satellite Corporation (the "Company") at $_______ per Share
-------
(the "Exercise Price") and herewith makes payment of $_______________ (such
--------------
payment being made in cash or by certified or official bank or bank cashier's
check payable to the order of the Company or by wire transfer or by cancellation
of indebtedness owed to the Holder or any combination of such methods) (unless
the undersigned Holder is exercising the Warrant pursuant to the net exercise
provisions of Section 2.B of the Warrant), all on the terms and conditions
specified in the within Warrant Certificate, surrenders this Warrant Certificate
and all right, title and interest therein to the Company and directs that the
Shares deliverable upon the exercise of this Warrant be registered or placed in
the name and at the address specified below and delivered thereto. If said
number of Shares is less than all of the shares of Common Stock for which the
Warrant is exercisable, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
the undersigned or nominee hereinafter set forth, and further that such
certificate be delivered to the undersigned at the address hereinafter set forth
or to such other person or entity as is hereinafter set forth.
Date:__________,____.
__________________________________
(Signature of Owner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:____________________________
Name:___________________________________________________________________________
Street Address:_________________________________________________________________
City, State and Zip Code:_______________________________________________________
Any unexercised portion of the Warrant evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:____________________________
Name:___________________________________________________________________________
Street Address:_________________________________________________________________
City, State and Zip Code:_______________________________________________________
<PAGE>
WARRANT ASSIGNMENT FORM
-----------------------
Dated ____________,_______
FOR VALUE RECEIVED,___________________________________________________
hereby sells, assigns and transfers unto________________________________________
______________________________________________________________ (the "Assignee"),
--------
(please type or print in block letters)
________________________________________________________________________________
(insert Assignee's address)
________________________________________________________________________________
(insert Assignee's social security or taxpayer ID number)
its right to purchase up to ________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
_________________________
Signature
Signature Guarantee:
<PAGE>
EXHIBIT 14
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT dated as of June 28, 1996 among American
Mobile Satellite Corporation, a Delaware corporation (the "Company"), Hughes
-------
Electronics Corporation, Singapore Telecommunications Ltd., and Baron Capital
Partners, L.P. (collectively, the "Guarantors") and each other Person who
----------
executes this Agreement.
W I T N E S E T H
WHEREAS, the Company and AMSC Subsidiary Corporation, a Delaware
corporation dually incorporated as a Virginia public service corporation ("AMSC
----
Subsidiary"), and the Guarantors have entered into a Guaranty Issuance Agreement
- ----------
(the "Guaranty Issuance Agreement") dated as of June 28, 1996; and
---------------------------
WHEREAS, in order to induce the Guarantors to enter into the Guaranty
Issuance Agreement and issue the Guaranties specified therein, the Company has
agreed to provide the registration rights set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have
-----------
the following meanings:
"Affiliate", as applied to any specified Person, shall mean any other
---------
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any Person, means the power to
-------
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means the Board of Directors of the Company.
------------------
"Bridge Shares" means the shares of Common Stock issued or issuable
-------------
upon exercise of the Bridge Warrants in accordance with the terms thereof and
any Common Stock issued as or issuable upon the conversion or exercise or any
warrant, option, right, or other security which is issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the shares
of Common Stock issued or issuable upon exercise of the Bridge Warrants.
"Bridge Registration Rights Agreement" means the registration rights
------------------------------------
agreement dated as of April 19, 1996 among the Company, Toronto Dominion
Investments, Inc., Morgan Guaranty Trust Company of New York and Hughes
Communications Satellite Services, Inc. with respect to the registration of the
Bridge Shares.
<PAGE>
"Bridge Warrants" means the warrants to purchase Common Stock
---------------
originally issued by the Company to Toronto Dominion Investments, Inc., Morgan
Guaranty Trust Company of New York and Hughes Communications Satellite Services,
Inc. on January 19, 1996.
"Commission" means the Securities and Exchange Commission, or any
----------
successor agency.
"Common Stock" means the common stock, par value $.01 per share, of
------------
the Company.
"Deferral Period" has the meaning set forth in Section 2.1.
---------------
"Demand Registration" has the meaning set forth in Section 2.1.
-------------------
"Demand Registration Notice" has the meaning set forth in Section 2.1.
--------------------------
"Demanding Group" has the meaning set forth in Section 2.1.
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Holder" means the holder of any Warrants or Warrant Shares other than
------
Warrant Shares that are acquired in a public distribution pursuant to a
registration statement under the Securities Act or pursuant to transactions
exempt from registration under the Securities Act where securities sold in such
transaction may be resold without subsequent registration under the Securities
Act.
"NASD" means the National Association of Securities Dealers, Inc.
----
"Person" means an individual, corporation, partnership, limited
------
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Piggy-Back Registration" has the meaning set forth in Section 2.2.
-----------------------
"Registrable Securities" means the Warrant Shares until (i) a
----------------------
Registration Statement covering such Warrant Shares has been declared effective
by the Commission and they have been disposed of pursuant to such effective
Registration Statement, (ii) they are sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or under which they may be sold pursuant to
Rule 144(k) or (iii) the Company has delivered a new certificate or other
evidence of ownership for them not bearing the legend required pursuant to the
Warrants and they may be resold without subsequent registration under the
Securities Act.
"Registration Statement" means any registration statement of the
----------------------
Company relating to a Demand Registration pursuant to Section 2.1 or a Piggy-
Back Registration pursuant to Section 2.2, in each case, including the
prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
2
<PAGE>
"Selling Holder" means a Holder who is selling Registrable Securities
--------------
pursuant to a Registration Statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
-----------
Securities as principal and not as part of such dealer's market-making
activities.
"Warrants" means the warrants dated June 28, 1996 to purchase Common
--------
Stock.
"Warrant Shares" means the shares of Common Stock issued or issuable
--------------
upon exercise of the Warrants, in each case in accordance with the terms
thereof, and any Common Stock or other securities issued or issuable upon the
exercise of any warrant, option, right, or other security which is issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of the shares of Common Stock issued or issuable upon exercise of
the Warrants.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration.
-------------------
(a) Right to Demand. At any time and from time to time prior to June
---------------
28, 2001, Holders of Registrable Securities representing at least 25% of the
original aggregate number of Warrant Shares for which the Warrants were
exercisable, as a group (each, a "Demanding Group") may make a written request
---------------
of the Company for registration with the Commission, under and in accordance
with the provisions of the Securities Act, of all or part of their Registrable
Securities (a "Demand Registration"). Within 5 days after receipt of the
-------------------
request for a Demand Registration, the Company will send written notice (the
"Demand Registration Notice") of such registration request and its intention to
--------------------------
comply therewith to each Holder and, subject to paragraph (c) below, the Company
will include in such registration all Registrable Securities of such Holders
with respect to which the Company has received written requests for inclusion
therein within 20 days after the Holder's receipt of the Demand Registration
Notice and such Holders will be deemed to be members of the Demanding Group.
All requests made pursuant to this paragraph (a) will specify the aggregate
number of Registrable Securities requested to be registered.
Promptly after receipt of any request for registration under this
paragraph (a), but in no event later than 60 days after receipt of such request,
the Company shall file a Registration Statement with the Commission with respect
to the Registrable Securities included in such request and shall use its best
efforts to have such Registration Statement declared effective as promptly as
practicable; provided, however, that the Company may postpone the filing of such
-------- -------
Registration Statement for a period of up to 90 days (the "Deferral Period") if
---------------
(x) the Board of Directors reasonably determines that (i) such a filing would
adversely affect any proposed financing, acquisition, divestiture or other
material transaction by the Company or (ii) such a filing would otherwise
represent an undue hardship for the Company, and (y) such determination is
reflected in a certificate signed by the Chief Executive Officer or President of
the Company. The Company shall not be entitled to request more than one such
deferral with respect to any Demand Registration within any 365-day period. If
the Company does elect to defer any such Demand Registration, the Holders
requesting such Demand Registration may, at their election by written notice to
the Company, (i) confirm their request to proceed with such Demand Registration
upon the expiration of the Deferral Period or (ii) withdraw their request for
such Demand Registration in which case no such
3
<PAGE>
request for a Demand Registration shall be deemed to have occurred for purposes
of Section 2.1(b) or for any other purposes under this Agreement (and if such
Deferral Period extends past June 28, 2001, the Holders shall nevertheless be
entitled to make subsequent requests for Demand Registration hereunder).
(b) Number of Demand Registrations. The Demanding Group(s) shall
------------------------------
collectively be entitled to two Demand Registrations hereunder. A Demand
Registration shall not be counted as a Demand Registration hereunder (i) until
such Demand Registration has been declared effective by the Commission and
maintained continuously effective for a period of at least 120 days or such
shorter period as will terminate when all Registrable Securities included
therein have been sold in accordance with such Demand Registration and (ii)
unless the number of Registrable Securities in such Demand Registration by the
Demand Group is at least 80% of the number of shares originally requested to be
included by such group after giving effect to any reductions pursuant to
paragraph (c) below.
(c) Priority on Demand Registrations. If in any Demand Registration
--------------------------------
the managing Underwriter or Underwriters thereof advise the Company in writing
that in its or their reasonable opinion or, in the case of a Demand Registration
not being underwritten, the Company shall reasonably determine after
consultation with an investment banking firm of nationally recognized standing,
that the number of Registrable Securities proposed to be sold in such Demand
Registration exceeds the number that can be sold in such offering or will
adversely affect the success of such offering (including, without limitation, an
impact on the selling price or the number of Registrable Securities that any
participant may sell), the Company shall include in such registration only the
number of Registrable Securities, if any, which in the opinion of such
Underwriter or Underwriters, or the Company, as the case may be, can be sold
without having an adverse effect on the success of the offering and in
accordance with the following priority: (i) first, subject to the priority
-----
rights of the holders of Bridge Shares pursuant to the Bridge Registration
Rights Agreement, Registrable Securities requested to be included in such
offering by Holders in the Demanding Group requesting such registration,
allocated pro rata among such Demanding Group (based upon the number of
Registrable Securities requested to be included in such Demand Registration),
(ii) second, pro rata (based upon the number of Registrable Securities or
------
similar securities requested to be included in such registration by such Holders
and other Persons, if any) among the other Holders of Registrable Securities and
other Persons having similar rights who have requested to include Registrable
Securities or similar securities in such registration pursuant to the piggy-back
registration provisions of Section 2.2 or other registration rights agreements
other than the Bridge Registration Rights Agreement, and (iii) third, securities
-----
proposed to be issued by the Company for its own account.
(d) Selection of Underwriters. If any Demand Registration is to be in
-------------------------
the form of an underwritten offering, the managing Underwriter or Underwriters
that will administer the offering shall be selected by the holders of a majority
of the Registrable Securities to be included in such offering; provided that
--------
such managing underwriter or underwriters must be of recognized national
standing and reasonably satisfactory to the Company. The Company shall
(together with all Holders of Registrable Securities proposing to distribute
Registrable Securities through such underwriting) enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such underwriting in the manner set forth above.
(e) Withdrawal. If any Holder of Registrable Securities disapproves
----------
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the managing Underwriter. If by
the withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the Underwriters), then the Company shall
offer to all Holders who
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have included Registrable Securities in the registration the right to include
additional Registrable Securities in the priority and proportions specified in
Section 2.1(c).
SECTION 2.2. Piggy-Back Registration.
-----------------------
(a) If the Company proposes to file a registration statement under
the Securities Act with respect to an offering by the Company for its own
account or for the account of any of its respective securityholders of any class
of equity security or security convertible into or exchangeable for any class of
equity security (other than a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the Commission), or a registration filed
in connection with an exchange offer or offering of securities solely to the
Company's existing securityholders or other registrations solely in connection
with employee stock options or other employee benefit plans), then the Company
shall give written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event less than 30 days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as each
such Holder may request (a "Piggy-Back Registration"). The Company shall use
-----------------------
its best efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company included therein and to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligations pursuant to Section 2.1, and no failure to effect a registration
under this Section 2.2 and complete the sale of shares in connection therewith
shall relieve the Company of any other obligation under this Agreement
(including, without limitation, the Company's obligations under Sections 3.2 and
4.1).
(b) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of an offering described in the foregoing paragraph
(a) deliver a written opinion to the Holders of the Registrable Securities
proposed to be included in such offering that (i) the size of the offering that
the Holders, the Company and such other Persons intend to make or (ii) the kind
of securities that the Holders, the Company and any other Persons intend to
include in such offering are such that the success of the offering would be
materially and adversely affected by inclusion of the Registrable Securities
requested to be included, then subject to the priority rights of the holders of
Bridge Shares pursuant to the Bridge Registration Rights Agreement, (A) if the
size of the offering is the basis of such Underwriter's opinion, the amount of
securities to be offered for the accounts of Holders and the amount of
securities to be offered for the account of the Company shall be reduced pro
rata (based upon the number of Registrable Securities or other securities
proposed to be included in such registration by the Holders and the Company) and
the amount of securities to be offered for the account of any other Persons
(other than the holders of Bridge Shares) shall be reduced to zero; and (B) if
the combination of securities to be offered is the basis of such Underwriter's
opinion, (x) the amount of securities to be offered for the accounts of Holders
and the amount of securities to be offered for the account of the Company shall
be reduced pro rata (based upon the number of Registrable Securities or other
securities proposed to be included in such registration by the Holders and the
Company) and the amount of securities to be offered for the account of such
other Persons (other than the holders of Bridge Shares) shall be reduced to zero
to the extent necessary, in the judgment of the managing Underwriter, to
substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering.
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<PAGE>
(c) The Holders of Registrable Securities included within such Piggy-
Back Registration may withdraw all or any part of the Registrable Securities
from such Piggy-Back Registration at any time (before but not after the
effective date of such Registration Statement), by delivering written notice of
such withdrawal request to the Company.
(d) If the Company shall determine for any reason (x) not to register
or (y) to delay a registration which includes Registrable Securities pursuant to
this Section 2.2, the Company may, at its election, give written notice of such
determination to the Holders of the Registrable Securities and, thereupon (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights, if any, of any Holder or
Holders of Registrable Securities to request that such registration be effected
as a Demand Registration under Section 2.1, and (ii) in the case of a delay in
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other shares.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever Registrable Securities
--------------------
are to be registered pursuant to Section 2.1 hereof, the Company will use its
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible (and in any
event within the time period specified in Section 2.1(a)) prepare and file
with the Commission a Registration Statement on any form for which the
Company then qualifies or which counsel for the Company and counsel for the
Selling Holders shall deem appropriate and which form shall be available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and if the
offering is an underwritten offering, shall be reasonably satisfactory to
the managing Underwriter or Underwriters. The Company will use its best
efforts to cause such filed Registration Statement to become and remain
continuously effective in accordance with Section 2.1(b).
(b) The Company will prior to filing a Registration Statement or
prospectus or any amendment or supplement thereto, furnish to each Selling
Holder and each Underwriter, if any, of the Registrable Securities covered
by such Registration Statement copies of such Registration Statement as
proposed to be filed, and thereafter furnish to such Selling Holder and
Underwriter, if any, such number of copies of such Registration Statement,
each amendment and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein), the prospectus
included in such Registration Statement (including each preliminary
prospectus) and such other documents as such Selling Holder or Underwriter
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) After the filing of the Registration Statement, the Company
will promptly notify each Selling Holder of Registrable Securities covered
by such Registration Statement of any
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<PAGE>
stop order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States as any Selling Holder or
managing Underwriter reasonably (in light of such Selling Holder's intended
plan of distribution) requests and (ii) cause such Registrable Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Selling Holder and the Underwriters,
if any, to consummate the disposition of the Registrable Securities owned
by such Selling Holder; provided that the Company will not be required to
--------
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject
itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Company will immediately notify each Selling Holder, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, in light of the circumstances
in which they were made, and promptly file with the Commission and make
available to each Selling Holder any such supplement or amendment.
(f) The Company will enter into customary agreements (including
an underwriting agreement in customary form if the offering is an
underwritten offering) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
Registrable Securities, including, in the case of an offering pursuant to
Section 2.1, cooperating in the marketing efforts of the Underwriters and
the Selling Holders by, among other things, making available, as reasonably
requested by the Underwriters and the Selling Holders, senior executive
officers of the Company for attendance at, and active participation with
the Underwriters in, informational meetings with prospective purchasers of
the Registrable Securities being offered, including meeting with groups of
such purchasers or with individual purchasers, providing information and
answering questions about the Company at such meetings, and traveling to
locations at reasonable times and as reasonably selected by the
Underwriters.
(g) The Company will make available for inspection by any Selling
Holder, any Underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other professional
retained by any such Selling Holder or Underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
----------
documents and properties of the Company (collectively, the "Records") as
-------
shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors
in connection with such Registration Statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction. Each
Selling Holder of such
7
<PAGE>
Registrable Securities agrees that information obtained by it as a result
of such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the
Company or its Affiliates unless and until such is made generally available
to the public. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder
or Underwriters of (i) an opinion or opinions of counsel to the Company and
(ii) a comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may
be, as the holders of a majority of the Registrable Securities included in
such offering or the managing Underwriter therefor reasonably requests.
(i) If requested by the Selling Holders, the Company will provide
a CUSIP number for all Registrable Securities not later than the effective
date of the Registration Statement covering such Registrable Securities and
provide the Company's transfer agent(s) and registrar(s) for the
Registrable Securities with printed certificates for the Registrable
Securities.
(j) The Company will cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any Underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules
and regulations of the NASD, and use its best efforts to cause such
Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Selling Holders or Underwriters, if any, to consummate the disposition of
such Registrable Securities.
(k) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the commencement of any public offering of securities pursuant
to the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(l) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
The Company may require each Selling Holder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request
and such other information as may be legally required in connection with such
registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.1(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended
8
<PAGE>
prospectus contemplated by Section 3.1(e) hereof, and, if so directed by the
Company, such Selling Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(e)
hereof to the date when the Company shall make available to the Selling Holders
a prospectus supplemented or amended to conform with the requirements of Section
3.1(e) hereof.
SECTION 3.2. Expenses. The Company shall pay the following expenses
--------
incurred in connection with any registration required hereunder (the
"Registration Expenses"), regardless of whether a Registration Statement becomes
---------------------
effective: (i) all registration and filing fees, (ii) fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing and engraving expenses, (iv) internal
expenses of the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
(v) all fees and expenses incurred in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
3.1(h) hereof), (vii) the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration, (viii) reasonable
fees and expenses of one counsel (who shall be reasonably acceptable to the
Company) for the Holders, (ix) in connection with any underwritten offering or
proposed underwritten offering of Registrable Securities hereunder, the
reasonable fees and disbursements of the Underwriters and counsel for the
Underwriters (excluding any underwriting discounts or commissions with respect
to Registrable Securities not being sold for the account of the Company), and
reasonable expenses in connection with the marketing efforts of the Underwriters
and the Selling Holders, including expenses related to meetings with prospective
purchasers of the Registrable Securities and any travel costs related thereto
and (xi) fees and expenses associated with any NASD filing required to be made
in connection with the registration of the Registrable Securities, including, if
applicable, the reasonable fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in accordance
with the rules and regulations of the NASD.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Selling Holder, its officers, directors and
agents, and each Person, if any, who controls such Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or prospectus relating to the Registrable Securities
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of a prospectus, in light of the circumstances under which they were made),
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement
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or omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for use therein; provided, however, that the foregoing
-------- -------
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Selling Holder from whom the Person asserting any such
loss, claim, damage or liability purchased the Registrable Securities if it is
determined that it was the responsibility of such Selling Holder to provide such
Person with a current copy of the prospectus and such current copy of the
prospectus would have cured the defect giving rise to such loss, claim, damage
or liability. In connection with any underwritten offering, the Company also
agrees to indemnify the Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 4.1.
SECTION 4.2. Indemnification by Selling Holders. Each Selling Holder
----------------------------------
agrees, severally but not jointly, to indemnify and hold harmless the Company,
its officers, directors and agents and each Person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Selling Holder, but only with reference to information related
to such Selling Holder furnished in writing to the Company by such Selling
Holder or on such Selling Holder's behalf expressly for use in any Registration
Statement or prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus. In connection with any
underwritten offering, each Selling Holder also agrees to indemnify and hold
harmless the Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Company provided in this
Section 4.2. Notwithstanding anything in this Agreement to the contrary, in no
event shall any Selling Holder be obligated to provide indemnification hereunder
in connection with any offering in an amount that exceeds the proceeds of such
offering received by such Selling Holder.
SECTION 4.3. Conduct of Indemnification Proceedings. In case any
--------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such Person (an "Indemnified Party") shall promptly notify
-----------------
the Person against whom such indemnity may be sought (an "Indemnifying Party")
------------------
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Party shall have requested an Indemnifying Party to
reimburse the Indemnified Party for fees and expenses of counsel as contemplated
by the third sentence of this paragraph, the Indemnifying Party agrees that it
shall be liable
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<PAGE>
for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 business days after receipt by such
Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
------------
this Article 4 is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities referred to herein, then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities. As between the Company on the one hand and each Selling
Holder on the other, the amount of contribution shall be in such proportion as
is appropriate to reflect the relative fault of the Company and of each Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding anything to the contrary in this Agreement, in no event shall
any Selling Holder be obligated to contribute in connection with any offering in
an amount that exceeds the proceeds of such offering received by such Selling
Holder, minus the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Selling Holders' obligations to contribute pursuant to
this Section 4.4 are several and not joint.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
Registration Rights.
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SECTION 5.2. Rule 144. The Company covenants that it will file any
--------
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.3. Holdback Agreements. (a) Restrictions on Public Sale
-------------------
by Holder of Registrable Securities. In the case of an underwritten public
offering, to the extent not inconsistent with applicable law, each Holder whose
securities are included in a Registration Statement agrees, except as part of
such public offering, not to effect any public sale or distribution of the issue
being registered or a similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to,
and during the 90-day period beginning on, the commencement of a public
distribution of Registrable Securities, if and to the extent requested by the
managing Underwriter or Underwriters.
(b) Restrictions on Public Sale by the Company and Others. The
Company agrees, on behalf of itself and its Affiliates, (i) not to effect any
public sale or distribution of any securities similar to those being registered
in accordance with Section 2.1 or Section 2.2 hereof, or any securities
convertible into or exchangeable or exercisable for such securities, (in each
case other than in connection with the Company's Employee Stock Purchase Plan,
Employee Stock Option Plan, Non-Employee Director Stock Ownership Plan, 401(k)
Plan or other similar employee stock option or incentive plan) during the 30
days prior to, and during the 180-day period beginning on, the commencement of a
public distribution of Registrable Securities (or such other period of time as
may be required by the Underwriter effecting such public distribution); and (ii)
that any agreement entered into after the date of this Agreement pursuant to
which the Company issues or agrees to issue any privately placed securities
shall contain a provision under which holders of such securities agree not to
effect any public sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to Rule 144 under
the Securities Act; provided, however, that the provisions of this paragraph (b)
-------- -------
shall not prevent the conversion or exchange of any securities pursuant to their
terms into or for other securities.
SECTION 5.4. Specific Performance. Each Holder, in addition to being
--------------------
entitled to exercise all rights provided herein or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
SECTION 5.5. Notices. Any notice, demand or delivery authorized or
-------
required by this Agreement shall be in writing and shall be given to the Holder
or the Company, as the case may be, at its address (or telecopier number) set
forth below, or such other address (or telecopier number) as shall have been
furnished to the party giving or making such notice, demand or delivery:
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If to the Company: American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, VA 22091
Telecopy: (703) 758-6134
Attention: Randy Segal, General Counsel
If to any Holder: at the address and telecopy number set forth in
the Guaranty Issuance Agreement.
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
SECTION 5.6. No Inconsistent Agreements. The Company will not on or
--------------------------
after the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company hereby
represents that the rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof. In
addition, the Company agrees that it will not amend its Certificate of
Incorporation, by-laws or other governing documents in any respect that would
materially and adversely affect the rights of the Holders hereunder.
SECTION 5.7. Further Assurances. Each party shall cooperate and take
------------------
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 5.8. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 5.9. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AGREEMENT
--------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF. THE PARTIES
HERETO IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
SECTION 5.10. Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 5.11. Amendments; Waivers. Any provision of this Agreement
-------------------
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by all parties to this Agreement, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
13
<PAGE>
SECTION 5.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(signature page follows)
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers, as of the date first
above written.
AMERICAN MOBILE SATELLITE CORPORATION
By:_______________________________________________
Name:
Title:
HUGHES ELECTRONICS CORPORATION
By:_______________________________________________
Name: Charles H. Noski
Title: Senior Vice President and Chief Financial
Officer
SINGAPORE TELECOMMUNICATIONS LTD.
By:_______________________________________________
Name: Lim Toon
Title: Executive Vice President (International
Services)
BARON CAPITAL PARTNERS, L.P.
By: Baron Capital Management, Inc., a General
Partner
By:_______________________________________________
Name: Morty Schaja
Title: Vice President
S-1
<PAGE>
EXHIBIT 15
June 27, 1996
Hughes Communications Satellite Singapore Telecommunications Ltd.
Services, Inc. 31 Exeter Road
1990 East Grand Avenue #20-00 Comcentre
El Segundo, California 90245 Singapore 0923
Attention: Mr. Craig Stephens Attention: Mr. Lim Toon
Space Technologies Investments, Inc.
1150 Connecticut Avenue, N.W.
Fourth Floor
Washington, D.C. 20036
Attention: Andrew A. Quartner, Esq.
Re: Waiver of Registration Rights in Connection with Long-Term Financing
--------------------------------------------------------------------
Gentlemen:
Hughes Electronics Corporation ("Hughes"), Singapore Telecommunications
Ltd. ("SingTel"), and Baron Capital Partners, L.P. ("Baron"), have offered to
guaranty certain long-term financing to be provided to AMSC Subsidiary
Corporation by Morgan Guaranty Trust Corporation of New York and Toronto
Dominion (Texas), Inc. As a condition to such guaranty, which will benefit
American Mobile Satellite Corporation (the parent corporation of AMSC Subsidiary
Corporation) and its stockholders, it is necessary that certain rights of the
stockholders party hereto (the "Stockholders") be waived as provided below.
1. Waiver of Stockholders' Agreement Provisions. Reference is made to the
--------------------------------------------
American Mobile Satellite Corporation Amended and Restated Stockholders'
Agreement dated as of December 1, 1993, by and among the parties listed on
Schedule 1 thereto and American Mobile Satellite Corporation (the "Stockholders'
Agreement"). Except as otherwise indicated, capitalized terms used in this
Section 1 shall have the meanings assigned to them in the Stockholders'
Agreement.
Pursuant to that certain Registration Rights Agreement to be dated on or
about June 28, 1996, among the Corporation, Hughes, SingTel and Baron (the
"Registration Rights Agreement"), the Corporation will grant to the Holders of
Registrable Securities (as each such term is defined in the Registration Rights
Agreement) certain registration rights intended to take precedence over other
registration rights granted to holders of the Corporation's securities. This
letter will evidence the agreement of the Stockholders, for the benefit of the
Corporation, the other parties to the Registration Rights Agreement, and any
other Holders from time to time of the Registrable Securities, that the
Stockholders will, and hereby do, waive the provisions of Article Ten of the
Stockholders' Agreement to the extent necessary to give full effect to the
provisions of the Registration Rights Agreement, including, without limitation,
Article II of the Registration Rights Agreement (a copy of which is attached
hereto).
Except as specifically provided herein, the Stockholders' Agreement is not
amended, modified or waived and shall remain in full force and effect.
<PAGE>
Hughes Communications Satellite Services, Inc.
Singapore Telecommunications Ltd.
Space Technologies Investments, Inc.
June 27, 1996
Page 2
Please indicate your agreement with the foregoing by executing this letter
in the space provided below.
AMERICAN MOBILE SATELLITE CORPORATION
By:
----------------------------------
Name:
Title:
Agreed to and accepted
as of the date set forth above:
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
By:
-------------------------------------------
Name:
Title:
SINGAPORE TELECOMMUNICATIONS LTD.
By:
-------------------------------------------
Name:
Title:
SPACE TECHNOLOGIES INVESTMENTS, INC.
By:
-------------------------------------------
Name:
Title:
SATELLITE COMMUNICATIONS INVESTMENT COMPANY
By:
-------------------------------------------
Name:
Title:
TRANSIT COMMUNICATIONS, INC.
By:
-------------------------------------------
Name:
Title:
