EXHIBIT 10.42
MOTIENT CORPORATION
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of June 30,
2004 and is by and among (i) MOTIENT CORPORATION, a Delaware corporation, with
its principal office at 000 Xxxxxxxxxxxxx Xxxx., Xxxxxxxxxxxx, XX 00000 (the
"Company"), (ii) The Raptor Global Portfolio, Ltd., The Tudor BVI Global
Portfolio, Ltd., The Altar Rock Fund L.P. and Tudor Proprietary Trading, L.L.C.
(collectively, "Tudor") and (iii) each investor listed on Schedule 1 hereto
(each of the persons or entities described in clauses (ii) and (iii),
individually, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, an aggregate of 3,500,000
shares (the "Shares") of the authorized but unissued shares of common stock,
$0.01 par value per share, of the Company (including any securities into which
or for which such shares may be exchanged for, or converted into, pursuant to
any stock dividend, stock split, stock combination, recapitalization,
reclassification, reorganization or other similar event the "Common Stock"), at
an aggregate purchase price of $29,995,000, all upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, simultaneously with entering into this Agreement, the Company
and the Purchasers are entering into that certain Registration Rights Agreement,
dated as of the date hereof (the "Registration Rights Agreement"), pursuant to
which the Company shall register for resale the Shares and the Warrant Shares
(as defined below) on the terms set forth therein;
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Affiliate" means any Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, a Person, as such terms are used and construed under Rule 144 (as defined
below), and with respect to Tudor, in addition to the foregoing, the term
"Affiliate" shall also include the Related Entities.
(b) "Board" means the board of directors of the Company.
(c) "Closing Date" means the date hereof.
(d) "Effective Date" means the earlier to occur of (i) date that occurs ninety
(90) days after the initial filing by the Company with the SEC of a registration
statement covering the resale of the Shares, and (ii) October 15, 2004.
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(e) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
all of the rules and regulations promulgated thereunder.
(f) "Fully Diluted Common Stock" means the outstanding Common Stock and the
shares of Common Stock issued or issuable upon exercise of Warrants.
(g) "Majority Purchasers" has the meaning set forth in Section 8.8.
(h) "Material Adverse Effect" has the meaning set forth in Section 3.1 of this
Agreement.
(i) "Person" (whether or not capitalized) means an individual, entity,
partnership, limited liability company, corporation, association, trust, joint
venture, unincorporated organization, and any government, governmental
department or agency or political subdivision thereof.
(j) "Related Entities" includes, with respect to Tudor, any entities for which
any of the Tudor Entities or its affiliates serve as a general partner and/or
investment advisor or in a similar capacity, and all mutual funds or other
pooled investment vehicles or entities under the control or management of the
Tudor Entities or the general partner or investment advisor thereof, or any
affiliate of any of them. For purposes of this Agreement, (a) "Tudor Entities"
means each of the following: any entity for which Tudor Investment Corporation
or an Affiliate thereof acts as general partner or investment adviser, Tudor
Investment Corporation, Tudor Group Holdings LLC, their respective Affiliates,
or any Affiliate or Affiliated Group of Tudor Investment Corporation and/xx
Xxxxx Group Holdings LLC, and (b) with respect to the Tudor Entities,
"Affiliated Group" has the meaning given to it in Section 1504 of the Internal
Revenue Code of 1986, as amended, and in addition includes any analogous
combined, consolidated, or unitary group, as defined under any applicable state,
local or foreign income tax law.
(k) "Rule 144" means Rule 144 promulgated under the Securities Act and any
successor or substitute rule, law or provision.
(l) "SEC" means the Securities and Exchange Commission.
(m) "Securities Act" means the Securities Act of 1933, as amended, and all of
the rules and regulations promulgated thereunder.
(o) "Transaction Documents" means, collectively, the Registration Rights
Agreement and the Warrants.
(p) "Transfer Agent Instructions" means the Irrevocable Transfer Agent
Instructions, in substantially the form of Exhibit B, executed by the Company
and delivered to and acknowledged in writing by the Company's transfer agent.
(q) "Warrants" means the warrants to purchase Common Stock, dated as of the date
hereof, issued by the Company to the Purchasers, in substantially the form
attached hereto as Exhibit C.
(r) "Warrant Shares" means the shares of Common Stock issued or issuable upon
the exercise of the Warrants.
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2. Purchase and Sale of Shares.
2.1 Purchase and Sale. Subject to and upon the terms and conditions set forth in
this Agreement, the Company agrees to issue and sell to each Purchaser, and each
Purchaser hereby agrees, severally and not jointly, to purchase from the
Company, at the Closing, the number of Shares set forth opposite such
Purchaser's name on Schedule 1 hereto, at a purchase price equal to $8.57 per
share. The aggregate purchase price payable by the Purchasers to the Company for
all of the Shares shall be $29,995,000.
2.2 Closing. The closing of the transactions contemplated under this Agreement
(the "Closing") shall take place at 5:00 pm (Eastern Time) at the offices of
Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
on the Closing Date, or on such other date and at such time as may be agreed
upon between the Purchasers, on the one hand, and the Company, on the other
hand. At the Closing, the Company shall deliver to each Purchaser a single stock
certificate, registered in the name of such Purchaser, representing the number
of Shares purchased by such Purchaser, against payment of the purchase price by
wire transfer of immediately available funds to such account as the Company
shall designate in writing.
2.3 Tejas Securities Group, Inc. Fee. Upon the Closing or as otherwise required
by any agreement between the Company and Tejas Securities Group, Inc. ("Tejas"),
the Company shall pay to Tejas a broker fee in connection with the transactions
contemplated hereunder in the amount of $875,000, by wire transfer of
immediately available funds to such account as Tejas shall designate in writing.
2.4 Tejas Securities Group, Inc. Warrants. Upon the Closing or as otherwise
required by any agreement between the Company and Tejas, the Company shall issue
to Tejas in connection with the transactions contemplated hereunder, warrants to
purchase 875,000 shares of Common Stock at an exercise price of $8.57 per share.
3. Representations and Warranties of the Company. The Company hereby represents
and warrants to each Purchaser, as of the date hereof and except as set forth on
the disclosure schedule furnished by the Company to each Purchaser (the
"Disclosure Schedule") attached hereto as Schedule 2, as follows:
3.1 Incorporation. Each of the Company and the Subsidiaries (as defined in
Section 3.18 below) is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the State of Delaware (or such
other applicable jurisdiction of incorporation or formation), and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or the character of the property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not result in a
material adverse effect on the assets, liabilities (contingent or otherwise),
business, affairs, operations, prospects or condition (financial or otherwise)
of the Company ("Material Adverse Effect"). Each of the Company and the
Subsidiaries has all requisite corporate power and authority to carry on its
business as now conducted and to carry out the transactions contemplated hereby.
Neither the Company nor any of the Subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation (or other charter document) or
By-laws.
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3.2 Capitalization. The authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock, of which 29,773,994 shares were outstanding
as of the date hereof, and (ii) 5,000,000 shares of preferred stock, of which no
shares are outstanding as of the date hereof. All shares of the Company's issued
and outstanding capital stock have been duly authorized, are validly issued and
outstanding, and are fully paid and nonassessable. Except as set forth in
Schedule 3.2 to the Disclosure Schedule, there are no existing options,
warrants, calls, preemptive (or similar) rights, subscriptions or other rights,
agreements, arrangements or commitments of any character obligating the Company
to issue, transfer or sell, or cause to be issued, transferred or sold, any
shares of the capital stock of the Company or other equity interests in the
Company or any securities convertible into or exchangeable for such shares of
capital stock or other equity interests, including the Shares, the Warrants and
the Warrant Shares, and there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests. The issue and sale of the Shares, the Warrants
and the Warrant Shares will not obligate the Company to issue or sell, pursuant
to any pre-emptive right or otherwise, shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
3.3 Registration Rights. Except as set forth on Schedule 3.3 to the Disclosure
Schedule, the Company has not granted or agreed to grant to any Person any right
(including "piggy-back" and demand registration rights) to have any capital
stock or other securities of the Company registered with the SEC or any other
government authority.
3.4 Authorization. All corporate action on the part of the Company, its officers
and directors necessary for the authorization, execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated herein and therein has been taken. When
executed and delivered by the Company, each of this Agreement and the
Transaction Documents shall constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and by general equitable principles.
The Company has all requisite corporate power and authority to enter into this
Agreement and the Transaction Documents and to carry out and perform its
obligations under their respective terms.
3.5 Valid Issuance of the Shares. The Shares, the Warrants and the Warrant
Shares have been duly authorized, and the Shares and the Warrant Shares, upon
issuance pursuant to the terms hereof and the terms of the Warrants,
respectively, will be validly issued, fully paid and nonassessable and not
subject to any encumbrances, preemptive rights or any other similar contractual
rights of the stockholders of the Company or any other Person. The Company has
reserved from its duly authorized capital stock the number of shares of Common
Stock issuable upon execution of this Agreement and upon exercise in full of the
Warrants (assuming the Warrants vest in full).
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3.6 Financial Statements. The Company has furnished to the Purchasers, and
attached as Schedule 3.6 to the Disclosure Schedule, true and complete copies of
the unaudited consolidated balance sheet of the Company and the Subsidiaries as
of March 31, 2004 (the "Balance Sheet") and the related consolidated income
statement, consolidated statement of cash flows and consolidated statement of
stockholders' equity of the Company for the three (3) months then ended. All of
the financial statements described above are hereinafter referred to,
collectively, as the "Financial Statements". The Financial Statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods covered thereby,
subject, to normal year-end adjustments (which individually and in the aggregate
are not material) and to the absence of footnotes thereto, and present fairly,
in all material respects, the financial position of the Company and the
Subsidiaries and the results of operations as of the date and for the periods
indicated therein.
3.7 SEC Documents. The Company has furnished to the Purchasers true and complete
copies of the following reports of the Company (collectively, the "SEC
Documents"): (i) the annual report on Form 10-K for the year ended December 31,
2002 (the "Annual Report") and (ii) quarterly reports on Form 10-Q for the
periods ended March 31, 2003, June 30, 2003 and September 30, 2003. As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act, and the rules and regulations
promulgated thereunder, and none of the SEC Documents contain any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto in effect at the time of filing. All
material agreements to which the Company is a party or to which the property or
assets of the Company are subject are included as part of or specifically
identified in the SEC Documents to the extent required by the rules and
regulations of the SEC as in effect at the time of filing. The Company has
prepared and filed with the SEC all filings and reports required by the
Securities Act and the Exchange Act to make the Company's filings and reports
current in all respects, except for the Company's annual report on Form 10-K
required to be filed for fiscal year 2003 and the Company's quarterly report on
Form 10-Q required to be filed with respect to first quarter of 2004 and any
filings made pursuant to the Securities Act which rely on such reports for their
continued effectiveness.
3.8 Consents. Except for (a) the filing and effectiveness of any registration
statement required to be filed by the Company under the Securities Act pursuant
to the terms of the Registration Rights Agreement and (b) any required state
"blue sky" law filings in connection with the transactions contemplated
hereunder or under the Transaction Documents, all consents, approvals, orders
and authorizations required on the part of the Company in connection with the
execution or delivery of, or the performance of the obligations under, this
Agreement and the Transaction Documents, and the consummation of the
transactions contemplated herein and therein, have been obtained and will be
effective as of the date hereof. The execution and delivery by the Company of
this Agreement and the Transaction Documents, the consummation of the
transactions contemplated herein and therein, and the issuance of the Shares,
the Warrants and the Warrant Shares, do not require the consent or approval of
the stockholders of, or any lender to, the Company.
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3.9 No Conflict; Compliance With Laws.
(a) The execution, delivery and performance by the Company of this Agreement and
the Transaction Documents, and the consummation of the transactions contemplated
hereby and thereby, including the issuance of the Shares, the Warrants and the
Warrant Shares, do not and will not (i) conflict with or violate any provision
of the Certificate of Incorporation (or other charter documents) or By-laws of
the Company or any of the Subsidiaries, (ii) breach, conflict with or result in
any violation of or default (or an event that with notice or lapse of time or
both would become a default) under, or give rise to a right of termination,
amendment, acceleration or cancellation (with or without notice or lapse of
time, or both) of any obligation, contract, commitment, lease, agreement,
mortgage, note, bond, indenture or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or by which they or any of their
properties or assets are bound, except in each case to the extent such breach,
conflict, violation, default, termination, amendment, acceleration or
cancellation does not, and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or (iii) result in
a violation of any statute, law, rule, regulation, order, ordinance or
restriction applicable to the Company, the Subsidiaries or any of their
properties or assets, or any judgment, writ, injunction or decree of any court,
judicial or quasi-judicial tribunal applicable to the Company, the Subsidiaries
or any of their properties or assets.
(b) Neither the Company nor any of the Subsidiaries (i) is in default under or
in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any
of the Subsidiaries), nor has the Company or any of the Subsidiaries received
written notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties or assets is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as does
not, and could not, reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.10 Brokers or Finders. Other than as described in Sections 2.3 and 2.4 above,
neither the Company nor any of the Subsidiaries has dealt with any broker or
finder in connection with the transactions contemplated by this Agreement or the
Transaction Documents, and neither the Company nor any of the Subsidiaries has
incurred, or shall incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or the Transaction Documents, or any transaction
contemplated hereby or thereby.
3.11 Pink Sheets. The Company's Common Stock is currently actively traded, and
thus quoted, on the pink sheets.
3.12 Absence of Litigation. Except as set forth on Schedule 3.12 to the
Disclosure Schedule, there are no pending or, to the Company's knowledge,
threatened actions, suits, claims, proceedings or investigations against or
involving the Company or any of the Subsidiaries except to the extent described
in the SEC Documents.
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3.13 No Undisclosed Liabilities; Indebtedness. Since the date of the Balance
Sheet, the Company and the Subsidiaries have incurred no liabilities or
obligations, whether known or unknown, asserted or unasserted, fixed or
contingent, accrued or unaccrued, matured or unmatured, liquidated or
unliquidated, or otherwise, except for liabilities or obligations that,
individually or in the aggregate, do not or would not have a Material Adverse
Effect and other than (a) liabilities and obligations arising in the ordinary
course of business and (b) the liabilities and obligations set forth on Schedule
3.13 to the Disclosure Schedule. Except for indebtedness reflected in the
Balance Sheet, the Company has no indebtedness outstanding as of the date
hereof. The Company is not in default with respect to any outstanding
indebtedness or any instrument relating thereto.
3.14 Contracts. All contracts, agreements, instruments and other documents
required to be filed as exhibits to any of the periodic reports required to be
filed by the Exchange Act are legal, valid, binding and in full force and effect
and are enforceable by the Company in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and by general equitable principles.
3.15 Title to Assets. Each of the Company and the Subsidiaries has good and
marketable title to all real and personal property owned by it that is material
to the business of the Company or such Subsidiaries, in each case free and clear
of all liens and encumbrances, except those, if any, reflected in the Financial
Statements or incurred in the ordinary course of business consistent with past
practice. Any real property and facilities held under lease by the Company or
the Subsidiaries are held by it or them under valid, subsisting and enforceable
leases (subject to laws of general application relating to bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors' rights
generally and other equitable remedies) with which the Company and the
Subsidiaries are in compliance in all material respects.
3.16 Labor Relations. Except as set forth on Schedule 3.16 to the Disclosure
Schedule, no labor or employment dispute exists or, to the knowledge of the
Company, is imminent or threatened, with respect to any of the employees or
consultants of the Company that has, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.17 Intellectual Property. The Company is the sole and exclusive owner of, or
has the exclusive right to use, all right, title and interest in and to all
material foreign and domestic patents, patent rights, trademarks, service marks,
trade names, brands, copyrights (whether or not registered and, if applicable,
including pending applications for registration) and other proprietary rights or
information, owned or used by the Company (collectively, the "Rights"), and in
and to each material invention, software, trade secret, and technology used by
the Company or any of the Subsidiaries (the Rights and such other items, the
"Intellectual Property"), and, to the Company's knowledge, the Company owns and
has the right to use the same, free and clear of any claim or conflict with the
rights of others (subject to the provisions of any applicable license
agreement). Except as set forth on Schedule 3.17 to the Disclosure Schedule,
there have been no written claims made against the Company or any of the
Subsidiaries asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intellectual Property, and, to the Company's knowledge, there are no
reasonable grounds for any such claims.
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3.18 Subsidiaries; Joint Ventures. Except for the subsidiaries listed on
Schedule 3.18 to the Disclosure Schedule (the "Subsidiaries"), the Company has
no subsidiaries and does not otherwise own or control, directly or indirectly,
any other Person. Except as described in the SEC Documents, the Company is not a
participant in any joint venture, partnership, or similar arrangement material
to its business.
3.19 Taxes. The Company and each of the Subsidiaries has filed (or has had filed
on its behalf), will timely file or will cause to be timely filed, or has timely
filed for an extension of the time to file, all material Tax Returns (as defined
below) required by applicable law to be filed by it or them prior to or as of
the date hereof, and such Tax Returns are, or will be at the time of filing,
true, correct and complete in all material respects. Each of the Company and the
Subsidiaries has paid (or has had paid on its behalf) or, where payment is not
yet due, has established (or has had established on its behalf and for its sole
benefit and recourse) or will establish or cause to be established in accordance
with United States generally accepted accounting principles on or before the
date of hereof an adequate accrual for the payment of, all material Taxes (as
defined below) due with respect to any period ending prior to or as of the date
hereof. "Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, license, value added, capital, net worth,
payroll, profits, franchise, transfer and recording taxes, fees and charges, and
any other taxes, assessment or similar charges imposed by the Internal Revenue
Service or any taxing authority (whether state, county, local or foreign) (each,
a "Taxing Authority"), including any interest, fines, penalties or additional
amounts attributable to or imposed upon any such taxes or other assessments.
"Tax Return" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any Taxing Authority, including
information returns, any documents with respect to accompanying payments of
estimated Taxes, or with respect to or accompanying requests for extensions of
time in which to file any such return, report, document, declaration or other
information. There are no claims or assessments pending against the Company or
any of the Subsidiaries for any material alleged deficiency in any Tax, and
neither the Company nor any of the Subsidiaries has been notified in writing of
any material proposed Tax claims or assessments against the Company or any of
the Subsidiaries. No Tax Return of the Company or any of the Subsidiaries is or
has been the subject of an examination by a Taxing Authority. Each of the
Company and the Subsidiaries has withheld from each payment made to any of its
past or present employees, officers and directors, and any other person, the
amount of all material Taxes and other deductions required to be withheld
therefrom and paid the same to the proper Taxing Authority within the time
required by law.
3.20 Pensions and Benefits.
(a) Schedule 3.20(a) to the Disclosure Schedule contains a true and complete
list of each "employee benefit plan" within the meaning of Section 3(3) of the
United States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of Section 3(37) of ERISA, and all retirement, profit sharing, stock option,
stock bonus, stock purchase, severance, fringe benefit, deferred compensation,
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and other employee benefit programs, plans, or arrangements, whether or not
subject to ERISA, under which (i) any current or former directors, officers,
employees or consultants of the Company has any present or future right to
benefits and which are contributed to, sponsored by or maintained by the Company
or any of the Subsidiaries, or (ii) the Company or any of the Subsidiaries has
any present or future liability. All such programs, plans, or arrangements shall
be collectively referred to as the "Company Plans." Each Company Plan is
included as part of or specifically identified in the SEC Documents to the
extent required by the rules and regulations of the SEC as in effect at the time
of filing.
(b) (i) Each Company Plan has been established and administered in all material
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the "Code"),
and other applicable laws, rules and regulations; (ii) each Company Plan which
is intended to be qualified within the meaning of Section 401(a) of the Code is
so qualified and has received a favorable determination letter as to its
qualification (or if maintained pursuant to a prototype form of instrument the
sponsor thereof has received a favorable opinion letter as to its
qualification), and to the Company's knowledge nothing has occurred, whether by
action or failure to act, that could reasonably be expected to cause the loss of
such qualification; and (iii) no Company Plan provides retiree health or life
insurance benefits (whether or not insured), and neither the Company nor the
Subsidiaries have any obligations to provide any such retiree benefits other
than as required pursuant to Section 4980B of the Code or other applicable law.
(c) No Company Plan is a "multiemployer plan" as defined in Section 4001(a)(3)
of ERISA) or a plan subject to the minimum funding requirements of Section 302
or ERISA or Section 412 of the Code or Title IV of ERISA, and neither the
Company, the Subsidiaries, nor any member of their Controlled Group has any
liability or obligation in respect of, any such multiemployer plan or plan. With
respect to any Company Plan and to the Company's knowledge, (i) no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or threatened, and (ii) no administrative investigation, audit or
other administrative proceeding by the Department of Labor, the Pension Benefit
Guaranty Corporation, the Internal Revenue Service or other governmental
agencies are pending, threatened or in progress.
3.21 Private Placement. Neither the Company nor any person acting on the
Company's behalf has sold or offered to sell or solicited any offer to buy the
Shares, the Warrants or the Warrant Shares by means of any form of general
solicitation or advertising. Neither the Company nor any of its Affiliates nor
any person acting on the Company's behalf has, directly or indirectly, at any
time within the past six (6) months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the sale or issuance of the Shares,
the Warrants or the Warrant Shares as contemplated hereby or (ii) cause the
offering or issuance of the Shares, the Warrants or the Warrant Shares pursuant
to this Agreement or any of the Transaction Documents to be integrated with
prior offerings by the Company for purposes of any applicable law, regulation or
stockholder approval provisions. None of the Company or any of the Subsidiaries
is, or is an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. None of the Company or any of the
Subsidiaries is a United States real property holding corporation within the
meaning of the Foreign Investment in Real Property Tax Act of 1980. No consent,
license, permit, waiver approval or authorization of, or designation,
declaration, registration or filing with, the SEC or any state securities
regulatory authority is required in connection with the offer, sale, issuance or
delivery of the Shares, the Warrants or the Warrant Shares other than the
possible filing of Form D with the SEC.
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3.22 Material Changes. Except as set forth on Schedule 3.22 to the Disclosure
Schedule, since the date of the Balance Sheet, the Company has conducted its
business only in the ordinary course, consistent with past practice, and since
such date there has not occurred: (i) any event, occurrence or development that
has had, or that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or any of the Subsidiaries;
(ii) any amendments or changes in the charter documents or by-laws of the
Company or the Subsidiaries; (iii) any: (A) incurrence, assumption or guarantee
by the Company or the Subsidiaries of any debt for borrowed money other than (1)
equipment leases made in the ordinary course of business, consistent with past
practice and (2) any such incurrence, assumption or guarantee with respect to an
amount of $25,000 or less that has been disclosed in the SEC Documents; (B)
issuance or sale of any securities convertible into or exchangeable for
securities of the Company other than to directors, employees and consultants
pursuant to existing equity compensation or stock purchase plans of the Company;
(C) issuance or sale of options or other rights to acquire from the Company or
the Subsidiaries, directly or indirectly, securities of the Company or any
securities convertible into or exchangeable for any such securities, other than
options issued to directors, employees and consultants in the ordinary course of
business, consistent with past practice; (D) issuance or sale of any stock, bond
or other corporate security other than to directors, employees and consultants
pursuant to existing equity compensation or stock purchase plans of the Company;
(E) declaration or making of any payment or distribution to stockholders or
purchase or redemption of any share of its capital stock or other security other
than to or from directors, officers and employees of the Company or the
Subsidiaries as compensation for or in connection with services rendered to the
Company or the Subsidiaries (as applicable) or for reimbursement of expenses
incurred on behalf of the Company or the Subsidiaries (as applicable); (F) sale,
assignment or transfer of any of its intangible assets except in the ordinary
course of business, consistent with past practice, or cancellation of any debt
or claim except in the ordinary course of business, consistent with past
practice; (G) waiver of any right of substantial value whether or not in the
ordinary course of business; (H) material change in officer compensation, except
in the ordinary course of business and consistent with past practice; or (I)
other commitment (contingent or otherwise) to do any of the foregoing; (iv) any
creation, sufferance or assumption by the Company or any of the Subsidiaries of
any lien on any asset or any making of any loan, advance or capital contribution
to or investment in any Person, in an aggregate amount which exceeds $25,000
outstanding at any time; (v) any entry into, amendment of, relinquishment,
termination or non-renewal by the Company or the Subsidiaries of any material
contract, license, lease, transaction, commitment or other right or obligation,
other than in the ordinary course of business, consistent with past practice; or
(vi) any transfer or grant of a right with respect to the Intellectual Property
Rights owned or licensed by the Company or the Subsidiaries, except as among the
Company and the Subsidiaries.
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3.23 Regulatory Permits. The Company and the Subsidiaries possess all
certificates, approvals, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their businesses as described in the SEC Documents, except where the failure to
possess such permits does not, and could not have, individually or in the
aggregate, a Material Adverse Effect (the "Material Permits"), and the Company
has not received any written notice of proceedings relating to the revocation or
modification of any Material Permits except as described in the SEC Documents.
3.24 Transactions with Affiliates and Employees. Except as set forth in the SEC
Documents or on Schedule 3.24 to the Disclosure Schedule, none of the officers
or directors of the Company and, to the knowledge of the Company, none of the
employees of the Company, is presently a party to any transaction or agreement
with the Company (other than for services as employees, officers and directors)
exceeding $60,000, including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
3.25 Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary for the business in which the Company and
the Subsidiaries are engaged. The Company has no reason to believe that it will
not be able to renew existing insurance coverage for itself and the Subsidiaries
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary or appropriate to continue business.
3.26 Solvency. Based on the consolidated financial condition of the Company and
the Subsidiaries as of the date hereof, (i) the fair saleable value of the
Company's assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
and contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted, including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debts when such amounts
are required to be paid. The Company has no present intention to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).
3.27 Internal Accounting Controls. Except as disclosed in the SEC Documents, the
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
United States generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorizations, (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences, and
(v) the Company is otherwise in compliance with the Securities Act, the Exchange
Act and all other rules and regulations promulgated by the SEC and applicable to
the Company, including the Xxxxxxxx-Xxxxx Act of 2002, as amended.
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3.28 Disclosure. Neither the Company nor, to the Company's knowledge, any other
Person acting on its behalf and at the direction of the Company, has provided to
any Purchaser or its agents or counsel any information that in the Company's
reasonable judgment, at the time such information was furnished, constitutes
material, non-public information, except such information as may have been
disclosed to certain Board members, who are affiliated with certain Purchasers
(other than Tudor and its Affiliates), in their capacity as directors of the
Company. The Company understands and confirms that each Purchaser will rely on
the representations and covenants contained herein in effecting the transactions
contemplated by this Agreement and the Transaction Documents, and in the
securities of the Company after the Closing. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement furnished by or on behalf of
the Company, taken as a whole is true and correct and does not contain any
untrue statement of material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or the Subsidiaries
or its or their business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 4.
3.29 Amendments to Warrants. Each of the Common Stock Purchase Warrants issued
by the Company on May 7, 2004 to The Raptor Global Portfolio Ltd., The Tudor BVI
Global Portfolio Ltd., Tudor Proprietary Trading L.L.C., The Altar Rock Fund
L.P., York Select L.P., York Select Unit Trust, Highland Crusader Offshore
Partners, L.P., Catalyst Credit Opportunity Fund, Catalyst Credit Opportunity
Fund Offshore, DCM Ltd., Greywolf Capital II L.P., Greywolf Capital Overseas
Fund and LC Capital Master Fund, was amended by the Company and the holder of
such Common Stock Purchase Warrant, to extend the Vesting Date to July 15, 2004
and the Effective Date to October 15, 2004 as such terms are used in such Common
Stock Purchase Warrant.
3.30 Debt Obligations. No amounts are due and owing under that certain Amended
and Restated Credit Term Facility dated as of January 27, 2003, by and among
Motient Communications Inc. and the lenders thereto. Motient Communications has
executed an agreement with Motorola Inc. to terminate the SLA Promissory Note
dated as of December 1, 2002 and the Amended and Restated Promissory Note dated
as of June 17, 1998, as amended from time to time.
4. Representations and Warranties of the Purchasers. Each Purchaser represents
and warrants, severally and not jointly, to the Company as follows:
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4.1 Authorization. All action on the part of such Purchaser and, if applicable,
its officers, directors, managers, members, shareholders and/or partners
necessary for the authorization, execution, delivery and performance of this
Agreement and the Registration Rights Agreement, and the consummation of the
transactions contemplated herein and therein, has been taken. When executed and
delivered, each of this Agreement and the Registration Rights Agreement will
constitute the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. Each Purchaser
has all requisite corporate power and authority to enter into each of this
Agreement and the Registration Rights Agreement, and to carry out and perform
its obligations under the terms of hereof and thereof.
4.2 Purchase Entirely for Own Account. Each Purchaser is acquiring the Shares,
the Warrants and the Warrant Shares for its own account for investment and not
for resale or with a view to distribution thereof in violation of the Securities
Act.
4.3 Investor Status; Etc. Each Purchaser certifies and represents to the Company
that it is an "accredited investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act and was not organized for the purpose of
acquiring any of the Shares, the Warrants or the Warrant Shares. Each
Purchaser's financial condition is such that it is able to bear the risk of
holding the Shares for an indefinite period of time and the risk of loss of its
entire investment. Each Purchaser has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to evaluate the
risks and merits of its investment in the Company.
4.4 Securities Not Registered. Each Purchaser understands that the Shares, the
Warrant and the Warrant Shares have not been registered under the Securities
Act, by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act, and that the Shares, the
Warrants and the Warrant Shares must continue to be held by such Purchaser
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration. Each Purchaser understands that the
exemptions from registration afforded by Rule 144 (the provisions of which are
known to it) promulgated under the Securities Act depend on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
4.5 No Conflict. The execution and delivery of this Agreement and the
Registration Rights Agreement by each Purchaser, and the consummation of the
transactions contemplated hereby and thereby, will not conflict with or result
in any violation of or default by such Purchaser (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents of such
Purchaser or (ii) any agreement or instrument, permit, franchise, license,
judgment, order, statute, law, ordinance, rule or regulations, applicable to
such Purchaser.
4.6 Brokers. Such Purchaser has not retained, utilized or been represented by
any broker or finder in connection with the transactions contemplated by this
Agreement.
4.7 Consents. All consents, approvals, orders and authorizations required on the
part of such Purchaser in connection with the execution, delivery or performance
of this Agreement and the consummation of the transactions contemplated herein
have been obtained and are effective as of the date hereof.
13
4.8 Disclosure of Information. Such Purchaser believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares, the Warrants and the Warrant Shares. Such Purchaser further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Shares, the Warrants and the Warrant Shares and the business, properties,
prospects and financial condition of the Company.
5. Conditions Precedent.
5.1. Conditions to the Obligation of the Purchasers to Consummate the Closing.
The obligation of each Purchaser to consummate the Closing and to purchase and
pay for the Shares is subject to the satisfaction of the following conditions
precedent:
(a) The representations and warranties of the Company contained herein shall be
true and correct on and as of the date hereof with the same force and effect as
though made on and as of the Closing Date. The Company shall have performed all
obligations and conditions herein required to be performed or complied with by
the Company on or prior to the Closing Date.
(b) There shall have been no material adverse change (actual or threatened) in
the assets, liabilities (contingent or otherwise), affairs, business,
operations, prospects, or condition (financial or otherwise) of the Company
prior to the Closing Date; and the Company shall have performed all obligations
and conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.
(c) No proceeding challenging this Agreement or the Transaction Documents, or
the transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or materially delay the Closing, shall have been instituted before any
court, arbitrator or governmental body, agency or official or shall be pending
against or involving the Company.
(d) The sale of the Shares and the issuance of the Warrants (and the Warrant
Shares) to the Purchasers shall not be prohibited by any law, rule, governmental
order or regulation. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or of or with any other Person with
respect to any of the transactions contemplated hereby shall have been duly
obtained or made and shall be in full force and effect.
(e) All instruments and corporate proceedings of the Company in connection with
the transactions contemplated by this Agreement and the Transaction Documents
shall be satisfactory in form and substance to each Purchaser, and each
Purchaser shall have received copies (executed or certified, as may be
appropriate) of all documents which the Purchasers may have reasonably requested
in connection with such transactions.
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(f) Each Purchaser shall have received from Xxxxxxx Xxxxx LLP, outside counsel
to the Company, an opinion addressed to such Purchaser, dated the Closing Date
and substantially in the form of Exhibit A hereto.
(g) The Registration Rights Agreement shall have been executed and delivered by
the Company.
(h) Each Purchaser shall have received from the Company an original stock
certificate evidencing the purchase of the Shares and an original Warrant, in
each case for the number of shares of Common Stock and the number of Warrant
Shares, respectively, set forth opposite such Purchaser's name on Schedule 1
hereto.
(i) The Company shall have delivered, in form and substance satisfactory to each
Purchaser, a certificate dated the Closing Date and signed by the secretary or
another officer of the Company, certifying (i) that attached copies of the
Certificate of Incorporation, the By-Laws and resolutions of the Board approving
this Agreement, the Transaction Documents and the transactions contemplated
hereby and thereby, are all true, complete and correct and remain in full force
and effect as of the date hereof, and (ii) as to the incumbency and specimen
signature of each officer of the Company executing this Agreement, the
Transaction Documents and any other document delivered in connection herewith on
behalf of the Company.
(j) The Company shall deliver to each Purchaser, a certificate in form and
substance satisfactory to each Purchaser, dated the Closing Date and signed by
the Company's chief operating officer, certifying that (i) the representations
and warranties of the Company contained in Section 3 hereof are true and correct
in all respects on the Closing Date and (ii) the Company has performed and
complied with all of the agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
(k) Each Purchaser shall have received duly executed Transfer Agent Instructions
acknowledged by the Company's transfer agent.
5.2. Conditions to the Obligation of the Company to Consummate the Closing. The
obligation of the Company to consummate the Closing and to issue and sell the
Shares to each Purchaser at the Closing is subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties of the Purchasers contained herein shall
be true and correct in all respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
(b) The Registration Rights Agreement shall have been executed and delivered by
the Purchasers.
(c) The Purchasers shall have performed all obligations and conditions herein
required to be performed or complied with by the Purchasers on or prior to the
Closing Date.
(d) No proceeding challenging this Agreement or the Transaction Documents, or
the transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or materially delay the Closing, shall have been instituted before any
court, arbitrator or governmental body, agency or official or shall be pending
against or involving such Purchaser.
15
(e) The sale of the Shares and the issuance of the Warrants (and the Warrant
Shares) by the Company shall not be prohibited by any law, rule, governmental
order or regulation. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or of any other Person with respect to
any of the transactions contemplated hereby shall have been duly obtained or
made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be satisfactory in form and substance to the Company, and the Company
shall have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
6. Certain Covenants and Agreements.
6.1. Transfer of Securities. Each Purchaser shall not sell, assign, pledge,
transfer or otherwise dispose of or encumber any of the Shares, the Warrants or
the Warrant Shares, except (i) pursuant to an effective registration statement
under the Securities Act, (ii) to an Affiliate (so long as such Affiliate agrees
to be bound by the terms and provisions of this Agreement as if, and to the
fullest extent as, such Purchaser), or (iii) pursuant to an available exemption
from registration under the Securities Act (including sales permitted pursuant
to Rule 144) and applicable state securities laws and, if requested by the
Company, upon delivery by such Purchaser of either an opinion of counsel of such
Purchaser reasonably satisfactory to the Company to the effect that the proposed
transfer is exempt from or does not require registration under the Securities
Act and applicable state securities laws or a representation letter of such
Purchaser reasonably satisfactory to the Company setting forth a factual basis
for concluding that such proposed transfer is exempt from or does not require
registration under the Securities Act and applicable state securities laws. Any
transfer or purported transfer of the Shares in violation of this Section 6.1
shall be void. The Company shall not register any transfer of the Shares in
violation of this Section 6.1. The Company may, and may instruct any transfer
agent for the Company, to place such stop transfer orders as may be required on
the transfer books of the Company in order to ensure compliance with the
provisions of this Section 6.1.
6.2. Legends.
(a) To the extent applicable, each certificate or other document evidencing the
Shares and the Warrant Shares shall be endorsed with the legend set forth below,
and each Purchaser covenants that, except to the extent such restrictions are
waived by the Company, it shall not transfer the shares represented by any such
certificate without complying with the restrictions on transfer described in
this Agreement and the legends endorsed on such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER
SAID ACT."
16
(b) The legend set forth in Section 6.2(a) shall be removed from the
certificates evidencing the Shares and the Warrant Shares, (i) following any
sale of such Shares or Warrant Shares pursuant to Rule 144 or any effective
registration statement, or (ii) if such Shares or Warrant Shares are eligible
for sale under Rule 144(k) (and the holder of such Shares or Warrant Shares has
submitted a written request for removal of the legend indicating that the holder
has complied with the applicable provisions of Rule 144 or such judicial
interpretation or pronouncement), or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission) (and
the holder of such Shares or Warrant Shares has submitted a written request for
removal of the legend indicating that the holder has complied with the
applicable provisions of Rule 144). The Company shall cause its counsel to issue
a legal opinion to the Company's transfer agent promptly upon the occurrence of
any of the events in clauses (i), (ii) or (iii) above to effect the removal of
the legend on certificates evidencing the Shares or the Warrant Shares and shall
also cause its counsel to issue a "blanket" legal opinion to the Company's
transfer agent promptly after the Effective Date (provided that there is an
effective registration statement covering the resale of the Shares or the
Warrant Shares, as the case may be), if required by the Company's transfer
agent, to allow sales without restriction pursuant to an effective registration
statement. The Company agrees that at such time as such legend is no longer
required under this Section 6.2(b), it will, no later than three (3) business
days following the delivery by a Purchaser to the Company or the Company's
transfer agent of a certificate representing the Shares or Warrant Shares issued
with a restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Shares or Warrant Shares that is free from all
restrictive and other legends; provided that in the case of removal of the
legend for reasons set forth in clause (ii) above, the holder of such Shares or
Warrant Shares has submitted a written request for removal of the legend
indicating that the holder has complied with the applicable provisions of Rule
144. The Company may not make any notation on its records or give instructions
to any transfer agent of the Company that enlarge the restrictions on transfer
set forth in this Section.
6.3 Publicity. Except to the extent required by applicable laws, rules,
regulations or stock exchange requirements, neither (i) the Company, the
Subsidiaries or any of their Affiliates nor (ii) any Purchaser or any of its
Affiliates shall, without the written consent of the other, make any public
announcement or issue any press release with respect to the transactions
contemplated by this Agreement. In no event will either (i) the Company, the
Subsidiaries or any of their Affiliates or (ii) any Purchaser or any of its
Affiliates make any public announcement or issue any press release with respect
to the transactions contemplated by this Agreement without consulting with the
other party, to the extent feasible, as to the content of such public
announcement or press release.
6.4 Material, Nonpublic Information. Except as required by law, the Company and
its directors, officers, employees and agents shall not provide any Purchaser
with any material non-public information regarding the Company or any of the
Subsidiaries at any time after the Closing, except such information as may be
required to be disclosed to certain Board members, who are affiliated with
17
certain Purchasers (other than Tudor and its Affiliates), in their capacity as
directors of the Company. In the event of a breach of the foregoing covenant
following the Effective Date, or in the event that Company is legally required
to make certain disclosures to any Purchaser (and does so) following the
Effective Date, then in addition to any other remedy provided for herein, in the
Transaction Documents or in equity or at law, each Purchaser to whom information
has been disclosed (whether as a result of breach or as required by law) may
request, in writing, that the Company promptly (but in no event more than five
(5) business days after the date of such writing) publicly disclose, by press
release, SEC filing, or otherwise, an appropriate summary of the information
that, in such Purchaser's reasonable judgment, constitutes the then material
non-public information. After such five (5) business-day period, the
Purchaser(s) who was or were in receipt of such material non-public information
shall be automatically authorized to make all of the information, or any portion
thereof, available to the public generally, without incurring any liability to
the Company for such disclosure.
6.5 Filing of Information. The Company shall use best efforts to, and shall,
promptly after the date hereof and in any event on or prior to July 15, 2004,
make current in all respects all filings and reports required by applicable
securities laws, including the preparation and filing of all periodic reports
under the Exchange Act, the filing of audited financial statements for fiscal
year 2003, and the filing of any statements required by or pursuant to the
Securities Act. The Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports (other
than the periodic reports with respect to fiscal year 2003 and the first quarter
of 2004) required to be filed by the Company pursuant to all applicable
securities laws, including the Exchange Act. At any time if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Purchasers and make publicly available in accordance with paragraph (c) of
Rule 144 such information as is required for the Purchasers to sell the Shares
and the Warrant Shares under Rule 144. The Company further covenants that it
will take such further action as any holder of Shares or Warrant Shares may
reasonably request to satisfy the provisions of Rule 144 applicable to the
issuer of securities relating to transactions for the sale of securities
pursuant to Rule 144.
6.6 Additional Issuance. The Company shall not issue any capital stock or other
securities in connection with the raising of additional financing or capital
until all of the Shares have been registered for resale pursuant to an effective
registration statement and otherwise in accordance with the terms set forth in
the Registration Rights Agreement; provided; however, that the foregoing shall
not prohibit the Company from issuing shares of Common Stock or securities
convertible into or exercisable for Common Stock: (i) upon conversion of the
Warrants or other securities issuable upon conversion of securities outstanding
on the date hereof, (ii) to employees, consultants, officers or directors of the
Company pursuant to stock option, stock purchase or stock bonus plans or
agreements or other stock incentive plans or arrangements approved by the Board,
which are in existence as of the date hereof, (iii) pursuant to the acquisition
of another business entity or business segment of any such entity by the Company
by merger, purchase of substantially all the assets or other reorganization or
corporate partnering agreement if such issuance is approved by the Board, (iv)
in connection with any stock split, stock dividend or recapitalization of the
Company, (v) with respect to warrants to purchase Common Stock issued to Tejas
and as described in Section 2.4 hereof, and (vi) in connection with lease lines,
bank loans, corporate partnering or other similar transactions, provided such
issuances described in this clause (vi) are not primarily for the purpose of
equity financing and are approved by the Board.
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6.7 Use of Proceeds. The Company covenants and agrees that the proceeds from the
sale of the Shares shall be used by the Company for repayment or prepayment of
indebtedness of the Company, working capital and general corporate purposes or
any other purpose approved by the Board, including, without limitation, growth
initiatives, capital expenditures and potential acquisitions; under no
circumstances shall any portion of the proceeds be applied to: (i) the payment
of dividends or other distributions on any capital stock or other securities of
the Company; (ii) the purchase of debt or equity securities of any Person for
cash, excluding debt securities of the Company or any of its subsidiaries,
except in connection with investment of excess cash in high quality (A1/P1 or
better) money market instruments having maturities of one year or less; (iii)
any expenditure not directly related to the business of the Company; or (iv) the
call, repurchase or redemption of any Company equity or equity-equivalent
securities.
6.8 Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that would require the registration under the Securities Act
of the sale of the Shares or the issuance of the Warrants or the Warrant Shares
to the Purchasers.
6.9 Pre-Emptive Right. Each Purchaser shall have the right to purchase a pro
rata share of New Securities (as defined in this Section 6.9) that the Company
may, from time to time, propose to sell and issue. Each Purchaser's pro rata
share, for purposes of this right, is the ratio of the number of shares of Fully
Diluted Common Stock owned by such holder immediately prior to the issuance of
New Securities to the total number of shares of Fully Diluted Common Stock
outstanding immediately prior to the issuance of New Securities. Each Purchaser
shall also have the right of over-allotment to purchase additional New
Securities set forth in paragraph (b) of this Section 6.9. This pre-emptive
right shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including Common Stock) of
the Company whether now authorized or not, and any rights, options or warrants
to purchase such capital stock, and securities of any type whatsoever that are,
or may become, convertible into or exchangeable for capital stock; provided that
the term "New Securities" does not include securities issued: (i) upon
conversion of the Warrants or other securities issuable upon conversion of
securities outstanding on the date hereof, (ii) to employees, consultants,
officers or directors of the Company pursuant to stock option, stock purchase or
stock bonus plans or agreements or other stock incentive plans or arrangements
approved by the Board, which are in existence as of the date hereof, (iii)
pursuant to the acquisition of another business entity or business segment of
any such entity by the Company by merger, purchase of substantially all the
assets or other reorganization or corporate partnering agreement if such
issuance is approved by the Board, (iv) in connection with any stock split,
stock dividend or recapitalization of the Company, (v) in connection with lease
lines, bank loans, corporate partnering or other similar transactions, provided
such issuances described in this clause (v) are not primarily for the purpose of
equity financing and are approved by the Board, and (vi) to directors of the
Company as compensation for their service as directors pursuant to a restricted
stock plan to be implemented and approved by the stockholders of the Company;
provided that such issuance of restricted stock shall not exceed 100,000 shares
per year.
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(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Purchaser certified written notice of its
intention, describing the type of New Securities, their price and the general
terms upon which the Company proposes to issue the same. Each Purchaser shall
have thirty (30) days after any such notice is mailed or delivered to agree to
purchase all or any portion of such Purchaser's pro rata share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased. Each Purchaser shall have the right of over-allotment such that
if any Purchaser fails to exercise its right under this Section 6.9 to purchase
its full pro rata share of New Securities, the other Purchasers may purchase the
portion of such Purchaser's remaining portion on a pro rata share within ten
(10) days from the date such non-purchasing Purchaser fails to exercise its
right hereunder to purchase its full pro rata share of New Securities.
(c) In the event the Purchasers fail to exercise the pre-emptive right within
such thirty (30) day period and after the expiration of the ten (10) day period
for the exercise of the over-allotment provisions of this Section 6.9, the
Company shall have ninety (90) days thereafter to sell the New Securities
respecting which the Purchasers' pre-emptive right set forth in this Section 6.9
was not exercised, at a price and upon terms no more favorable to the purchasers
thereof or to the Company than specified in the Company's notice to the
Purchasers pursuant to Section 6.9(b) above. In the event the Company has not
sold the New Securities respecting which the Purchasers' preemptive right set
forth in the Section 6.9 was not exercised within such ninety (90) day period,
the Company shall not thereafter issue or sell any New Securities, without first
again offering such securities to the Purchasers in the manner provided in
Section 6.9(b) above.
6.10 Reservation of Common Stock for Issuance; Listing of Shares. The Company
agrees to reserve from its duly authorized capital stock the total number of
shares of Common Stock issuable upon execution of this Agreement and upon the
exercise in full of the Warrants. The Company agrees that at any time, if and
when its shares of Common Stock are listed on NASDAQ, that it will use
reasonable efforts to promptly list and qualify the Shares and the Warrant
Shares for trading on NASDAQ.
7. Indemnification.
7.1 By the Company. The Company agrees to indemnify, defend and hold harmless
each Purchaser and its Affiliates and their respective officers, directors,
agents, employees, subsidiaries, partners, members and controlling persons
(collectively, the "Purchaser Indemnitees") to the fullest extent permitted by
law from and against any and all claims, losses, liabilities, damages,
deficiencies, judgments, assessments, fines, settlements, costs or expenses
(including interest, penalties and reasonable fees, disbursements and other
charges of counsel) (collectively, "Losses") based upon, arising out of or
otherwise in respect of any breach by the Company of any representation,
warranty, covenant or agreement of the Company contained in this Agreement or in
the Transaction Documents, or for any Losses claimed by Tejas or any other
broker or placement agent.
20
7.2 Claims All claims for indemnification by a Purchaser Indemnitee pursuant to
this Section 7 shall be made as follows:
(a) If a Purchaser Indemnitee has incurred or suffered Losses for which it is
entitled to indemnification under this Section 7, then such Purchaser Indemnitee
shall give prompt written notice of such claim (a "Claim Notice") to the
Company. Each Claim Notice shall state the amount of claimed Losses (the
"Claimed Amount"), if known, and the basis for such claim.
(b) Within 30 days after delivery of a Claim Notice, the Company (the
"Indemnifying Party") shall provide to each Purchaser Indemnitee (the
"Indemnified Party"), a written response (the "Response Notice") in which the
Indemnifying Party shall: (i) agree that all of the Claimed Amount is owed to
the Indemnified Party, (ii) agree that part, but not all, of the Claimed Amount
(the "Agreed Amount") is owed to the Indemnified Party, or (iii) contest that
any of the Claimed Amount is owed to the Indemnified Party. The Indemnifying
Party may contest the payment of all or a portion of the Claimed Amount only
based upon a good faith belief that all or such portion of the Claimed Amount
does not constitute Losses for which the Indemnified Party is entitled to
indemnification under this Section 7. If no Response Notice is delivered by the
Indemnifying Party within such 30-day period, then the Indemnifying Party shall
be deemed to have agreed that all of the Claimed Amount is owed to the
Indemnified Party.
(c) If the Indemnifying Party in the Response Notice agrees (or is deemed to
have agreed) that all of the Claimed Amount is owed to the Indemnified Party,
then the Indemnifying Party shall owe to the Indemnified Party an amount equal
to the Claimed Amount to be paid in the manner set forth in this Section 7. If
the Indemnifying Party in the Response Notice agrees that part, but not all, of
the Claimed Amount is owed to the Indemnified Party, then the Indemnifying Party
shall owe to the Indemnified Party an amount equal to the agreed amount set
forth in such Response Notice to be paid in the manner set forth in this Section
7.
(d) No delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent of any actual prejudice caused by or arising out
of such delay.
7.3. Payment of Claims. An Indemnifying Party shall make payment of any portion
of any Claimed Amount that such Indemnifying Party has agreed in a Response
Notice that it owes to an Indemnified Party, or that such Indemnifying Party is
deemed to have agreed it owes to such Indemnifying Party, said payment to be
made within thirty (30) days after such Response Notice is delivered by such
Indemnifying Party or should have been delivered by such Indemnifying Party, as
the case may be.
7.4. Limitations.
(a) Time for Claims. No Indemnifying Party will be liable for any Losses
hereunder arising out of a breach of representation or warranty unless a written
claim for indemnification is given by the Indemnified Party to the Indemnifying
Party on or prior to the third anniversary of the date on which the registration
statement covering the resale of the Shares initially became effective.
21
(b) Maximum Amount. Notwithstanding anything contained herein to the contrary,
no Indemnifying Party will be liable for any Losses hereunder in excess of
$29,995,000.
7.5 Applicability; Exclusivity. Notwithstanding any term to the contrary in this
Section 7, the indemnification and contribution provisions of the Registration
Rights Agreement shall govern any claim made with respect to registration
statements filed pursuant thereto or sales made thereunder. The parties hereby
acknowledge and agree that in addition to remedies of the parties hereto in
respect of any and all claims relating to any breach or purported breach of any
representation, warranty, covenant or agreement that is contained in this
Agreement pursuant to the indemnification provisions of this Section 7, all
parties shall always retain the right to pursue and obtain injunctive relief in
addition to any other rights or remedies hereunder.
8. Miscellaneous Provisions.
8.1 Rights Cumulative. Each and all of the various rights, powers and remedies
of the parties shall be considered to be cumulative with and in addition to any
other rights, powers and remedies which such parties may have at law or in
equity in the event of the breach of any of the terms of this Agreement. The
exercise or partial exercise of any right, power or remedy shall neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party.
8.2 Pronouns. All pronouns or any variation thereof shall be deemed to refer to
the masculine, feminine or neuter, singular or plural, as the identity of the
person, persons, entity or entities may require.
8.3 Notices.
(a) Any notices, reports or other correspondence (hereinafter collectively
referred to as "correspondence") required or permitted to be given hereunder
shall be sent by postage prepaid first class mail, overnight courier or
telecopy, or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(b) All correspondence to the Company shall be addressed as follows:
Motient Corporation 000 Xxxxxxxxxxxxx Xxxxxxx Xxxxxxxxxxxx, XX 00000 Attention:
Xxxxxxxxxxx Xxxxxx, Executive Vice President and Chief Operating Officer
Telecopier: (000) 000-0000
with copies to:
Motient Corporation
000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
-and-
Xxxxxxx Xxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
22
(c) All correspondence to the Purchasers shall be addressed pursuant to the
contact information set forth on Schedule 1 attached hereto.
(d) Any entity may change the address to which correspondence to it is to be
addressed by notification as provided for herein.
8.4 Captions. The captions and paragraph headings of this Agreement are solely
for the convenience of reference and shall not affect its interpretation.
8.5 Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of New York and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
8.7 Waiver. No waiver of any term, provision or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or be construed as, a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision or condition
of this Agreement.
8.8 Assignment. The rights and obligations of any party hereto shall inure to
the benefit of and shall be binding upon the authorized successors and permitted
assigns of such party. The Company may not assign this Agreement or any rights
or obligations hereunder without the prior written consent of Purchasers who
hold a majority of the outstanding Shares (the "Majority Purchasers"). Each
Purchaser may assign or transfer any or all of its rights under this Agreement
to any Person provided that such assignee or transferee agrees in writing to be
bound, with respect to the transferred Shares and Warrant Shares, by the
provisions hereof that apply to such assigning or transferring Purchaser;
whereupon such assignee or transferee shall be deemed to be a "Purchaser" for
all purposes of this Agreement.
8.9 Survival. The respective representations and warranties given by the parties
hereto shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of time equal to the time for which
indemnification may be sought hereunder, without regard to any investigation
made by any party. The respective covenants and agreements agreed to by a party
hereto shall survive the Closing Date and the consummation of the transactions
contemplated herein in accordance with their respective terms and conditions.
23
8.10 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, negotiations, understandings, representations and statements
respecting the subject matter hereof, whether written or oral.
8.11 Amendments. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provisions of this Agreement
shall be effective only if made or given in writing and signed by the Company
and the Majority Purchasers; provided, that with respect to any amendment,
supplement, modification or waiver relating to Tudor, the consent or waiver of
Tudor shall also be required..
8.12 No Third Party Rights. This Agreement is intended solely for the benefit of
the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any Person (including, without limitation, any
stockholder or debt holder of the Company) other than the parties hereto.
8.13 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document. The parties hereto confirm that any
facsimile copy of another party's executed counterpart of this Agreement (or its
signature page thereof) will be deemed to be an executed original thereof.
[signature pages to follow]
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year first above written.
MOTIENT CORPORATION
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Executive Vice President and COO
-------------------------
Purchaser's name
By:
----------------------------------------------
Name:
Title:
25
MOTIENT ALLOCATIONS
NAME WARRANTS SHARES
Rockbay Capital Fund, LLC 90 600
Rockbay Capital Institutional Fund, LLC 1092 7277
Rockbay Capital Offshore Fund, Ltd. 2568 17123
Glenview Capital Partner, L.P. 3750 25,000
Glenview Institutional Partners, L.P. 10,800 72,000
Glenview Capital Master Fund, Ltd. 22,050 147,000
GCM Little Arbor Master Fund, Ltd. 900 6,000
OZ Master Fund, Ltd. 62597 417,315
OZ Mac 13 Ltd. 755 5,031
Fleet Maritime, Inc. 1148 7654
Xxxx Waterfall 15,000 100,000
Xxxxx Xxxxxxx 15,000 100,000
Xxxxxx Hedgecap Limited 61,500 410,000
Catalyst Credit Opportunity Fund Offshore 2760 18,400
Catalyst Credit Opportunity Fund 900 6000
DCM Ltd. 90 600
York Capital Management, L.P. 6405 42,701
York Investment Limited 22327 148,846
York Select, L.P. 6414 42,757
York Select Unit Trust 4488 29,920
York Distressed Opportunities Fund, L.P. 14,366 95,776
York Global Value Partner, L.P. 13,500 90,000
The Raptor Global Portfolio Ltd. 100,169 667,796
The Tudor BVI Global Portfolio Ltd. 21,980 146,533
Tudor Proprietary Trading, L.L.C 11,743 78,285
The Altar Rock Fund L.P. 1108 7386
LC Capital Master Fund, Ltd. 22,500 150,000
Singer Children's Management Trust 20,250 135,000
Greywolf Capital Partners II L.P. 3150 21,000
Greywolf Capital Overseas Fund LLC 4350 29,000
Highland Equity Focus Fund, L.P. 63,750 425,000
Highland Equity Fund, L.P. 7,500 50,000
26
