EXHIBIT 10(a)
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Subscription Agreement") is entered into
as of the 11th day of August, 1997 by and between Atlantic Tele-Network, Inc.,
a Delaware corporation (the "Company"), and Emerging Communications, Inc., a
Delaware corporation ("ECI").
WHEREAS, to eliminate corporate disputes and to maximize the value of the
Company for the benefit of the Company and its stockholders, the Company has
entered into a Principal Terms Agreement dated January 29, 1997 among the
Company and its co-chief executive officers and principal stockholders,
Xxxxxxxxx X. Prior, Jr. ("Prior") and Xxxxxxx X. Xxxxxxx ("Xxxxxxx"), which
contemplates the separation of the businesses and assets of the Company in the
manner set forth herein and in the Recapitalization Agreement (as defined
below) and the Merger Agreement (as defined below); and
WHEREAS, in order to accomplish such separation, subject to the terms and
conditions set forth herein, the Company desires to transfer to ECI all of the
capital stock of its wholly owned subsidiaries, Atlantic Tele-Network, Co., a
Virgin Islands corporation ("ATNCo."), and Atlantic Aircraft, Inc., a Delaware
corporation ("Aircraft Corp."), as well as certain other assets of the Company
as more fully described herein relating to businesses conducted by ATNCo., its
subsidiaries, Virgin Islands Telephone Corporation, a Virgin Islands
corporation ("VITELCO"), Vitelcom Cellular Inc., a Virgin Islands corporation
("VCI"), and Vitelcom, Inc., a Virgin Islands corporation ("Vitelcom" and,
together with ATNCo., Aircraft Corp., VITELCO and VCI, the "Transferred
Subsidiaries"), and Aircraft Corp. in exchange for 10,959,131 shares of common
stock, par value $0.01 per share (the "ECI Common Stock"), of ECI; and
WHEREAS, in order to accomplish such separation, subject to the terms and
conditions set forth herein, in consideration of the transfer to it of the
Assets (as defined herein), ECI desires to issue to the Company 10,959,131
shares of ECI Common Stock and assume the Assumed Liabilities (as defined
herein); and
WHEREAS, the Company, Prior, individually and as Trustee of the 1994 Prior
Charitable Remainder Trust (the "Trust"), and Xxxxxxx have entered into a
Recapitalization Agreement dated of even date herewith attached hereto as
Exhibit A (the "Recapitalization Agreement"), pursuant to which, subject to
the terms and conditions set forth therein, (a) the Company has agreed to
repurchase (the "Repurchase") an aggregate of 765,562 shares of common stock,
par value $.01 per share (the "Company Common Stock"), of the Company owned by
Prior and the Trust, and (b) Xxxxxxx has agreed to exchange 3,325,000 shares
of Company Common Stock owned by Xxxxxxx and certain members of his family for
3,325,000 shares of a new series of common stock of the Company to be
designated Class A Common Stock and Prior has agreed to exchange 2,927,038
shares of Company Common Stock owned by Prior and certain members of his
family for 2,927,038 shares of a new series of common stock of the Company to
be designated Class B Common Stock (the "Recapitalization"); and
WHEREAS, the Company and ATN MergerCo., a Delaware corporation ("Merger
Sub"), have entered into an Agreement and Plan of Merger of even date herewith
attached hereto as Exhibit B (the "Merger Agreement"), pursuant to which,
subject to the terms and conditions contained therein, Merger Sub will merge
with and into the Company, with each share of Company Common Stock being
converted into one share of ECI Common Stock and 0.4 shares of Company Common
Stock, the outstanding shares of Class A Common Stock will be converted into
an aggregate of 5,704,231 shares of ECI Common Stock and the outstanding
shares of Class B Common Stock will be converted into an aggregate of
2,807,040 shares of Company Common Stock (the "Merger"); and
WHEREAS, the consummation of the Closing (as defined herein) is a condition
to the consummation of the Repurchase and Recapitalization pursuant to the
Recapitalization Agreement and a condition to the consummation of the Merger
pursuant to the Merger Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein contained and subject to the terms and conditions hereinafter
set forth, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Subscription Agreement, the
following terms shall have the meanings ascribed to them in this Section 1.01
"Aircraft Corp." has the meaning set forth in the recitals hereto.
"Aircraft Receivables" means all indebtedness owing from Aircraft Corp. to
the Company.
"Assets" has the meaning set forth in Section 2.02 hereof.
"Assumed Liabilities" has the meaning set forth in Section 2.05 hereof.
"ATNCo." has the meaning set forth in the recitals hereto.
"Auditor" has the meaning set forth in Section 3.02 hereof.
"Banco Popular Indebtedness" means Indebtedness outstanding under the loan
agreement dated May 29, 1990, as amended February 25, 1993, and as amended
October 6, 1993, between the Company and Banco Popular de Puerto Rico.
"Business Day" shall mean any day, excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized or required by law or other governmental
actions to close.
"Cash Equivalents" shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (b) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof, (c) U.S. dollar denominated
time deposits, certificates of deposit and bankers' acceptances, (d)
commercial paper and variable or fixed rate notes maturing within one year of
the Closing Date and (e) repurchase agreements maturing within one year of the
Closing Date.
"Closing" has the meaning set forth in Section 7.01 hereof.
"Closing Date" has the meaning set forth in Section 7.01 hereof.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning set forth in the first paragraph hereof.
"Company Common Stock" has the meaning set forth in the recitals hereto.
"Company Projects" has the meaning set forth in Section 2.03 hereof.
"Credits" means, collectively, (a) an amount equal to 50% of the cash and
Cash Equivalents of the Company as of Xxxxx 00, 0000, (x) an amount equal to
50% of all accounts receivable and other receivables of the Company (other
than (w) the principal amount of any Indebtedness owing to the Company by any
of its Subsidiaries, (x) any receivables identified on Schedule 2.02(i)
hereof, (y) the Aircraft Receivables or (z) any receivables (other than
receivables owing from any Subsidiary of the Company) which remain unpaid on
the Closing Date), including, without limitation, all accrued and unpaid
advisory and management fees, intercompany interest and stockholders'
receivables, as of April 30, 1997, (c) an amount equal to 50% of the current
assets of the Company as of April 30, 1997 (other than those included in or
specifically excluded by
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clause (a) or (b) above), (d) an amount equal to 50% of all principal payments
made by Transferred Subsidiaries after December 31, 1996 and on or prior to
April 30, 1997 on Indebtedness owing to the Company, (e) an amount equal to
50% of all dividends paid by Transferred Subsidiaries to the Company after
December 31, 1996 and on or prior to Xxxxx 00, 0000, (x) an amount equal to
50% of the principal amount of all loans by the Company to, and of all capital
contributions by the Company to, GTT after December 31, 1996 and on or prior
to April 30, 1997, (g) an amount equal to 50% of all costs and expenses
incurred by the Company after December 31, 1996 and on or prior to April 30,
1997 relating to the Company Projects or any potential acquisitions (including
any which may have been abandoned after December 31, 1996) to be consummated
by the Company or any of its Subsidiaries (other than the Transferred
Subsidiaries), (h) an amount equal to 100% of all principal payments made by
the Transferred Subsidiaries after April 30, 1997 and on or prior to the
Closing Date on Indebtedness (other than with respect to the Aircraft
Receivables) owing to the Company, (i) an amount equal to 100% of all
dividends paid by Transferred Subsidiaries to the Company after April 30, 1997
and on or prior to the Closing Date, (j) an amount equal to 100% of all
payments of interest accruing after April 30, 1997 and made by Transferred
Subsidiaries to the Company (other than with respect to the Aircraft
Receivables) after April 30, 1997 and on or prior to the Closing Date on
Indebtedness owing to the Company, (k) an amount equal to 50% of the book
value as of April 30, 1997 of the furniture, fixtures, equipment and leasehold
improvements at the St. Xxxxxx Office, (l) an amount equal to 100% of all
payments received by the Company after April 30, 1997 on any receivables
identified on Schedule 2.02(i) hereof and (m) an amount equal to 100% of the
principal amount of and accrued interest on the Indebtedness listed in
Schedule 2.05(d) as of the Closing Date. Any amounts comprising the Credits
which are denominated in a currency other than U.S. dollars shall be converted
into a U.S. dollar amount using the applicable exchange rate in effect as of
the fifth Business Day prior to the Closing Date, in the case of the Estimated
Statement, and as of the Closing Date, in the case of the Final Statement, as
published in The Wall Street Journal on the next succeeding Business Day.
"Debits" means, collectively, (a) an amount equal to 50% of the Indebtedness
(including Banco Popular Indebtedness) of the Company owing to banks or listed
on Schedule 2.05(d) attached hereto or as of Xxxxx 00, 0000, (x) an amount
equal to 50% of all other current liabilities of the Company as of April 30,
1997 (other than Excluded Liabilities), (c) an amount equal to 50% of the
total severance payments with respect to the persons set forth on Schedule
5.02 attached hereto, (d) an amount equal to 50% of all principal payments
made by GTT on Indebtedness owing to the Company after December 31, 1996 and
on or prior to April 30, 1997, (e) an amount equal to 50% of all dividends
paid by GTT to the Company after December 31, 1996 and on or prior to Xxxxx
00, 0000, (x) an amount equal to 50% of the principal amount of all loans by
the Company to, and all capital contributions by the Company to, Transferred
Subsidiaries (other than Aircraft Receivables) after December 31, 1996 and on
or prior to April 30, 1997, (g) an amount equal to 50% of all costs and
expenses incurred by the Company after December 31, 1996 and on or prior to
April 30, 1997 relating to the project for the privatization of the telephone
company for the Republic of Congo or any potential acquisitions (including any
which may have been abandoned after December 31, 1996) to be consummated by
ECI or any of the Transferred Subsidiaries, (h) an amount equal to 100% of the
principal amount of all loans made by the Company to, and of all capital
contributions by the Company to, Transferred Subsidiaries (including Aircraft
Receivables, unless the proceeds relating thereto were used by Aircraft Corp.
to repay third-party Indebtedness) after April 30, 1997 and on or prior to the
Closing Date, (i) an amount equal to 100% of all interest accrued as of April
30, 1997 which has not been paid to the Company on or prior to the Closing
Date on Indebtedness owing by Transferred Subsidiaries (other than with
respect to the Aircraft Receivables) to the Company, (j) an amount equal to
100% of all costs and expenses incurred by the Company after April 30, 1997
and on or prior to the Closing Date relating to the project for the
privatization of the telephone company for the Republic of Congo or any
potential acquisitions (including any which may have been abandoned after
December 31, 1996) to be consummated by ECI or any of the Transferred
Subsidiaries, (k) an amount equal to 100% of all costs and expenses incurred
by the Company after April 30, 1997 and on or prior to the Closing Date
relating to furniture, fixtures, equipment and leasehold improvements at, or
otherwise pertaining to, the St. Croix Office, (l) an amount equal to 50% of
the book value as of April 30, 1997 of the furniture, fixtures, equipment and
leasehold improvements at the St. Croix Office, (m) an amount equal to 100% of
the compensation and other expenses incurred by the Company after April 30,
1997 and on or prior to the Closing Date relating to the employees and
consultants identified on
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Schedule 1.01A attached hereto, (n) an amount equal to 50% of all fees and
expenses incurred by Prior, Xxxxxxx, the Company, ECI and their respective
Subsidiaries relating to the Transactions and all agreements, documents and
proceedings in connection therewith, including, without limitation, all fees
and expenses of each counsel set forth on Schedule 1.01B attached hereto,
accountants and investment bankers, filing fees with the Commission and state
securities agencies, stock exchange listing fees, transfer agent fees,
transfer taxes and filing fees with the State of Delaware, it being expressly
understood and agreed that the payment of all such fees and expenses (but, as
to counsel fees and expenses, limited to the counsel named in Schedule 1.01B)
shall be the obligation of the Company, (o) an amount equal to 50% of the
compensation and other expenses incurred by the Company after April 30, 1997
and on or prior to the Closing Date relating to the employees identified on
Schedule 1.01C attached hereto, (p) an amount equal to 50% of (i) the "blue
book" values of the two aircraft owned by Aircraft Corp. as of the latest
"blue book" available to the parties on the third Business Day prior to the
Closing Date less (ii) the amount of all Indebtedness and accrued interest
owing by Aircraft Corp. to third parties as of the Closing Date, (q) an amount
equal to 50% of the carrying value as of April 30, 1997 of the assets
identified on Schedule 2.02(i) hereof, (r) an amount equal to the provision
for Income Tax expense of the Company which would be accrued on a hypothetical
statement of operations of the Company for the period after April 30, 1997 to
and including the Closing Date which statement of operations includes as
revenues or gross income only dividends paid by the Transferred Subsidiaries
to the Company during such period and interest accrued during such period on
Indebtedness of the Transferred Subsidiaries to the Company and includes as
expense only the expenses charged to ECI under clauses (c), (j), (k), (m),
(n), (o) and (s) of this definition of "Debits" (and only to the extent such
charges represent expenses which are deductible for Income Tax purposes), and
(s) an amount equal to 50% of all expenses incurred by the Company after April
30, 1997 and on or prior to the Closing Date (including interest accrued on
Indebtedness listed on Schedule 2.05(d)) to the extent such expenses are of a
type which do not constitute a Credit hereunder or a Debit pursuant to any
other clause of this definition of "Debits." Any amount comprising the Debits
which are denominated in a currency other than U.S. dollars shall be converted
into a U.S. dollar amount using the applicable exchange rate in effect as of
the fifth Business Day prior to the Closing Date, in the case of the Estimated
Statement, and as of the Closing Date, in the case of the Final Statement, as
published in The Wall Street Journal on the next succeeding Business Day.
"ECI" has the meaning set forth in the first paragraph hereof.
"ECI Common Stock" has the meaning set forth in the recitals hereto.
"Estimated Statement" has the meaning set forth in Section 3.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" has the meaning set forth in Section 2.03.
"Excluded Liabilities" has the meaning set forth in Section 2.06.
"Final Statement" has the meaning set forth in Section 3.02.
"Goods" has the meaning set forth in the Uniform Commercial Code of the
State of New York.
"GTT" has the meaning set forth in Section 2.03.
"Income Tax" has the meaning set forth in the Tax Sharing Agreement.
"Indebtedness" of any person shall mean, without duplication, (a) all
indebtedness of such person for borrowed money, (b) the deferred purchase
price of assets or services which in accordance with generally accepted
accounting principles would be shown on the liability side of the balance
sheet of such person, (c) the face amount of all letters of credit issued for
the account of such person and, without duplication, all drafts drawn
thereunder and (d) all Indebtedness of a second person secured by any lien on
any property owned by such first person, whether or not such Indebtedness has
been assumed by such first person.
"Materials" has the meaning set forth in Section 5.01 hereof.
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"Merger" has the meaning set forth in the recitals hereto.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"Prior" has the meaning set forth in the recitals hereto.
"Xxxxxxx" has the meaning set forth in the recitals hereto.
"Recapitalization" has the meaning set forth in the recitals hereto.
"Recapitalization Agreement" has the meaning set forth in the recitals
hereto.
"Repurchase" has the meaning set forth in the recitals hereto.
"Retained Indebtedness" has the meaning set forth in Section 2.02.
"Retained Names" has the meaning set forth in Section 5.01 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning set forth in Section 2.01 hereof.
"Special Meeting" has the meaning set forth in the Merger Agreement.
"St. Croix Office" means the office of the Company located at Chase
Financial Center, Orange Grove, Christiansted, St. Croix, U.S. Virgin Islands
00821.
"St. Croix Office Lease" means the current lease between Chase Manhattan
Bank and VITELCO for the St. Croix Office, any and all renewals, extensions or
amendments thereof and any new lease for the St. Croix Office entered into on
or prior to the Closing Date.
"St. Xxxxxx Office" means the office of the Company located at 00 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000.
"St. Xxxxxx Office Lease" means the lease agreement dated October 1, 1992,
as amended July 22, 1993, between the Company and St. Xxxxxx Liquor Co., Ltd.
for the St. Xxxxxx Office.
"Subscription Agreement" has the meaning set forth in the first paragraph
hereof.
"Subsidiary" shall mean, of any person at any time,
(a) any corporation of which a majority (by number of shares or number of
votes) of any class of outstanding capital stock normally entitled to vote
for the election of one or more directors (regardless of any contingency
which does or may suspend or dilute the voting rights of such class) is at
such time owned directly or indirectly, beneficially or of record, by such
person or one or more Subsidiaries of such person;
(b) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such
person or one or more Subsidiaries of such person; and
(c) any partnership, joint venture or other entity of which ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at such time
owned directly or indirectly, beneficially or of record, by, or which is
otherwise controlled directly, indirectly or through one or more
intermediaries by, such person or one or more Subsidiaries of such person.
"Tax" or "Taxes" means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, stamp, excise,
severance, occupation, service, sales, use, license, lease, transfer, import,
export, value added,
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alternative minimum, estimated or other similar tax (including any fee,
assessment or other charge in the nature of or in lieu of any tax) imposed by
any governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the foregoing.
"Transactions" has the meaning set forth in Section 6.02 hereof.
"Transferred Subsidiaries" has the meaning set forth in the recitals hereto.
"Trust" has the meaning set forth in the recitals hereto.
"VCI" has the meaning set forth in the recitals hereto.
"VITELCO" has the meaning set forth in the recitals hereto.
"Vitelcom" has the meaning set forth in the recitals hereto.
Section 1.02. Rules of Construction. Unless the context otherwise requires:
(a) a capitalized term used herein has the meaning ascribed to such term;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular; and
(d) "herein," "hereof" and other words of similar import refer to this
Subscription Agreement as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II
SUBSCRIPTION FOR AND ACQUISITION OF THE SHARES
Section 2.01. Subscription for the Shares. The Company hereby subscribes for
and, subject to the terms and conditions contained herein, agrees to acquire
at the Closing 10,959,131 shares of ECI Common Stock (the "Shares").
Section 2.02. Acquisition of the Shares. In consideration of the issuance of
the Shares by ECI and the performance of its other obligations hereunder,
subject to the terms and conditions contained herein, the Company agrees to
transfer, convey, assign and deliver, or cause to be transferred, conveyed,
assigned and delivered, at the Closing to ECI the following assets (which are
collectively referred to herein as the "Assets"):
(a) all of the issued and outstanding capital stock of ATNCo.;
(b) all of the issued and outstanding capital stock of Aircraft Corp.;
(c) all Indebtedness of each Transferred Subsidiary owing to the Company
except the Subordinated Demand Note of ATNCo. payable to the order of the
Company, which had an unpaid principal amount of $22,031,586 at April 30,
1997 (the "Retained Indebtedness");
(d) all rights of the Company under the St. Croix Office Lease;
(e) all equipment, furniture, fixtures and leasehold improvements of the
Company located at the St. Croix Office;
(f) all rights of the Company under any leases of equipment located at
the St. Croix Office;
(g) all rights of the Company and GTT (including any capitalized costs
relating thereto) relating to the project for the privatization of the
telephone company for the Republic of Congo;
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(h) all books, records and other data and papers held by the Company at
the Closing relating to the operation of the businesses of the Transferred
Subsidiaries;
(i) all of the right, title and interest of the Company in the assets set
forth on Schedule 2.02(i) attached hereto; and
(j) 50% of all receivables of the Company as of April 30, 1997 which
remain unpaid as of the Closing Date (other than Indebtedness owing to the
Company by any of its Subsidiaries and any receivables identified on
Schedule 2.02(i)).
Section 2.03. Excluded Assets. For the avoidance of doubt, each of the
parties hereto acknowledges and agrees that there shall not be included in
Assets to be transferred, conveyed, assigned and delivered to ECI at the
Closing any of the following assets (which are collectively referred to herein
as the "Excluded Assets"):
(a) any of the capital stock of Guyana Telephone & Telegraph Company
Ltd., a Guyana corporation ("GTT");
(b) any Indebtedness of GTT owing to the Company;
(c) any rights of the Company under the St. Xxxxxx Office Lease;
(d) any equipment, furniture, fixtures and leasehold improvements of the
Company located at the St. Xxxxxx Offices;
(e) any rights of the Company under any leases of equipment located at
the St. Xxxxxx Office;
(f) any rights of the Company or GTT (including any capitalized costs
relating thereto) relating to the projects for the privatization of the
Suriname telephone company, the purchase of the St. Xxxxxx cellular
operation or the long distance telephone opportunity in Jamaica (the
"Company Projects"); and
(g) any rights of the Company under any advisory or management agreement
between GTT and the Company.
Section 2.04. Issuance of the Shares. At the Closing, subject to the terms
and conditions contained herein, ECI agrees to issue and deliver the Shares to
the Company.
Section 2.05. Assumption of Liabilities. In consideration of the transfer,
conveyance, assignment and delivery of the Assets and the performance by the
Company of its other obligations hereunder, subject to the terms and
conditions contained herein, ECI agrees to assume at the Closing in accordance
with their respective terms the following liabilities (which are collectively
referred to herein as the "Assumed Liabilities"):
(a) all obligations of the Company under the St. Croix Office Lease;
(b) all obligations of the Company under all of the leases of equipment
located at the St. Croix Office and all other leases of equipment located
at the St. Croix Office entered into by the Company after the date of this
Subscription Agreement and prior to the Closing;
(c) all obligations of the Company arising out of or relating to the
Transferred Subsidiaries and the project for the privatization of the
telephone company for the Republic of Congo;
(d) the obligations of the Company set forth on Schedule 2.05(d);
(e) certain Tax liabilities of the Company as more particularly described
in the Tax Sharing and Indemnification Agreement; and
(f) except as otherwise provided in the Indemnity Agreement, one-half of
all liabilities and obligations of the Company, whether known or unknown,
arising out of events or acts or omissions occurring at or prior to the
Closing, except for (i) any Tax liabilities, (ii) any liabilities or
obligations that are taken into account in clauses (b) and (c) of the
definition of "Debits" for purposes of calculating the Final Closing
Adjustment and (iii) any liabilities and obligations that are Assumed
Liabilities pursuant to clauses (a)-(d) of this Section 2.05 or Excluded
Liabilities pursuant to clauses (a)-(c) of Section 2.06.
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Section 2.06. Excluded Liabilities. For the avoidance of doubt, each of the
parties hereto acknowledges and agrees that ECI does not hereby assume or
agree to assume any of the following obligations or liabilities (which are
collectively referred to herein as the "Excluded Liabilities"):
(a) any obligations of the Company under the St. Xxxxxx Office Lease;
(b) any obligations of the Company under the leases of equipment located
at the St. Xxxxxx Office; and
(c) any liability or obligation of the Company, whether known or unknown,
or matured or contingent, arising out of or relating to GTT or the Company
Projects.
Section 2.07. Restricted Assets. In the event that any Asset is not
assignable or transferable to ECI at the Closing by its terms or under
applicable law (each, a "Restricted Asset"), the Company shall use all
reasonable efforts, and ECI shall cooperate reasonably with the Company, to
promptly obtain the consents and waivers necessary to cause to be assigned or
transferred to ECI such Restricted Asset. After the Closing and continuing for
the duration of the useful life of each Restricted Asset, the Company shall
use reasonable efforts to provide ECI with the benefits of such Restricted
Asset and enforce at the request of ECI, or allow ECI to enforce, any rights
of the Company under such Restricted Asset; provided that the reasonable costs
and expenses of the Company incurred at ECI's request with respect to any such
enforcement shall be reimbursed by ECI.
Section 2.08. Access to Information. Each of the parties shall give to the
other reasonable access to information necessary to consummate the
transactions contemplated by this Subscription Agreement and shall deliver at
its expense all records relating to businesses and operations of the other
party and its Subsidiaries which may inadvertently remain in its possession
after the Closing. Each of the parties shall retain records relating to the
businesses and operations of the other party and its Subsidiaries in its
possession for a period of five years after the Closing Date.
ARTICLE III
CLOSING ADJUSTMENT
Section 3.01. Preliminary Closing Adjustment.
(a) On the third Business Day prior to the Closing Date, the Company
shall deliver to ECI an estimated statement of the Debits and the Credits
(the "Estimated Statement"), which Estimated Statement shall be in form and
substance reasonably satisfactory to ECI. The difference between the Debits
and the Credits shown on the Estimated Statement is herein called the
"Closing Date Adjustment." If the Debits exceed the Credits the Closing
Date Adjustment shall be a positive amount representing the sum resulting
from the Closing Date Adjustment due by ECI to the Company. If the Credits
exceed the Debits the Closing Date Adjustment shall be a negative amount
representing the sum resulting from the Closing Date Adjustment due by the
Company to ECI.
(b) ECI shall cause ATNCo to pay on the Closing Date, by wire transfer of
immediately available funds, as a payment of the Retained Indebtedness,
$17.4 million increased by the sum of the Closing Date Adjustment should
such adjustment be a positive amount or decreased by the Closing Date
Adjustment should such amount be a negative amount. If the amount of the
payment to be made by ATNCo. under this Section 3.01 exceeds the principal
amount of the Retained Indebtedness, such excess amount shall be paid by
ECI to the Company.
Section 3.02. Final Closing Adjustment.
(a) As promptly as practicable after the Closing Date, the Company shall
deliver to ECI a statement of Debits and Credits as of the Closing Date
(the "Closing Date Statement"). The Company and ECI shall engage the Omaha,
Nebraska office of Deloitte & Touche LLP (the "Auditor") to perform an
audit of the Debits and Credits shown on the Closing Date Statement. The
Auditor shall, within 60 days after the
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Closing Date, deliver to the parties a report of the calculation of the
Debits and the Credits (the "Final Statement"). The Final Statement shall
be conclusive and binding upon the parties, absent fraud or manifest error.
Each of the parties shall give the Auditor full access to its books,
records, facilities and employees in connection with the Auditor's audit of
the Final Statement. The fees and disbursements of the Auditor shall be
paid equally by the Company and ECI. The amount by which the amount of the
Debits shown on the Final Statement exceeds the amount of the Credits shown
on the Final Statement is herein called the "Final Closing Adjustment." If
the amount of Credits exceeds the amount of Debits, the Final Closing
Adjustment shall be a negative amount.
(b) If the Final Closing Adjustment exceeds the amount of the Closing
Date Adjustment, then within three Business Days after receipt of the Final
Statement by ECI, ECI shall cause ATNCo. to pay to the Company on account
of the principal amount of the Retained Indebtedness by wire transfer of
immediately available funds to an account specified by the Company therefor
an amount in cash in U.S. dollars equal to the amount by which the Final
Closing Adjustment exceeds the Closing Date Adjustment. If the amount of
the payment to be made by ATNCo. under this clause (b) exceeds the
remaining principal amount of the Retained Indebtedness, such excess amount
shall be paid by ECI to the Company.
(c) If the Final Closing Adjustment is less than the Closing Date
Adjustment, then within three Business Days after receipt of the Final
Statement by the Company, the Company shall pay to ECI by wire transfer of
immediately available funds to an account specified by ECI therefor an
amount in cash in U.S. dollars equal to the amount by which the Final
Closing Adjustment is less than the amount of the Closing Date Adjustment.
(d) For the avoidance of doubt, it is hereby acknowledged and agreed that
a positive amount is always larger than any negative amount (e.g. $10 is
$110 larger than -$100), that a negative amount is always less than a
positive amount (e.g. -$100 is $110 less than $10), and that a larger
negative number is "less than" a smaller negative number (e.g. -$110 is $10
less than -$100).
(e) Immediately following the payment specified in clause (b) or (c) of
this Section 3.02, the Company shall note on the promissory note evidencing
the Retained Indebtedness the aggregate amount of the payments, if any,
received by it with respect to the Retained Indebtedness pursuant to
Section 3.01 and this Section 3.02 and assign and deliver the Retained
Indebtedness to ECI.
ARTICLE IV
NO REPRESENTATIONS OR WARRANTIES;
CONDITION OF ASSETS, DISCLAIMERS
Section 4.01. No Representations or Warranties. Each of the parties
understands and agrees that no party is making, in this Subscription Agreement
or in any other agreement or document entered into in connection with the
Transactions, representations or warranties to the other in any way as to the
business or operations of the Company prior to or after the Closing or as to
the business or operations of ECI after the Closing, or as to any consents or
approvals required in connection therewith.
Section 4.02. Condition of Assets, Disclaimers. All Goods to be conveyed
pursuant to this Subscription Agreement are expressly agreed to be conveyed
"AS IS" and "WITH ALL FAULTS." All of the Assets to be transferred and
assigned to ECI pursuant to the provisions of this Subscription Agreement
shall be transferred and assigned to ECI as is, where is, in the condition
thereof and subject to the state of title thereto, the rights of any parties
in possession, and the right of ownership of others therein, and are subject
to all applicable laws, rules, regulations, ordinances, licenses, permits,
franchises, judgments, orders and other governmental actions, whether now in
effect or hereafter taken, and without representations or warranties of any
kind by the Company or any person acting or purporting to act on its behalf.
The Company makes no warranty or representation, express or implied, as to the
title, design, condition, value, operation, workmanship, merchantibility or
suitability for a particular purpose of the Assets, or any portion thereof, or
any other warranty or representation, express or implied, of any kind
whatsoever with respect to the Assets or any portion thereof.
9
ARTICLE V
CERTAIN AGREEMENTS OF THE COMPANY AND ECI
Section 5.01. Use of Retained Names. After the Closing, ECI shall not, and
shall cause its Subsidiaries not to, put into use any products, signs,
purchase orders, sales orders, labels, letterheads, or other materials
(collectively, "Materials") not in existence on the Closing Date that bear the
name "Atlantic Tele-Network, Inc." or "ATN" (the "Retained Names"). After the
Closing, ECI and its Subsidiaries shall be entitled to use any Materials in
existence as of the Closing that bear the Retained Names for a period not
exceeding 30 days.
Section 5.02. Severance. Prior to the Closing, the Company shall terminate
the employment of each of its employees identified on Schedule 5.02 attached
hereto.
Section 5.03. Aircraft Corp. Costs. Effective May 1, 1997, the Transferred
Subsidiaries, the project for the privatization of the telephone company for
the Republic of Congo, the Company Projects, and GTT shall be charged for use
of Aircraft Corp.'s jet aircraft only in an amount equal to the cost incident
to such use computed in the same manner and on the same basis as Xxxxxxx and
Prior have heretofore been charged for personal use of such aircraft, and all
remaining expenses of Aircraft Corp. with respect to the jet aircraft for the
period after April 30, 1997 and on or prior to the Closing Date shall be
charged to the Company as an expense to be allocated 50% to ECI pursuant to
clause(s) of the definition of "Debits" in this Subscription Agreement.
Section 5.04. Exchange of Indebtedness. Upon receipt of Indebtedness of
Transferred Subsidiaries pursuant to Section 2.02(c), ECI shall immediately
exchange any such Indebtedness for a promissory note with a term of at least
ten years at a variable rate of interest at least equal to the variable rate
of interest under the senior credit facility between Atlantic Tele-Network,
Co. and Rural Telephone Finance Cooperative and under which the obligor has
the right to prepay such note at any time without premium or penalty.
ARTICLE VI
CONDITIONS TO CLOSING
The obligations of the parties to consummate the purchase and sale of the
Shares, the assumption of the Assumed Liabilities and the other transactions
to be consummated by the parties hereto at the Closing shall be subject to the
satisfaction of the following conditions on or prior to the Closing Date:
Section 6.01. Third-Party Approvals. All consents, approvals,
authorizations, permits and orders with respect to the transactions
contemplated by this Subscription Agreement, the Recapitalization Agreement
and the Merger Agreement and the other agreements to be entered into pursuant
hereto and thereto required from any person, entity or court or governmental
agency, authority or instrumentality, federal, state or local, having or
asserting rights against or jurisdictions over the Company, ECI, or such
transactions (including, without limitation, from the Rural Telephone Finance
Corporation, the Rural Utilities Service, and Northern Telecom International
Finance B.V.) shall have been obtained and be valid and in full force and
effect.
Section 6.02. Registration Statement and Stockholder Approval. The
Registration Statement registering the Shares to be issued to stockholders of
the Company pursuant to the Merger Agreement under the Securities Act shall
have become effective in accordance with the provisions of the Securities Act;
no stop order suspending the effectiveness of such Registration Statement
shall have been issued by the Commission and remain in effect; all necessary
state securities or blue sky authorizations shall have been received. The
approval and adoption of this Subscription Agreement, the Recapitalization
Agreement, the Merger Agreement and the other agreements to be entered into
pursuant hereto and thereto and the transactions contemplated hereby and
thereby (the "Transactions"), by a majority of the outstanding shares of
Company Common Stock shall have been obtained.
10
Section 6.03. Internal Revenue Service Ruling. The Company shall have
received rulings from the Internal Revenue Service reasonably acceptable to
the Company and ECI, which rulings shall be in full force and effect as of the
Closing Date, to the effect that:
(i) the transactions contemplated by the Subscription Agreement will be a
tax-free reorganization as described in Section 368(a)(1)(D) of the Code;
and
(ii) the distribution of ECI Common Stock to the holders of Company
Common Stock and the holders of the Class A Common Stock pursuant to the
Merger Agreement will be tax-free for federal income tax purposes to the
Company under Section 355(c) or 361(c) of the Code and to the holders of
Company Common Stock and the holders of the Class A Common Stock under
Section 355(a) of the Code.
Section 6.04. Fairness Opinion. The Board of Directors of the Company shall
have received an opinion from Prudential Securities Inc. dated July 7, 1997
and reaffirmed within five Business Days prior to the date a definitive proxy
statement is mailed to the holders of Company Common Stock under the Exchange
Act to the effect that the Transactions are fair from a financial point of
view to the public stockholders of the Company.
Section 6.05. [Intentionally Omitted]
Section 6.06. Liquidation of Vitelcom. Vitelcom shall be liquidated or
merged into ATN Co. and the business of Vitelcom shall be continued by ATN
Co., which may continue such business as a separate division of ATN Co. but
not as a separate corporate Subsidiary.
Section 6.07. Minimum Borrowing Capacity. Each of the Company and ECI shall
have minimum available borrowing capacity with reputable lenders or available
cash on hand necessary to make and, in ECI's case, to cause ATNCo. to make the
payments expected to be required under Article III hereof.
Section 6.08. No Material Adverse Change. Since the date of this Agreement,
there shall have been no material adverse change in the business to be
conducted by either (a) the Company and its Subsidiaries after the Closing or
(b) ECI and its Subsidiaries after the Closing.
Section 6.09. No Litigation. No action, suit, investigation or other
proceeding shall be pending or threatened before any arbitrator, court or
governmental agency which, in the opinion of at least one-half of the members
of the Board of Directors of either the Company or ECI, presents a substantial
risk of the restriction or prohibition of any material component of the
Transactions, or obtaining material damages or other relief in connection
therewith.
Section 6.10. Agreements in Full Force. Each of the Merger Agreement and the
Recapitalization Agreement shall be in full force and effect and no party
thereto shall be in material breach of any of its obligations thereunder.
Section 6.11. Listing. The Shares issuable in the Merger shall have been
authorized for listing on the American Stock Exchange subject to a final
notice of issuance. The outstanding Common Stock of the Company shall be
listed on the American Stock Exchange, and no proceedings shall be pending or
threatened to delist such stock from such Exchange.
Section 6.12. Performance. Each of the parties shall have performed and
complied in all material respects with all obligations and conditions required
by this Subscription Agreement to be performed or complied with by it at or
prior to the Closing and such party shall furnish to the other an officer's
certificate to evidence such performance and compliance.
Section 6.13. ECI Charter. ECI shall have adopted and filed with the
Secretary of State of Delaware a Restated Certificate of Incorporation
substantially in the form of Exhibit D attached hereto.
Section 6.14. Boards of Directors and Officers. The Board of Directors and
officers of ECI and each Transferred Subsidiary shall consist of those persons
designated in writing by Xxxxxxx to the Company on the
11
Business Day preceding the Closing Date. The Board of Directors and officers
of the Company and GTT shall consist of those persons designated in writing by
Prior to the Company on the business day preceding the Closing Date.
Section 6.15. Non-Competition Agreement. ECI and Xxxxxxx shall have entered
into a Non-Competition Agreement substantially in the form of Exhibit E
attached hereto, and such agreement shall be in full force and effect and no
party thereto shall be in material default of any of its obligations
thereunder.
Section 6.16. Indemnity Agreement. The Company, ECI, Prior and Xxxxxxx shall
have entered into an Indemnity Agreement substantially in the form of Exhibit
F attached hereto, and such agreement shall be in full force and effect and no
party thereto shall be in material default of any of its obligations
thereunder.
Section 6.17. Personal Debts. Each of Prior and Xxxxxxx shall have repaid
all personal debts owing to the Company or any of its Subsidiaries (including
any Transferred Subsidiaries); and Prior shall have caused the repayment of
all amounts owing by Prior's private wireless cable television business to
Vitelcom as of the Closing Date.
Section 6.18. Employee Benefits Agreement. The Company and ECI shall have
entered into an Employee Benefits Agreement substantially in the form of
Exhibit G attached hereto, and such agreement shall be in full force and
effect and no party thereto shall be in material default of any of its
obligations thereunder.
Section 6.19. Tax Sharing and Indemnification Agreement. The Company and ECI
shall have entered into a Tax Sharing and Indemnification Agreement
substantially in the form of Exhibit H attached hereto (the "Tax Sharing
Agreement"), and such agreement shall be in full force and effect and no party
thereto shall be in material default of any of its obligations thereunder.
Section 6.20. Assumed Liabilities. ECI shall have assumed all obligations of
the Company with respect to the Assumed Liabilities outstanding as of the
Closing Date.
Section 6.21. Technical Assistance Agreement. The Company, ATNCo., VITELCO
and VCI shall have entered into a Technical Assistance Agreement substantially
in the form of Exhibit C attached hereto (the "Technical Services Agreement"),
and such agreement shall be in full force and effect and no party thereto
shall be in material default of any of its obligations thereunder.
Section 6.22. Recapitalization Agreement Closing. Each of the conditions to
the closing under the Recapitalization Agreement (the "Recapitalization
Agreement Closing") shall have been satisfied or, with the consent of each of
the parties hereto waived; and all parties thereto shall appear ready, willing
and able to consummate the transactions therein provided to be consummated at
the Recapitalization Agreement Closing.
Section 6.23. Merger Agreement Closing. Each of the conditions to the
closing under the Merger Agreement (the "Merger Agreement Closing") shall have
been satisfied or, with the consent of each of the parties hereto waived; and
all parties thereto shall appear ready, willing and able to consummate the
transactions therein provided to be consummated at the Merger Agreement
Closing.
ARTICLE VII
CLOSING DATE; CLOSING
Section 7.01. Closing Date; Closing. The closing of the acquisition and
issuance of the Shares hereunder (the "Closing") shall take place on the same
Business Day as the Recapitalization Agreement Closing and the Merger
Agreement Closing and shall be held as soon as reasonably practicable after
satisfaction or waiver by the parties hereto of the conditions set forth in
Article VI hereof. The date on which the Closing occurs is referred to herein
as the "Closing Date." The Closing shall take place at the offices of Xxxxxx
Xxxxxx &
12
Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the Closing, (i) ECI
shall issue the Shares to the Company registered in such names and
denominations as the Company shall request, (ii) the transfer, conveyance,
assignment and delivery of the Assets shall be effected by the delivery by the
Company of such deeds, bills of sale, endorsements, assignments, certificates
or other instruments as ECI shall reasonably request, (iii) the assumption of
the Assumed Liabilities shall be effected by the delivery by ECI of such
instruments of assumption as the Company shall reasonably request and (iv) ECI
shall have consummated or caused ATNCo. to have consummated the wire transfer
contemplated by Section 3.01 hereof.
Section 7.02. Further Assurances. Each of the parties agrees that after the
Closing, upon reasonable request of the other party, it will do, execute,
deliver and acknowledge, and will cause to be done, executed, delivered and
acknowledged, all such further acts, deeds, certificates, assignments,
assumptions, transfers, conveyances, powers of attorney and other documents as
may be reasonably required to consummate the transactions contemplated hereby.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Termination. This Subscription Agreement shall terminate upon
the termination of the Recapitalization Agreement or the Merger Agreement. In
addition, this Subscription Agreement may be terminated at any time prior to
the Closing by the Board of Directors of the Company and the Board of
Directors of ECI without the authorization or consent of the Company's or
ECI's stockholders. In the event of any such termination, neither party shall
have any liability of any kind to the other party.
Section 8.02. Entire Agreement. This Subscription Agreement, together with
all other written agreements which may be entered into between the parties in
connection herewith and the transactions contemplated hereby and all other
documents and instruments delivered in connection herewith and therewith and
the transactions contemplated hereby and thereby, set forth the full and
complete understanding of the parties hereto with respect to the transactions
contemplated hereby.
Section 8.03. Governing Law. This Subscription Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
reference to the conflict of laws rules thereof.
Section 8.04. Headings. The headings in this Subscription Agreement are
intended solely for convenience of reference and shall be given no effect in
the interpretation of this Subscription Agreement.
Section 8.05. Counterparts. This Subscription Agreement may be executed in
two counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
Section 8.06. Benefits. This Subscription Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, and no other person will have any right or obligation
hereunder.
Section 8.07. Assignment. Neither this Subscription Agreement nor any right
hereunder may be assigned by the parties hereto without the prior written
consent of the other party. Subject to the foregoing, this Subscription
Agreement shall be binding upon and inure to the benefit of the successors,
heirs, representatives and assigns of each party hereto.
Section 8.08. Amendment and Waiver. This Subscription Agreement may be
amended only by an instrument in writing signed on behalf of each of the
parties hereto. Any term, condition or provision of this Subscription
Agreement may be waived (if in writing) at any time by the party or each of
the parties entitled to the benefits thereof.
13
Section 8.09. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
given if delivered by hand, or when sent by telex or telecopier (with receipt
confirmed) or by registered mail, return receipt requested, addressed as
follows (or to such other address as a party may designate by notice to the
other):
(a) If to the Company:
Atlantic Tele-Network, Inc.
Estate Havensight
X.X. Xxx 00000
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000
(000) 000-0000 or 000-0000
Attention: Xxxxxxxxx X. Prior
Telecopy: (000) 000-0000
with copies to:
Xxxxx X. Xxxxx, P.C.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopy: (000) 000-0000
(b) If to ECI:
Atlantic Tele-Network, Inc.
Chase Financial Center
X.X. Xxx 0000
Xx. Xxxxx, X.X. Xxxxxx Xxxxxxx 00000-0000
(000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopy: (000) 000-0000
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IN WITNESS WHEREOF, each of the Company and ECI has caused this Subscription
Agreement to be executed on the date first written above.
Atlantic Tele-Network, Inc.
By: /s/ Xxxxxxxxx X. Prior
__________________________________
Name: Xxxxxxxxx X. Prior
Title:Co-Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxx
__________________________________
Name: Xxxxxxx X. Xxxxxxx
Title:Co-Chief Executive Officer
Emerging Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
__________________________________
Name: Xxxxxxx X. Xxxxxxx
Title:Chief Executive Officer
15
SCHEDULE 1.01A
XXXXXXX DESIGNATED EMPLOYEES AND CONSULTANTS
Xxxxx X. Xxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxx
Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxx
Xxxxx Cullwood
Xxxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxx Xxxxxxxx X. Xxxxxxx
Xxxx Xxxxxx
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SCHEDULE 1.01B
COUNSEL
Xxxxxx Xxxxxx & Xxxxxxx
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxxxxx, Xxxxxx & Xxxxxxxx
Xxxxxxxx, Xxxxxx & Finger
Xxxxx & Wood LLP
Xxxxxx Xxxx & Xxxxxx
Xxxxx, Xxxx & Xxxxxxxx
17
SCHEDULE 1.01C
UNDESIGNATED EMPLOYEES
Xxxxxx Xxxxxxx
18
SCHEDULE 2.02(I)
CERTAIN ASSETS
--Any loans or advances to or other receivables from Xxxxxxx X. Xxxxxxx or any
of the persons listed on Schedule 1.01A hereof
--AS400 Computer currently located at the premises of Vitelco
--Key-man life insurance policies on the life of Xxxxxxx X. Xxxxxxx, including
pre-paid premiums relating thereto
--Rent deposits relating to the St. Croix Office or leases relating to
equipment located at the St. Croix Office
--Any other prepaid expenses, deposits or similar assets of the Company
relating to assets to be transferred to ECI under this Agreement, relating to
assets, liabilities, or operations of any of the Transferred Subsidiaries or
relating to Xxxxxxx X. Xxxxxxx of any of the person listed on Schedule 1.01A
hereof.
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SCHEDULE 2.05(D)
CERTAIN ASSUMED LIABILITIES
--Banco Popular Indebtedness
--Indebtedness relating to the AS400 Computer
--Any other indebtedness of the Company that is secured by assets to be
transferred to ECI or assets of a Transferred Subsidiary
20
SCHEDULE 5.02
EMPLOYEES TO BE TERMINATED
Xxxxxx Xxxxxxx
21
