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THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) UNLESS SUCH
SHARES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE. IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
ACT.
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AMENDED AND RESTATED
REGISTRATION RIGHTS AND STOCKHOLDERS' AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AND STOCKHOLDERS'
AGREEMENT (this "Agreement") is made as of this 30th day of March, 2001, by
and among America Online Latin America, Inc., a Delaware corporation having
its principal place of business at 0000 X. Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), Banco Itau, S.A., a Brazilian
Sociedade Anonima having its principal registered office at 176 Rua Boa
Vista, Sao Paulo ("Itau"), Banco Xxxxxx, X.X., a Brazilian Sociedade
Anonima having its principal registered office at Xxx xx Xxxxxxxxx 00, 0xx
Xxxxx, Xxx xx Xxxxxxx, Banco Itau, S.A. - Cayman Branch, a Brazilian
Sociedade Anonima having its principal registered office at Xxxxxxxxx
Xxxxx, 0xx Xxxxx, 20 Genesis Close, P.O. 501, Grand Cayman, Cayman Islands,
B.W.I. ("Itau - Cayman"), and Itau Bank Limited, a Cayman limited liability
company having its principal registered office at Xxxxxxxxx Xxxxx, 0xx
Xxxxx, 20 Genesis Close - P.O. Box 10141, Grand Cayman, Cayman Islands,
B.W.I. (with Itau, Banco Xxxxxx, X.X., and Itau - Cayman, each a
"Stockholder" and collectively, the "Stockholders") and, for the limited
purpose of joining in the covenants contained in Sections 10.1(g), 10.2,
10.3, 10.4 and 10.5 hereof, America Online, Inc., a Delaware corporation
("AOL"), Aspen Investments LLC, a Delaware limited liability company
("Aspen"), and Atlantis Investments LLC, a Delaware limited liability
company ("Atlantis," and together with Aspen, "ODC").
WHEREAS, the Company has issued to the Stockholders 31,700,000
shares (the "Initial Shares") of its Common Stock (as defined herein)
pursuant to a Regulation S Stock Subscription Agreement (the "Stock
Subscription Agreement") dated June 12, 2000 between the Company and Itau
and Banco Xxxxxx, X.X. (collectively, the "Former Stockholders"); and
WHEREAS, in connection with the issuance of the Initial Shares (as
defined below), the Company and the Former Stockholders entered into a
Registration Rights and Stockholders' Agreement dated August 11, 2000 (the
"Original Agreement"), which agreement was joined for a limited purpose by
AOL and Riverview Media Corp., a British Virgin Islands corporation
("Riverview"); and
WHEREAS, the Former Stockholders assigned their interests in the
Initial Shares, the Stock Subscription Agreement and the Original Agreement
to Banco Itau, S.A. - Cayman Branch and Itau Bank Limited pursuant to a
letter agreement dated August 8, 2000; and
WHEREAS, pursuant to the AOL-LA Share Transfer and Assignment
Agreement, dated as of December 28, 2000, by and between Riverview, Aspen
and Atlantis, Riverview assigned all if its right, title and interest in
and to all securities of the Company owned by it to Aspen and Atlantis,
together with all of its rights, duties and obligations under each of the
agreements related thereto, including the Original Agreement; and
WHEREAS, the Company has agreed to issue to Itau - Cayman U.S.
$19,864,875 worth of shares (the "New Shares") of its Common Stock pursuant
to a Stock Purchase Agreement (the "Stock Purchase Agreement") dated March
30, 2001 between the Company, Itau - Cayman, AOL and ODC, and in connection
therewith the parties wish to make the New Shares subject to certain
provisions of the Original Agreement and to effect certain additional
changes, and in connection therewith, the Company and the Stockholders
desire to amend and restate in its entirety the Original Agreement as
described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties hereto hereby agree
to amend and restate the Original Agreement in its entirety as follows:
Section 1. Definitions
Section 1.1. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning given in the Exchange Act.
"Agreement" shall have the meaning given in the Preamble.
"AOL" means America Online, Inc., a Delaware corporation, and it
successors.
"AOL-TW" means AOL-Time Warner, Inc., a Delaware corporation, and
it successors.
"Available Shares" means, (i) at any time prior to the
consummation of the IPO, all of the shares of Common Stock owned by the
Stockholders and (ii) at any time after the consummation of the IPO, all of
the Unrestricted Shares of Common Stock.
"Board" means the Board of Directors of the Company as constituted
from time to time.
"Business Day" means any day, other than a Saturday or Sunday, on
which federally chartered banks in the United States and Brazil are open
for business.
"Change in Control" shall mean the first to occur of the
following: (a) the date on which AOL and ODC do not own, collectively,
shares of capital stock of the Company representing more than fifty percent
(50%) of the voting power entitled to be cast at elections for directors
("Voting Power") of the Company, (b) the date on which AOL and ODC do not,
collectively, have the right to elect either (i) at least a majority of the
Board of Directors of the Company or (ii) at least a majority of the
members of the Special Committee of the Board of Directors of the Company
(as such term is defined in the Restated Certificate of Incorporation), so
long as such Special Committee is constituted and empowered as set forth in
the Restated Certificate of Incorporation (the "Special Committee"), (c)
any Person or Persons other than AOL or ODC acquires any general power to
prevent the Company's Board of Directors or shareholders from taking action
on a substantial range of corporate actions without the approval of such
Person or Persons other than pursuant to covenants and agreements of the
Company contained in any loan documents, indentures or similar agreements
entered into in connection with any bona fide indebtedness for money
borrowed by the Company after the date hereof, or (d) the date on which the
Company sells, leases, exchanges or otherwise transfers (in one transaction
or a series of related transactions) all or substantially all of the assets
of the Company to any Person other than one in which (x) AOL and ODC own,
collectively, shares of capital stock or other equity securities of the
acquiring Person representing more than fifty percent (50%) of the Voting
Power or collectively have the right to elect at least a majority of the
board of directors or managers, as applicable, of the acquiring Person, (y)
no Person or Persons other than AOL or ODC has any general power described
in clause (c) above with respect to such acquiring Person and (z) the
Holders have not less than the same proportionate interest in such
acquiring Person vis-a-vis AOL and ODC as they had in the Company
immediately prior to consummation of such sale, lease, assignment or
transfer.
Notwithstanding the foregoing, a Change of Control shall not be
deemed to have occurred pursuant to clauses (a) or (b) so long as AOL,
together with any Subsidiary, not less than seventy-five percent (75%) of
the outstanding equity securities and Voting Power of which are owned,
directly or indirectly, by AOL-TW, together with another third party, (i)
retains not less than fifty percent (50%) of the Voting Power of the
Company, with AOL and such Subsidiaries retaining greater Voting Power in
the Company than such third party and (ii) has the right to elect either
(i) at least a majority of the Board of Directors of the Company or (ii) at
least a majority of the members of the Special Committee.
"Closing Price" means, as of any date, the closing price of the
Common Stock on the trading date immediately preceding the date in question
as reported in the Eastern Edition of The Wall Street Journal or, if The
Wall Street Journal does not then report the sales price of the Common
Stock, such other source as reasonably shall be selected by the board of
the directors of the Company.
"Commission" means the Securities and Exchange Commission, or any
successor agency performing the functions currently performed by the
Securities and Exchange Commission.
"Common Stock" means the Class A Common Stock, par value U.S $.01
per share, of the Company.
"Company" shall have the meaning given in the Preamble.
"Competitor" means any Person which competes (or any of whose
Affiliates competes) in a material way with the Company or any of its
operating companies; for purposes hereof, "Competitor" shall be deemed to
include, without limitation, the following companies and their respective
Affiliates: Xxxxx.xxx, StarMedia, Yahoo, XXX.xxx, TerraLycos, Universo
Online, Prodigy and Ciudad Internet. For purposes of this definition of
"Competitor" only, Affiliate of any Person shall mean any other Person
that, directly or indirectly, controls, is under common control with or is
controlled by that Person. For purposes of this definition, "control"
(including, with its correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Demand Filing Date" shall have the meaning given in Section 3.2.
"Demand Holder" shall have the meaning given in Section 3.1.
"Demand Registration" shall have the meaning given in Section 3.1.
"Demand Request" shall have the meaning given in Section 3.1.
"Effective Date" means August 7, 2000.
"Encumbrance" shall mean any mortgage, pledge, security interest,
lien, restriction on use or transfer, other than those imposed by law,
voting agreement, adverse claim or encumbrance or charge of any kind
(including any agreement to give any of the foregoing), any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of, or any agreement to give, any financing statement under
the Uniform Commercial Code or similar law of any jurisdiction.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder, as amended.
"Governmental Authority" shall mean any domestic or foreign
national, state or municipal or other local government or multi-national
body, any subdivision, agency, commission or authority thereof, or any
quasi-governmental or private body exercising any regulatory authority
thereunder and any corporation, partnership or other entity directly or
indirectly owned by or subject to the control of any of the foregoing.
"Holder" means, as of any date, the Stockholders and each other
person to whom a Stockholder shall have assigned any rights hereunder in
accordance with the provisions of Section 12.6 and who owns Registrable
Securities as of such date.
"Indemnified Party" shall have the meaning given in Section 9.3.
"Indemnifying Party" shall have the meaning given in Section 9.3.
"Initial Shares" shall have the meaning given in the Preamble.
"IPO" means the initial public offering of the Common Stock
pursuant to an offering registered under the Securities Act.
"Itau" means Banco Itau, S.A., a Brazilian Sociedade Anonima.
"Itau - Cayman" Banco Itau, S.A. - Cayman Branch, a Brazilian
Sociedade Anonima.
"Itausa" means Itausa-Investimentos Itau, S.A., a Brazilian
Sociedade Anonima.
"Launch Date" shall have the meaning given in the Marketing
Agreement.
"Lock-Up Agreement" means the agreement between each Holder and
the managing underwriter or underwriters for an Underwritten Offering,
pursuant to which each Holder agrees that it will not, during the Lock-Up
Period (as defined below) offer to sell, contract to sell, or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to any
shares of Common Stock, any options or warrants to purchase any shares of
Common Stock, or any securities convertible into or exchangeable for any
shares of Common Stock now owned or hereafter acquired directly by such
Holder or with respect to which such Holder has or hereafter acquires the
power of disposition, provided such restriction shall not apply to (i)
transfers to Permitted Stockholder Affiliates or (ii) Repo transactions
effected in accordance with the provisions of Section 10.1(f).
"Lock-Up Period" means the respective period agreed to in a
Lock-Up Agreement during which time each Holder agrees that it will not
offer to sell, contract to sell, or otherwise sell, dispose of, loan,
pledge or grant any rights with respect to any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any
securities convertible into or exchangeable for any shares of Common Stock
now owned or hereafter acquired directly by such Holder or with respect to
which such Holder has or hereafter acquires the power of disposition,
provided such restriction shall not apply to (i) transfers to Permitted
Stockholder Affiliates or (ii) Repo transactions effected in accordance
with the provisions of Section 10.1(f).
"Losses" shall have the meaning given in Section 9.1.
"Marketing Agreement" means the Strategic Interactive Services and
Marketing Agreement, dated as of June 12, 2000, by and between the Company,
America Online Brasil Ltda., a Brazilian limited liability quota company
("AOLB"), and Itau.
"New Shares" shall have the meaning given in the Preamble.
"ODC" means, collectively, Aspen, Atlantis and each of their
successors.
"Original Agreement" shall have the meaning given in the Preamble.
"Permitted Stockholder Affiliate" means any Person, not less than
seventy-five percent (75%) of the outstanding equity securities and Voting
Power of which are owned, directly or indirectly, by any Stockholder or
Itausa.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust, university, or unincorporated
organization, or a government or any agency or political subdivision
thereof.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means any prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective Registration Statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by any Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.
"Public Sale" shall mean a sale of securities pursuant to an
offering registered under the Securities Act or in a transaction pursuant
to Rule 144 or in a Nasdaq Transaction as defined in Section 10.1(e)
herein.
"Register," "Registered" and "Registration," whether or not
capitalized, mean and refer to a registration effected by preparing and
filing a Registration Statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such Registration
Statement.
"Registrable Securities" means any Unrestricted Shares owned by a
Holder; provided, however, that Unrestricted Shares that are Registrable
Securities shall cease to be Registrable Securities (x) upon the
consummation of any sale of such shares pursuant to (i) an effective
Registration Statement under the Securities Act or (ii) Regulation S or
Rule 144, (y) at such time, if any, as such shares of Common Stock (which
are issued or which may become issued upon conversion or exchange of any
other security) become eligible for sale under Rule 144(k) under the
Securities Act and (z) with respect to any Holder, on the first date when
all of the Registrable Securities then held by such Holder are eligible for
sale during a single three month period under Rule 144.
"Registration Expenses" shall have the meaning given in Section 8.
"Registration Statement" means any registration statement filed
with the Commission by the Company pursuant to the Securities Act and any
additional registration statement, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre-and post-effective amendments, all exhibits thereto, and all
material incorporated by reference in such registration statement to be
filed pursuant to the terms of this Agreement.
"Regulation S" means Regulation S promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Regulation.
"Repo" shall have the meaning given in Section 10.1(f).
"Required Efforts" means (i) best efforts, with respect to any
registration of Registrable Securities having an aggregate market value of
at least U.S. $100,000,000 (or, if the registration relates to all of the
then outstanding Registrable Securities, U.S. $50,000,000), based on the
closing market price for the Common Stock on the trading day prior to the
Company's receipt of the request at issue and before calculation of
underwriting discounts and commissions, and (ii) all commercially
reasonable efforts, with respect to any other registration of Registrable
Securities.
"Restated Certificate of Incorporation" means the Company's
Amended and Restated Certificate of Incorporation as the same may be
amended from time to time.
"Restricted Shares" shall have the meaning given in Section
10.1(b).
"Rule 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Sale" has the meaning given in Section 10.1(e).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder, as
amended.
"Sell" has the meaning given in Section 10.1(e).
"Shares" means, collectively, the Initial Shares and the New
Shares, together with securities issued with respect to, or in exchange for
or in replacement of, such shares by way of stock dividend, stock
distribution or stock split, or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization or otherwise.
"Stockholder" and "Stockholders" shall have the meanings given in
the Preamble.
"Stock Purchase Agreement" shall have the meaning given in the
Preamble.
"Stock Subscription Agreement" shall have the meaning given in the
Preamble.
"Subsidiary" has the meaning given in the Restated Certificate.
"Underwritten Registration or Underwritten Offering" means a
registration in connection with which securities of the Company are sold to
an underwriter for reoffering to the public pursuant to an effective
Registration Statement.
"Unrestricted Shares" shall have the meaning given in Section
10.1(c).
Section 2. "Piggy-Back" Registrations
Section 2.1. "Piggy-Back" Rights. If at any time after the IPO the
Company shall determine to register for its own account or the account of
others under the Securities Act (including (i) in connection with a public
offering by the Company other than the IPO or (ii) a demand for
registration made by any stockholder of the Company including any of the
parties hereto) any of its equity securities (other than on Form S-4 or
Form S-8 or their then equivalents relating to shares of Common Stock to be
issued solely in connection with any acquisition of an entity or business
or shares of Common Stock issuable in connection with stock option or other
employee benefit plans) it shall send to each Holder written notice of such
determination and if, within 30 days after the mailing of such notice, such
Holder shall so request in writing, the Company shall use its Required
Efforts to include in such Registration Statement all or any part of the
Registrable Securities such Holder requests to be registered. The Company
shall have the right to postpone or withdraw any registration effected
pursuant to this Section 2.1 without any obligation to any Holder.
Section 2.2. Underwritten Offerings. If the registration of which
the Company gives notice is for an Underwritten Offering, the Company shall
so advise the Holders as a part of the written notice given pursuant to
Section 2.1. In such event, the right of any Holder to registration
pursuant to Section 2.1 shall be conditioned upon such Holder's
participation in such Underwritten Offering and the inclusion of such
Holder's Registrable Securities in the Underwritten Offering to the extent
provided herein. All Holders proposing to distribute their securities
through such Underwritten Offering shall (together with the Company and the
other holders of securities of the Company with registration rights to
participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the
Company or the stockholders effecting such registration.
Notwithstanding any other provision of this Section 2, if the
managing underwriter shall preclude any shares of Common Stock from being
included in the Registration Statement as to which a Holder has elected to
exercise the piggy-back rights granted pursuant to this Section 2 or
otherwise impose a limitation on the number of shares of such Common Stock
which may be included in the Registration Statement as to which a Holder
has elected to exercise the piggy-back rights granted pursuant to this
Section 2 because, in such underwriter's reasonable judgment, such
preclusion or limitation is necessary to effect an orderly public
distribution, the number of shares to be included in the Underwritten
Offering or registration, if any, shall be allocated as set forth in
Section 2.3. If any person does not agree to the terms of any such
customary underwriting agreement, such person shall be excluded therefrom
by written notice from the Company or the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such Underwritten
Offering shall be withdrawn from such registration. If shares are so
withdrawn from the registration and if the number of shares of Registrable
Securities to be included in such registration was previously reduced as a
result of marketing factors, the Company shall then offer to all persons
who have retained the right to include securities in the registration the
right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among the persons requesting additional inclusion in accordance
with Section 2.3.
Section 2.3. Cut-backs in "Piggy-Back" Registrations. For purposes
of this Section 2, in any circumstance in which all of the Registrable
Securities and other shares of Common Stock or other securities of the
Company (including shares of Common Stock issued or issuable upon
conversion of any outstanding securities of the Company) with registration
rights (the "Other Shares") requested to be included in a registration on
behalf of the Holders or other selling stockholders cannot be so included
as a result of limitations of the aggregate number of shares of Registrable
Securities and Other Shares that may be so included, the number of shares
of Registrable Securities and Other Shares that may be so included, if any,
shall be allocated first to the Company for securities being sold for its
own account and second to all holders of the Company's common stock,
including any Holders hereunder, who timely exercised their piggy-back
registration rights pro rata based upon their total ownership of the
aggregate number of shares requested to be included in such registration by
the holders of piggy-back registration rights, or if such registration is a
demand registration initiated by the Company on behalf of any other holders
of demand registration rights, (i) first to such holders pro rata based
upon their total ownership of the aggregate number of shares requested to
be included in such registration by the holders of demand registration
rights, (ii) second to all holders of the Company's common stock, including
any Holders hereunder, who timely exercised their piggy-back registration
rights pro rata based upon their total ownership of the aggregate number of
shares requested to be included in such registration by the holders of
piggy-back registration rights, and (iii) thereafter to the Company for
securities being sold for its own account. The Company shall not limit the
number of Registrable Securities to be included in a registration pursuant
to this Agreement in order to include shares held by stockholders with no
registration rights.
Section 3. "Demand" Registrations
Section 3.1. "Demand" Rights. At any time following the first
anniversary of the Effective Date, each Holder (a "Demand Holder") may,
from time to time, make a written request (each a "Demand Request") for
registration under the Securities Act (a "Demand Registration") of all or
part of the Registrable Securities held by such Holder; provided, however,
that the Registrable Securities requested to be registered shall, on the
date that the Demand Request is delivered, have an aggregate market value
of at least U.S. $50,000,000 before calculation of underwriting discounts
and commissions (based on the closing market price for the Common Stock on
the trading day prior to the Company's receipt of the Demand Request). Each
Demand Request shall specify the number of Registrable Shares proposed to
be sold by such Demand Stockholder.
Section 3.2. Within 15 days after receipt of each Demand Request,
the Company shall give written notice of such Demand Request to all
non-requesting Holders and shall use its Required Efforts to cause a
Registration Statement to be filed with the Commission on a date (the
"Demand Filing Date") not later than 120 days after the Company's receipt
of a Demand Request, and shall use its Required Efforts to cause the same
to be declared effective by the Commission as promptly as practicable after
such filing. Both the initial Demand Request and any request to join in
such Demand Request shall be considered a single Demand Request. The
Registration Statement shall cover the Registrable Securities specified in
the Demand Request, together with all or such portion of the Registrable
Securities of any Holder joining in such request as are specified in a
written request received by the Company within 20 days after the written
notice of the Demand Request from the Company is mailed or delivered to the
non-requesting Holders. Subject to Sections 3.6 and 3.7, the Registration
Statement filed pursuant to the request of the Demand Holders may also
include other securities of the Company.
Section 3.3. Limitations on Demand Rights. Notwithstanding any
other provision set forth in this Section 3, no Holder shall be entitled to
deliver a Demand Request within 90 days after the effectiveness of any
Registration Statement filed (i) by the Company pursuant to an Underwritten
Offering by the Company or (ii) on behalf of any Demand Holder or any other
holder of demand registration rights with respect to the Common Stock.
The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to Section 3.2:
(a) if the Company has initiated three (3) such registrations
pursuant to Section 3.2, provided that only the following registrations
shall be counted: (1) registrations which have been declared or ordered
effective and pursuant to which Registrable Securities have been sold and
(2) registrations which have been withdrawn by the Holders (other than
pursuant to the last sentence of Section 3.4) as to which the Holders have
not elected to bear the Registration Expenses;
(b) if the Demand Holders request that the offering be
underwritten in any manner other than a firm commitment basis by
underwriters selected by the Company (subject to the consent of a majority
of the Demand Holders, which consent will not be unreasonably withheld,
conditioned or delayed, or, if the Company has not selected an underwriter
within 30 days after its receipt of a Demand Request, by the underwriters
selected by holders of a majority of the Registrable Securities to be
included in such Registration Statement) or if the Demand Holders request
that the offering not be underwritten; or
(c) if the Company and the Demand Holders are unable to obtain the
commitment of the underwriter described in clause (b) above to firmly
underwrite the offer.
Section 3.4. Deferral of Demand Registrations. The Company may
defer the filing (but not the preparation) of a Registration Statement
required to be filed by this Section 3 until a date not later than 120 days
after the Demand Filing Date if:
(a) at the time the Company receives the Demand Request, there is
(i) material non-public information regarding the Company which the Board
reasonably determines not to be in the Company's interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including but not limited to the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board reasonably determines
not to be in the Company's best interest to disclose; or
(b) prior to receiving the Demand Request, the Board had
determined to effect an Underwritten Offering and the Company had taken
substantial steps and is proceeding with reasonable diligence to effect
such Underwritten Offering.
A deferral of the filing of a Registration Statement pursuant to
this Section 3.4 shall be lifted, and the requested Registration Statement
shall be filed forthwith, if, (x) in the case of a deferral pursuant to
clause (a)(i), the material non-public information is made public by the
Company or is no longer material, (y) in the case of a deferral pursuant to
clause (a)(ii), the significant business opportunity is disclosed by the
Company or is terminated, or (z) in the case of a deferral pursuant to
clause (b), the proposed registration for the Company's account is
abandoned. In order to defer the filing of a Registration Statement
pursuant to this Section 3.4, the Company shall promptly (but in any event
within 10 days), upon determining to seek such deferral, deliver to each
Demand Holder a certificate signed by an executive officer of the Company
stating that the Company is deferring such filing pursuant to this Section
3.4 and containing an approximation of the anticipated delay. Within 20
days after receiving such certificate, the holders of a majority of the
Registrable Securities held by the Demand Holder and each other Holder and
for which registration was previously requested may withdraw such Demand
Request by giving written notice to the Company.
Section 3.5. Right to Participate. The rights of any Holder to
participate in an underwritten registration pursuant to this Section 3
shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein.
Section 3.6. Participation in Demand Registrations. If the Company
shall request inclusion in any registration pursuant to Section 3.2 of
securities being sold for its own account, or if persons holding Other
Shares shall request inclusion in any registration pursuant to Section 3.2,
the Demand Holders shall, on behalf of all Holders, offer to include such
securities in the registration and may condition such offer on such
persons' acceptance of the further applicable provisions of this Agreement
(including Section 6). The Company shall (together with all Holders and
other persons proposing to distribute their securities through such
registration) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters. Notwithstanding any
other provision of this Section 3, if the managing underwriter shall
preclude any shares of Common Stock from being included in the Registration
Statement as to which a Holder has elected to exercise the piggy-back
rights granted pursuant to Section 3.2 or otherwise impose a limitation on
the number of shares of such Common Stock which may be included in a
Registration Statement being filed pursuant to Section 3.2 because in its
judgment, such limitation is necessary to effect an orderly public
distribution, the number of shares to be included in the underwriting or
registration, if any, shall be allocated as set forth in Section 3.7. If a
person who has requested inclusion in such registration as provided above
does not agree to the terms of any such underwriting, such person shall be
excluded therefrom by written notice from the Company, the underwriter or
the Demand Holders holding a majority of the securities being requested in
such offering (not including such non-agreeing holders). Any Registrable
Securities or other securities excluded shall also be withdrawn from such
registration. If shares are so withdrawn from the registration and the
number of shares to be included in such registration was previously reduced
as a result of marketing factors pursuant to this Section 3.6, then the
Company shall offer to all persons who have retained rights to include
securities in the registration the right to include additional securities
in the registration in an aggregate amount equal to the number of shares so
withdrawn, with such shares to be allocated among such persons requesting
additional inclusion in accordance with Section 3.7.
Section 3.7. Cutbacks in Demand Registrations. For purposes of
Sections 3.2 and 3.6, in any circumstance in which all of the Registrable
Securities and Other Shares requested to be included in a registration on
behalf of the Holders undertaken pursuant to said Section 3.2 cannot be so
included as a result of limitations of the aggregate number of shares of
Registrable Securities and Other Shares, if any, that may be so included
pursuant to Section 3.6, the number of shares of Registrable Securities and
Other Shares that may be so included shall be allocated among the Holders
and other selling stockholders requesting inclusion of shares (i) first, to
each Holder, pro rata on the basis of the number of shares of Registrable
Securities held by such Holders that such Holders had timely requested to
be included in the registration, (ii) thereafter, to the selling holders of
the Other Shares, pro rata on the basis of the number of Other Shares that
such other selling stockholders had requested to be included in the
registration, and (iii) thereafter to the Company. The Company shall not
limit the number of Registrable Securities to be included in a registration
pursuant to Section 3.2 in order to include shares held by any other
stockholders or by the Company.
Section 4. S-3 Registrations.
At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to
secondary offerings), Holders of Registrable Securities may request the
Company, in writing, to effect the registration on Form S-3 (or such
successor form), of Registrable Shares having an aggregate market value of
at least U.S. $25,000,000 (based on the closing market price for the Common
Stock on the trading day prior to the Company's receipt of the request).
The Company shall not be obligated to effect any registration under this
Section 4 (i) if in a given six month period, the Company has effected one
(1) such registration in such period, or (ii) if the Company has initiated
four (4) such registrations pursuant to this Section 4, provided that only
the following registrations shall be counted: (1) registrations which have
been declared or ordered effective and pursuant to which Registrable
Securities have been sold and (2) registrations which have been withdrawn
by the Holders (other than pursuant to the last sentence of Section 3.4) as
to which the Holders have not elected to bear the Registration Expenses.
Upon receipt of any such request, the Company shall promptly give written
notice of such proposed registration to all Holders from whom notice has
not been received. Such Holders shall have the right, by giving written
notice to the Company within 20 days after the Company provides its notice,
to elect to have included in such registration such of their Registrable
Securities as such Holders may request in such notice of election. The
provisions of Sections 3.5 through 3.7 shall apply to such registration.
Thereupon the Company shall use its Required Efforts to effect the
registration on Form S-3, or such successor form, of all Registrable
Securities that the Company has been requested to register in connection
with such registration.
Section 5. Registration Procedures
Whenever any Holder has requested that any Registrable Securities
be registered pursuant to this Agreement, the Company shall use its
Required Efforts to effect the registration of such Registrable Securities
and in furtherance thereof the Company shall:
(a) prepare and file with the Commission on any appropriate form
under the Securities Act with respect to such Registrable Securities and
use its Required Efforts to cause such Registration Statement to become
effective;
(b) (i) prepare and file with the Commission such amendments,
including post-effective amendments and supplements to the Registration
Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for a
period of not less than 180 days (or (1) such lesser period as is necessary
for the underwriters in an Underwritten Offering to sell unsold allotments
or (2) such longer period as may be commercially reasonable if such
Registration Statement is for a shelf registration conducted pursuant to
the provisions of Rule 415 (or any similar provisions then in force)
promulgated under the Securities Act), but in any case not including in
such 180 days any period for which sales have been discontinued pursuant to
Section 7(c); (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and, as so supplemented
or amended, to be filed pursuant to Rule 424 (or any similar provisions
then in force) promulgated under the Securities Act; (iii) respond as
promptly as possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and, as
promptly as possible, provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition
set forth in the Registration Statement as so amended or in such Prospectus
as so supplemented;
(c) (i) furnish to the Holders of Registrable Securities to be
sold, their counsel and any managing underwriters, copies of all such
documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such Holders,
their counsel and such managing underwriters, and (ii) cause its officers
and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion
of respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act;
(d) notify the Holders of Registrable Securities to be sold, their
counsel and any managing underwriters as promptly as possible and confirm
such notice in writing no later than one Business Day following the day:
(i) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed
to be filed;
(ii) when the Commission notifies the Company whether
there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration
Statement;
(iii) when the Registration Statement or any
post-effective amendment thereto has become effective;
(iv) of any request by the Commission or any other
Federal or state governmental authority for amendments or
supplements to the Registration Statement or Prospectus or for
additional information;
(v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose;
(vi) when any of the representations and warranties of
the Company contained in any agreement (including any underwriting
agreement) contemplated hereby shall cease to be true and correct
in all material respects;
(vii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale
in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and
(viii) of the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or
the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
(e) use all Required Efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment;
(f) if reasonably requested by any managing underwriter, if any
Registrable Securities are to be sold in connection with an Underwritten
Offering, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii)
thereafter make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this clause (f) that
would, in the opinion of counsel for the Company, violate applicable law;
(g) furnish to each Holder of Registrable Securities to be sold,
their counsel and any managing underwriters, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the
extent requested by such person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with
the Commission;
(h) promptly deliver to each Holder of Registrable Securities to
be sold, their counsel, and any underwriters, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
Prospectus) and each amendment or supplement thereto as such persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
stockholders and any underwriters in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto;
(i) prior to any public offering of Registrable Securities, use
its Required Efforts to register or qualify or cooperate with the selling
Holders, any underwriters and their counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder or underwriter requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective for at
least 180 days (or such shorter period as the applicable Registration
Statement shall be effective) and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject;
(j) cooperate with the selling Holders and any managing
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates shall be free, to the extent
permitted by applicable law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such
names as any such managing underwriters or stockholders may request at
least two Business Days prior to any sale of Registrable Securities;
(k) upon the occurrence of any event contemplated by Section
5(d)(viii) of this Agreement, as promptly as possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
all other required documents so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) use its Required Efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the securities
exchange, quotation system, market or over-the-counter bulletin board on
which similar securities issued by the Company are then listed;
(m) enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith
(including those reasonably requested by any managing underwriters in order
to expedite or facilitate the disposition of such Registrable Securities,
and those reasonably requested by the selling Holders whether or not an
underwriting agreement is entered into):
(i) make such representations and warranties to such
selling Holders and such underwriters as are customarily made by
issuers to underwriters in underwritten public offerings, and
confirm the same if and when requested;
(ii) in the case of an Underwritten Offering, obtain and
deliver copies thereof to the managing underwriters, if any, of
opinions of counsel to the Company and updates thereof addressed
to each such underwriter, in form, scope and substance reasonably
satisfactory to any such managing underwriters and counsel to the
selling stockholders covering the matters customarily covered in
opinions requested in Underwritten Offerings and such other
matters as may be reasonably requested by such counsel and
underwriters;
(iii) immediately prior to the effectiveness of the
Registration Statement, and, in the case of an Underwritten
Offering, at the time of delivery of any Registrable Securities
sold pursuant thereto, obtain and deliver copies to the selling
Holders and the managing underwriters, if any, of "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be,
included in the Registration Statement), addressed to each selling
Holder and each of the underwriters, if any, in form and substance
as are customary in connection with Underwritten Offerings;
(iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no
less favorable to the selling Holders and the underwriters than
those set forth in Section 9 of this Agreement (or such other
provisions and procedures acceptable to the managing underwriters
and such selling Holders); and
(v) deliver such documents and certificates as may be
reasonably requested by the selling Holders, their counsel and any
managing underwriters to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained
in the underwriting agreement or other agreement entered into by
the Company;
(n) make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holder or underwriters, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the officers, directors, agents and employees
of the Company and its subsidiaries to supply all information in each case
reasonably requested by any such Holder, representative, underwriter,
attorney or accountant in connection with the Registration Statement;
provided, however, that any information that is determined in good faith by
the Company to be of a confidential nature at the time of delivery of such
information (A) shall be kept confidential by such persons, unless (i)
disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities; (ii)
disclosure of such information, in the opinion of counsel to such person,
is required by law; (iii) such information becomes generally available to
the public other than as a result of a disclosure or failure to safeguard
by such person; or (iv) such information becomes available to such person
from a source other than the Company and such source is not known by such
person to be bound by a confidentiality agreement with the Company and (B)
shall not be required to be disclosed to any representative or agent of a
Holder with respect to which the Company has a good faith basis to request,
and does so request, that disclosure of such confidential information not
be made to such representative or agent;
(o) comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment
or best efforts Underwritten Offering and (ii) if not sold to underwriters
in such an offering, commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of Rule 158;
(p) require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the
Registrable Securities of any such selling Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request. If the Registration Statement refers to any such Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (if such reference to such Holder by name
or otherwise is not required by the Securities Act or any similar Federal
statute then in force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required; and
(q) not file a Registration Statement pursuant to Section 3.2
hereof if Holders of a majority of the Registrable Securities covered
thereby or their counsel or any managing underwriter of the Registrable
Securities covered thereby shall reasonably object in writing within 3
Business Days of their receipt of such Registration Statement for review
pursuant to Section 5(c)(i) hereof.
Section 6. Lock-Up Agreement; Stockholder Right to Review Information
If requested by the Company and an underwriter of Common Stock (or
other securities) of the Company, each Holder shall enter into a Lock-Up
Agreement pursuant to which they shall agree not to sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the
Company held by such Holder (other than those included in the registration)
during the one hundred and eighty (180) day period following the effective
date of a registration statement of the Company filed under the Securities
Act relating to an Underwritten Offering by the Company of its securities,
provided that all stockholders of the Company holding in excess of fifteen
percent (15%) of the shares of Common Stock then outstanding (calculated on
an as converted fully-diluted basis) enter into similar Lock-Up Agreements
of no lesser duration than that requested of such Holder and provided that
such other stockholders agree not to sell any of their Company securities
during the term of the Lock-Up Agreement pursuant to consent of the
underwriters unless such Holder receives such consent of the underwriters
to sell a proportional amount of the Common Stock held by it.
Notwithstanding the foregoing, during such 180-day period, (A) each
Stockholder may (i) transfer Common Stock (or other securities) of the
Company to its Permitted Stockholder Affiliates, provided that each such
transferee executes an identical Lock-Up Agreement and (ii) effect Repo
transactions in accordance with the provisions of Section 10.1(f) hereof
and (B) any Holder may transfer Common Stock (or other securities) of the
Company to any Affiliate, all of the outstanding equity securities and
Voting Power of which is owned, directly or indirectly, by such Holder,
provided that each such transferee executes an identical Lock-Up Agreement.
The obligations described in this Section 6 shall not apply to a
registration on Form S-8 or S-4 or any successor form. The Company may
impose stop-transfer instructions with respect to the Shares (or other
securities) subject to the foregoing restrictions until the end of any
applicable Lock-Up Period.
Prior to the Company filing with the Commission any Registration
Statement for Common Stock or any other securities of the Company, the
Holders shall have a reasonable opportunity to review and comment upon any
information contained in such Registration Statement relating in any way to
the Holders. The Company agrees to request confidential treatment from the
Commission for any information relating to the Holders if reasonably
requested by the Holders.
Section 7. Holder Covenants
Each Holder hereby covenants and agrees that:
(a) it will not sell any Registrable Securities under a
Registration Statement until it has received notice from the Company that
such Registration Statement and any post-effective amendments thereto have
become effective;
(b) it and its officers, directors or Affiliates, if any, will
comply with the Prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities
pursuant to a Registration Statement; and
(c) upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 5(d)(iv), (v), (vi), (vii) or
(viii) of this Agreement, such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder's receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement or until it is advised in writing by
the Company that the use of the applicable Prospectus may be resumed, and,
in either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in
such Prospectus or Registration Statement.
Section 8. Registration Expenses
Except to the extent limited by the applicable state law, all fees
and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not
pursuant to an Underwritten Offering and whether or not any Registration
Statement is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to any Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be
made with any securities exchange or market on which Registrable Securities
are required hereunder to be listed, and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees
and disbursements of one counsel for all Holders in connection with Blue
Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as the managing underwriters, if any, determine)); (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing Prospectuses if the
printing of Prospectuses is requested by the managing underwriters, if any;
(iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company; (v) Securities Act liability
insurance, if the Company desires such insurance; (vi) fees and expenses of
all other persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement; and (vii)
all of the internal expenses of the Company incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties, the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder
(all such expenses being referred to herein as "Registration Expenses");
provided, however, that except as expressly set forth herein, in no event
shall Registration Expenses include any underwriting discounts,
commissions, or fees attributable to the sale of the Registrable Securities
or, except as provided in (i) above, any counsel, accountants or other
persons retained by the Holders incurred in connection with the
consummation of the transactions contemplated by this Agreement.
Section 9. Indemnification and Contribution
Section 9.1. Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder and its agents, brokers, investment advisors and
employees of each of them and each underwriter of the Registrable
Securities and each such Person's respective officers, directors,
affiliates, partners and any broker or dealer through whom such shares may
be sold and each person, if any, who controls (within the meaning of
Section 15 of the Securities Act) such Holder or any such underwriter, to
the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and
expenses (collectively, "Losses"), as incurred, arising out of or relating
to any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus or any form of Prospectus or in
any amendment or supplement thereto or in any preliminary Prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of Prospectus or
supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, which information was reasonably relied on by
the Company for use therein or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in any Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement
thereto. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
Section 9.2. Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees
of such controlling persons, to the fullest extent permitted by applicable
law, from and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising
solely out of or based solely upon any untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of
Prospectus, or arising solely out of or based solely upon any untrue
statement or omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form of Prospectus or supplement thereto, in light of the circumstances
under which they were made), not misleading to the extent, but only to the
extent, that such untrue statement or omission is contained or omitted, as
the case may be, in any information so furnished in writing by such Holder
to the Company specifically for inclusion in the Registration Statement or
such Prospectus and that such information was reasonably relied upon by the
Company for use in the Registration Statement, such Prospectus or such form
of Prospectus or to the extent that such information relates to such Holder
or such Holder's proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto. In no event shall the
liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
Section 9.3. Conduct of Indemnification Proceedings.
(a) If any Proceeding shall be brought or asserted against any
person entitled to indemnity hereunder (an "Indemnified Party"), such
Indemnified Party promptly shall notify the person from whom indemnity is
sought (the "Indemnifying Party") in writing, and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
(b) An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof,
provided, however, the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding or to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have
been advised by counsel that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at
the reasonable expense of the Indemnifying Party, the Indemnifying Party
shall not have the right to assume the defense thereof and such counsel
shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,
unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.
(c) All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within 10 Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to
undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).
Section 9.4. Contribution.
(a) If a claim for indemnification under Section 9.1 or 9.2 is
unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with
its terms (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
Losses, in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as
any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth herein, any reasonable
attorneys' or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.
In no event shall the liability of any selling Holder hereunder be greater
in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 9, no
Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(c) The indemnity and contribution agreements contained in this
Section 9 are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
Section 9.5. Rule 144. Following the IPO, the Company covenants that:
(a) it shall file the reports required to be filed by the Company
under the Securities Act and the Exchange Act, so as to enable the Holders
to sell Registrable Securities pursuant to Rule 144 under the Securities
Act;
(b) it shall cooperate with any Holder in connection with any
sale, transfer or other disposition by such Holder of any Registrable
Securities pursuant to Rule 144 under the Securities Act;
(c) it shall take such action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder
to sell its Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act, including providing any legal opinions; and
(d) upon the request of any Holder, it shall deliver to such
Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
Section 10. Restrictions on Transfer; Certain Covenants.
Section 10.1. Restrictions on Transfer by Stockholders.
(a) Initial Lock-up. As a condition to, and in consideration of,
the issuance by the Company to the Stockholders of the Initial Shares
pursuant to the Stock Subscription Agreement, each Stockholder agrees that
it will not, directly or indirectly, without the prior written consent of
the Company, offer, sell, contract to sell, pledge or otherwise dispose of,
or enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) of any
right, title or interest in any of the Restricted Shares, including,
without limitation, by filing (or participating in the filing of) a
registration statement with the Securities and Exchange Commission in
respect of, or establishing or increasing a put equivalent position within
the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, with respect to, any of the Restricted
Shares. Notwithstanding the foregoing, each Stockholder may, without
violating the provisions hereof, transfer all or any part of the Restricted
Shares to any Permitted Stockholder Affiliate, and may pledge, hypothecate
or engage in another similar financing transaction of any Restricted Shares
(including, without limitation, Repos (as defined below), if conducted in
accordance with the provisions of Section 10.1(f) hereof), but not
including short sales or transactions involving any hedging of a
Stockholder's Shares or use of any puts, calls or other derivatives in
connection with any of a Stockholder's Shares (other than in connection
with Repos conducted in accordance with the provisions of Section 10.1(f)
hereof) so long as (i) the transferring Stockholder continues, prior to
default thereunder, to retain record and beneficial title (in connection
with transactions other than Repo transactions and other than transfers to
any Permitted Stockholder Affiliates) to, and have the sole and exclusive
authority and right to vote the shares subject to, any such pledge,
hypothecation or other financing transaction and (ii) if effected or
entered into prior to the expiration of the "distribution compliance
period" (as defined in Regulation S), the provisions of such transaction
complies with the provisions of Regulation S. In addition, each Stockholder
may, without violating the provisions hereof, tender or exchange all or any
part of the Restricted Shares into any tender or exchange offer for Common
Stock conducted by the Company or any third party; provided, that if such
tender or exchange offer is for less than all of the then outstanding
shares of Common Stock, upon consummation of such tender or exchange offer,
each Stockholder shall be deemed to have first tendered or exchanged and
sold all of the Unrestricted Shares then held by such Stockholder prior to
selling any Restricted Shares, with the result that any Shares tendered or
exchanged by a Stockholder in excess of such number of Unrestricted Shares
and not purchased in the tender or exchange offer shall continue as
Restricted Shares for all purposes hereunder.
(b)(i) Release from Lock-up. For purposes hereof, all of the
Initial Shares shall constitute "Restricted Shares" until the First Release
Date. After the First Release Date, and each Release Date thereafter, the
number of "Restricted Shares" shall be determined as set forth below. For
purposes hereof, the "First Release Date" shall be December 10, 2001, and
each subsequent "Release Date" shall be the dates that are the first,
second, third and fourth anniversaries of the First Release Date.
Initial
Release Date Shares Restricted
December 10, 2001 83.33%
December 10, 2002 41.67%
December 10, 2003 25.00%
December 10, 2004 8.33%
December 10, 2005 0.00%
(ii) Notwithstanding the foregoing, the number of Restricted
Shares shall be deemed to be zero (0) upon the first to occur of (A) a
Change in Control and (B) the date on which Itau becomes entitled to
terminate, and does so terminate, the Marketing Agreement, including,
without limitation, because of an AOLA Change of Control (as such term is
defined in the Marketing Agreement); provided, that if the Company timely
challenges any such termination in accordance with the provisions of the
Marketing Agreement, the provisions of this paragraph (b)(ii) shall not be
effective unless and until there is a final arbitration award issued
pursuant to Section 13 of the Marketing Agreement, that Itau was in fact
entitled to terminate such Agreement. In addition, the number of Restricted
Shares shall be deemed to be zero (0) if, at any time after December 10,
2003, the Company or AOLB terminates the Marketing Agreement and Itau makes
payment in full in cash of the Termination Fee required to be made pursuant
to Section 11.2.3(c) of the Marketing Agreement.
(c) Certain Definitions. The number of Initial Shares in excess of
the number of Restricted Shares, plus all of the New Shares, are referred
to herein as "Unrestricted Shares."
(d) Additional Securities. For purposes hereof, if after the date
hereof the Company subdivides or combines its Common Stock shares or issues
by way of stock dividend, stock distribution or stock split, or in
connection with a combination of shares, recapitalization, merger,
consolidation or reorganization or otherwise, the percentages set forth
above shall be derived by calculating the percentage which the Restricted
Shares as so subdivided, combined or reclassified represent in relation to
the number of Initial Shares initially issued to the Stockholders assuming
for such purpose that the number of Initial Shares initially issued had
been subdivided, combined or reclassified in the same manner as the
Restricted Shares.
(e) Additional Restrictions. Notwithstanding anything to the
contrary contained herein, all sales of Shares by the Holders, regardless
of whether or not such Shares have been registered for resale in accordance
with the provisions of this Agreement, shall be subject to the following
restrictions:
(i) At least five business days prior to any Sale (as
defined below) of any Common Stock by a Holder, including, without
limitation, any Large Trade (as defined below), such Holder will advise the
Company in writing of the dates on which such disposition is expected to
commence and terminate, the number of shares of Common Stock expected to be
Sold, the method of disposition and such other information as the Company
may reasonably request in order to ensure such Holder's compliance with the
provisions of this Section. Each Holder agrees to notify any broker/dealer
in writing of the restrictions on Sale contained in this Agreement and
provide the Company a copy of such notice.
(ii) No Holder may, directly or indirectly, offer, sell,
contract to sell, pledge or otherwise dispose of, or enter into any
transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) of, shares of
Common Stock (collectively, to "Sell" or a "Sale"), in any event in a
transaction recorded on the Nasdaq National Market (or any other market on
which the Common Stock is then listed for trading) (a "Nasdaq Transaction")
which, when aggregated with all other shares Sold by Holders in a Nasdaq
Transaction on the same day, exceeds on such single trading day, 10.0% of
the average trading volume of the Common Stock during the 20 trading-day
period ending on the trading day prior to the date of such Sale (the
"Average Trading Volume"). The restrictions contained in the preceding
sentence shall not apply to any (i) Sale in which a Holder sells, in a
single block transaction, shares of Common Stock which exceed in number
10.0% of the Average Trading Volume in which the sales price is at least
95% of the Closing Price (a "Large Trade"), (ii) series of Sales in a
single trading day in which a Holder sells shares of Common Stock which
exceed in number 10.0% of the Average Trading Volume ("Serial Large Trade")
in which the sales price at which all of such Sales are consummated is at
least 95% of the Closing Price, or (iii) in connection with any Sales
effected pursuant to an Underwritten Offering of Shares conducted by means
of a firm commitment underwriting effected by a nationally or
internationally recognized investment banking firm. Notwithstanding the
foregoing: (i) no more than one Large Trade may be consummated on any two
(2) or more trading days in any period of ten (10) consecutive trading days
unless such Large Trade (other than the first Large Trade in such period)
is one in which the sales price is at least 100% of the Closing Price and
(ii) no more than one Serial Large Trade may be effected on any two (2) or
more trading days in any period of ten (10) consecutive trading days unless
the sales prices at which all Sales constituting any such Serial Large
Trade (other than such Sales on the first trading day in such period on
which a Serial Large Trade in made) is at least 100% of the Closing Price.
In addition, notwithstanding the foregoing and as an additional
restriction, no Holder may effect any Nasdaq Transaction if the shares to
be Sold in such Nasdaq Transaction, when aggregated with all other shares
Sold by Holders in Nasdaq Transactions in the prior 90 days, exceeds (i)
during the first two years after the date hereof, such number of
unregistered shares of capital stock of an issuer which may be sold by a
single holder in any 3 month period pursuant to the provisions of Rule
144(e) promulgated under the Securities Act, and (ii) thereafter, the
greater of (1) 1.0% of the aggregate number of shares of Common Stock
outstanding (calculated on an as converted basis) as of the start of such
90-day period and (2) the number of unregistered shares of capital stock of
an issuer which may be sold by a single holder in any 3 month period
pursuant to the provisions of Rule 144(e).
(iii) Notwithstanding the foregoing, with respect to the
Initial Shares, each Holder may, without complying with the restrictions
set forth in subsection (ii) hereof, Sell all or any part of the Initial
Shares that are then Unrestricted Shares in a private placement or other
transaction not involving any public offering or Public Sale to a
transferee reasonably acceptable to the Company (with the determination of
such acceptability not to be withheld or delayed unreasonably) so long as
the transferee, as a condition to such transfer, executes and delivers to
the Company a written instrument in form and substance reasonably
satisfactory to the Company, by which such transferee agrees to be bound by
all of the provisions of this Agreement (except that, with respect to
Section 10, only Sections 10.1(e)(i), (ii) and (iii) of Section 10 shall
apply to such transferee and the Company) and by the provisions of the
Stock Subscription Agreement applicable to the transferees of the Initial
Shares, to the same extent as if such transferee had signed this Agreement
and the Stock Subscription Agreement.
(iv) Notwithstanding the foregoing, with respect to the
New Shares, each Holder may, without complying with the restrictions set
forth in subsection (ii) hereof, but subject to the provisions of Section
10.1(g) hereof, Sell all or any part of the New Shares in a private
placement or other transaction not involving any public offering or Public
Sale so long as (a) the transferee is not a Competitor and (b) the
transferee, as a condition to such transfer, executes and delivers to the
Company a written instrument in form and substance reasonably satisfactory
to the Company, by which such transferee agrees to be bound by all of the
provisions of this Agreement (except that, with respect to Section 10, only
Sections 10.1(e)(i), (ii) and (iv)(b) and (g) of Section 10 shall apply to
such transferee and the Company) to the same extent as if such transferee
had signed this Agreement. If the transferee under this Section 10.1(e)(iv)
is the Company, the restrictions in the preceding sentence shall not apply.
(f) Repurchase Transactions. Notwithstanding the
restrictions contained in this Section 10.1, each Stockholder and each
Permitted Stockholder Affiliate may effect repurchase transactions ("Repos"
or "Repo transactions") with respect to all or any part of the Shares so
long as such Stockholder or Permitted Stockholder Affiliate, as applicable,
complies with the following:
(i) The Stockholder or Permitted Stockholder Affiliate
shall consummate Repo transactions only (A) with such counterparties as may
be specified on a list of acceptable broker/dealer or other financial
institutions, as such list may be amended by agreement of the Company and
the Stockholders from time to time and (B) after the Company has been
provided a copy of any repurchase agreement or other instrument which a
Stockholder proposes to use in connection with any contemplated Repo
transaction and has determined, in its reasonable judgment, that such
instrument or agreement complies in all material respects with the
provisions of this Section 10.1(f); provided, that the Company shall
provide any objections to any such agreement as promptly as practicable
after its receipt of a true and complete copy thereof, and in any event
within five (5) Business Days of its receipt of a true and complete copy
thereof, and if the Company does not object to any proposed contract or
agreement within such five (5) Business Day period, such instrument or
agreement shall be deemed approved by the Company. Any dispute as to
whether or not any such proposed contract or agreement complies in all
material respects with the provisions of this Section 10.1(f) shall be
resolved by arbitration pursuant to the provisions of Section 12.11 hereof;
provided, that such arbitration shall be held pursuant to the procedures
for a forty-five day arbitration set forth in Section 13.4 of the Marketing
Agreement;
(ii) No more than 10 Repo transactions in the aggregate
may be in effect with respect to the Initial Shares with not more than 5
counterparties in the aggregate, in any event at any one time (with such
limitations applying in the aggregate, not per Stockholder or Permitted
Stockholder Affiliate);
(iii) The counterparty to a Repo must agree in the
applicable repurchase agreement (A) to comply with the provisions of this
Section 10.1 and the restrictions contained in the Stock Subscription
Agreement, with respect to all Initial Shares subject to such repurchase
agreement, and to inform any transferee of any of such Shares in writing of
the existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions, (B) to
hold all such Shares free and clear of all liens, claims and encumbrances
of any kind or nature, other than those securing the Holder's obligations
under such repurchase agreement, (C) not assign or transfer the repurchase
agreement or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of such counterparty who agrees in writing
to be bound by all of the terms and conditions of such repurchase
agreement, the provisions of this Section 10.1 and the restrictions
contained in the Stock Subscription Agreement, with respect to all Initial
Shares subject to such repurchase agreement and prior to any such
assignment or transfer, identify any proposed assignee or transferee of any
of the Shares subject to any repurchase agreement or any proposed
transferee or assignee of any repurchase agreement or any of the
counterparty's duties or obligations thereunder and include such obligation
in any Repo agreement, (D) that the Company shall have a right to approve
any proposed transferee of Shares or assignee of the repurchase agreement
or any of its rights, duties or obligations thereunder, including, without
limitation, any Affiliate of such counterparty, such approval not with be
withheld or delayed unreasonably, and (E) to make the Company a third party
beneficiary entitled to enforce such agreements against the counterparty;
and
(iv) The Stockholder must, as part of each Repo
transaction, (A) prior to default thereunder, retain the sole and exclusive
authority and right to vote the shares subject to such Repo transaction,
(B) if such Repo transaction is effected with respect to any Initial Shares
prior to the expiration of the "distribution compliance period" (as defined
in Regulation S), certify to the Company that such Repo transaction
complies with the provisions of Regulation S and deliver to the Company an
opinion of counsel, in form and substance, and from counsel, reasonably
acceptable to the Company, that such Repo transaction does so comply, (C)
retain the risk of economic loss on the Shares in connection with any Repo
transaction and (D) agree on an exercise price for the put and call for the
applicable Common Stock (or the repurchase price, settlement price or
equivalent price term in any similar arrangement designed to effect the
transfer of such Common Stock back to the Stockholder at the conclusion or
earlier termination of the Repo transaction) that is at least equal to the
purchase price for the Common Stock at which such Repo transaction was
effected, which purchase price shall, unless the Company shall otherwise
consent, be not less than the last reported sales price therefor as
reported on the Nasdaq National Market (or such other market on which the
Common Stock is then listed for trading and which has the then largest
daily trading volume for the Common Stock.
Each Stockholder hereby covenants that it will not settle any Repo
transactions to which it may be party at any time by any other means other
than by reacquiring record and beneficial title to the Shares that were the
subject of such Repo transaction. If either Stockholder (i) fails to timely
settle any Repo transaction by reacquiring record and beneficial title to
the Shares that were the subject of such Repo transaction, (ii) modifies
the price for any put and call or similar arrangement in connection with
any Repo transaction to a price below the purchase price for the Common
Stock at which such Repo transaction was effected, or (iii) renews or
extends any Repo transaction at a price below the last reported sales price
therefor as reported on the Nasdaq National Market (or such other market on
which the Common Stock is then listed for trading and which has the then
largest daily trading volume for the Common Stock), in any event as of the
effective date or any renewal or extension, as applicable, such failure,
modification, renewal or extension shall be deemed a breach of this
Agreement, and, in addition to any remedies which the Company or any other
affected party may seek as a consequence of such breach, the provisions of
this Section 10.1(f) shall be deemed to have been terminated and each
Stockholder's right to effect additional Repo transactions from and after
such time in respect of any Restricted Shares, including, without
limitation, any renewals or extensions of then existing Repo transactions,
shall immediately terminate without the requirement of any notice from or
other action on the part of the Company. The Company and the Stockholders
shall consult with each other regarding any press releases or other
disclosures, including, without limitation, any disclosures required
pursuant to the provisions of the Securities Act or the Exchange Act, with
respect to each Repo transaction. The Stockholders shall, and hereby agree
to, indemnify and hold the Company harmless from and against any and all
Losses to the extent they arise out of or in connection with any Repo
transaction except to the extent such Losses arise out of the Company's
disclosure in any filing made by the Company under the Securities Act or
the Exchange Act of the terms of any Repo transaction effected by a
Stockholder in a manner which is inaccurate and different in any material
respect from any description provided in writing by the Stockholders of any
such Repo transaction for use in such filing.
(g) Right of First Refusal. (i) If a Stockholder wants to Sell any
New Shares to any other Person in a bona fide transaction, such Stockholder
(the "Offeror") shall be entitled to do so provided that such Offeror first
offers to sell such New Shares to the Company at the same price and the
same terms and conditions as the Offeror would receive from such other
Person. The Offeror shall submit to the Company and each of AOL and ODC
(collectively, the "Offerees") a written notice (the "Offer Notice")
stating in reasonable detail such price or other consideration and
summarizing the material terms and conditions thereof and identifying the
Person and all Persons who beneficially own more than five percent (5%) of
the outstanding equity or voting power of such Person, proposing to
purchase the New Shares. To the extent that the identities of such five
percent (5%) beneficial holders are not publicly known, the Offerees will
agree to keep such information confidential pursuant to a customary
confidentiality agreement. The Offerees shall have a period of fifteen (15)
Business Days after the receipt of the Offer Notice in which to deliver
notice (the "Acceptance Notice") to the Offeror that such Offerees accept
or reject such offer, subject to the provisions of subsection (ii) below.
One or more of the Offerees may elect to accept such offer. The Offerees
shall mutually agree upon the number of New Shares that each of them will
purchase. If the Offerees cannot agree upon the number of New Shares that
each of them will purchase within such fifteen (15) business days, the
number of New Shares that may be purchased shall be allocated first to the
Company and second to AOL and ODC in proportion to their respective
percentage ownership interests in the Company's voting securities. The
Acceptance Notice shall specify (i) which of the Offerees is electing to
accept the offer, (ii) the number of New Shares that each Offeree is
purchasing, and (iii) a date for the closing of the purchase which, subject
to the expiration or early termination of any waiting period required by
any Governmental Authority and the receipt of any required approvals of any
Governmental Authority, shall not be more than thirty (30) days after the
date of the giving of such Acceptance Notice. Notwithstanding the
foregoing, each Offeree may, at its sole discretion, subject to the
provisions of any then existing restrictions on their transfer of shares of
capital stock of the Company, specify one or more additional Persons to
whom or which such Offeree may appoint as its designee with respect to some
or all of the New Shares as to which it has delivered an Acceptance Notice.
(ii) If the Offerees do not in the aggregate elect to purchase all
of the New Shares subject to an Offer Notice, the Offer Notice shall be
deemed rejected as to all of the New Shares, and the Offeror shall have the
right to Sell to the Person identified in the Offer Notice, subject to
Section 10.1(e)(iv), all (but not less than all) of such New Shares on the
same terms and conditions including the price or other consideration
specified in the Offer Notice, free from the restrictions of this Section
10.1(g) (for purposes of such specific transaction, but not for purposes of
any subsequent transaction) in a bona fide transaction, for a period of
ninety (90) days from the expiration of the period for delivering an
Acceptance Notice hereunder, provided that any such purchaser shall prior
to such Sale agree in writing to be bound by all of the provisions of this
Agreement (except that, with respect to Section 10, only Sections
10.1(e)(i), (ii) and (iv)(b) and (g) of Section 10 shall apply to such
purchaser and the Company) to the same extent as if such purchaser had
signed this Agreement. At the end of such ninety (90) day period, the
Offeror shall notify the Company in writing whether the New Shares subject
to the Offer Notice have been sold in a bona fide transaction during such
period. To the extent not sold during such ninety (90) day period, all of
such New Shares shall again become subject to all of the restrictions and
provisions of this Section 10.1(g).
(iii) If any of the Company, AOL and/or ODC accepts the offer set
forth in the Offer Notice, the closing of the purchase shall take place at
the principal office of the Company or such other location as shall be
mutually agreeable to the entity accepting the offer and the Offeror, and
the purchase price shall be paid at the closing by wire transfer of
immediately available funds or in such other appropriate form if for
consideration other than cash. Notwithstanding the foregoing, if the
consideration set forth in the Offer Notice is other than all cash, the
party or parties electing to accept such offer may pay its equivalent fair
market value in cash. The Offeror and the parties accepting offer contained
in the Offer Notice shall negotiate in good faith regarding the fair market
value of any such non-cash consideration. If the parties are unable to
reach a mutually acceptable resolution as to the fair market value of such
non-cash consideration within 15 days, the determination of such fair
market value shall be made pursuant to an arbitration conducted pursuant to
the provisions of Section 12.11 hereof and the closing shall be postponed
until the conclusion of such arbitration. At the closing, the Offeror shall
deliver to accepting entity or entities the certificates evidencing the New
Shares to be transferred, duly endorsed and in negotiable form together
with a duly executed stock power, "Deed of Transfer" or other appropriate
instrument conveying to accepting entity or entities the New Shares being
purchased thereby, free and clear of any Encumbrances, except those in this
Agreement which are expressly assumed. If less than all of the New Shares
evidenced by a stock certificate are being purchased, the Company shall,
upon receipt of such duly endorsed stock certificate, issue to the
accepting entity or entities a stock certificate evidencing the New Shares
being purchased and issue to the Offeror a stock certificate evidencing the
number of New Shares not being purchased.
(iv) Notwithstanding anything in this Section 10.1(g) to
the contrary, each Stockholder may Sell all or part of the New
Shares owned by it as follows without complying with Section
10.1(g)(i), (ii), (iii) and (v), except if required in such
Section 10.1(g)(v) below:
(1) to any transferee that is a Permitted Stockholder
Affiliate.
(2) pursuant to a pledge, hypothecation or other similar
financing transaction so long as the Selling Stockholder
continues to have the sole and exclusive authority and
right to vote the New Shares subject to such pledge,
hypothecation or other financing transaction.
(3) to any other Stockholder.
(4) to the Company.
(5) subject to the provisions of Section 10.1(e)(i) and
(ii), in a Public Sale, which shall include Sales made
pursuant to Section 10.1(e).
(v) Notwithstanding the provisions of Section 10.1(e)(iv)
that relate to transferees of New Shares, in the event that a
Stockholder Sells New Shares pursuant to Section 10.1(g)(iv)(1),
(2) or (3), such transferee or pledgee, as a condition to such
transfer, shall deliver to the Company a written instrument, in
form and substance reasonably satisfactory to the Company, by
which such transferee or pledgee agrees to be bound by all of the
provisions of this Agreement, including Section 10.1(g) and the
restrictions on Sales to Competitors in Section 10.1(e)(iv)(a), to
the same extent as if such transferee had signed this Agreement.
(vi) In addition, notwithstanding anything in this
Section 10.1(g) to the contrary and without complying with Section
10.1(g)(i), (ii), (iii), (iv) and (v), each Shareholder may effect
Repo transactions with respect to the New Shares pursuant and
subject to the provisions of Section 10.1(f).
Section 10.2. Nominee to the Company's Board; Advisory
Committee.
(a) The Company will take all action (if any) necessary in
accordance with the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation, as amended, and By-laws, to increase
by one (1) the total number of directors constituting the entire the Board
of Directors of the Company and to appoint Itau's President and Chief
Executive Officer as a Class A Director to fill such vacancy and to keep
such vacancy available for the person nominated as described below. The
Company further agrees that for the two years following the Effective Date
and thereafter as long as (i) the Stockholders and their Permitted
Stockholder Affiliates together continue to hold at least 5/12ths of the
Initial Shares and (ii) the Marketing Agreement remains in full force and
effect, to continue to nominate one person selected by the Stockholders as
a director of the Company at each annual or special meeting of the Company
stockholders at which directors are elected or pursuant to any written
consents involving the election of directors. Such person shall be either
the then current President or Chief Executive Officer of Itau for so long
as the Board of Directors of the Company includes (i) either the Chief
Executive Officer or the Chief Operating Officer of AOL and (ii) a person
who is a nominee of ODC, and thereafter may include one of the then current
Senior Vice Presidents who reports directly to either the President or the
Chief Executive Officer of Itau. Notwithstanding the foregoing, if any such
nominee resigns in mid-term for any reason other than death, serious
illness or other incapacity or separation of his or her employment with the
Itau or removal from the qualifying position set forth above, the
Stockholders shall not be entitled to nominate any replacement until the
next annual meeting of the Company at which directors are elected, and the
Board of Directors of the Company may fill such vacancy temporarily in
accordance with the provisions of the Company's by-laws.
(b) The Company will take all action (if any) necessary in
accordance with the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation, as amended, and By-laws, to appoint
an Advisory Committee and to appoint the person nominated pursuant to
Section 10.2(a) as a member of such Advisory Committee.
(c) Each of AOL and ODC agrees to take all necessary action,
including voting all of the Common Stock and Common Stock Equivalents (as
hereinafter defined) of the Company now owned or hereafter acquired by such
party (and attend, in person or by proxy, all meetings of stockholders
called for the purpose of electing directors) and executing any necessary
consents, and the Company agrees to take all actions (including, but not
limited to the nomination and recommendation to its shareholders of the
specified persons) to cause and maintain the election of the person
nominated pursuant to Section 10.2(a) to the Board of Directors of the
Company and the Advisory Committee in accordance with the provisions of
this Section 10.2.
Section 10.3 Right of Participation in Sales by AOL and ODC.
(a) If at any time AOL and/or ODC wishes to sell, transfer, assign
or otherwise dispose of any shares of Common Stock or any securities of the
Company convertible into, exercisable for or exchangeable for shares of
Common Stock ("Common Stock Equivalents") to any Person (the "Purchaser")
in a single transaction or series of transactions which would result in the
transfer, either individually or when combined with all other sales,
transfers and other dispositions of Common Stock and Common Stock
Equivalents by the transferring party in the immediately preceding 12 month
period, of more than fifteen percent (15%) of the shares of Common Stock of
the Company held by AOL or ODC, as applicable, immediately following
consummation of the IPO and the transactions contemplated hereby (as
adjusted to reflect any stock splits, stock dividends, reverse stock
splits, recapitalizations and similar capital events), in each case
calculated on an as converted, fully diluted basis, it shall so notify the
Stockholders (the "Sale Notice"), and each Stockholder shall have the right
to require, as a condition to such sale or disposition, that the Purchaser
purchase from such Stockholder at the same price per share and on the same
terms and conditions as involved in such sale or disposition by AOL and/or
ODC, as applicable, the same percentage of the Available Shares then held
by such Stockholder as such sale or disposition represents with respect to
the aggregate number of shares of Common Stock and Common Stock Equivalents
owned by whichever of AOL and ODC is selling, calculated on an as
converted, fully diluted basis (the "Aggregate Stockholdings"), or, if both
are selling, the same percentage as such sale or disposition represents
with respect to the Aggregate Stockholdings owned by whichever of AOL and
ODC that is selling the greatest percentage of its Aggregate Stockholdings;
provided, that if the right to participate as provided in this Section
accrues only after a combination of transactions which together exceed such
15% threshold, then each Stockholder shall have the right to require, as a
condition to such sale or disposition, that the Purchaser purchase from
such Stockholder the same percentage of the Available Shares then held by
such Stockholder as such combined sales or dispositions represent with
respect to the Aggregate Stockholdings owned by whichever of AOL and ODC is
selling as of the first of such sales, or, if both are selling, the same
percentage as such combined sales or dispositions represent with respect to
the Aggregate Stockholdings owned by whichever of AOL and ODC has sold the
greatest percentage of its Aggregate Stockholdings as of the first of such
sales. If a Stockholder wishes so to participate in any such sale or
disposition it shall notify AOL and/or ODC, as applicable, of such
intention as soon as reasonably practicable after receipt of the Sale
Notice, and in all events within fifteen (15) days after receipt thereof,
which communication shall be delivered by hand or mailed to AOL and/or ODC,
as applicable, at the address set forth in Section 12.2 below. AOL and/or
ODC, as applicable, and the Stockholder(s) shall sell to the Purchaser all,
or at the option of the Purchaser, any part of the Common Stock proposed to
be sold by them at not less than the price and upon other terms and
conditions, if any, not more favorable to the Purchaser than those
originally offered; provided, however, that any purchase of less than all
of such Common Stock by the Purchaser shall be made from AOL and/or ODC and
the Stockholder pro rata based upon the Available Shares held by the
Stockholder(s) timely electing to participate in such sales and the
Aggregate Stockholdings of AOL and/or ODC, as applicable. AOL and ODC, as
applicable, shall each use its best efforts to obtain the agreement of the
Purchaser to the participation of the Stockholders in the contemplated
sale, and shall not sell any Common Stock to such Purchaser if such
Purchaser declines to permit the Stockholders to participate pursuant to
the terms of this Section 10.3.
(b) Notwithstanding the foregoing, the provisions of this Section
10.3 shall not apply to: (i) any transfer of Common Stock or Common Stock
Equivalents by gift; (ii) any transfer of Common Stock or Common Stock
Equivalents to any Person, not less than seventy-five percent (75%) of the
outstanding equity securities and Voting Power of which is held by the
transferring party or which holds not less than seventy-five percent (75%)
of the outstanding equity securities and Voting Power of the transferring
party; (iii) any sale of Common Stock in a public offering pursuant to a
registration statement filed with the Commission; (iv) any transfer of
Common Stock or Common Stock Equivalents by ODC to AOL at any time after
the consummation of the IPO, (v) any transfer of Common Stock or Common
Stock Equivalents by ODC to any member of the Xxxxxxxx Family (as such term
is defined in the Restated Certificate of Incorporation) and (vi) any
bona-fide pledge, hypothecation or other similar financing transaction in
which the transferring party continues to have the sole and exclusive
authority and right to vote the shares subject to such pledge,
hypothecation or other financing transaction; provided that, in the case of
transfers effected pursuant to clauses (i), (ii) or (v) above, such Person
agrees to be bound by the provisions of this Section 10.3 with respect to
the Common Stock and Common Stock Equivalents so transferred.
(c) The provisions of this Section 10.3 shall be of no further
force and effect from and after the first to occur of (i) the date on which
the Marketing Agreement is terminated in accordance with its terms other
than by reason of a breach by the Company and/or AOLB of the provisions
thereof and (ii) the date that the aggregate number of shares of Common
Stock then held by the Stockholders and their Permitted Stockholder
Affiliates represents less than 5/24ths of the Initial Shares (as adjusted
for stock splits, stock dividends, reclassifications, recapitalizations or
other similar events); provided, that if the Company and/or AOLB terminates
the Marketing Agreement and the Stockholders timely challenge such
termination in accordance with the terms of the Marketing Agreement, the
provisions of clause (i) of this paragraph (c) shall not be effective
unless and until there is a final arbitration award issued pursuant to
Section 13 of the Marketing Agreement that the Company and/or AOLB, as
applicable, was in fact entitled to terminate such Agreement.
Section 10.4. Noncompetition Provisions (a) Each of AOL and ODC
agrees that, for so long as the Stockholders and their Permitted
Stockholder Affiliates collectively hold shares of Common Stock
representing not less than 6% of the outstanding capital stock of the
Company, calculated on a fully diluted basis, the Stockholders shall be
entitled to enforce the noncompetition obligations of AOL and ODC (the
"Existing Stockholders") contained in Sections 4.1 and 4.2 of the Amended
and Restated Stockholders' Agreement, dated as of March 30, 2001, by and
between the Company, AOL and ODC (the "Existing Stockholders' Agreement"),
as the same may be amended from time to time, on the terms and conditions
set forth therein as if the Stockholders were parties thereto; provided,
that the provisions of the Existing Stockholders' Agreement that are
effective only so long as each of AOL and ODC owns 20% of the issued and
outstanding Voting Stock, as such percentage is adjusted pursuant to the
Existing Stockholders' Agreement, shall be enforceable against AOL or ODC,
as the case may be, so long as such party owns 20% of the issued and
outstanding Voting Stock, as such percentage is adjusted pursuant to the
Existing Stockholders' Agreement.
(b) Each Stockholder covenants and agrees to be bound by and
comply with the provisions of Sections 4.1 and 4.2 of the Existing
Stockholders' Agreement that are applicable to ODC thereunder as if such
Stockholder were a party thereto, except that (i) such covenant and
agreement shall expire at such time as the Stockholders and their Permitted
Stockholder Affiliates collectively own less than six percent (6%) of the
outstanding capital stock of the Company, calculated on a fully diluted
basis, (ii) such covenant and agreement shall not be enforceable by any
Existing Stockholder against whom the Existing Stockholders' Agreement is
not enforceable by the Stockholders, and (iii) all references to "Xxxxxxxx
Family Members," "RSL-LA" and "GLA" shall not apply with respect to the
Stockholders.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 10.4 shall expire on the first to occur of (i)
the date on which the Marketing Agreement is terminated in accordance with
its terms and (ii) August 11, 2010. In addition, the parties hereto agree
that the provisions of Section 4.2(a) of the Existing Stockholders'
Agreement, as they apply to the Stockholders, shall be applied so that (i)
the repurchase obligations contained therein that are triggered upon a
breach by AOL or ODC shall apply, with respect to the Shares held by the
Stockholders and their Permitted Stockholder Affiliates, to whichever of
AOL or ODC as shall have breached the provisions of Section 4.1 of the
Existing Stockholders' Agreement and (ii) AOL shall have the right to
repurchase the Shares held by the Stockholders and any Permitted
Stockholder Affiliates upon any breach by either or both of the
Stockholders, or any Permitted Stockholder Affiliate then holding any
Shares, of the provisions of said Section 4.1.
(d) For the avoidance of doubt, with respect to PC Access
Services, TV Access Services and Wireless Access Services (as such terms
are defined in the Existing Stockholders' Agreement), neither Stockholder
shall be deemed to be engaging in a Restricted Activity (as such term is
defined in the Existing Stockholders' Agreement), unless (i) a Stockholder
or any Permitted Stockholder Affiliate then holding Shares is a Significant
Competitor (as such term is defined in the Existing Stockholders'
Agreement), or the Stockholders and the Permitted Stockholder Affiliates
then holding Shares are an Aggregated Significant Competitor (as such term
is defined in the Existing Stockholders' Agreement) or (ii)(A) a
Stockholder has, or the Stockholders' and/or the Permitted Stockholder
Affiliates then holding Shares collectively have, a direct and/or indirect
ownership interest in any applicable Person or Persons of at least thirty
five percent (35%) and (B) such Person is a Significant Competitor or a
Stockholder together with the other Stockholder and the Permitted
Stockholder Affiliates then holding Shares and/or such other Person or
Persons are an Aggregated Significant Competitor.
Section 10.5 Participation in Registrations by AOL and ODC. Each
of AOL and ODC agrees that the "piggy back" registration rights granted to
the Stockholders pursuant to Section 2.1 hereof shall be applicable to any
demand or Form S-3 registrations to be conducted by the Company on either
of their behalf pursuant to the provisions of the Amended and Restated
Registration Rights Agreement, dated as of March 30, 2001, by and between
the Company, AOL and ODC, subject to the provisions of Section 2.3 hereof.
Section 10.6 Right of Participation in Sales by the Company.
(a) Right of Participation. Except as provided in Section 10.6(f)
of this Agreement, the Company shall not issue, sell or exchange, agree or
obligate itself to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange (i) any debt or equity security of the Company
(other than debt with no equity feature) including without limitation, any
debt security which by its terms is convertible into or exchangeable for
any equity security of the Company, (iii) any security of the Company that
is a combination of debt and equity, or (iv) any option, warrant or other
right to subscribe for, purchase or otherwise acquire any such equity, debt
or combination security of the Company, in any event solely for cash or
cash equivalents, to any Person including any Existing Stockholder or any
Affiliate thereof (the "Offered Securities"), unless in each case the
Company shall have first offered to each Stockholder that portion of such
securities as the number of Shares then held by such Stockholder bears to
the total number of shares of Common Stock (including all shares of capital
stock convertible into Common Stock, on a fully-diluted basis) of the
Company then outstanding (each Stockholder's "Pro Rata Amount," and
collectively, the "Aggregate Pro Rata Amount"), at a cash price and on such
other terms as shall have been specified by the Company in writing
delivered to such Stockholder (the "Offer"), which Offer by its terms shall
remain open and irrevocable for a period of ten (10) Business Days from
receipt of the offer.
(b) Notice of Acceptance. Notice of each Stockholder's intention
to accept, in whole or in part, any Offer made pursuant to Section 10.6(a)
shall be evidenced by a writing signed by such Stockholder and delivered to
the Company prior to the end of the 10 Business Day period of such Offer,
setting forth such of the Stockholder's Pro Rata Amount as such Stockholder
elects to purchase (the "Notice of Acceptance").
(c) Conditions to Acceptances and Purchase.
(i) Permitted Sales. The Company shall have
ninety (90) days from the expiration of the period set forth in Section
10.6(a) to close the sale of all or any part of such Offered Securities as
to which a Notice of Acceptance has not been given by the Stockholders, but
only for cash at the per share price and/or interest rates, as applicable,
and otherwise in all respects upon terms and conditions which are no less
favorable, in the aggregate, to the Company than those set forth in the
Offer. If the number of Offered Securities to be sold is reduced in any
material amount, the Company shall again provide the Stockholders with
notice pursuant to the provisions of Section 10.6(a), regardless of whether
Notices of Acceptance previously have been delivered, and the Purchasers
shall have an additional five (5) Business Day period in which to submit a
Notice of Acceptance, if one has not been previously submitted, or withdraw
a previously submitted Notice of Acceptance, in any event with respect to
such reduced amount of Offered Securities.
(ii) Closing. Upon the closing, which shall include full
payment to the Company, of the sale to another Person or Persons of all or
less than all the Offered Securities, the Stockholders shall purchase from
the Company, and the Company shall sell to the Stockholders, the number of
Offered Securities specified in the Notices of Acceptance. The purchase by
the Stockholders of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Stockholders of
a purchase agreement relating to such Offered Securities reasonably
satisfactory in form and substance to the Stockholders and their counsel
and containing terms and conditions no less favorable, in the aggregate,
than those contained in the similar purchase agreements entered into with
the other purchasers of Offered Securities.
(d) Further Sale. In each case, any Offered Securities not
purchased by the Stockholders or other Person or Persons in accordance with
Section 6(c) may not be sold or otherwise disposed of until they are again
offered to the Stockholders under the procedures specified in Sections
6(a), 6(b) and 6(c).
(e) Termination of Right of Participation. The rights of the
Stockholders under this Section 10.6 shall terminate immediately upon the
first to occur of (i) the date on which the Marketing Agreement is
terminated in accordance with its terms for any reason other than a breach
by the Company and/or AOLB of the provisions thereof and (ii) August 11,
2004, regardless of whether or not the Company is then subject to the
provisions of the Exchange Act with respect to any of its equity or debt
securities; provided, that if the Company and/or AOLB terminates the
Marketing Agreement and the Stockholders timely challenge such termination
in accordance with the terms of the Marketing Agreement, the provisions of
clause (i) of this paragraph (e) shall not be effective unless and until
there is a final arbitration award issued pursuant to Section 13 of the
Marketing Agreement that the Company and/or AOLB, as applicable, was in
fact entitled to terminate such Agreement.
(f) Exception. The rights of the Stockholders under this Section
10.6 shall not apply to:
(i) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares of Common
Stock,
(ii) shares of Preferred Stock issued as a dividend to
holders of Preferred Stock upon any subdivision or combination of shares of
such series of Preferred Stock,
(iii) shares of Common Stock issued or issuable pursuant
to options, warrants or other rights (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like) issued to employees,
officers or directors of, or consultants or advisors (other than AOL, ODC
or their Affiliates) to the Company or any subsidiary pursuant to stock
purchase or stock option plans or other arrangements that are approved by
the Board of Directors,
(iv) Common Stock offered to the public pursuant to a
registration statement filed under the Securities Act, and
(v) the issuance of Common Stock issued upon the exercise
of options or warrants to purchase Common Stock outstanding as of the date
of execution of the Stock Subscription Agreement.
(g) Waiver. The rights of the Stockholders under this Section 10.6
may be waived in any instance, on behalf of all of the Stockholders,
prospectively or retroactively, by the written agreement of the holders of
not less than sixty six and two-thirds percent (66-2/3%) of the Common
Stock owned beneficially or of record by the Stockholders and or their
Permitted Stockholder Affiliates.
Section 10.7 Repatriation. Each Stockholder covenants and agrees
to use all commercially reasonable efforts, as and when requested by the
Company, to assist the Company in obtaining all required consents and
approvals, if any, of the Brazilian central bank and other Brazilian
regulatory authorities in connection with any contemplated repatriation or
other movement or transfer of funds from Brazil to a jurisdiction outside
of Brazil in connection with the transactions contemplated hereby. Any such
assistance shall be provided without cost or expense to the Stockholders,
and each may require, as a condition to providing such assistance, that the
Company agree to indemnify and hold such Stockholder harmless from and
against any liability that may arise as a consequence of the Stockholder
providing such assistance other than as a result of the Stockholder's
illegal acts, gross negligence or bad faith.
Section 11. Term of Registration Rights
The rights of Holders with respect to the registration rights
granted pursuant to this Agreement shall remain in effect, subject to the
terms hereof, so long as there are Restricted Securities or Registrable
Securities or securities which are directly or indirectly convertible or
exchangeable for Restricted Securities or Registrable Securities issued and
outstanding.
Section 12. Miscellaneous.
Section 12.1. Entire Agreement; Amendments. This Agreement
contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
Section 12.2. Notices. Any and all notices or other communications
or deliveries required or permitted to be provided pursuant to this
Agreement shall be in writing and shall be deemed to have been received (a)
upon hand delivery (receipt acknowledged) or delivery by telex (with
correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below, or such
other address as may be designated in writing hereafter, in the same
manner, by such person (if delivered on a Business Day during normal
business hours where such notice is to be received), or the first Business
Day following such delivery (if delivered on a Business Day after normal
business hours where such notice is to be received) or (b) on the second
Business Day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for each Holder shall
be maintained by the Company.
The address for the Company shall be:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000, XXX
Attention: Chief Executive Officer
fax: (000) 000-0000
Copies of all notices shall be sent to:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000, XXX
Attention: General Counsel
fax: (000) 000-0000
The address for the Stockholders shall be:
c/o Banco Itau X.X.
Xxx Xxx Xxxxx 000
Xxx Xxxxx Xxxxxx
Attn: President and CEO
Fax No: (000) 00-00-000-0000
Copies of all notices shall be sent to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No: (000) 000-0000
The address for AOL shall be:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000, XXX
Attn: President, AOL International
Fax No.: (000) 000-0000
Copies of all notices shall be sent to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000, XXX
Attn: General Counsel
Fax No.: (000) 000-0000
The address for ODC shall be:
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000, XXX
Attn:
Fax No.:
Copies of all notices shall be sent to:
Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000, XXX
Attn: Legal Department
Fax No.: (000) 000-0000
Section 12.3. Remedies. In the event of a breach by the Company or
by a Holder of any of their obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and the Stockholders agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, the breaching party or
parties shall waive the defense that a remedy at law would be adequate.
Section 12.4. No Inconsistent Agreements. Neither the Company nor
any of its Subsidiaries has, as of the date hereof, nor shall the Company
or any of its subsidiaries, on or after the date of this Agreement, enter
inuo any agreement with respect to its securities that is inconsistent with
the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Without limiting the generality of the
foregoing, the Company shall not grant to any person the right to request
the Company to register any securities of the Company under the Securities
Act unless the rights so granted are subject in all respects to the prior
rights in full of the Holders, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
Section 12.5. Amendments and Waivers. No provision of this
Agreement may be waived or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Holders; or, in the
case of a waiver, by the party against whom enforcement of any such waiver
is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. Notwithstanding the foregoing, no
such amendment shall be effective to the extent that it applies to less
than all of the Holders. The Company shall not offer or pay any
consideration to a Holder for consenting to such an amendment or waiver
unless the same consideration is offered to each Holder and the same
consideration is paid to each Holder which consents to such amendment or
waiver.
Section 12.6. Successors and Assigns. Except as otherwise provided
in this Agreement, this Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties.
The rights of each Holder hereunder, including the right to have the
Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder
together with the Registrable Securities, or the securities into which such
Registrable Securities are convertible or exchangeable into, to another
Person if: (a) the assigning Holder transfers or otherwise assigns to such
Person at least 2,641,666 Shares (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock
splits and the like), or, if the number of shares of Registrable Securities
so assigned is less than such number, the assignee is a Permitted
Stockholder Affiliate, (b) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (i) the name
and address of such transferee or assignee, and (ii) the number of
securities with respect to which such registration rights are being
transferred or assigned, (c) at or before the time the Company receives the
written notice contemplated by clause (b) of this Section, the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions of this Agreement and, with respect to any Initial Shares, by
the provisions of the Stock Subscription Agreement applicable to transfers
of Initial Shares, and (d) such transfer shall have been made in accordance
with the applicable requirements of any agreement applicable to the
transfer of such shares. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns. Notwithstanding the
foregoing, the Stockholders shall have no right to assign any of the rights
granted to the Stockholders pursuant to Sections 10.2, 10.3, 10.4 and 10.6
of this Agreement, each of which shall be non-transferable and personal to
the Stockholders, and any such assignment shall be null and void, except
that each Stockholder may assign such rights to its Permitted Stockholder
Affiliates in connection with transfers of Shares to such Permitted
Stockholder Affiliates, and from and after any such assignment, the
Permitted Stockholder Affiliate shall have the rights of the Stockholders
hereunder.
Section 12.7. No Third-Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
Section 12.8. Cumulative Remedies. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
Section 12.9. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
Section 12.10. Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of reference
only and shall in no way modify, or affect, or be considered in construing
or interpreting the meaning or construction of any of the terms or
provisions hereof.
Section 12.11. Arbitration of Disputes.
(a) Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or validity thereof
("Dispute"), shall be decided by arbitration administered by the American
Arbitration Association ("AAA") in accordance with the International
Arbitration Rules of the AAA ("Rules"). For the purpose of any arbitration
held pursuant to this Section 12.11, the Company shall act as one party and
the Holders shall act as one party for the purpose of the appointment of
arbitrators and for general conduct of the arbitration. The arbitration
shall be conducted and the award shall be rendered in New York, New York in
the English language. Any judicial proceeding by a party seeking to set
aside, vacate or modify an arbitral award issued hereunder shall be filed
in the United States District Court for the Southern District of New York
or the New York State Courts located in New York, New York and shall be
subject to the Federal Arbitration Act, 9 U.S.C. sec. 1 et seq. The parties
hereto consent to the exclusive jurisdiction of the aforesaid courts for
any action to vacate or set aside an arbitration award hereunder. Each
arbitration shall be commenced by, and on the date of, the serving of a
statement of claim by the claimant on the respondent ("Commencement"). The
claimant shall simultaneously file such statement of claim with the AAA.
The arbitral award shall be final and binding and the prevailing party may
enter such award in any court having jurisdiction. The panel shall order
all expenses and costs of an arbitration, including reasonable counsel and
consultant fees, to be paid by the non-prevailing party. In a proceeding in
which both parties prevail on different issues in dispute, the panel shall
provide in its award for an apportionment of such expenses and costs
reasonably reflecting the relative significance of the issues decided. Any
disputes as to the reasonableness of counsel fees or other expenses or
costs of the prevailing party shall be decided by the same panel. The
arbitral award shall incorporate the amount of costs and fees to be paid by
the non-prevailing party. By agreeing to arbitration, the parties do not
intend to deprive any court of its jurisdiction to issue a pre-arbitral
injunction, pre-arbitral attachment, or other order in aid of arbitration
proceedings and the enforcement of any award. Without prejudice to such
provisional remedies as may be available under the jurisdiction of a court,
the arbitral tribunal shall have full authority to grant provisional
remedies or to order any party or parties to request that a court modify or
vacate any temporary or preliminary relief issued by that court, and to
award damages for the failure of any party to respect the arbitral
tribunal's orders to that effect. The parties shall use commercially
reasonable efforts to facilitate the expeditious resolution of any
Disputes.
(b) In connection with any Arbitration hereunder, the following
specific schedule and content of proceedings shall be adhered to by the
parties unless otherwise mutually agreed. There shall be three (3) neutral
arbitrators, of whom each party shall appoint one within thirty (30) days
of the receipt by the respondent of the statement of claim. If any
arbitrator is not appointed within the time limit provided herein, such
arbitrator shall be appointed by the American Arbitration Association. The
two arbitrators so appointed shall select the chair of the arbitral
tribunal within thirty (30) days of the appointment of the second
arbitrator. If the third arbitrator is not appointed within the time limit
provided herein, such arbitrator shall be appointed by the American
Arbitration Association by providing the parties a list of ten (10)
qualified arbitrators and their relevant biographical data. Within ten (10)
days after receipt of such list, each party shall return said list to the
AAA in which it shall strike three (3) of the arbitrators and rank the
remaining arbitrators 1 through 7, 1 being the party's first choice. Unless
the parties agree to request an additional list from the AAA, and thus to
repeat the process with the same timing, the AAA shall select the
arbitrator as promptly as possible having the highest combined preference
based upon the rankings of the parties. Upon written notice by the AAA to
the parties of the third arbitrator selected, the panel shall be seated.
The arbitrator who shall serve as chair of the tribunal shall not be a
national of the United States or Brazil.
(c) In order to facilitate the comprehensive resolution of related
disputes, all claims between any of the parties to this Agreement that
arise under or in connection with this Agreement and/or any of the Related
Agreements (other than the Escrow Agreement) may be brought in a single
arbitration. Upon the request of any party to an arbitration proceeding
constituted under this Agreement, the arbitral tribunal shall consolidate
the arbitration proceeding with any other arbitration proceeding involving
any of the parties hereto relating to any of the Related Agreements (other
than the Escrow Agreement) if the arbitrators determine that (i) there are
issues of fact or law common to the proceedings so that a consolidated
proceeding would be more efficient than separate proceedings, and (ii) no
party would be unduly prejudiced as a result of such consolidation through
undue delay or otherwise. In the case of all arbitration proceedings
hereunder, the award of the arbitrators shall be final and fully effective
as between the parties when the award is issued to the parties without
regard to the filing by any party of judicial proceedings seeking to set
aside, vacate or modify the award. If proceedings are filed as to any award
and a final judicial determination is made setting aside, vacating or
modifying the award, the parties shall take all appropriate actions to
comply with such determination, including the revocation or unwinding of
any actions taken or restoration of any payments made pursuant to the
arbitral award with interest thereon at the prevailing rate. In any
consolidated arbitration held pursuant to this Section 12.11(c), the
procedures to be followed shall be the arbitration procedures set forth in
Sections 13.2 and 13.2 of the Marketing Agreement.
Section 12.12. Counterparts; Facsimiles. This Agreement may be
executed and delivered in one or more counterparts, each of which shall be
deemed to be an original, and all of which when taken together shall
constitute one and the same instrument and shall become effective when
copies hereof, bearing the signatures of each of the Parties, shall have
been received by the Company, each of the Stockholders, ODC and AOL.
Facsimile signatures to this Agreement and each of the exhibits attached
hereto shall be effective if promptly followed by the original signed
Agreement or exhibit, as the case may be.
Section 12.13 Governing Law. This Agreement, and the rights and
liabilities of the Parties hereunder, shall be governed by the substantive
laws of the State of Delaware, USA without giving effect to its rules
relating to conflict of laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
AMERICA ONLINE LATIN AMERICA, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: CFO
BANCO ITAU, S.A.
WITNESS:
By: /s/ Xxxxxxx Egydio Setubal
----------------------------
By:/s/ Xxxxxx Xxxxxx xx Xxxxxx Dietri Name: Xxxxxxx Egydio Setubal
---------------------------------- Title: President and Chief Executive
Name: Xxxxxx Xxxxxx xx Xxxxxx Dietri Officer
Title: Assistant
WITNESS:
By: /s/ Xxxxxx Xxxx Xxxxx Xxxxxxxx
--------------------------------
By: /s/ Xxxxxx Xxxxxxx Xxxxxxx Name: Xxxxxx Xxxx Xxxxx Xxxxxxxx
--------------------------------- Title: Executive Vice President
Name: Xxxxxx Xxxxxxx Xxxxxxx
Title: Assistant
BANCO XXXXXX, X.X.
WITNESS:
By: /s/ Xxxxxxx Egydio Setubal
----------------------------
Name: Xxxxxxx Egydio Setubal
By: /s/ Xxxxxx Xxxxxx xx Xxxxxx Dietri Title: President
-----------------------------------
Name: Xxxxxx Xxxxxx xx Xxxxxx Dietri
Title: Assistant
WITNESS:
By: /s/ Xxxxxx Xxxxx de Jongh
---------------------------
Name: Xxxxxx Xxxxx de Jongh
By: /s/ Xxxxxx Xxxxxxx Xxxxxxx Title: Executive Director
----------------------------
Name: Xxxxxx Xxxxxxx Xxxxxxx
Title: Assistant
WITNESS:
BANCO ITAU, S.A. - CAYMAN BRANCH
By: /s/ Xxxxxx Xxxxxx xx Xxxxxx Dietri By: /s/ Xxxxxxxx A. N. Lima
----------------------------------- -----------------------
Name: Xxxxxx Xxxxxx xx Xxxxxx Dietri Name: Xxxxxxxx A. N. Lima
Title: Assistant Title: Managing Director
WITNESS:
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxxx Xxxxxx
By: /s/ Xxxxxx Xxxxxxx Xxxxxxx Title: Attorney
----------------------------
Name: Xxxxxx Xxxxxxx Xxxxxxx
Title: Assistant
ITAU BANK LIMITED
WITNESS:
By: /s/ Xxxxxxxx A. N. Lima
-----------------------
Name: Xxxxxxxx A. N. Lima
By: /s/ Xxxxxx Xxxxxx xx Xxxxxx Dietri Title: Director
-----------------------------------
Name: Xxxxxx Xxxxxx xx Xxxxxx Dietri
Title: Assistant
WITNESS:
By: /s/ Xxxxxxx X. Setubal
-----------------------
Name: Xxxxxxx X. Setubal
By: /s/ Xxxxxx Xxxxxxx Xxxxxxx Title: President
---------------------------
Name: Xxxxxx Xxxxxxx Xxxxxxx
Title: Assistant
The parties signing below are signing for the limited purpose of joining
the covenants contained in Sections 10.1(g), 10.2, 10.3, 10.4 and 10.5 of
this Agreement.
AMERICA ONLINE, INC.
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
ASPEN INVESTMENTS LLC
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ATLANTIS INVESTMENTS LLC
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
