EXHIBIT (f)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this ("Indemnity Agreement") is entered into as of
the 30th day of December, 1997 by and among Atlantic Tele-Network, Inc., a
Delaware corporation (the "Company"), Emerging Communications, Inc., a
Delaware corporation ("ECI"), Xxxxxxxxx X. Prior, Jr. ("Prior") and Xxxxxxx X.
Xxxxxxx ("Xxxxxxx").
WHEREAS, the execution and delivery of this Indemnity Agreement by the
parties hereto is contemplated by the Subscription Agreement dated as of
August 11, 1997 (the "Subscription Agreement") between the Company and ECI and
is a condition to the Closing (as defined in the Subscription Agreement); and
WHEREAS, each of the parties hereto desires to consummate, and will receive
substantial benefits from the consummation of, the Closing.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein contained and subject to the conditions hereinafter set
forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Indemnity
Agreement without definition shall have the respective meanings ascribed to
such terms in the Subscription Agreement.
"Affiliate" of any person shall mean any other person which controls, is
controlled by, or is under common control with such person, and "person" for
purposes hereof means and includes any individual, partnership, limited
liability company, firm, corporation or other entity.
ARTICLE II
INDEMNIFICATION
Section 2.01. Indemnification by Xxxxxxx. Subject to the terms and
conditions contained herein, Xxxxxxx hereby agrees to indemnify and hold
harmless the Company, its Subsidiaries after the Closing, their respective
officers, directors and agents and Prior, individually and as Trustee of the
1994 Prior Charitable Remainder Trust, from and against any and all losses,
liabilities, damages, costs, and expenses (including, without limitation,
reasonable attorney's fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending any action, suit or
proceeding, commenced or threatened) of any kind and nature (collectively,
"Losses") (A) which relate to or arise out of any action, suit or proceeding
brought by or on behalf of any stockholder of the Company or ECI arising out
of or relating to (i) the repurchase by the Company of shares of Company
Common Stock owned by Prior and/or the Trust pursuant to the Recapitalization
Agreement or (ii) the number of shares of ECI Common Stock to be received by
Xxxxxxx pursuant to the Merger Agreement, or (B) which relate to or arise out
of any action, suit or proceeding arising out of relating to an untrue
statement of a material fact or alleged untrue statement of a material fact
contained in the proxy statement/prospectus to be delivered to holders of
Company Common Stock (the "Proxy Statement") or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with respect
to the beneficial ownership of stock of the Company by Xxxxxxx and/or members
of his family and his or their Affiliates and biographical information with
respect to Xx. Xxxxxxx.
Section 2.02. Indemnification by Prior. Subject to the terms and conditions
contained herein, Prior hereby agrees to indemnify and hold harmless ECI, the
entities which will become its Subsidiaries after the Closing, their
respective officers, directors and agents and Xxxxxxx from and against any and
all Losses (A) which
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relate to or arise out of any action, suit or proceeding brought by or on
behalf of any stockholder of the Company or ECI arising out of or relating to
the number of shares of Surviving Corporation Common Stock (as defined in the
Merger Agreement) to be received by Prior pursuant to the Merger Agreement or
(B) an untrue statement of a material fact or alleged untrue statement of a
material fact contained in the Proxy Statement or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with respect
to the beneficial ownership of stock of the Company by Prior and/or members of
his family and his or their Affiliates and biographical information with
respect to Mr. Prior.
Section 2.03. Indemnification by ECI. Subject to the terms and conditions
contained herein, ECI hereby agrees to indemnify and hold harmless the
Company, its Subsidiaries after the Closing, their respective officers,
directors and agents and Prior from and against any and all Losses which
relate to or arise out of, (i) the business or operations conducted by ECI and
the Transferred Subsidiaries before or after the Closing, or any other
Subsidiaries of ECI after the Closing, (ii) the Assumed Liabilities or (iii)
any action, suit or proceeding arising out of or relating to an untrue
statement of a material fact or alleged untrue statement of a material fact
contained in the Proxy Statement or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with respect to (a) the business,
prospects or planned or proposed activities of ECI and its Subsidiaries after
the Closing Date, (b) activities of ECI or the Transferred Subsidiaries after
April 30, 1997 and (c) prospective acquisitions of businesses or other
transactions not in the ordinary course of business planned or contemplated by
ECI, the Transferred Subsidiaries or Xxxxxxx.
Section 2.04. Indemnication by the Company. Subject to the terms and
conditions contained herein, the Company hereby agrees to indemnify and hold
harmless ECI, the entities which will become its Subsidiaries after the
Closing, their respective officers, directors and agents and Xxxxxxx from and
against any and all Losses which relate to or arise out of (i) the business
and operations conducted by GTT before or after the Closing or the business
and operations after the Closing of the Company or any other entity which will
be a Subsidiary of the Company after the Closing, (ii) the Excluded
Liabilities or (iii) any action, suit or proceeding arising out of or relating
to an untrue statement of a material fact or alleged untrue statement of a
material fact contained in the Proxy Statement or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with respect
to (a) the business, prospects or planned or proposed activities of the
Company and its Subsidiaries after the Closing Date, (b) activities of GTT and
the Company with respect to GTT after April 30, 1997 and (c) prospective
acquisitions of businesses or other transactions not in the ordinary course of
business planned or contemplated by GTT or Prior.
Section 2.05. No Third Party Rights. Nothing in this Indemnity Agreement,
express or implied, is intended or shall be construed to give to any person,
firm or corporation, other than an Indemnified Party (as defined below), any
rights, remedy, claim or cause of action under or by reason of this Indemnity
Agreement, or any terms, covenants or conditions hereof.
Section 2.06. Indemnification Procedures. (a) If any party or person which
may seek indemnification hereunder (an "Indemnified Party") determines that it
is or may be entitled to indemnification by any party hereto (an "Indemnifying
Party") under this Agreement (other than in connection with any Third Party
Claim (as defined below) subject to clause (b) of this Section 2.06), the
Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. After the Indemnifying Party shall
have been notified of the amount for which the Indemnified Party seeks
indemnification, the Indemnifying Party shall, within 30 days after receipt of
such notice, pay the Indemnified Party such amount in cash or other
immediately available funds (or reach agreement with the Indemnified Party as
to a mutually agreeable alternative payment schedule) unless the Indemnifying
Party objects to the claim for indemnification or the amount thereof. If the
Indemnifying Party does not give the Indemnified Party written notice
objecting to such claim and setting forth the grounds therefor within the same
30 day period, the Indemnifying Party shall be deemed to have acknowledged its
liability for such claim and the Indemnified Party may exercise any and all of
its rights under applicable law to collect such amount.
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(b) Promptly following the earlier of (i) receipt of notice of the
commencement by a third party of any action, suit or proceeding against or
otherwise involving any Indemnified Party or (ii) receipt of information from
a third party alleging the existence of a claim against an Indemnified Party,
in either case, with respect to which indemnification may be sought pursuant
to this Indemnity Agreement (a "Third-Party Claim"), the Indemnified Party
shall give the Indemnifying Party prompt written notice thereof. The failure
of the Indemnified Party to give notice as provided in this clause (b) shall
not relieve the Indemnifying Party of its obligations under this Indemnity
Agreement, except to the extent that the Indemnifying Party is materially
prejudiced by such failure to give notice. Within 30 days after receipt of
such notice, the Indemnifying Party may (i) by giving written notice thereof
to the Indemnified Party, acknowledge liability for and at its option elect to
assume the defense of such Third-Party Claim at its sole cost and expense or
(ii) object to the claim of indemnification set forth in the notice delivered
by the Indemnified Party pursuant to the first sentence of this clause (b);
provided that if the Indemnifying Party does not within the same 30 day period
give the Indemnified Party written notice objecting to such claim and setting
forth the grounds therefor or electing to assume the defense, the Indemnifying
Party shall be deemed to have acknowledged its liability for such Third-Party
Claim. Any contest of a Third-Party Claim as to which the Indemnifying Party
has elected to assume the defense shall be conducted by attorneys employed by
the Indemnifying Party and reasonably satisfactory to the Indemnified Party,
and the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, except as provided in the following sentence. The Indemnified
Party shall have the right to participate in the defense against the Third
Party Claim and to be represented by attorneys of its own choosing, but the
fees and expenses of such attorneys shall be at the expense of the Indemnified
Party unless (i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such attorneys by the Indemnified Party or
(ii) representation of both parties by the same counsel in respect of such
Third Party Claim would be inappropriate due to actual or potential differing
interests between them (in which case the Indemnifying Party shall not be
entitled to assume or direct the defense of such proceeding on behalf of the
Indemnified Party); provided that in no event shall the Indemnifying Party be
required to pay the fees and expenses of more than one separate counsel (in
addition to local counsel) in any one proceeding representing the Indemnified
Parties who are parties thereto. If the Indemnifying Party assumes the defense
of a Third-Party Claim, the Indemnifying Party may settle or compromise the
claim without the prior written consent of the Indemnified Party; provided
that without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld, the Indemnifying Party may not agree to
any such settlement or compromise unless such settlement or compromise
includes an unconditional release of the Indemnified Party from all liability
on claims that are or could be the subject matter of such proceeding. If the
Indemnifying Party does not assume the defense of a Third-Party Claim for
which it has acknowledged liability for indemnification as described herein,
the Indemnified Party may require the Indemnifying Party to reimburse it on a
current basis for its reasonable expenses of investigation, reasonable
attorney's fees and reasonable out-of-pocket expenses incurred in defending
against such Third-Party Claim and the Indemnifying Party shall be bound by
the result obtained with respect thereto by the Indemnified Party; provided
that the Indemnifying Party shall not be liable for any settlement effected
without its consent, which consent shall not be unreasonably withheld. The
Indemnifying Party shall pay to the Indemnified Party in cash the amount for
which the Indemnified Party is entitled to be indemnified (if any) within 15
days after the final resolution of such Third-Party Claim (whether by the
final nonappealable judgment of a court of competent jurisdiction or
otherwise) or, in the case of any Third-Party Claim as to which the
Indemnifying Party has not acknowledged liability, within 15 days after such
Indemnifying Party's objection has been resolved by settlement, compromise or
the final nonappealable judgment of a court of competent jurisdiction.
(c) This Section 2.06 shall have no applicability to any claim for
indemnification with respect to any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, value added, alternative minimum, estimated or other similar
tax (including any fee, assessment, or other charge in the nature of or in
lieu of any tax) imposed by any governmental entity or political subdivision
thereof, and any interest, penalties, additions to tax, or additional amounts
in respect of the foregoing (collectively "Taxes"), it being understood that
the procedures for
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indemnification with respect to Taxes are covered in that separate Tax Sharing
and Indemnification Agreement dated the date hereof among the parties hereto.
ARTICLE III
FORBEARANCE; STANDSTILL
Section 3.01. Forbearance. Except with respect to enforcing specific
provisions of an agreement entered into in connection with the Transactions,
including, without limitation, this Indemnity Agreement, (a) Xxxxxxx and ECI
hereby agree not to bring any action, suit or proceeding against Prior or the
Company with respect to any of the matters constituting the Transactions, or
arising out or relating to the business, operations or management of the
Company or any of its Subsidiaries prior to and including the Closing and (b)
Prior and the Company hereby agree not to bring any action, suit or proceeding
against Xxxxxxx or ECI with respect to any of the matters constituting the
Transactions or arising out of or relating to the business, operations or
management of the Company or any of its Subsidiaries prior to and including
the Closing.
Section 3.02. Standstill.
(a) Each of Xxxxxxx and ECI agrees that for a period of ten years after the
Closing Date, he or it, as the case may be, shall not, and shall not permit
his or its, as the case may be, Controlled Affiliates (as defined below) to,
without the prior written consent of the Company, duly authorized by its Board
of Directors:
(i) be the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of greater than 5% of the outstanding Voting Securities (as
defined below) of the Company; or offer or agree to purchase any Voting
Securities of the Company if, after giving effect to such purchase, he or
it, as the case may be, would be the beneficial owner of greater than 5% of
the outstanding Voting Securities of the Company; or
(ii) make, or in any way participate in, any "solicitation" of "proxies"
(as such terms are defined in Rule 14a-1 under the Exchange Act) with
respect to Voting Securities of the Company; become a participant in any
"election contest" (within the meaning of Rule 14a-11 of the Exchange Act)
with respect to the Company; seek to advise or influence any person with
respect to the voting of any Voting Securities of the Company; execute any
written consent in lieu of a meeting of holders of any class or series of
Voting Securities of the Company; or initiate, propose or otherwise solicit
holders of Voting Securities of the Company for the approval or rejection
of a proposal for a vote of holders of Voting Securities of the Company.
(b) Each of Prior and the Company agrees that for a period of ten years
after the Closing Date, he or it, as the case may be, shall not, and shall not
permit his or its, as the case may be, Controlled Affiliates (as defined
below) to, without the prior written consent of ECI, duly authorized by its
Board of Directors:
(i) be the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of greater than 5% of the outstanding Voting Securities (as
defined below) of ECI; or offer or agree to purchase any Voting Securities
of ECI if, after giving effect to such purchase, he or it, as the case may
be, would be the beneficial owner of greater than 5% of the outstanding
Voting Securities of ECI; or
(ii) make, or in any way participate in, any "solicitation" of "proxies"
(as such terms are defined in Rule 14a-1 under the Exchange Act) with
respect to Voting Securities of ECI; become a participant in any "election
contest" (within the meaning of Rule 14a-11 of the Exchange Act) with
respect to ECI; seek to advise or influence any person with respect to the
voting of any Voting Securities of ECI; execute any written consent in lieu
of a meeting of holders of any class or series of Voting Securities of ECI;
or initiate, propose or otherwise solicit holders of Voting Securities of
ECI for the approval or rejection of a proposal for a vote of holders of
Voting Securities of ECI.
(c) As used in this Section 3.02, the following terms have the meanings
assigned to them below:
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"Controlled Affiliate" of any person means any other person under the
control of such person. As used in this definition, "control" means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through ownership of
Voting Securities, by contract or otherwise.
"Voting Securities" of any person means securities, the holders of which
are, at the applicable time in question, entitled to vote for the election of
directors of such person.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Effectiveness. This Indemnity Agreement shall become operative
upon consummation of the Merger.
Section 4.02. Entire Agreement. This Indemnity Agreement, together with all
other written agreements which may be entered into between the parties in
connection herewith and the transactions contemplated hereby and all other
documents and instruments delivered in connection herewith and therewith and
the transactions contemplated hereby and thereby, set forth the full and
complete understanding of the parties hereto with respect to the transactions
contemplated hereby.
Section 4.03. Governing Law. This Indemnity Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
reference to the conflict of laws rules thereof.
Section 4.04. Headings. The headings in this Indemnity Agreement are
intended solely for convenience of reference and shall be given no effect in
the interpretation of this Indemnity Agreement.
Section 4.05. Counterparts. This Indemnity Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
Section 4.06. Benefits. This Indemnity Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns, and no other person (other than an Indemnified Party) will have any
right or obligation hereunder.
Section 4.07. Assignment. Neither this Indemnity Agreement nor any right
hereunder may be assigned by the parties hereto without the prior written
consent of the other parties. Subject to the foregoing, this Indemnity
Agreement shall be binding upon and inure to the benefit of the successors,
heirs, representatives and assigns of each party hereto.
Section 4.08. Amendment and Waiver. This Indemnity Agreement may be amended
only by an instrument in writing signed on behalf of each of the parties
hereto. Any term, condition or provision of this Indemnity Agreement may be
waived (if in writing) at any time by the party or each of the parties
entitled to the benefits thereof.
Section 4.09. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
given if delivered by hand, or when sent by telex or telecopier (with
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receipt confirmed) or by registered mail, return receipt requested, addressed
as follows (or to such other address as a party may designate by notice to the
other):
(a) If to the Company or Prior:
Atlantic Tele-Network, Inc.
Estate Havensight
X.X. Xxx 00000
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000
(000) 000-0000 or 000-0000
Attention: Xxxxxxxxx X. Prior
Telecopy: (000) 000-0000
with copies to:
Xxxxx X. Xxxxx, P.C.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopy: (000) 000-0000
(b) If to ECI or Xxxxxxx:
Atlantic Tele-Network, Inc.
Chase Financial Center
X.X. Xxx 0000
Xx. Xxxxx, X.X. Xxxxxx Xxxxxxx 00000-0000
(000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopy: (000) 000-0000
Section 4.10. Jurisdiction. Any action or proceeding brought by any party to
this Indemnity Agreement against any other party hereto with respect to the
enforcement or breach of this Indemnity Agreement may be brought in the courts
of the State of New York or of the United States for the Southern District of
New York. Each of the parties hereto irrevocably submits to the jurisdiction
of each such court in respect of any such action or proceeding, irrevocably
waives any objection that it may now or hereafter have to the laying of venue
of any such action or proceeding in any such court and any claim that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum, and irrevocably consents that service of process or other
legal summons for purposes of any such action or proceeding may be served on
it by personal service within or without the State of New York or by mailing a
copy thereof by registered mail, or a form of mail substantially equivalent to
registered mail, addressed to such party at its address as provided for
notices hereunder.
Section 4.11. Expenses of Enforcement. In the event of any breach of this
Indemnity Agreement by any party hereto, any other party hereto which is
aggrieved by such breach (an "Aggrieved Party") shall be entitled to recover
from the party in breach, any and all costs and expenses, including without
limitation reasonable attorneys fees, incurred by the Aggrieved Party as a
result of such breach or in connection with enforcing the provisions of this
Indemnity Agreement with respect to such breach.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Indemnity
Agreement to be duly executed, all as of the date first written above.
Atlantic Tele-Network, Inc.
By: /s/ Xxxxxxxxx X. Prior
_________________________________
Name: Xxxxxxxxx X. Prior
Title: Co-Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxx
_________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Co-Chief Executive Officer
Emerging Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
_________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
/s/ Xxxxxxxxx X. Prior, Jr.
_________________________________
Xxxxxxxxx X. Prior, Jr.
/s/ Xxxxxxx X. Xxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxx
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