EXHIBIT 10.25
EXECUTION COPY CONFIDENTIAL
AETHER SYSTEMS, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS Common STOCK PURCHASE AGREEMENT ("AGREEMENT") is entered into
(entrance into this Agreement, "SIGNING") as of November 5, 2001 (the "SIGNING
DATE"), by and between Aether Systems, Inc., a Delaware corporation (the
"COMPANY"), and America Online, Inc., a Delaware corporation (the "PURCHASER").
The Company and the Purchaser may be referred to herein individually as a
"PARTY" and collectively as the "PARTIES."
WHEREAS, the Purchaser has indicated a desire to purchase from the
Company shares of the Company's common stock, $0.01 par value per share ("COMMON
STOCK"); and
WHEREAS, the Company has indicated a desire to sell shares of Common
Stock to the Purchaser and to register such securities under the Securities Act
(as such term is defined herein) on the terms set forth herein.
NOW, THEREFORE, for and in consideration of the mutual consents and
agreements herein contained, the Parties do hereby covenant and agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Subject to the terms and conditions
hereinafter set forth, on the Closing Date (as defined below) the Company shall
issue and sell to the Purchaser, and the Purchaser shall purchase from the
Company, that number of shares of Common Stock equal to the aggregate purchase
price of Five Million Dollars ($5,000,000) (the "PURCHASE PRICE") divided by the
average of the closing prices per share of Common Stock for the ten (10) trading
days immediately prior to but excluding the Signing Date as reported on the
Nasdaq National Market ("PURCHASED SHARE PRICE," with the shares obtained by
dividing the Purchase Price by the Purchased Share Price being referred to in
this Agreement as the "PURCHASED SHARES"). The Company shall only issue whole
shares rounded up to the next whole number. The Common Stock shall have the
rights, terms and privileges set forth in the Company's Amended and Restated
Certificate of Incorporation. Terms used herein as defined terms that are not
defined in the context hereof shall have the meaning set forth in Article IX.
1.2 CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article VI and Article VII hereof as of the Closing Date, a closing
of the sale and purchase of the Purchased Shares ("CLOSING") shall take place
immediately prior to the Company's filing the Purchased Shares Registration
Statement with the Commission (the date of Closing, the "CLOSING DATE"). The
Closing shall take place at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X
Xxxxxx, Xxxxxxxxxx, X.X. 00000, or such other place as shall be mutually agreed
upon by the Company and the Purchaser. At the Closing, the Company will deliver
to the Purchaser evidence of entry on the Company's books and records that the
Purchaser is the record holder of the Purchased Shares upon receipt by the
Company of payment of the Purchase Price by or on behalf of the Purchaser to the
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Company by wire transfer of immediately available funds to an account designated
in writing by the Company in a written notice delivered to the Purchaser.
1.3 5% INITIAL SHARES. Notwithstanding the foregoing provisions of
this Article I, the Purchaser shall not be required to purchase at Closing more
than the number of shares of Common Stock ("INITIAL THRESHOLD SHARES") equal to
one less than that number of shares that would result in the Purchaser's
becoming the beneficial owner (determined in accordance with Rule 13d-3 under
the Exchange Act) of 5% or more of the Company's outstanding Common Stock
determined by counting all Purchased Shares (the difference between the number
of Purchased Shares and the number of Initial Threshold Shares, "5% INITIAL
SHARES").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchaser to purchase the Purchased Shares, the
Company hereby represents and warrants to the Purchaser as follows, except as
set forth on the Schedule of Exceptions attached hereto as Exhibit E:
2.1 ORGANIZATION, CORPORATE POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
conduct its business as presently conducted and as currently proposed to be
conducted by it, except where failure to have power and authority would not have
a Material Adverse Effect. The Company has full corporate power and authority to
enter into and perform this Agreement and to carry out the transactions
contemplated by this Agreement. The Company is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the nature of its
business or properties makes such qualification or licensing necessary, except
where the failure to so qualify or be licensed would not have a Material Adverse
Effect. The execution, delivery and performance by the Company of this Agreement
has been duly and validly approved and authorized by all necessary corporate
action on its part. This Agreement is a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and subject to general principles of
equity.
2.2 CONSENTS AND APPROVALS; NO CONFLICTS. No consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any court, arbitrational tribunal, administrative
agency or commission or other governmental or regulatory authority or agency
(each of the foregoing is hereafter referred to as a "GOVERNMENTAL ENTITY") or
any other Person is required on the part of the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation of any of the transactions contemplated hereby,
including without limitation the offer, issuance, sale and delivery of the
Purchased Shares, except such filings as shall have been made prior to and shall
be effective on and as of the Signing and such filings required to be made after
the Signing under applicable federal and state securities laws. Based on the
representations made by the Purchaser in Section 4.1 of this Agreement, the
offer and sale of the Purchased Shares to the Purchaser will be in compliance
with applicable federal and state securities laws. Neither the execution and
delivery of
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this Agreement nor the consummation of the transactions or performance of the
Company's obligations contemplated hereby will conflict with, result in a
material breach or violation of, or cause a default under, any provision of (i)
the Company's Certificate of Incorporation or Bylaws, each as is currently in
effect, (ii) any instrument, contract or agreement that is material to the
business of the Company and its subsidiaries taken as a whole or (iii) any
judgment, writ, decree, order, law, statute, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries, except in the case of
clause (ii) and (iii), for violations, breaches, defaults or conflicts that
would not have a Material Adverse Effect or as disclosed in the Company Reports.
2.3 AUTHORIZED AND OUTSTANDING STOCK. The authorized capital stock
of the Company (immediately prior to the Signing) consists of 1,000,000,000
shares of Common Stock, 40,956,353 of which were issued and outstanding as of
October 12, 2001, and 1,000,000 shares of preferred stock, par value $.01 per
share (the "PREFERRED STOCK"), none of which is issued and outstanding. As of
October 12, 2001, options and warrants to purchase 6,484,096 shares of Common
Stock and 598,478 shares of restricted Common Stock under the Company's employee
and director benefit plans were issued and outstanding. In addition, warrants to
purchase 893,665 additional shares of Common Stock were issued and outstanding
on that date. Since October 12, 2001, the Company has not issued any options or
warrants or any capital stock other than Common Stock issued upon the exercise
of options and warrants outstanding on that date or upon the issuance of options
and/or warrants for newly hired employees since that date. As of the Signing
Date, there are not issued and outstanding options to purchase more than
6,684,096 shares of Common Stock under the Company's employee and director
benefit plans.
2.4 ISSUANCE OF SECURITIES. The Purchased Shares and the Capital
Call Shares (if any), when issued, sold and delivered against payment therefor
in accordance with the provisions of this Agreement will be duly and validly
issued, fully paid and nonassessable. None of the offer, issuance or sale of the
Purchased Shares or the Capital Call Shares (if any) is subject to, or in
violation of, any preemptive rights, rights of first refusal, or other rights to
purchase such stock, pursuant to any agreement or commitment of the Company.
2.5 COMMISSION DOCUMENTS; FINANCIAL INFORMATION. The Company has
made all filings with the Commission required under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), or the Securities Act of 1933, as
amended (the "SECURITIES Act"), on a timely basis. The Company has previously
made available to the public (including the Purchaser) complete and accurate
copies, as amended or supplemented through the date hereof, of the following
forms filed with the Commission: (i) Form 10-Q under the Exchange Act for the
period ended Xxxxx 00, 0000, (xx) Form 10-Q under the Exchange Act filed for
period ended June 30, 2001, (ii) Form 10-K, as amended, for the fiscal year
ended December 31, 2000, and (iv) each Form 8-K filed during fiscal year 2001
prior to the Signing Date (such reports are collectively referred to herein as
the "COMPANY REPORTS"). As of their respective dates, the Company Reports did
not contain any 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. The
audited financial statements and unaudited interim financial statements of the
Company included in the Company Reports (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, (ii) have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the
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periods covered thereby (except as may be indicated therein or in the notes
thereto, and in the case of quarterly financial statements, as permitted by Form
10-Q under the Exchange Act), and (iii) fairly presented in all material
respects (subject, in the case of the unaudited interim financial statements, to
normal, year-end audit adjustments, none of which will be material) the
consolidated financial condition, results of operations and cash flows of the
Company as of the respective dates thereof and for the periods referred to
therein.
2.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
Reports, since June 30, 2001, there has been no change, event or effect that is
materially adverse to the assets, business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, except for
those changes, events and effects that are directly caused by (a) conditions
affecting the United States economy as a whole but not affecting the Company
more than similarly situated Persons, or (b) fluctuations in the market price of
the Common Stock.
2.7 LITIGATION. Except as disclosed in the Company Reports, there is
no action, suit or legal proceeding, or governmental inquiry or investigation,
pending against the Company or any of its subsidiaries, or, to the Company's
knowledge, threatened against the Company or any of its subsidiaries which (a)
questions the validity of this Agreement or the right of the Company to enter
into this Agreement or perform any of its obligations hereunder or (b) would
have a Material Adverse Effect.
2.8 UNDISCLOSED LIABILITIES. Neither the Company nor any of its
subsidiaries has any liability (whether absolute, accrued, contingent or
otherwise), except for (i) liabilities reflected in the Company Reports, (ii)
liabilities which have arisen since June 30, 2001 in the ordinary course of
business and that are consistent with past experience and (iii) contractual
liabilities incurred in the ordinary course of business.
2.9 COMPLIANCE WITH LAWS. Neither the Company nor any of its
subsidiaries is (i) subject to the terms or provisions of any material judgment,
decree, order, writ or injunction or (ii) in violation of any terms or
provisions of any laws, rules, or regulations applicable to it or its business
as previously or currently being conducted, except where such judgments,
decrees, orders, writs or injunctions or violations would not have a Material
Adverse Effect or as disclosed in the Company Reports.
2.10 NO BROKERS OR FINDERS. No Person has or will have, as a result
of the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Company or the Purchaser for any commission, fee or other
compensation as a finder or broker because of any act or omission by the
Company.
ARTICLE III
COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof or as may be
otherwise set forth below, the Company covenants and agrees that it will observe
the following covenants on and after the date hereof and for so long as
Purchaser holds any shares of Common Stock:
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3.1 THE COMPANY SEC DOCUMENTS. Commencing on the Signing Date and
continuing until the date on which all of the Purchased Shares and the Capital
Call Shares (if any) shall no longer be deemed to be Registrable Securities, the
Company shall continue to file all reports in accordance with Section 13 and
Section 15(d) of the Exchange Act with the Commission in order to maintain the
Company's eligibility to register the Registrable Securities on Form S-3 (or any
successor form thereto).
3.2 PURCHASER PUT RIGHTS.
(a) If the Purchased Shares Registration Statement has not
been declared effective by the Commission within 150 days of the Signing Date,
then the Purchaser may, by written notice given to the Company not later than
forty-five (45) days following such date, require that the Company purchase from
the Purchaser, and the Company shall purchase from the Purchaser, the Purchased
Shares for the Purchase Price. In such event, no later than five (5) business
days following delivery to the Company of the written notice required by the
immediately preceding sentence, the Company shall pay to the Purchaser the
Purchase Price by wire transfer of immediately available funds to an account
designated in writing by the Purchaser in such written notice.
(b) If any of the Year 1 Registration Statement, the Year 2
Registration Statement, or the Year 3 Registration Statement has not been
declared effective by the Commission within 150 days of the first, second, or
third anniversary of the Signing Date (respectively), then the Purchaser may, by
written notice given to the Company not later than forty-five (45) days
following such date, require that the Company purchase from the Purchaser, and
the Company shall purchase from the Purchaser, the Registrable Securities
covered by such Registration Statement for the aggregate purchase price paid by
the Purchaser for those Registrable Securities (e.g., the Year 1 Price, the Year
2 Price, or the Year 3 Price). In that event, no later than five (5) business
days following delivery to the Company of the written notice required by the
immediately preceding sentence, the Company shall pay to the Purchaser such
aggregate purchase price by wire transfer of immediately available funds to an
account designated in writing by the Purchaser in such written notice.
(c) If the Purchaser exercises its put rights under this
Section 3.2 with respect to any Registrable Securities, then the Company may
withdraw from the Commission the Registration Statement covering such
Registrable Securities.
ARTICLE IV
PURCHASER REPRESENTATIONS
4.1 REPRESENTATIONS AND WARRANTIES. The Purchaser hereby represents
and warrants to the Company, understanding and agreeing that the Company is
entering into this Agreement in part in reliance on such representations and
warranties, as follows:
(a) Purchaser is an "ACCREDITED INVESTOR" as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act;
(b) Purchaser has been advised by the Company that the
Purchased Shares and the Capital Call Shares (if any) have not been registered
under the Securities Act, that the
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Purchased Shares will be issued on the basis of the statutory exemption provided
by Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or
both, relating to transactions by an issuer not involving any public offering
and under similar exemptions under certain state securities laws, that this
transaction has not been reviewed by, passed on or submitted to any federal or
state agency or self-regulatory organization where an exemption is being relied
upon, and that the Company's reliance thereon is based in part upon the
representations made by Purchaser in this Agreement. Purchaser acknowledges that
it has been informed by the Company of, or is otherwise familiar with, the
nature of the limitations imposed by the Securities Act and the rules and
regulations thereunder on the transfer of securities;
(c) Purchaser is purchasing the Purchased Shares and the
Capital Call Shares (if any) for investment purposes, for its own account and
not with a view to, or for sale in connection with, any distribution thereof in
violation of federal or state securities laws;
(d) By reason of its business or financial experience,
Purchaser has the capacity to protect its own interest in connection with the
transactions contemplated hereunder; and
(e) No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or claim
against or upon Purchaser, the Company, or any of its subsidiaries for any
commission, fee or other compensation as a finder or broker because of any act
or omission by the Purchaser.
4.2 LITIGATION. There is no action, suit or legal proceeding, or
governmental inquiry or investigation, pending against the Purchaser, or, to the
Purchaser's knowledge, threatened against the Purchaser which questions the
validity of this Agreement or the right of the Purchaser to enter into this
Agreement or perform any of its obligations hereunder.
4.3 CONSENTS AND APPROVALS; NO CONFLICTS. No consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Entity or any other Person is
required on the part of the Purchaser in connection with the execution and
delivery of this Agreement or the consummation of any of the transactions
contemplated hereby, except such filings as shall have been made prior to and
shall be effective on and as of the Signing and such filings required to be made
after the Signing under applicable federal and state securities laws. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions or performance of the Purchaser's obligations contemplated hereby
will conflict with, result in a material breach or violation of, or cause a
default under, any provision of (i) the Purchaser's Certificate of Incorporation
or Bylaws, each as is currently in effect, (ii) any instrument, contract or
agreement that is material to the business of the Purchaser or (iii) any
judgment, writ, decree, order, law, statute, ordinance, rule or regulation
applicable to the Purchaser, except in the case of clause (ii) and (iii), for
violations, breaches, defaults or conflicts that would not have a Material
Adverse Effect.
4.4 ORGANIZATION, CORPORATE POWER AND AUTHORITY. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Purchaser has full corporate power and authority
to conduct its business as presently conducted and as proposed to be conducted
by it and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement. The Purchaser is
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duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect. The execution, delivery
and performance by the Purchaser of this Agreement has been duly and validly
approved and authorized by all necessary corporate action on its part. This
Agreement is a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
4.5 NO BROKERS OR FINDERS. No person has or will have, as a result
of the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Company or any Purchaser for any commission, fee or other
compensation as a finder or broker because of any act or omission by the
Purchaser.
ARTICLE V
COVENANTS OF THE PURCHASER
Without limiting any other covenants and provisions hereof or as may be
otherwise set forth below, the Purchaser covenants and agrees that it will
observe the following covenants on and after the date hereof and until the later
of: (a) the last day the Purchaser holds any shares of Common Stock and (b) the
one hundred fifty-first day after the third anniversary of the Signing Date:
5.1 AETHER CAPITAL CALL RIGHTS. The Company shall have the right but
not the obligation to require the Purchaser to purchase, and the Purchaser shall
be obligated to purchase, additional shares of Common Stock as follows:
(a) On written notice delivered (in accordance with Section
10.4) by the Company to the Purchaser during the sixty (60) day period ending on
the first anniversary of the Signing Date, the Company may require the Purchaser
to purchase, in which case the Purchaser shall purchase, from the Company
either:
(i) Common Stock worth up to (as indicated in such
written notice) Five Million Dollars ($5,000,000) plus the aggregate dollar
value (calculated using the Purchased Share Price) of any 5% Initial Shares that
would have been Purchased Shares but for the restrictions in Section 1.3; or
(ii) if (1) the Purchaser has exercised its put
rights under Section 3.2 with respect to the Purchased Shares or (2) the Closing
did not occur, then Common Stock worth up to (as indicated in such written
notice) Ten Million Dollars ($10,000,000) (the aggregate purchase price
indicated in such written notice, "YEAR 1 PRICE") (the shares purchased by the
Purchaser pursuant to this Section 5.1(a), "YEAR 1 SHARES");
provided that the Company may deliver only one such written
notice pursuant to this Section 5.1(a). A closing of the sale and purchase of
the Year 1 Shares (the "YEAR 1 CLOSING") shall take place immediately prior to
the Company's filing with the Commission the Year 1 Registration Statement (the
date of Year 1 Closing, "YEAR 1 CLOSING DATE"). The Year 1 Closing shall take
place at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X Xxxxxx, Xxxxxxxxxx,
D.C.
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20037, or such other place as shall be mutually agreed upon by the Company and
the Purchaser. At the Year 1 Closing, the Company will deliver to the Purchaser
evidence of entry on the Company's books and records that the Purchaser is the
record holder of the Year 1 Shares upon receipt by the Company of payment of the
Year 1 Price by or on behalf of the Purchaser to the Company by wire transfer of
immediately available funds to an account designated in writing by the Company
in a written notice delivered to the Purchaser. The number of Year 1 Shares
shall be equal (rounded up to the nearest whole number) to the Year 1 Price
divided by the average of the closing prices per share of Common Stock for the
twenty (20) trading days immediately prior to but excluding the thirtieth day
after the first anniversary of the Signing Date as reported on the Nasdaq
National Market or other comparable national exchange ("YEAR 1 SHARE PRICE").
(b) On written notice delivered (in accordance with Section
10.4) by the Company to the Purchaser during the sixty (60) day period ending on
the second anniversary of the Signing Date, the Company may require the
Purchaser to purchase, in which case the Purchaser shall purchase, from the
Company:
(i) Common Stock worth up to (as indicated in such
written notice) Five Million Dollars ($5,000,000) plus the aggregate dollar
value (calculated using the Year 1 Share Price) of any 5% Shares that would have
been Year 1 Shares but for the restrictions in Section 5.1(d); or
(ii) if the Purchaser has (1) exercised its put
rights under Section 3.2 with respect to the Year 1 Shares or (2) failed to
purchase the Year 1 Shares due to the occurrence of a Capital Call Condition,
then Common Stock worth up to (as indicated in such written notice) Ten Million
Dollars ($10,000,000) plus the aggregate dollar value (calculated using the Year
1 Share Price) of any 5% Shares that would have been Year 1 Shares but for the
restrictions in Section 5.1(d); or
(iii) if (1) the Purchaser has exercised its put
rights under Section 3.2 with respect to the Purchased Shares or the Closing did
not occur, and (2) the Purchaser has exercised its put rights under Section 3.2
with respect to the Year 1 Shares or failed to purchase the Year 1 Shares due to
the occurrence of a Capital Call Condition, then Common Stock worth up to (as
indicated in such written notice) Fifteen Million Dollars ($15,000,000) (the
aggregate purchase price indicated in such written notice, "YEAR 2 Price") (the
shares purchased by the Purchaser pursuant to this Section 5.1(b), "YEAR 2
SHARES");
provided that the Company may deliver only one such written
notice pursuant to this Section 5.1(b). A closing of the sale and purchase of
the Year 2 Shares (the "YEAR 2 CLOSING") shall take place immediately prior to
the Company's filing with the Commission the Year 2 Registration Statement (the
date of the Year 2 Closing, "YEAR 2 CLOSING DATE"). The Year 2 Closing shall
take place at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X Xxxxxx,
Xxxxxxxxxx, X.X. 00000, or such other place as shall be mutually agreed upon by
the Company and the Purchaser. At the Year 2 Closing, the Company will deliver
to the Purchaser evidence of entry on the Company's books and records that the
Purchaser is the record holder of the Year 2 Shares upon receipt by the Company
of payment of the Year 2 Price by or on behalf of the Purchaser to the Company
by wire transfer of immediately available funds to an account designated in
writing by the Company in a written notice delivered to the Purchaser. The
number of Year 2 Shares shall be equal (rounded up to the nearest whole number)
to the Year 2 Price divided by the average of the
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closing prices per share of Common Stock for the twenty (20) trading days
immediately prior to but excluding the thirtieth day after the second
anniversary of the Signing Date as reported on the Nasdaq National Market or
other comparable national exchange ("YEAR 2 SHARE PRICE").
(c) On written notice delivered (in accordance with Section
10.4) by the Company to the Purchaser during the sixty (60) day period ending on
the third anniversary of the Signing Date, the Company may require the Purchaser
to purchase, in which case the Purchaser shall purchase, from the Company:
(i) Common Stock worth up to (as indicated in such
written notice) Five Million Dollars ($5,000,000) plus the aggregate dollar
value (calculated using the Year 2 Share Price) of any 5% Shares that would have
been Year 2 Shares but for the restrictions in Section 5.1(d); or
(ii) if the Purchaser has (1) exercised its put
rights under Section 3.2 with respect to the Year 2 Shares or (2) failed to
purchase the Year 2 Shares due to the occurrence of a Capital Call Condition,
then Common Stock worth up to (as indicated in such written notice) Ten Million
Dollars ($10,000,000) plus the value (calculated using the Year 2 Share Price)
of any 5% Shares that would have been Year 2 Shares but for the restrictions in
Section 5.1(d); or
(iii) if (1) the Purchaser has exercised its put
rights under Section 3.2 with respect to the Year 2 Shares or failed to purchase
the Year 2 Shares due to the occurrence of a Capital Call Condition, and (2) the
Purchaser has exercised its put rights under Section 3.2 with respect to the
Year 1 Shares or failed to purchase the Year 1 Shares due to the occurrence of a
Capital Call Condition, then Common Stock worth up to (as indicated in such
written notice) Fifteen Million Dollars ($15,000,000) plus the value (calculated
using the Year 2 Share Price) of any 5% Shares that would have been Year 2
Shares but for the restrictions in Section 5.1(d); or
(iv) if (1) the Purchaser has exercised its put
rights under Section 3.2 with respect to the Purchased Shares or the Closing did
not occur, and (2) the Purchaser has exercised its put rights under Section 3.2
with respect to the Year 2 Shares or failed to purchase the Year 2 Shares due to
the occurrence of a Capital Call Condition, and (3) the Purchaser has exercised
its put rights under Section 3.2 with respect to the Year 1 Shares or failed to
purchase the Year 1 Shares due to the occurrence of a Capital Call Condition,
then Common Stock worth up to (as indicated in such written notice) Twenty
Million Dollars ($20,000,000) (the aggregate purchase price indicated in such
written notice, "YEAR 3 PRICE") (the shares purchased by the Purchaser pursuant
to this Section 5.1(c), "YEAR 3 SHARES," and together with the Year 1 Shares and
the Year 2 Shares, "CAPITAL CALL SHARES");
provided that the Company may deliver only one such written
notice pursuant to this Section 5.1(c). A closing of the sale and purchase of
the Year 3 Shares (the "YEAR 3 CLOSING") shall take place immediately prior to
the Company's filing with the Commission the Year 3 Registration Statement (the
date of the Year 3 Closing, "YEAR 3 CLOSING DATE"). The Year 3 Closing shall
take place at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X Xxxxxx,
Xxxxxxxxxx, X.X. 00000, or such other place as shall be mutually agreed upon by
the Company and the Purchaser. At the Year 3 Closing, the Company will deliver
to the Purchaser evidence of entry on the Company's books and records that the
Purchaser is the record holder of the Year 3 Shares upon receipt by the Company
of payment of the Year 3 Price by or on behalf of the Purchaser to the Company
by wire transfer of immediately available funds to an account designated in
writing by
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the Company in a written notice delivered to the Purchaser. The number of Year 3
Shares shall be equal (rounded up to the nearest whole number) to the Year 3
Price divided by the average of the closing prices per share of Common Stock for
the twenty (20) trading days immediately prior to but excluding the thirtieth
day after the third anniversary of the Signing Date as reported on the Nasdaq
National Market or other comparable national exchange.
(d) Notwithstanding any provision of this Agreement to the
contrary: (x) the Purchaser shall not be required to purchase more than the
number of Year 1 Shares, Year 2 Shares, or Year 3 Shares (as appropriate)
("THRESHOLD SHARES") equal to one less than that number of shares that would
result in the Purchaser's becoming the beneficial owner (determined in
accordance with Rule 13d-3 under the Exchange Act) of 5% or more of the
Company's outstanding Common Stock determined by counting all shares of Common
Stock issued by the Company to the Purchaser pursuant to this Agreement whether
or not such shares have been sold by the Purchaser (other than shares
repurchased by the Company pursuant to Section 3.2) (the difference between the
number of Year 1 Shares, Year 2 Shares, or Year 3 Shares (as appropriate) and
the number of Threshold Shares, "5% SHARES"); and (y) the Purchaser shall not be
required to purchase the Year 1 Shares, the Year 2 Shares, or the Year 3 Shares
(as appropriate) if, as of the Year 1 Closing Date, the Year 2 Closing Date, or
the Year 3 Closing Date (respectively) any of the following conditions or events
(each, a "CAPITAL CALL CONDITION") has occurred and is continuing: (i) the
Common Stock is no longer listed on the Nasdaq National Market or a comparable
national exchange; (ii) the Company is at that time the subject of any
proceeding related to its liquidation or insolvency (whether voluntary or
involuntary); (iii) the Company has materially breached either the PDLA or the
Media Agreement and such breach has not been cured or waived; (iv) the PDLA or
the Media Agreement has been terminated other than (1) as a result of the
material breach of the PDLA by the Purchaser or of the Media Agreement by AOLTW
or (2) pursuant to Section 13.5 of the PDLA or Section 6(e) of the Media
Agreement.
5.2 XXX XXXXXXX ON COMPANY BOARD. At the Company's request, the
Purchaser shall use its reasonable best efforts to cause Xxx Xxxxxxx to begin
serving on the Company's Board of Directors on the later of January 1, 2002, and
thirty (30) days after the Commission declares the Purchased Shares Registration
Statement effective. For the avoidance of doubt, and notwithstanding any other
provision of this Agreement to the contrary, (a) any obligation imposed on the
Purchaser by this Section 5.2 shall be deemed satisfied upon Xxx Xxxxxxx
beginning to serve on the Company's Board of Directors, and (b) in accordance
with Article SEVENTH(a) of the Company's Amended and Restated Articles of
Incorporation, after beginning to serve on the Company's Board of Directors, Xxx
Xxxxxxx shall hold office until the next annual meeting of the stockholders of
the Company and until his successor is elected and qualified, or until he sooner
resigns, is removed, or becomes disqualified.
5.3 TRANSFER RESTRICTIONS; LEGENDS.
(a) None of the Purchased Shares, Capital Call Shares, or
any security issued in respect of any of the foregoing other than shares
registered under an effective Registration Statement or eligible for resale
pursuant to Rule 144 of the Securities Act ("RESTRICTED SECURITIES") shall be
pledged, disposed of, conveyed, hypothecated, assigned or otherwise transferred
(by operation of law or otherwise) (a "TRANSFER"); provided that the Company may
in its sole discretion require that the Purchaser furnish the Company with an
opinion of counsel (which counsel and
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opinion shall be reasonably acceptable to the Company) at the Purchaser's
expense that explains eligibility for resale pursuant to Rule 144 of the
Securities Act of any Purchased Shares, Capital Call Shares, or any security
issued in respect of any of the foregoing; provided, further, that
notwithstanding the foregoing, the Purchaser shall not be required to furnish
the Company with an opinion of counsel explaining the eligibility of such
securities for resale pursuant to Rule 144(k) of the Securities Act if the
Purchaser has instead furnished the Company with evidence reasonably
satisfactory to the Company that the Purchaser is in compliance with Rule 144(k)
of the Securities Act. Notwithstanding the foregoing, the Purchaser may
effectuate a Transfer of Restricted Securities to one or more Permitted
Transferees, if (i) the Permitted Transferee agrees in writing to be subject to
the terms hereof to the same extent as if it were an original purchaser
hereunder and (ii) such Transfer is exempt from the registration requirements of
the Securities Act and applicable state securities or "BLUE-SKY" laws; provided
that the Company may in its sole discretion require that the Purchaser furnish
the Company with an opinion of counsel (which counsel and opinion shall be
reasonably acceptable to the Company) at the Purchaser's expense that explains
any applicable exemptions from registration. The Purchaser and each Permitted
Transferee will cause any Permitted Transferee (other than a transferee
acquiring such securities in connection with a registered offering covering such
disposition) to agree to take and hold such Restricted Securities subject to the
provisions and upon the conditions set forth in this Agreement. The Purchaser
and any Permitted Transferee shall give the Company written notice of any
proposed Transfer (with reasonable detail about the proposed Transfer) prior to
effectuating the Transfer unless there is in effect an effective Registration
Statement under the Securities Act covering the proposed Transfer.
(b) Notwithstanding the restrictions on Transfer of
Restricted Securities set forth in the first sentence of Section 5.3(a), and
subject to the Purchaser's and such Permitted Transferee's compliance with
applicable federal and state securities laws, rules, and regulations, nothing in
this Agreement shall limit the ability of the Purchaser or any Permitted
Transferee otherwise to:
(i) enter into transactions (including without
limitation swaps, options, puts, calls, cashless collars, forward contracts,
prepaid forward contracts, futures contracts, shorts, lending or borrowing of
Common Stock and similar transactions and instruments) for bona fide hedging
purposes (collectively, "HEDGING TRANSACTIONS") with respect to Restricted
Securities at any average reference price;
(ii) pledge Restricted Securities as collateral
pursuant to a bona fide financing transaction with an independent third party
bank or other financial institution or as part of any Hedging Transactions and
permit such independent third party bank or other financial institution or hedge
party to realize on the collateral represented by such pledged Restricted
Securities on the terms and conditions set forth in the agreements or
instruments evidencing such financing transactions or Hedging Transactions; or
(iii) transfer Restricted Securities for the purpose
of (a) a bona fide financing transaction, (b) a bona fide credit enhancement, or
(c) putting a bona fide limit on balance sheet or profit and loss statement
effects on the Purchaser or its Affiliates of the investment in the Company, in
each case, to a special purpose entity ("SPE") wholly or partially owned,
directly or indirectly, by the Purchaser or one of its Affiliates to which is
also transferred other investments of the Purchaser or its Affiliates; provided
that the Purchaser or its Affiliates shall own, directly or indirectly,
convertible securities of such SPE that, if converted, would cause the SPE to be
an Affiliate of the Purchaser;
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provided that any Person to whom the Purchaser or such Permitted
Transferee Transfers Restricted Securities pursuant to this Section 5.3(b) shall
agree in writing with the Company to be bound by the terms of this Section 5.3;
and provided further that (1) in no event shall any Transfer of Restricted
Securities to any Person pursuant to this Section 5.3(b) confer on any such
Person any right of the Purchaser or any Permitted Transferee under this
Agreement other than under this Section 5.3 nor shall any such Transfer relieve
the Purchaser or any Permitted Transferee of any of their respective obligations
under this Agreement; and (2) nothing in this Section 5.3(b) shall place the
Company under any additional obligation to act or refrain from acting.
(c) The certificates representing the Restricted Securities
shall bear a legend evidencing such restriction on transfer substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE-NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR AN OPINION OF COUNSEL FOR
THE HOLDER, REASONABLY SATISFACTORY TO AETHER SYSTEMS,
INC. ("Company"), THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR, IN THE CASE OF A SALE,
OFFERING FOR SALE, PLEDGE, OR HYPOTHECATION PURSUANT
TO RULE 144(K) OF THE ACT, IN THE ABSENCE OF EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY THAT THE HOLDER
IS IN COMPLIANCE WITH RULE 144(K) OF THE ACT."
The Purchaser and each Permitted Transferee consents to the Company making a
notation on its records and giving instructions to any transfer agent of the
Restricted Securities in order to implement the restrictions on Transfer in this
Section 5.3. The Company shall be obligated to reisssue promptly unlegended
certificates at the request of the Purchaser or any Permitted Transferee if such
party shall have (i) obtained an opinion of counsel at such party's expense
(which opinion and counsel shall be reasonably satisfactory to the Company) to
the effect that the securities proposed to be Transferred may be lawfully so
Transferred without registration, qualification or legend or (ii) provided the
Company with evidence reasonably satisfactory to the Company that such party is
in compliance with Rule 144(k) of the Securities Act.
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ARTICLE VI
CONDITIONS OF PURCHASER'S OBLIGATION
6.1 EFFECT OF CONDITIONS. The obligation of the Purchaser to
purchase and pay for the Purchased Shares pursuant to this Agreement shall be
subject at its election to the satisfaction of each of the conditions stated in
the following Sections of this Article VI as of the Closing Date.
6.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects on the Closing Date. The Company shall have
performed and complied in all material respects with all of the agreements,
covenants and conditions contained in this Agreement required to be performed or
complied with by it at or prior to the Closing. The Company shall have delivered
to the Purchaser a certificate, dated as of the Closing, signed by its Chief
Executive Officer or Chief Financial Officer certifying that, to the best of
such Person's knowledge, the statements in the preceding two sentences are true
and correct.
6.3 OPINION OF COUNSEL. The Company shall have delivered to
Purchaser an opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx in form and substance
reasonably satisfactory to the Purchaser but addressing only the matters set
forth in Exhibit C.
6.4 PRODUCT DEVELOPMENT AND LICENSing AGREEMENT. The Company and the
Purchaser shall have executed the Product Development and Licensing Agreement
substantially in the form of Exhibit A attached hereto (the "PDLA").
6.5 MEDIA AGREEMENT. The Company and AOL Time Warner, Inc. ("AOLTW")
shall have executed the AOLTW Promotional Agreement substantially in the form of
Exhibit B attached hereto (the "MEDIA AGREEMENT").
6.6 CONSENTS AND WAIVERS. The Company shall have obtained all
consents or waivers necessary to execute this Agreement, to issue the Purchased
Shares and to carry out the transactions contemplated hereby and thereby. All
corporate and other action and governmental filings necessary to effectuate the
terms of this Agreement, the Purchased Shares and other agreements and
instruments executed and delivered by the Company in connection herewith shall
have been made or taken.
6.7 TIMING. Sixty (60) days shall not have elapsed from the Signing
Date.
ARTICLE VII
CONDITIONS OF THE COMPANY'S OBLIGATION
7.1 EFFECT OF CONDITIONS. The Company's obligation to sell the
Purchased Shares shall be subject at its election to the satisfaction of each of
the conditions stated in the following Sections of this Article VII.
7.2 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of the Purchaser contained in this Agreement shall be true and
correct in all material
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respects on the date of the Closing with the same effect as though made on and
as of that date. The Purchaser shall have performed and complied in all material
respects with all of the agreements, covenants and conditions contained in this
Agreement required to be performed or complied with by it at or prior to the
Closing.
7.3 PRODUCT DEVELOPMENT AND LICENSING AGREEMENT. The Company and the
Purchaser shall have executed the PDLA.
7.4 MEDIA AGREEMENT. The Company and AOLTW shall have executed the
Media Agreement.
7.5 PRESS RELEASE. The Purchaser shall have issued to the public on
the date of this Agreement a press release in the form attached hereto as
Exhibit D ("PRESS RELEASE").
ARTICLE VIII
REGISTRATION RIGHTS AGREEMENT
8.1 CERTAIN DEFINITIONS. As used in this Article VIII, the following
terms shall have the following meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"REGISTRABLE SECURITIES" means any of (i) Purchased Shares and Capital
Call Shares (if any) and (ii) any other securities issued or issuable with
respect to the Purchased Shares or the Capital Call Shares (if any) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
Any Registrable Security will cease to be a Registrable Security when (i) a
Registration Statement covering such Registrable Security has been declared
effective under the Securities Act by the Commission and such Registrable
Security has been disposed of pursuant to such effective Registration Statement,
(ii) such Registrable Security has been sold pursuant to Rule 144 under the
Securities Act or may be resold, without any limitation as to volume, pursuant
to Rule 144 under the Securities Act (or a comparable successor rule or
regulation), or otherwise may be publicly resold without registration under the
Securities Act and without any limitation as to volume or other material
restriction, or (iii) such Registrable Security is no longer held by a Rights
Holder.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the acceleration of the effectiveness of
such registration statement.
"REGISTRATION STATEMENT" shall mean any of the Purchased Shares
Registration Statement, the Year 1 Registration Statement, the Year 2
Registration Statement, and the Year 3 Registration Statement.
"REGISTRATION EXPENSES" shall mean all expenses, incurred by the Company
or any Rights Holder in complying with Section 8.2 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for
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the Company, blue sky fees and expenses, stock transfer taxes applicable to the
securities registered by each Rights Holder, all fees and disbursements of one
(1) counsel for the Rights Holders, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company provided, however, that the Registration Expenses shall not include any
and all Selling Expenses).
"RIGHTS HOLDER" shall mean the Purchaser, any Permitted Transferee or
any other Person to whom the registration rights granted hereunder have been
assigned under Section 8.7 hereof.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions.
8.2 REGISTRATION OF REGISTRABLE SECURITIES.
(a) Subject to the terms and conditions of this Agreement,
the Company shall file with the Commission, on each of the Closing Date, the
Year 1 Closing Date, the Year 2 Closing Date, and the Year 3 Closing Date, a
registration statement on Form S-3 to register for resale, respectively: (i) the
Purchased Shares and any securities issued or issuable with respect thereto that
are Registrable Securities ("PURCHASED SHARES REGISTRATION STATEMENT"), (ii) the
Year 1 Shares and any securities issued or issuable with respect thereto that
are Registrable Securities ("YEAR 1 REGISTRATION STATEMENT"), (iii) the Year 2
Shares and any securities issued or issuable with respect thereto that are
Registrable Securities ("YEAR 2 REGISTRATION STATEMENT"), and (iv) the Year 3
Shares and any securities issued or issuable with respect thereto that are
Registrable Securities ("YEAR 3 REGISTRATION Statement"). The Company shall use
its reasonable best efforts to cause each Registration Statement to become
effective as soon as possible after filing and to remain effective for the
period ending on the earlier of (x) the Termination Date for such Registration
Statement (except as may otherwise be provided in Section 8.8 with respect to
Xxx Xxxxxxx'x membership on the Company's Board of Directors), and (y) the date
on which there are no Registrable Securities covered by that Registration
Statement.
Each Registration Statement shall be filed as a "shelf"
registration statement pursuant to Rule 415 under the Securities Act (or any
successor rule) and shall cover the disposition of all Registrable Securities
covered by that Registration Statement in one or more underwritten offerings,
block transactions, broker transactions, at-market transactions and in such
other manner or manners as may reasonably be specified by Purchaser; provided,
however, that the Purchaser may not request an underwritten offering (i) unless
the underwritten offering is for the sale of Purchased Shares and would result
in gross proceeds of at least the Purchase Price (exclusive of underwriter fees,
discounts and commissions) and (ii) such underwritten offering shall not take
place any time during the six-month period immediately following the date of
this Agreement. The Company shall use its reasonable best efforts to keep such
Registration Statement continuously effective (in accordance with the last
sentence of the first paragraph of this Section 8.2(a)), and in furtherance of
such obligation, shall supplement or amend such Registration Statement if, as
and when required by the rules, regulations and instructions applicable to the
form used by the Company for such registration or by the Securities Act or by
any other rules and regulations thereunder applicable to shelf registrations.
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(b) If any Rights Holder intends to distribute Registrable
Securities by means of an underwriting as set forth in Section 8.2(a), it shall
so advise the Company and the Company shall promptly amend the prospectus as may
be necessary to reflect the terms of such underwriting. The Company shall have
the right to select the managing underwriter for offering; provided, that such
managing underwriter shall be approved by such Rights Holder, such approval not
to be unreasonably withheld or delayed. The Company shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting.
(c) Notwithstanding anything to the contrary in this
Agreement, if at any time after the filing of a Registration Statement, a
majority of the Board of Directors of the Company determines, in its good faith
business judgment, that the offering or sale of Registrable Securities covered
by such Registration Statement would materially interfere with or otherwise
materially adversely affect any financing, acquisition, corporate reorganization
or other material transaction or development involving the Company or any of its
Affiliates or require the Company to disclose matters that otherwise would not
be required to be disclosed at such time and the disclosure of which would be
materially adverse to the interests of the Company, then the Company may require
the suspension of the distribution of any Registrable Securities under that
Registration Statement (a "BLACKOUT PERIOD") by giving written notice to the
Rights Holders; provided that the Company may not impose such Blackout Period
unless its executive officers are under substantially similar restrictions. Any
such notice need not specify the reasons for such suspension if a majority of
the Board of Directors of the Company determines, in its good faith business
judgment, that doing so would interfere with or adversely affect such
transaction or development or would result in the disclosure of material
non-public information. In the event that such notice is given, then until a
majority of the Board of Directors of the Company has determined, in its good
faith business judgment, that such distribution would no longer materially
interfere with the matters described in the preceding sentence and has given
written notice thereof to the Rights Holders, the Company's obligations under
this Article VIII to update or keep current such Registration Statement and the
Rights Holders right to sell Registrable Securities pursuant to such
Registration Statement will be suspended, provided, that such suspension shall
not exceed the first to occur of (x) the filing of the Company's next filing
with the Commission and (y) 120 days.
(d) Notwithstanding anything to the contrary in this
Agreement, if requested at any time by the Company and the managing underwriter
of an underwritten public offering by the Company of Common Stock, each Rights
Holder shall not sell or otherwise transfer or dispose of any Registrable
Securities or other securities of the Company held by such Rights Holder for a
period of up to 120 days following the effective date of a registration
statement covering securities of the Company to be sold on its behalf to the
public in an underwritten offering. The Company may impose stop-transfer
instructions with respect to the Registrable Securities or other securities
subject to the foregoing restriction until the end of such 120-day period. Any
Rights Holder receiving any written notice from the Company regarding the
Company's plans to file a registration statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement. Notwithstanding the
foregoing, the Company may not impose any such stop-transfer instructions unless
its executive officers are under substantially similar restrictions.
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(e) Notwithstanding Section 8.2(c) and Section 8.2(d) above,
the Company shall only have the right to impose (i) a Blackout Period under
Section 8.2(c) and (ii) a stop transfer order under Section 8.2(d) for up to an
aggregate of 120 days in any 360 day period.
8.3 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with registrations pursuant to Section 8.2 shall be borne by the
Company. Selling Expenses shall be borne by the Rights Holders based upon the
number of Registrable Securities sold by each Rights Holder in such
registration.
8.4 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep the Rights Holders advised in writing as to the initiation
of each registration, qualification and compliance and as to the completion
thereof. The Company will:
(a) Prepare and furnish to the Rights Holders and to the
underwriters (if any) of the securities being registered such reasonable number
of copies of the Registration Statement, preliminary prospectus, final
prospectus (any supplements or revisions thereto required under the Securities
Act) and such other documents as each Rights Holder and underwriters may
reasonably request in order to facilitate the public offering of such securities
and make the Company's representatives and the Company's counsel available for
discussion of such document and make such changes in such document relating to
each Rights Holder prior to the filing thereof as each Rights Holder, its
counsel, or underwriters may reasonably request.
(b) Use its reasonable best efforts to register and qualify
the securities covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Purchaser, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business, submit
to taxation or to file a general consent to service of process in any such
states or jurisdictions.
(c) Notify the Rights Holders at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and to promptly prepare and file all amendments or
supplements and related revised prospectuses as shall be required under the
Securities Act as a result of such untrue statements or omissions.
(d) Use its reasonable best efforts to comply with all
applicable federal and state securities laws (including without limitation the
rules and regulations of the Commission), and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act no later than forty-five (45) days after the end of a
twelve (12) month period after the Closing Date (or within ninety (90) days
after the end of a fiscal year).
Each Rights Holder, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (c) above, will
forthwith discontinue, and cause its Affiliates to discontinue, disposition of
the Registrable Securities until its receipt of the copies of
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the supplemented or amended prospectus contemplated by paragraph (c) above or
until advised in writing by the Company that the use of the prospectus may be
resumed and it has received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus. If so directed by the
Company, each Rights Holder will deliver to the Company or destroy all copies,
other than permanent file copies then in the possession of such Rights Holder or
its Affiliates, of the prospectus required to be supplemented or amended.
8.5 INDEMNIFICATION.
(a) With respect to any registration of Registrable
Securities, the Company will indemnify each Rights Holder, its officers and
directors and each person controlling such Rights Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any Registration Statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act, the Exchange
Act, state securities law or any rule or regulation promulgated under such laws
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each Rights Holder,
its officers, directors and partners, and each person controlling such Rights
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, whether or not resulting in any
liability, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Rights Holder,
controlling person or underwriter and stated to be specifically for use therein;
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus,
such indemnity agreement shall not inure to the benefit of any underwriter, or
Rights Holder, if there is no underwriter, if a copy of the final prospectus
filed with the Commission pursuant to its Rule 424(b) was not furnished to the
Person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act, and if such final prospectus
cured the untrue statement, alleged untrue statement, omission or alleged
omission giving rise to the loss, liability, claim or damage.
(b) With respect to any registration of Registrable
Securities, each Rights Holder will indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered by
such Registration Statement, and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or
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based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such Registration Statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such directors,
officers, partners, Persons, underwriters or control persons for any legal or
any other expenses reasonably incurred, as such expenses are incurred, in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Rights Holder
and stated to be specifically for use therein. Notwithstanding the foregoing,
the liability of a Rights Holder under this Section 8.4(b) shall be limited to
and in proportion to an amount equal to the net proceeds received by such Rights
Holder from the sale of the Registrable Securities sold by such Rights Holder
pursuant to such Registration Statement. In no event will any Rights Holder be
required to enter into any agreement or undertaking for the benefit of the
Company in connection with any registration under this Agreement providing for
any indemnification or contribution obligations on the part of such Rights
Holder greater than such Rights Holder's obligations under this Section 8.4(b).
(c) Each party entitled to indemnification under this
Section 8.4 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action, and provided further that the Indemnifying Party shall not
assume the defense for matters as to which representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them, but
shall instead in such event pay the fees and costs of separate counsel for the
Indemnified Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnified Party shall be entitled to indemnification from any
Indemnifying Party for any amounts paid in any settlement effected without the
consent of the Indemnifying Party.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Party or any officer, director or controlling
person of such Indemnified Party.
8.6 CONDITIONS. The Company's obligations to each Rights Holders
under this Article VIII will be conditioned on compliance with the following:
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(a) Such Rights Holder and its Affiliates will cooperate
with the Company in connection with the preparation of the applicable
Registration Statement, and for so long as the Company is obligated to keep such
Registration Statement effective, such Rights Holder and its Affiliates will
provide to the Company, in writing and in a timely manner, for use in such
Registration Statement (and expressly identified in writing as such), all
information regarding themselves and their respective Affiliates and such other
information as may be required by applicable law to enable the Company to
prepare such Registration Statement and the related prospectus covering the
applicable Registrable Securities owned by such Rights Holder and to maintain
the accuracy, completeness and effectiveness thereof;
(b) During such time as such Rights Holder and its
Affiliates may be engaged in a distribution of the Registrable Securities, such
Rights Holder and its Affiliates will comply with all applicable laws, including
Regulation M promulgated under the Exchange Act, and, to the extent required by
such laws, will, among other things: (A) not engage in any stabilization
activity in connection with the securities of the Company in contravention of
such rules; (B) distribute the Registrable Securities acquired by it solely in
the manner described in the applicable Registration Statement; and (C) if
required by applicable law, rules or regulations, cause to be furnished to each
agent or broker-dealer to or through whom such Registrable Securities may be
offered, or to the offeree if an offer is made directly by such Rights Holder or
any of its Affiliates, such copies of the applicable prospectus (as amended and
supplemented to such date) and documents incorporated by reference therein as
may be required by such agent, broker-dealer or offeree; provided that the
Company shall provide such Rights Holder with an adequate number of copies
thereof;
(c) Such Rights Holder and its Affiliates will permit the
Company and its representatives and agents to examine such documents and
records, and will supply in a timely manner any information as they may
reasonably request, in connection with the offering or other distribution of
Registrable Securities by such Rights Holder; and
(d) On notice from the Company of the happening of any of
the events specified in Section 8.4(c), or that requires the suspension by such
Rights Holder or its Affiliates of the distribution of any of the Registrable
Securities owned by such Rights Holder, then such Rights Holder and its
Affiliates will immediately cease offering or distributing the Registrable
Securities owned by such Rights Holder until the offering and distribution of
the Registrable Securities owned by such Rights Holder may recommence in
accordance with the terms hereof and applicable law.
8.7 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted to the Purchaser under this Article VIII may be
assigned or transferred to any Permitted Transferee of any of the Registrable
Securities.
8.8 TERMINATION OF REGISTRATION RIGHTS. All of the Company's
obligations to register Registrable Securities covered by a Registration
Statement (including without limitation to keep the Registration Statement
covering such Registrable Securities effective) shall terminate, if not
previously terminated pursuant to the terms of Section 8.2(a), two (2) years
from the date of the effectiveness of such Registration Statement (the
"TERMINATION DATE"); provided that if Xxx Xxxxxxx remains a member of the
Company's Board of Directors on the Termination Date, then the Termination Date
with respect to such Registration Statement shall automatically extend until the
earlier of (a) three (3) months after the first day on which Xxx Xxxxxxx is no
longer a member of the
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Company's Board of Directors and (b) three (3) years from the date of the
effectiveness of such Registration Statement.
ARTICLE IX
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"AFFILIATE" of any Person shall mean any Person, directly or indirectly,
controlling, controlled by or under common control with such Person.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect upon the
business, financial condition, assets, or results of operations of the Company
and its subsidiaries taken as a whole, or the Purchaser, as the context shall
require.
"PERMITTED TRANSFEREE" shall mean with respect to the Purchaser (i) an
Affiliate of the Purchaser and (ii) a successor of the Purchaser or of any
Permitted Transferee.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or a
government or agency or political subdivision thereof.
ARTICLE X
MISCELLANEOUS
10.1 SURVIVAL OF REPRESENTATIONS. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the Closing of the transactions contemplated hereby. Notwithstanding the
foregoing, the representations and warranties contained in or made pursuant to
this Agreement, other than those in the fourth sentence of Section 2.1 and in
Sections 2.4 and 4.1(a), shall terminate on, and no claim or action with respect
thereto may be brought after, the second anniversary of the Signing Date.
10.2 PARTIES IN INTEREST. All covenants, agreements, representations,
warranties and undertakings contained in this Agreement shall be binding on and
shall inure to the benefit of the respective successors and permitted assigns of
the parties hereto (including Permitted Transferees of any of the Purchased
Shares). Except as may be required to be disclosed by order of a court or
otherwise required by law, the parties agree to maintain in confidence the terms
of the purchase of the Purchased Shares hereunder, except that the Purchaser may
disclose such terms to their investors in the ordinary course and except that
the Company may disclose such terms to its stockholders, accountants, bankers
and advisors in the ordinary course.
10.3 AMENDMENTS AND WAIVERS. Amendments or additions to this
Agreement may be made and compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively
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or prospectively) upon the written consent of the Company and the Purchaser (or
the Rights Holder, as applicable). This Agreement (including the Schedules and
Exhibits annexed hereto, which are an integral part of this Agreement)
constitutes the full and complete agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings
with respect to the subject matter hereof, including without limitation the
draft letter of intent circulated among the parties hereto.
10.4 NOTICES. All notices, requests, consents, reports and demands
shall be in writing and shall be hand delivered, sent by facsimile or other
electronic medium, or mailed, postage prepaid, to the Company or to the
Purchaser at the address set forth below or to such other address as may be
furnished in writing to the other parties hereto:
The Company: Aether Systems, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxx, Chairman and CEO
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxx.xxx
with copy to: Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxxx.xxx
Purchaser: America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Senior Vice President,
Business Affairs and Development
Tel: 000-000-0000
Fax: 000-000-0000
E-mail: xxxxxxx@xxx.xxx
with copy to: Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx_xxx@xxxxxxx.xxx
All such notices, request, demands, consents and other communications
shall be deemed to have been duly given or sent seven (7) days following the
date on which mailed, or on the date on
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which delivered by hand, by facsimile transmission or e-mail (receipt
confirmed), as the case may be, and addressed as aforesaid.
10.5 EXPENSES. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby.
10.6 COUNTERPARTS. This Agreement and any schedule or exhibit hereto
may be executed in multiple counterparts, each of which shall constitute an
original but all of which shall constitute but one and the same instrument. One
or more counterparts of this Agreement or any exhibit hereto may be delivered
via telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
10.7 EFFECT OF HEADINGS. The article and section headings herein are
for convenience only and shall not affect the construction or interpretation
hereof.
10.8 GOVERNING LAW. The parties hereby agree that this Agreement will
be interpreted, construed and enforced in all respects in accordance with the
laws of the State of New York except for its conflicts of laws principles. In
the event of a dispute under this Agreement, the Parties shall work in good
faith to promptly resolve the dispute; provided that, if they cannot do so, the
dispute will be submitted to a committee made up of a senior executive from each
of the Purchaser and the Company for resolution within a ten (10) day period.
Neither Party will seek, nor will be entitled to seek, binding outside
resolution of the dispute unless and until the Parties have been unable to
amicably resolve the dispute as described in the previous sentence. In that
event, any claim or action shall be brought a court of competent jurisdiction in
the State of New York. Each party irrevocably consents to the exclusive
jurisdiction of the courts of the State of New York and the federal courts
situated in the State of New York, in connection with any action to enforce the
provisions of this Agreement, to recover damages or other relief for breach or
default under this Agreement or otherwise arising under or by reason of this
Agreement.
10.9 ASSIGNMENT. This Agreement may not be assigned by the Purchaser
or any Rights Holders except that the Purchaser and any Permitted Transferee has
the right to assign or transfer any of its rights pursuant to this Agreement in
connection with (and in proportion to) its transfer of securities purchased
hereunder to any Permitted Transferee in accordance with Sections 5.3 and 8.7.
The Company may not assign or transfer any of its rights pursuant to this
Agreement unless the Company first obtains the express written consent of the
Purchaser, except in connection with a sale of the Company or substantially all
of its assets, which shall not require the Purchaser's consent. Any transferee,
assignee or successor in interest shall be bound by the terms of this Agreement.
Any assignment in violation of the terms of this Agreement shall be null and
void ab initio.
10.10 REMEDIES. The parties stipulate that the remedies at law of the
other party in the event of any breach or default or threatened breach or
default by the other party in the performance of or compliance with any of the
terms of this Agreement are not and will not be adequate, and that such terms
may be specifically enforced by a decree for the specific performance of any
provision of this Agreement or by an injunction against a violation of any of
the terms thereof or otherwise.
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10.11 WAIVER OF JURY TRIAL. Each of the Company and the Purchaser
hereby expressly waives its respective rights to a jury trial of any claim or
cause of action based upon or arising out of this Agreement or any dealings
between them relating to the subject matter of this Agreement. The Company and
the Purchaser also waive any bond or surety or security upon such bond which
might, but for this waiver, be required of any party. The scope of this waiver
is intended to be all encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. The Company and the Purchaser further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each voluntarily waives its jury trial rights following consultation
with legal counsel. This waiver is irrevocable and may only be modified either
orally or in amendments, renewals, supplements or modifications to this
agreement, any other related agreement or the purchased shares. In the event of
litigation, this Agreement may be filed as a written consent to a trial (without
a jury) by the court.
10.12 PUBLICITY. The Parties shall cooperate and work together in good
faith to release a mutually agreeable statement to the press regarding the
relationship of the Parties resulting from this Agreement, the PDLA, and the
Media Agreement promptly after execution of all such documents; provided that
except as and to the extent required by law or permitted by either the PDLA or
the Media Agreement, neither the Company, the Purchaser, nor any Affiliate of
the Purchaser will make, and each will direct its representatives not to make,
directly or indirectly, any public comment, statement or communication
(including press releases and the like) with respect to, or otherwise to
disclose or permit the disclosure of the existence of discussions regarding this
business arrangement, this Agreement or the terms thereof, without the prior
written consent of the other Party. Each Party will submit to the other Party,
for its prior written approval, which will not be unreasonably withheld or
delayed, any marketing, advertising, and all other promotional materials related
to the transactions contemplated hereunder or using the other Party's Marks (as
defined in the PDLA). If a Party is required by law to release information in
contravention of this Section 10.12 ("DISCLOSURE"), it must, to the extent
legally permitted, (a) provide the other Party with at least five (5) business
days prior written notice of such proposed disclosure, to the extent reasonably
practicable, as well as the content of the Disclosure, the reasons that such
Disclosure is required by law and the time and place that the Disclosure will be
made and (b) to the extent reasonably requested by the other Party, will use
commercially reasonable efforts to obtain confidential treatment, if available,
of any portion of the Disclosure and/or redact certain portions prior to such
Disclosure.
ARTICLE XI
DEFINITIONS
Term Page
---- ----
5% INITIAL SHARES.................................................................................................2
5% SHARES........................................................................................................10
ACCREDITED INVESTOR...............................................................................................5
AFFILIATE........................................................................................................21
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AGREEMENT.........................................................................................................1
AOLTW............................................................................................................13
BLACKOUT PERIOD..................................................................................................16
BLUE-SKY.........................................................................................................11
CAPITAL CALL CONDITION...........................................................................................10
CAPITAL CALL SHARES...............................................................................................9
CLOSING...........................................................................................................1
COMMISSION.......................................................................................................14
COMMON STOCK......................................................................................................1
COMPANY...........................................................................................................1
COMPANY REPORTS...................................................................................................3
DISCLOSURE.......................................................................................................24
EXCHANGE ACT......................................................................................................3
GAAP..............................................................................................................3
GOVERNMENTAL ENTITY...............................................................................................2
HEDGING TRANSACTION..............................................................................................11
INDEMNIFIED PARTY................................................................................................19
INDEMNIFYING PARTY...............................................................................................19
INITIAL THRESHOLD SHARES..........................................................................................2
MATERIAL ADVERSE EFFECT..........................................................................................21
MEDIA AGREEMENT..................................................................................................13
PARTIES...........................................................................................................1
PARTY.............................................................................................................1
PDLA.............................................................................................................13
PERMITTED TRANSFEREE.............................................................................................21
PERSON...........................................................................................................21
PREFERRED STOCK...................................................................................................3
PRESS RELEASE....................................................................................................14
PURCHASE PRICE....................................................................................................1
PURCHASED SHARE PRICE.............................................................................................1
PURCHASED SHARES..................................................................................................1
PURCHASED SHARES REGISTRATION STATEMENT..........................................................................15
PURCHASER.........................................................................................................1
REGISTER.........................................................................................................14
REGISTERED.......................................................................................................14
REGISTRABLE SECURITIES...........................................................................................14
REGISTRATION.....................................................................................................14
REGISTRATION EXPENSES............................................................................................14
REGISTRATION STATEMENT...........................................................................................14
RELEASE...........................................................................................................1
RESTRICTED SECURITIES............................................................................................10
RIGHTS HOLDER....................................................................................................15
SECURITIES ACT....................................................................................................3
SELLING EXPENSES.................................................................................................15
SIGNING...........................................................................................................1
SIGNING DATE......................................................................................................1
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SPE..............................................................................................................11
TERMINATION DATE.................................................................................................20
THRESHOLD SHARES.................................................................................................10
TRANSFER.........................................................................................................10
YEAR 1 CLOSING....................................................................................................7
YEAR 1 CLOSING DATE...............................................................................................7
YEAR 1 PRICE......................................................................................................7
YEAR 1 REGISTRATION STATEMENT....................................................................................15
YEAR 1 SHARE PRICE................................................................................................8
YEAR 1 SHARES.....................................................................................................7
YEAR 2 CLOSING....................................................................................................8
YEAR 2 CLOSING DATE...............................................................................................8
YEAR 2 PRICE......................................................................................................8
YEAR 2 REGISTRATION STATEMENT....................................................................................15
YEAR 2 SHARE PRICE................................................................................................9
YEAR 2 SHARES.....................................................................................................8
YEAR 3 CLOSING....................................................................................................9
YEAR 3 CLOSING DATE...............................................................................................9
YEAR 3 PRICE......................................................................................................9
YEAR 3 REGISTRATION STATEMENT....................................................................................15
YEAR 3 SHARES.....................................................................................................9
(Signature page follows)
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AETHER SYSTEMS, INC.
COMMON STOCK PURCHASE AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be duly executed and delivered as of the date first above written.
THE COMPANY:
AETHER SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------
Title: CEO
-----------------------------------
PURCHASER:
AMERICA ONLINE, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
-----------------------------------
Title: Senior Vice President
-----------------------------------
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