EXHIBIT 10.15
REGISTRATION RIGHTS AND STOCKHOLDERS' AGREEMENT
This REGISTRATION RIGHTS AND STOCKHOLDERS' AGREEMENT (this "Agreement") is
---------
made as of this ____ day of __________, 2000, by and among America Online Latin
America, Inc., a Delaware corporation having its principal place of business at
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (the
"Company"), Banco Itau, S.A., a Brazilian Sociedade Anonima having its principal
-------
registered office at 176 Rua Boa Vista, Sao Paulo ("Itau") and Banco Xxxxxx,
----
S.A., a Brazilian Sociedade Anonima having its principal registered office at
Xxx xx Xxxxxxxxx 00, 0xx Xxxxx, Xxx xx Xxxxxxx, XX, (with Itau, each a
"Stockholder" and collectively, the "Stockholders"), and, for the limited
------------ ------------
purpose of joining in the covenants contained in Sections 10.2, 10.3, 10.4 and
10.5 hereof, America Online, Inc., a Delaware corporation, and Riverview Media
Corp., a British Virgin Islands corporation.
WHEREAS, the Company has issued to the Stockholders shares of its Common
Stock (as defined herein) pursuant to a Regulation S Stock Subscription
Agreement dated June 12, 2000 between the Company and the Stockholders (the
"Stock Subscription Agreement"); and
-----------------------------
WHEREAS, the Company and the Stockholders wish to provide, among other
things, for certain registration and other rights for the Stockholders and
certain restrictions on the Stockholders' ability to sell the Shares (as defined
below).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions herein contained, the parties hereto hereby agree as follows:
Section 1. Definitions
--------- -----------
Section 1.1. As used in this Agreement, the following terms shall have the
-----------
following meanings:
"Affiliate" shall have the meaning given in the Exchange Act.
---------
"Agreement" shall have the meaning given in the Preamble.
---------
"AOL" means America Online, Inc., a Delaware corporation, and it
---
successors.
"Available Shares" means, (i) at any time prior to the consummation of the
----------------
IPO, all of the shares of Common Stock owned by the Stockholders and (ii) at
any time after the consummation of the IPO, all of the Unrestricted Shares of
Common Stock.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) UNLESS SUCH SHARES ARE REGISTERED
UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
"Board" means the Board of Directors of the Company as constituted from
-----
time to time.
"Business Day" means any day, other than a Saturday or Sunday, on which
------------
federally chartered banks in the United States and Brazil are open for business.
"Change in Control" shall mean the first to occur of the following: (a) the
-----------------
date on which AOL and ODC do not own, collectively, shares of capital stock of
the Company representing more than fifty percent (50%) of the voting power
entitled to be cast at elections for directors ("Voting Power") of the Company,
------------
(b) the date on which AOL and ODC do not, collectively, have the right to elect
either (i) at least a majority of the Board of Directors of the Company or (ii)
at least a majority of the members of the Special Committee of the Board of
Directors of the Company (as such term is defined in the Restated Certificate of
Incorporation), so long as such Special Committee is constituted and empowered
as set forth in the Restated Certificate of Incorporation (the "Special
-------
Committee"), (c) any Person or Persons other than AOL or ODC acquires any
---------
general power to prevent the Company's Board of Directors or shareholders from
taking action on a substantial range of corporate actions without the approval
of such Person or Persons other than pursuant to covenants and agreements of the
Company contained in any loan documents, indentures or similar agreements
entered into in connection with any bona fide indebtedness for money borrowed
by the Company after the date hereof, or (d) the date on which the Company
sells, leases, exchanges or otherwise transfers (in one transaction or a series
of related transactions) all or substantially all of the assets of the Company
to any Person other than one in which (x) AOL and ODC own, collectively, shares
of capital stock or other equity securities of the acquiring Person representing
more than fifty percent (50%) of the Voting Power or collectively have the right
to elect at least a majority of the board of directors or managers, as
applicable, of the acquiring Person, (y) no Person or Persons other than AOL or
ODC has any general power described in clause (c) above with respect to such
acquiring Person and (z) the Holders have not less than the same proportionate
interest in such acquiring Person vis-a-vis AOL and ODC as they had in the
Company immediately prior to consummation of such sale, lease, assignment or
transfer.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred pursuant to clauses (a) or (b) so long as AOL, together with any
Subsidiary, not less than seventy-five percent (75%) of the outstanding equity
securities and Voting Power of which are owned, directly or indirectly, by AOL,
together with another third party, (i) retains not less than fifty percent (50%)
of the Voting Power of the Company, with AOL retaining greater Voting Power in
the Company than such third party and (ii) has the right to elect either (i) at
least a majority of the Board of Directors of the Company or (ii) at least a
majority of the members of the Special Committee.
"Closing Price" means, as of any date, the closing price of the Common
-------------
Stock on the trading date immediately preceding the date in question as reported
in the Eastern Edition of The Wall Street Journal or, if The Wall Street Journal
----------------------- -----------------------
does not then report the sales price of the Common Stock, such other source as
reasonably shall be selected by the board of the directors of the Company.
2
"Commission" means the Securities and Exchange Commission, or any successor
----------
agency performing the functions currently performed by the Securities and
Exchange Commission.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
------------
the Company.
"Company" shall have the meaning given in the Preamble.
-------
"Demand Filing Date" shall have the meaning given in Section 3.2.
------------------
"Demand Holder" shall have the meaning given in Section 3.1.
-------------
"Demand Registration" shall have the meaning given in Section 3.1.
-------------------
"Demand Request" shall have the meaning given in Section 3.1.
--------------
"Effective Date" means the date on which the shares of Common Stock are
--------------
issued to the Stockholders pursuant to the provisions of the Stock Subscription
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the Commission promulgated thereunder, as amended.
"Holder" means, as of any date, the Stockholders and each other person to
------
whom a Stockholder shall have assigned any rights hereunder in accordance with
the provisions of Section 12.6 and who owns Registrable Securities as of such
date.
"Indemnified Party" shall have the meaning given in Section 9.3.
-----------------
"Indemnifying Party" shall have the meaning given in Section 9.3.
------------------
"IPO" means the initial public offering of the Common Stock pursuant to an
---
offering registered under the Securities Act.
"Itausa" means Itausa-Investimentos Itau, S.A., a Brazilian Sociedade
------
Anonima.
"Launch Date" shall have the meaning given in the Marketing Agreement.
-----------
"Lock-Up Agreement" means the agreement between each Holder and the
-----------------
managing underwriter or underwriters for the IPO, pursuant to which each Holder
agrees that it will not, during the Lock-Up Period (as defined below) offer to
sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock, or any securities convertible into or
exchangeable for any shares of Common Stock now owned or hereafter acquired
directly by
3
such Holder or with respect to which such Holder has or hereafter acquires the
power of disposition, provided such restriction shall not apply to (i) transfers
to Permitted Stockholder Affiliates or (ii) Repo transactions effected in
accordance with the provisions of Section 10.1(f).
"Lock-Up Period" means the respective period agreed to in a Lock-Up
--------------
Agreement during which time each Holder agrees that it will not offer to sell,
contract to sell, or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock, or any securities convertible into or
exchangeable for any shares of Common Stock now owned or hereafter acquired
directly by such Holder or with respect to which such Holder has or hereafter
acquires the power of disposition, provided such restriction shall not apply to
(i) transfers to Permitted Stockholder Affiliates or (ii) Repo transactions
effected in accordance with the provisions of Section 10.1(f).
"Losses" shall have the meaning given in Section 9.1.
------
"Marketing Agreement" means the Strategic Interactive Services and
-------------------
Marketing Agreement, dated as of June 12, 2000, by and between the Company,
America Online Brasil Ltda., a Brazilian limited liability quota company
("AOLB"), and Itau.
----
"ODC" means Riverview Media Corp., a British Virgin Islands corporation,
---
and its successors.
"Permitted Stockholder Affiliate" means any Person, not less than seventy-
-------------------------------
five percent (75%) of the outstanding equity securities and Voting Power of
which are owned, directly or indirectly, by Itau or Itausa.
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, trust, university, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Proceeding" means an action, claim, suit, investigation or proceeding
----------
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means any prospectus included in a Registration Statement
----------
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by any
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Register," "Registered" and "Registration," whether or not capitalized,
-------- ---------- ------------
mean and refer to a registration effected by preparing and filing a Registration
Statement in compliance with the
4
Securities Act, and the declaration or ordering of the effectiveness of such
Registration Statement.
"Registrable Securities" means any Unrestricted Shares owned by a Holder;
----------------------
provided, however, that Unrestricted Shares that are Registrable Securities
shall cease to be Registrable Securities (x) upon the consummation of any sale
of such shares pursuant to (i) an effective Registration Statement under the
Securities Act or (ii) Regulation S or Rule 144, (y) at such time, if any, as
such shares of Common Stock (which are issued or which may become issued upon
conversion or exchange of any other security) become eligible for sale under
Rule 144(k) under the Securities Act and (z) with respect to any Holder, on the
first date when all of the Registrable Securities then held by such Holder are
eligible for sale during a single three month period under Rule 144.
"Registration Expenses" shall have the meaning given in Section 8.
---------------------
"Registration Statement" means any registration statement filed with the
----------------------
Commission by the Company pursuant to the Securities Act and any additional
registration statement, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement to be filed pursuant to the terms of
this Agreement.
"Regulation S" means Regulation S promulgated by the Commission pursuant to
------------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Regulation.
"Repo" shall have the meaning given in Section 10.1(f).
----
"Required Efforts" means (i) best efforts, with respect to any registration
----------------
of Registrable Securities having an aggregate market value of at least
$100,000,000 (or, if the registration relates to all of the then outstanding
Registrable Securities, $50,000,000), based on the closing market price for the
Common Stock on the trading day prior to the Company's receipt of the request at
issue and before calculation of underwriting discounts and commissions, and (ii)
all commercially reasonable efforts, with respect to any other registration of
Registrable Securities.
"Restated Certificate of Incorporation" means the Company's Restated
-------------------------------------
Certificate of Incorporation as proposed to be adopted by the Company in
connection with the consummation of the IPO in accordance with the terms of the
Letter Agreement, dated as of January 20, 2000, by and between the Company,
America Online, Inc., Riverview Media Corp. and Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
"Restricted Shares" shall have the meaning given in Section 10.1(b).
-----------------
5
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
--------
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
--------
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
--------
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Commission promulgated thereunder, as amended.
"Shares" means the shares of Common Stock issued to the Stockholders
------
pursuant to the Stock Subscription Agreement, together with securities issued
with respect to, or in exchange for or in replacement of, such shares by way of
stock dividend, stock distribution or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or reorganization
or otherwise.
"Stockholder" and "Stockholders" shall have the meanings given in the
----------- ------------
Preamble.
"Underwritten Registration or Underwritten Offering" means a registration
--------------------------------------------------
in connection with which securities of the Company are sold to an underwriter
for reoffering to the public pursuant to an effective Registration Statement.
"Unrestricted Shares" shall have the meaning given in Section 10.1(c).
-------------------
Section 2. "Piggy-Back" Registrations
--------- --------------------------
Section 2.1. "Piggy-Back" Rights. If at any time after the IPO the
----------- -------------------
Company shall determine to register for its own account or the account of others
under the Securities Act (including (i) in connection with a public offering by
the Company other than the IPO or (ii) a demand for registration made by any
stockholder of the Company including any of the parties hereto) any of its
equity securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to shares of Common Stock to be issued solely in connection with any
acquisition of an entity or business or shares of Common Stock issuable in
connection with stock option or other employee benefit plans) it shall send to
each Holder written notice of such determination and if, within 30 days after
the mailing of such notice, such Holder shall so request in writing, the Company
shall use its Required Efforts to include in such Registration Statement all or
any part of the Registrable Securities such Holder requests to be registered.
The Company shall have the right to postpone or withdraw any registration
effected pursuant to this Section 2.1 without any obligation to any Holder.
6
Section 2.2. Underwritten Offerings. If the registration of which the
----------- ----------------------
Company gives notice is for an Underwritten Offering, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
2.1. In such event, the right of any Holder to registration pursuant to Section
2.1 shall be conditioned upon such Holder's participation in such Underwritten
Offering and the inclusion of such Holder's Registrable Securities in the
Underwritten Offering to the extent provided herein. All Holders proposing to
distribute their securities through such Underwritten Offering shall (together
with the Company and the other holders of securities of the Company with
registration rights to participate therein distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the Company or
the stockholders effecting such registration.
Notwithstanding any other provision of this Section 2, if the managing
underwriter shall preclude any shares of Common Stock from being included in the
Registration Statement as to which a Holder has elected to exercise the piggy-
back rights granted pursuant to this Section 2 or otherwise impose a limitation
on the number of shares of such Common Stock which may be included in the
Registration Statement as to which a Holder has elected to exercise the piggy-
back rights granted pursuant to this Section 2 because, in such underwriter's
reasonable judgment, such preclusion or limitation is necessary to effect an
orderly public distribution, the number of shares to be included in the
Underwritten Offering or registration, if any, shall be allocated as set forth
in Section 2.3. If any person does not agree to the terms of any such customary
underwriting agreement, such person shall be excluded therefrom by written
notice from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such Underwritten Offering shall be
withdrawn from such registration. If shares are so withdrawn from the
registration and if the number of shares of Registrable Securities to be
included in such registration was previously reduced as a result of marketing
factors, the Company shall then offer to all persons who have retained the right
to include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among the persons
requesting additional inclusion in accordance with Section 2.3.
Section 2.3. Cut-backs in "Piggy-Back" Registrations. For purposes of
----------- ---------------------------------------
this Section 2, in any circumstance in which all of the Registrable Securities
and other shares of Common Stock or other securities of the Company (including
shares of Common Stock issued or issuable upon conversion of any outstanding
securities of the Company) with registration rights (the "Other Shares")
------------
requested to be included in a registration on behalf of the Holders or other
selling stockholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares that may
be so included, the number of shares of Registrable Securities and Other Shares
that may be so included, if any, shall be allocated first to the Company for
securities being sold for its own account and second to all holders of the
Company's common stock, including any Holders hereunder, who timely exercised
their piggy-back registration rights pro rata based upon their total ownership
of the aggregate number of shares requested to be included in such registration
by the holders of piggy-back registration rights, or if such registration is a
demand registration initiated by the Company on behalf of any other holders of
demand registration rights, (i) first to such holders pro rata based upon their
7
total ownership of the aggregate number of shares requested to be included in
such registration by the holders of demand registration rights, (ii) second to
all holders of the Company's common stock, including any Holders hereunder, who
timely exercised their piggy-back registration rights pro rata based upon their
total ownership of the aggregate number of shares requested to be included in
such registration by the holders of piggy-back registration rights, and (iii)
thereafter to the Company for securities being sold for its own account. The
Company shall not limit the number of Registrable Securities to be included in a
registration pursuant to this Agreement in order to include shares held by
stockholders with no registration rights.
Section 3. "Demand" Registrations
--------- ----------------------
Section 3.1. "Demand" Rights. At any time following the first anniversary
----------- ---------------
of the Effective Date, each Holder (a "Demand Holder") may, from time to time,
-------------
make a written request (each a "Demand Request") for registration under the
--------------
Securities Act (a "Demand Registration") of all or part of the Registrable
-------------------
Securities held by such Holder; provided, however, that the Registrable
Securities requested to be registered shall, on the date that the Demand Request
is delivered, have an aggregate market value of at least $50,000,000 before
calculation of underwriting discounts and commissions (based on the closing
market price for the Common Stock on the trading day prior to the Company's
receipt of the Demand Request). Each Demand Request shall specify the number of
Registrable Shares proposed to be sold by such Demand Stockholder.
Section 3.2. Within 15 days after receipt of each Demand Request, the
-----------
Company shall give written notice of such Demand Request to all non-requesting
Holders and shall use its Required Efforts to cause a Registration Statement to
be filed with the Commission on a date (the "Demand Filing Date") not later than
------------------
120 days after the Company's receipt of a Demand Request, and shall use its
Required Efforts to cause the same to be declared effective by the Commission as
promptly as practicable after such filing. Both the initial Demand Request and
any request to join in such Demand Request shall be considered a single Demand
Request. The Registration Statement shall cover the Registrable Securities
specified in the Demand Request, together with all or such portion of the
Registrable Securities of any Holder joining in such request as are specified in
a written request received by the Company within 20 days after the written
notice of the Demand Request from the Company is mailed or delivered to the non-
requesting Holders. Subject to Sections 3.6 and 3.7, the Registration Statement
filed pursuant to the request of the Demand Holders may also include other
securities of the Company.
Section 3.3. Limitations on Demand Rights. Notwithstanding any other
----------- ----------------------------
provision set forth in this Section 3, no Holder shall be entitled to deliver a
Demand Request within 90 days after the effectiveness of any Registration
Statement filed (i) by the Company pursuant to an Underwritten Offering by the
Company or (ii) on behalf of any Demand Holder or any other holder of demand
registration rights with respect to the Common Stock.
The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to Section 3.2:
8
(a) if the Company has initiated three (3) such registrations pursuant to
Section 3.2, provided that only the following registrations shall be counted:
(1) registrations which have been declared or ordered effective and pursuant to
which Registrable Securities have been sold and (2) registrations which have
been withdrawn by the Holders (other than pursuant to the last sentence of
Section 3.4) as to which the Holders have not elected to bear the Registration
Expenses;
(b) if the Demand Holders request that the offering be underwritten in any
manner other than a firm commitment basis by underwriters selected by the
Company (subject to the consent of a majority of the Demand Holders, which
consent will not be unreasonably withheld, conditioned or delayed, or, if the
Company has not selected an underwriter within 30 days after its receipt of a
Demand Request, by the underwriters selected by holders of a majority of the
Registrable Securities to be included in such Registration Statement) or if the
Demand Holders request that the offering not be underwritten; or
(c) if the Company and the Demand Holders are unable to obtain the
commitment of the underwriter described in clause (b) above to firmly underwrite
the offer.
Section 3.4. Deferral of Demand Registrations. The Company may defer the
----------- --------------------------------
filing (but not the preparation) of a Registration Statement required to be
filed by this Section 3 until a date not later than 120 days after the Demand
Filing Date if:
(a) at the time the Company receives the Demand Request, there is (i)
material non-public information regarding the Company which the Board reasonably
determines not to be in the Company's interest to disclose and which the Company
is not otherwise required to disclose, or (ii) there is a significant business
opportunity (including but not limited to the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose; or
(b) prior to receiving the Demand Request, the Board had determined to
effect an Underwritten Offering and the Company had taken substantial steps and
is proceeding with reasonable diligence to effect such Underwritten Offering.
A deferral of the filing of a Registration Statement pursuant to this
Section 3.4 shall be lifted, and the requested Registration Statement shall be
filed forthwith, if, (x) in the case of a deferral pursuant to clause (a)(i),
the material non-public information is made public by the Company or is no
longer material, (y) in the case of a deferral pursuant to clause (a)(ii), the
significant business opportunity is disclosed by the Company or is terminated,
or (z) in the case of a deferral pursuant to clause (b), the proposed
registration for the Company's account is abandoned. In order to defer the
filing of a Registration Statement pursuant to this Section 3.4, the Company
shall promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each Demand Holder a certificate signed by an executive
officer of the Company stating that the Company is deferring such filing
pursuant to this Section 3.4 and containing an approximation of the anticipated
delay. Within 20 days after receiving such certificate, the holders of a
majority of the Registrable Securities held by the Demand Holder and
9
each other Holder and for which registration was previously requested may
withdraw such Demand Request by giving written notice to the Company.
Section 3.5. Right to Participate. The rights of any Holder to
----------- --------------------
participate in an underwritten registration pursuant to this Section 3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein.
Section 3.6. Participation in Demand Registrations. If the Company shall
----------- -------------------------------------
request inclusion in any registration pursuant to Section 3.2 of securities
being sold for its own account, or if persons holding Other Shares shall request
inclusion in any registration pursuant to Section 3.2, the Demand Holders shall,
on behalf of all Holders, offer to include such securities in the registration
and may condition such offer on such persons' acceptance of the further
applicable provisions of this Agreement (including Section 6). The Company shall
(together with all Holders and other persons proposing to distribute their
securities through such registration) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters.
Notwithstanding any other provision of this Section 3, if the managing
underwriter shall preclude any shares of Common Stock from being included in the
Registration Statement as to which a Holder has elected to exercise the piggy-
back rights granted pursuant to Section 3.2 or otherwise impose a limitation on
the number of shares of such Common Stock which may be included in a
Registration Statement being filed pursuant to Section 3.2 because in its
judgment, such limitation is necessary to effect an orderly public distribution,
the number of shares to be included in the underwriting or registration, if any,
shall be allocated as set forth in Section 3.7. If a person who has requested
inclusion in such registration as provided above does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from the Company, the underwriter or the Demand Holders holding a majority of
the securities being requested in such offering (not including such non-agreeing
holders). Any Registrable Securities or other securities excluded shall also be
withdrawn from such registration. If shares are so withdrawn from the
registration and the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to this Section
3.6, then the Company shall offer to all persons who have retained rights to
include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among such persons
requesting additional inclusion in accordance with Section 3.7.
Section 3.7. Cutbacks in Demand Registrations. For purposes of Sections
----------- --------------------------------
3.2 and 3.6, in any circumstance in which all of the Registrable Securities and
Other Shares requested to be included in a registration on behalf of the Holders
undertaken pursuant to said Section 3.2 cannot be so included as a result of
limitations of the aggregate number of shares of Registrable Securities and
Other Shares, if any, that may be so included pursuant to Section 3.6, the
number of shares of Registrable Securities and Other Shares that may be so
included shall be allocated among the Holders and other selling stockholders
requesting inclusion of shares (i) first, to each Holder, pro rata on the basis
of the number of shares of Registrable Securities held by such Holders that such
Holders had timely requested to be included in the registration, (ii)
thereafter, to the selling holders of the Other Shares, pro rata on the basis of
the number of Other Shares
10
that such other selling stockholders had requested to be included in the
registration, and (iii) thereafter to the Company. The Company shall not limit
the number of Registrable Securities to be included in a registration pursuant
to Section 3.2 in order to include shares held by any other stockholders or by
the Company.
Section 4. S-3 Registrations.
--------- -----------------
At any time after the Company becomes eligible to file a Registration
Statement on Form S-3 (or any successor form relating to secondary offerings),
Holders of Registrable Securities may request the Company, in writing, to effect
the registration on Form S-3 (or such successor form), of Registrable Shares
having an aggregate market value of at least $25,000,000 (based on the closing
market price for the Common Stock on the trading day prior to the Company's
receipt of the request). The Company shall not be obligated to effect any
registration under this Section 4 (i) if in a given six month period, the
Company has effected one (1) such registration in such period, or (ii) if the
Company has initiated four (4) such registrations pursuant to this Section 4,
provided that only the following registrations shall be counted: (1)
registrations which have been declared or ordered effective and pursuant to
which Registrable Securities have been sold and (2) registrations which have
been withdrawn by the Holders (other than pursuant to the last sentence of
Section 3.4) as to which the Holders have not elected to bear the Registration
Expenses. Upon receipt of any such request, the Company shall promptly give
written notice of such proposed registration to all Holders from whom notice has
not been received. Such Holders shall have the right, by giving written notice
to the Company within 20 days after the Company provides its notice, to elect to
have included in such registration such of their Registrable Securities as such
Holders may request in such notice of election. The provisions of Sections 3.5
through 3.7 shall apply to such registration. Thereupon the Company shall use
its Required Efforts to effect the registration on Form S-3, or such successor
form, of all Registrable Securities that the Company has been requested to
register in connection with such registration.
Section 5. Registration Procedures
--------- -----------------------
Whenever any Holder has requested that any Registrable Securities be
registered pursuant to this Agreement, the Company shall use its Required
Efforts to effect the registration of such Registrable Securities and in
furtherance thereof the Company shall:
(a) prepare and file with the Commission on any appropriate form under the
Securities Act with respect to such Registrable Securities and use its Required
Efforts to cause such Registration Statement to become effective;
(b) (i) prepare and file with the Commission such amendments, including
post-effective amendments and supplements to the Registration Statement as may
be necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for a period of not less than 180 days (or (1)
such lesser period as is necessary for the underwriters in an Underwritten
Offering to sell unsold allotments or (2) such longer period as may be
commercially reasonable if such Registration Statement is for a shelf
registration conducted pursuant to the provisions of Rule 415 (or any similar
provisions then in force)
11
promulgated under the Securities Act), but in any case not including in such 180
days any period for which sales have been discontinued pursuant to Section 7(c);
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and, as so supplemented or amended, to be filed pursuant
to Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and, as promptly as possible, provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented;
(c) (i) furnish to the Holders of Registrable Securities to be sold, their
counsel and any managing underwriters, copies of all such documents proposed to
be filed, which documents (other than those incorporated by reference) will be
subject to the review of such Holders, their counsel and such managing
underwriters, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective counsel to such Holders and such
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act;
(d) notify the Holders of Registrable Securities to be sold, their counsel
and any managing underwriters as promptly as possible and confirm such notice in
writing no later than one Business Day following the day:
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed;
(ii) when the Commission notifies the Company whether there will be a
"review" of such Registration Statement and whenever the Commission
comments in writing on such Registration Statement;
(iii) when the Registration Statement or any post-effective amendment
thereto has become effective;
(iv) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information;
(v) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that
purpose;
12
(vi) when any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated hereby shall cease to be true and correct in all material
respects;
(vii) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and
(viii) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration
Statement or the Prospectus, as the case may be, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(e) use all Required Efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment;
(f) if reasonably requested by any managing underwriter, if any
Registrable Securities are to be sold in connection with an Underwritten
Offering, (i) promptly incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the Company
reasonably agrees should be included therein and (ii) thereafter make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this clause (f) that would, in the opinion of counsel for the
Company, violate applicable law;
(g) furnish to each Holder of Registrable Securities to be sold, their
counsel and any managing underwriters, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission;
(h) promptly deliver to each Holder of Registrable Securities to be sold,
their counsel, and any underwriters, without charge, as many copies of the
Prospectus or Prospectuses (including each form of Prospectus) and each
amendment or supplement thereto as such persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling stockholders and any underwriters
13
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto;
(i) prior to any public offering of Registrable Securities, use its
Required Efforts to register or qualify or cooperate with the selling Holders,
any underwriters and their counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any selling Holder or
underwriter requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective for at least 180 days (or such shorter period
as the applicable Registration Statement shall be effective) and to do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject;
(j) cooperate with the selling Holders and any managing underwriters to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or
stockholders may request at least two Business Days prior to any sale of
Registrable Securities;
(k) upon the occurrence of any event contemplated by Section 5(d)(viii) of
this Agreement, as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file all other required documents so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(l) use its Required Efforts to cause all Registrable Securities relating
to such Registration Statement to be listed on the securities exchange,
quotation system, market or over-the-counter bulletin board on which similar
securities issued by the Company are then listed;
(m) enter into such agreements (including an underwriting agreement in
form, scope and substance as is customary in Underwritten Offerings) and take
all such other actions in connection therewith (including those reasonably
requested by any managing underwriters in order to expedite or facilitate the
disposition of such Registrable Securities, and those reasonably requested by
the selling Holders whether or not an underwriting agreement is entered into):
14
(i) make such representations and warranties to such selling Holders
and such underwriters as are customarily made by issuers to underwriters in
underwritten public offerings, and confirm the same if and when requested;
(ii) in the case of an Underwritten Offering, obtain and deliver
copies thereof to the managing underwriters, if any, of opinions of counsel
to the Company and updates thereof addressed to each such underwriter, in
form, scope and substance reasonably satisfactory to any such managing
underwriters and counsel to the selling stockholders covering the matters
customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by such counsel and
underwriters;
(iii) immediately prior to the effectiveness of the Registration
Statement, and, in the case of an Underwritten Offering, at the time of
delivery of any Registrable Securities sold pursuant thereto, obtain and
deliver copies to the selling Holders and the managing underwriters, if
any, of "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements
and financial data is, or is required to be, included in the Registration
Statement), addressed to each selling Holder and each of the underwriters,
if any, in form and substance as are customary in connection with
Underwritten Offerings;
(iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
selling Holders and the underwriters than those set forth in Section 9 of
this Agreement (or such other provisions and procedures acceptable to the
managing underwriters and such selling Holders); and
(v) deliver such documents and certificates as may be reasonably
requested by the selling Holders, their counsel and any managing
underwriters to evidence the continued validity of the representations and
warranties made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company;
(n) make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any disposition
of Registrable Securities, and any attorney or accountant retained by such
selling Holder or underwriters, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; provided, however, that any information that is
determined in good faith by the Company to be of a confidential nature at the
time of delivery of such information (A) shall be kept confidential by such
persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to
15
respond to inquiries of regulatory authorities; (ii) disclosure of such
information, in the opinion of counsel to such person, is required by law; (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such person; or (iv) such
information becomes available to such person from a source other than the
Company and such source is not known by such person to be bound by a
confidentiality agreement with the Company and (B) shall not be required to be
disclosed to any representative or agent of a Holder with respect to which the
Company has a good faith basis to request, and does so request, that disclosure
of such confidential information not be made to such representative or agent;
(o) comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or best
efforts Underwritten Offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the Company
after the effective date of the Registration Statement, which statement shall
conform to the requirements of Rule 158;
(p) require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is
required by law to be disclosed in the Registration Statement, and the Company
may exclude from such registration the Registrable Securities of any such
selling Holder who unreasonably fails to furnish such information within a
reasonable time after receiving such request. If the Registration Statement
refers to any such Holder by name or otherwise as the holder of any securities
of the Company, then such Holder shall have the right to require (if such
reference to such Holder by name or otherwise is not required by the Securities
Act or any similar Federal statute then in force) the deletion of the reference
to such Holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to be
required; and
(q) not file a Registration Statement pursuant to Section 3.2 hereof if
Holders of a majority of the Registrable Securities covered thereby or their
counsel or any managing underwriter of the Registrable Securities covered
thereby shall reasonably object in writing within 3 Business Days of their
receipt of such Registration Statement for review pursuant to Section 5(c)(i)
hereof.
Section 6. Lock-Up Agreement; Stockholder Right to Review Information
--------- ----------------------------------------------------------
Each Holder agrees, if such Holder is so requested by the managing
underwriter in the IPO, to enter into a Lock-Up Agreement, provided that the
Lock-Up Period required therein shall not exceed 180 days.
In addition, after the IPO, if requested by the Company and an underwriter
of Common Stock (or other securities) of the Company, each Holder shall agree in
writing not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by
16
such Holder (other than those included in the registration) during the one
hundred and eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act relating to
an Underwritten Offering by the Company of its securities, provided that all
stockholders of the Company holding in excess of fifteen percent (15%) of the
shares of Common Stock then outstanding (calculated on an as converted
fully-diluted basis) enter into similar agreements of no lesser duration than
that requested of such Holder and provided that such other stockholders agree
not to sell any of their Company securities during the term of the Lock-Up
Agreement pursuant to consent of the underwriters unless such Holder receives
such consent of the underwriters to sell a proportional amount of the Common
Stock held by it. Notwithstanding the foregoing, during such 180-day period, (A)
each Stockholder may (i) transfer Common Stock (or other securities) of the
Company to its Permitted Stockholder Affiliates, provided that each such
transferee executes an identical lock-up agreement and (ii) effect Repo
transactions in accordance with the provisions of Section 10.1(f) hereof and (B)
any Holder may transfer Common Stock (or other securities) of the Company to any
Affiliate, all of the outstanding equity securities and Voting Power of which is
owned, directly or indirectly, by such Holder, provided that each such
transferee executes an identical lock-up agreement .
The obligations described in this Section 6 shall not apply to a
registration on Form S-8 or S-4 or any successor form. The Company may impose
stop-transfer instructions with respect to the Shares (or other securities)
subject to the foregoing restrictions until the end of any applicable Lock-Up
Period.
Prior to the Company filing with the Commission any Registration Statement
for Common Stock or any other securities of the Company, including, without
limitation, the Registration Statement relating to the IPO, the Holders shall
have a reasonable opportunity to review and comment upon any information
contained in such Registration Statement relating in any way to the Holders. The
Company agrees to request confidential treatment from the Commission for any
information relating to the Holders if reasonably requested by the Holders.
Section 7. Holder Covenants
--------- ----------------
Each Holder hereby covenants and agrees that:
(a) it will not sell any Registrable Securities under a Registration
Statement until it has received notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective;
(b) it and its officers, directors or Affiliates, if any, will comply with
the Prospectus delivery requirements of the Securities Act as applicable to them
in connection with sales of Registrable Securities pursuant to a Registration
Statement; and
(c) upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 5(d)(iv), (v), (vi), (vii) or (viii) of
this Agreement, such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended
17
Registration Statement or until it is advised in writing by the Company that the
use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.
Section 8. Registration Expenses
--------- ---------------------
Except to the extent limited by the applicable state law, all fees and
expenses incident to the performance of or compliance with this Agreement by the
Company shall be borne by the Company whether or not pursuant to an Underwritten
Offering and whether or not any Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to any
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any securities exchange or market on which Registrable
Securities are required hereunder to be listed, and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of one counsel for all Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, determine)); (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing Prospectuses if the printing of
Prospectuses is requested by the managing underwriters, if any; (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company; (v) Securities Act liability insurance, if the Company desires such
insurance; (vi) fees and expenses of all other persons retained by the Company
in connection with the consummation of the transactions contemplated by this
Agreement; and (vii) all of the internal expenses of the Company incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties, the expense of any
annual audit, the fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange as required hereunder (all
such expenses being referred to herein as "Registration Expenses"); provided,
---------------------
however, that except as expressly set forth herein, in no event shall
Registration Expenses include any underwriting discounts, commissions, or fees
attributable to the sale of the Registrable Securities or, except as provided in
(i) above, any counsel, accountants or other persons retained by the Holders
incurred in connection with the consummation of the transactions contemplated by
this Agreement.
Section 9. Indemnification and Contribution
--------- --------------------------------
Section 9.1. Indemnification by the Company. The Company shall,
----------- ------------------------------
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder and its agents, brokers, investment advisors and employees of each
of them and each underwriter of the Registrable Securities and each such
Person's respective officers, directors, affiliates, partners and any broker or
dealer through whom such shares may be sold and each person, if any, who
controls (within the meaning of Section 15 of the Securities Act) such Holder or
any such underwriter, to the
18
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
------
untrue statement of a material fact contained in any Registration Statement, any
Prospectus or any form of Prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, which information was reasonably relied on by the
Company for use therein or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in any Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto. The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.
Section 9.2. Indemnification by Holders. Each Holder shall, severally and
----------- --------------------------
not jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of Prospectus, or arising solely out of or based solely
upon any untrue statement or omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made), not misleading to the extent, but
only to the extent, that such untrue statement or omission is contained or
omitted, as the case may be, in any information so furnished in writing by such
Holder to the Company specifically for inclusion in the Registration Statement
or such Prospectus and that such information was reasonably relied upon by the
Company for use in the Registration Statement, such Prospectus or such form of
Prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
19
Section 9.3. Conduct of Indemnification Proceedings.
----------- --------------------------------------
(a) If any Proceeding shall be brought or asserted against any person
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party
-----------------
promptly shall notify the person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall assume the
-------------------
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
(b) An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, provided,
however, the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding or to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the reasonable expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall be at
the reasonable expense of the Indemnifying Party). The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
(c) All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within 10 Business
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
20
Section 9.4. Contribution.
----------- ------------
(a) If a claim for indemnification under Section 9.1 or 9.2 is unavailable
to an Indemnified Party because of a failure or refusal of a governmental
authority to enforce such indemnification in accordance with its terms (by
reason of public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth herein, any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms. In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9, no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(c) The indemnity and contribution agreements contained in this Section 9
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
Section 9.5. Rule 144. Following the IPO, the Company covenants that:
----------- --------
(a) it shall file the reports required to be filed by the Company under
the Securities Act and the Exchange Act, so as to enable the Holders to sell
Registrable Securities pursuant to Rule 144 under the Securities Act;
21
(b) it shall cooperate with any Holder in connection with any sale,
transfer or other disposition by such Holder of any Registrable Securities
pursuant to Rule 144 under the Securities Act;
(c) it shall take such action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell its Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions; and
(d) upon the request of any Holder, it shall deliver to such Holder a
written certification of a duly authorized officer as to whether it has complied
with such requirements.
Section 10. Restrictions on Transfer; Certain Covenants.
------------ -------------------------------------------
Section 10.1. Restrictions on Transfer by Stockholders.
------------ ----------------------------------------
(a) Initial Lock-up. As a condition to, and in consideration of, the
---------------
issuance by the Company to the Stockholders of the Shares pursuant to the Stock
Subscription Agreement, each Stockholder agrees that it will not, directly or
indirectly, without the prior written consent of the Company, offer, sell,
contract to sell, pledge or otherwise dispose of, or enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise) of any right, title or interest in any of the
Restricted Shares, including, without limitation, by filing (or participating in
the filing of) a registration statement with the Securities and Exchange
Commission in respect of, or establishing or increasing a put equivalent
position within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, with respect to, any of the Restricted
Shares. Notwithstanding the foregoing, each Stockholder may, without violating
the provisions hereof, transfer all or any part of the Restricted Securities to
any Permitted Stockholder Affiliate, and may pledge, hypothecate or engage in
another similar financing transaction of any Restricted Securities (including,
without limitation, Repos (as defined below), if conducted in accordance with
the provisions of Section 10.1(f) hereof), but not including short sales or
transactions involving any hedging of a Stockholder's Shares or use of any puts,
calls or other derivatives in connection with any of a Stockholder's Shares
(other than in connection with Repos conducted in accordance with the provisions
of Section 10.1(f) hereof) so long as (i) the transferring Stockholder
continues, prior to default thereunder, to retain record and beneficial title
(in connection with transactions other than Repo transactions and other than
transfers to any Permitted Stockholder Affiliates) to, and have the sole and
exclusive authority and right to vote the shares subject to, any such pledge,
hypothecation or other financing transaction and (ii) if effected or entered
into prior to the expiration of the "distribution compliance period" (as defined
in Regulation S), the provisions of such transaction complies with the
provisions of Regulation S. In addition, each Stockholder may, without
violating the provisions hereof, tender or exchange all or any part of the
Restricted Shares into any tender or exchange offer for Common Stock conducted
by the Company or any third party; provided, that if such tender or exchange
--------
offer is for less than all of the then outstanding shares of Common
22
Stock, upon consummation of such tender or exchange offer, each Stockholder
shall be deemed to have first tendered or exchanged and sold all of the
Unrestricted Shares then held by such Stockholder prior to selling any
Restricted Shares, with the result that any Shares tendered or exchanged by a
Stockholder in excess of such number of Unrestricted Shares and not purchased in
the tender or exchange offer shall continue as Restricted Shares for all
purposes hereunder.
(b)(i) Release from Lock-up. For purposes hereof, all of the Shares shall
--------------------
constitute "Restricted Shares" until the First Release Date. After the First
-----------------
Release Date, and each Release Date thereafter, the number of "Restricted
Shares" shall be determined as set forth below. For purposes hereof, the "First
-----
Release Date" shall be the first anniversary of the last to occur of (A) the
------------
closing of the transactions contemplated by the Stock Subscription Agreement and
(B) the first to occur of (1) the Launch Date and (2) the date that is six (6)
months from the date hereof, and each subsequent "Release Date" shall be the
------------
dates that are the first, second, third and fourth anniversaries of the First
Release Date.
Release Date Shares Restricted
------------ -----------------
First Release Date 83.33%
Second Release Date 41.67%
Third Release Date 25.00%
Fourth Release Date 8.33%
Fifth Release Date 0.00%
(ii) Notwithstanding the foregoing, the number of Restricted Shares shall
be deemed to be zero (0) upon the first to occur of (A) a Change in Control and
(B) the date on which Itau becomes entitled to terminate, and does so terminate,
the Marketing Agreement, including, without limitation, because of an AOLA
Change of Control (as such term is defined in the Marketing Agreement);
provided, that if the Company timely challenges any such termination in
--------
accordance with the provisions of the Marketing Agreement, the provisions of
this paragraph (b)(ii) shall not be effective unless and until there is a final
arbitration award issued pursuant to Section 13 of the Marketing Agreement, that
Itau was in fact entitled to terminate such Agreement. In addition, the number
of Restricted Shares shall be deemed to be zero (0) if, at any time after the
Third Release Date, the Company or AOLB terminates the Marketing Agreement and
Itau makes payment in full in cash of the Termination Fee required to be made
pursuant to Section 11.2.3(c) of the Marketing Agreement.
(c) Certain Definitions. The number of Shares in excess of the number of
-------------------
Restricted Shares are referred to herein as "Unrestricted Shares."
-------------------
(d) Additional Securities. For purposes hereof, if after the date hereof
---------------------
the Company subdivides or combines its Common Stock shares or issues by way of
stock dividend, stock distribution or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or reorganization
or otherwise, the percentages set forth above shall be derived by calculating
the percentage which the Restricted Shares as so subdivided, combined or
reclassified represent in relation to the number of Shares initially issued to
the Stockholders
23
assuming for such purpose that the number of Shares initially issued had been
subdivided, combined or reclassified in the same manner as the Restricted
Shares.
(e) Additional Restrictions. Notwithstanding anything to the contrary
-----------------------
contained herein, all sales of Shares by the Stockholders, regardless of whether
or not such Shares have been registered for resale in accordance with the
provisions of this Agreement, shall be subject to the following restrictions:
(i) At least five business days prior to any Sale (as defined below) of
any Common Stock by a Stockholder, including, without limitation, any Large
Trade (as defined below), such Stockholder will advise the Company in writing of
the dates on which such disposition is expected to commence and terminate, the
number of shares of Common Stock expected to be sold, the method of disposition
and such other information as the Company may reasonably request in order to
ensure such Stockholder's compliance with the provisions of this Section. Each
Stockholder agrees to notify any broker/dealer in writing of the restrictions on
Sale contained in this Agreement and provide the Company a copy of such notice.
(ii) No Holder may, directly or indirectly, offer, sell, contract to
sell, pledge or otherwise dispose of, or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) of, shares of Common Stock (collectively, a "Sale"), in
----
any event in a transaction recorded on the Nasdaq National Market (or any other
market on which the Common Stock is then listed for trading) (a "Nasdaq
------
Transaction") which, when aggregated with all other shares Sold by Holders in a
-----------
Nasdaq Transaction on the same day, exceeds on such single trading day, 10.0% of
the average trading volume of the Common Stock during the 20 trading-day period
ending on the trading day prior to the date of such Sale (the "Average Trading
---------------
Volume"). The restrictions contained in the preceding sentence shall not apply
------
to any (i) Sale in which a Holder sells, in a single block transaction, shares
of Common Stock which exceed in number 10.0% of the Average Trading Volume in
which the sales price is at least 95% of the Closing Price (a "Large Trade"),
-----------
(ii) series of Sales in a single trading day in which a Holder sells shares of
Common Stock which exceed in number 10.0% of the Average Trading Volume ("Serial
------
Large Trade") in which the sales price at which all of such Sales are
-----------
consummated is at least 95% of the Closing Price, or (iii) in connection with
any Sales effected pursuant to an Underwritten Offering of Shares conducted by
means of a firm commitment underwriting effected by a nationally or
internationally recognized investment banking firm. Notwithstanding the
foregoing: (i) no more than one Large Trade may be consummated on any two (2) or
more trading days in any period of ten (10) consecutive trading days unless such
Large Trade (other than the first Large Trade in such period) is one in which
the sales price is at least 100% of the Closing Price and (ii) no more than one
Serial Large Trade may be effected on any two (2) or more trading days in any
period of ten (10) consecutive trading days unless the sales prices at which all
Sales constituting any such Serial Large Trade (other than such Sales on the
first trading day in such period on which a Serial Large Trade in made) is at
least 100% of the Closing Price. In addition, notwithstanding the foregoing and
as an additional restriction, no Holder may effect any Nasdaq Transaction if the
shares to be Sold in such Nasdaq Transaction, when aggregated with all other
shares Sold by Holders in Nasdaq Transactions in the prior 90
24
days, exceeds (i) during the first two years after the date hereof, such number
of unregistered shares of capital stock of an issuer which may be sold by a
single holder in any 3 month period pursuant to the provisions of Rule 144(e)
promulgated under the Securities Act, and (ii) thereafter, the greater of (1)
1.0% of the aggregate number of shares of Common Stock outstanding (calculated
on an as converted basis) as of the start of such 90-day period and (2) the
number of unregistered shares of capital stock of an issuer which may be sold by
a single holder in any 3 month period pursuant to the provisions of Rule 144(e).
(iii) Notwithstanding the foregoing, each Holder may, without complying
with the restrictions set forth in subsection (ii) hereof, sell all or any part
of the Unrestricted Shares in a private placement or other transaction not
involving any public offering or public sale to a transferee reasonably
acceptable to the Company (with the determination of such acceptability not to
be withheld or delayed unreasonably) so long as the transferee, as a condition
to such transfer, delivers to the Company a written instrument in form and
substance reasonably satisfactory to the Company, by which such transferee
agrees to be bound by the restrictions contained in this Section 10.1 and in the
Stock Subscription Agreement to the same extent as if such transferee had signed
this Agreement.
(f) Repurchase Transactions. Notwithstanding the restrictions contained in
-----------------------
this Section 10.1, each Stockholder and each Permitted Stockholder Affiliate may
effect repurchase transactions ("Repos") with respect to all or any part of the
-----
Shares so long as such Stockholder or Permitted Stockholder Affiliate, as
applicable, complies with the following:
(i) The Stockholder or Permitted Stockholder Affiliate shall consummate
Repo transactions only (A) with such counterparties as may be specified on a
list of acceptable broker/dealer or other financial institutions, as such list
may be amended by agreement of the Company and the Stockholders from time to
time and (B) after the Company has been provided a copy of any repurchase
agreement or other instrument which a Stockholder proposes to use in connection
with any contemplated Repo transaction and has determined, in its reasonable
judgment, that such instrument or agreement complies in all material respects
with the provisions of this Section 10.1(f); provided, that if the Company does
not object to any proposed contract or agreement within ten (10) Business Days
following its receipt of a copy thereof, such instrument or agreement shall be
deemed approved by the Company. Any dispute as to whether or not any such
proposed contract or agreement complies in all material respects with the
provisions of this Section 10.1(f) shall be resolved by arbitration pursuant to
the provisions of Section 12.11 hereof; provided, that such arbitration shall be
held pursuant to the procedures for a forty-five day arbitration set forth in
Section 13.4 of the Marketing Agreement;
(ii) No more than 10 Repo transactions in the aggregate may be in effect
with not more than 5 counterparties in the aggregate, in any event at any one
time (with such limitations applying in the aggregate, not per Stockholder or
Permitted Stockholder Affiliate);
(iii) The counterparty to a Repo must agree in the applicable repurchase
agreement (A) to comply with the provisions of this Section 10.1 and the
restrictions contained in the Stock Subscription Agreement with respect to all
Shares subject to such repurchase
25
agreement, and to inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any transferee to
agree in writing to be bound by such restrictions, (B) to hold all such shares
free and clear of all liens, claims and encumbrances of any kind or nature,
other than those securing the Holder's obligations under such repurchase
agreement, (C) not assign or transfer the repurchase agreement or any of its
rights, duties or obligations thereunder to any Person other than an Affiliate
of such counterparty who agrees in writing to be bound by all of the terms and
conditions of such repurchase agreement, the provisions of this Section 10.1 and
the restrictions contained in the Stock Subscription Agreement with respect to
all Shares subject to such repurchase agreement, and prior to any such
assignment or transfer, identify any proposed assignee or transferee of any of
the Shares subject to any repurchase agreement or any proposed transferee or
assignee of any repurchase agreement or any of the counterparty's duties or
obligations thereunder and include such obligation in any Repo agreement, (D)
that the Company shall have a right to approve any proposed transferee of Shares
or assignee of the repurchase agreement or any of its rights, duties or
obligations thereunder, including, without limitation, any Affiliate of such
counterparty, such approval not with be withheld or delayed unreasonably, and
(E) to make the Company a third party beneficiary entitled to enforce such
agreements against the counterparty; and
(iv) The Stockholder must, as part of each Repo transaction, (A) prior to
default thereunder, retain the sole and exclusive authority and right to vote
the shares subject to such Repo transaction, (B) if such Repo transaction is
effected prior to the expiration of the "distribution compliance period" (as
defined in Regulation S), certify to the Company that such Repo transaction
complies with the provisions of Regulation S and deliver to the Company an
opinion of counsel, in form and substance, and from counsel, reasonably
acceptable to the Company, that such Repo transaction does so comply, (C) retain
the risk of economic loss on the Shares in connection with any Repo transaction
and (D) agree on an exercise price for the put and call for the applicable
Common Stock (or the repurchase price, settlement price or equivalent price term
in any similar arrangement designed to effect the transfer of such Common Stock
back to the Stockholder at the conclusion or earlier termination of the Repo
transaction) that is at least equal to the purchase price for the Common Stock
at which such Repo transaction was effected, which purchase price shall, unless
the Company shall otherwise consent, be not less than the last reported sales
price therefor as reported on the Nasdaq National Market (or such other market
on which the Common Stock is then listed for trading and which has the then
largest daily trading volume for the Common Stock); provided, that the purchase,
repurchase and exercise price for the initial Repo transactions effected by the
Stockholders after consummation of the IPO may, if such Repo transactions are
consummated within 30 days of the consummation of the IPO, be not less than the
initial public offering price at which the Common Stock was sold to the public
in connection with the IPO; provided, that if such initial Repo transactions are
not consummated within 30 days of the consummation of the IPO despite the
Purchasers' use of all commercially reasonable efforts to so consummate such
initial Repo transactions, such 30 day period may, with the consent of the
Company, which shall not be withheld or delayed unreasonably, be extended for an
additional 30 day period; and provided further, however, that the aggregate
number of Shares as to which the provisions of the preceding proviso shall be
applicable shall not exceed the aggregate number of Shares issued to the
Purchasers pursuant to the Stock Subscription Agreement.
26
Each Stockholder hereby covenants that it will not settle any Repo
transactions to which it may be party at any time by any other means other than
by reacquiring record and beneficial title to the Shares that were the subject
of such Repo transaction. If either Stockholder (i) fails to timely settle any
Repo transaction by reacquiring record and beneficial title to the Shares that
were the subject of such Repo transaction, (ii) modifies the price for any put
and call or similar arrangement in connection with any Repo transaction to a
price below the purchase price for the Common Stock at which such Repo
transaction was effected, or (iii) renews or extends any Repo transaction at a
price below the last reported sales price therefor as reported on the Nasdaq
National Market (or such other market on which the Common Stock is then listed
for trading and which has the then largest daily trading volume for the Common
Stock), in any event as of the effective date or any renewal or extension, as
applicable, such failure, modification, renewal or extension shall be deemed a
breach of this Agreement, and, in addition to any remedies which the Company or
any other affected party may seek as a consequence of such breach, the
provisions of this Section 10.1(f) shall be deemed to have been terminated and
each Stockholder's right to effect additional Repo transactions from and after
such time in respect of any Restricted Shares, including, without limitation,
any renewals or extensions of then existing Repo transactions, shall immediately
terminate without the requirement of any notice from or other action on the part
of the Company The Company and the Stockholders shall consult with each other
regarding any press releases or other disclosures, including, without
limitation, any disclosures required pursuant to the provisions of the
Securities Act or the Exchange Act, with respect to each Repo transaction. The
Stockholders shall, and hereby agree to, indemnify and hold the Company harmless
from and against any and all Losses to the extent they arise out of or in
connection with any Repo transaction except to the extent such Losses arise out
of the Company's disclosure in any filing made by the Company under the
Securities Act or the Exchange Act of the terms of any Repo transaction effected
by a Stockholder in a manner which is inaccurate and different in any material
respect from any description provided in writing by the Stockholders of any such
Repo transaction for use in such filing.
Section 10.2. Nominee to the Company's Board; Advisory Committee.
------------ --------------------------------------------------
(a) The Company will take all action (if any) necessary in accordance with
the Delaware General Corporation Law, the Company's Restated Certificate of
Incorporation, as amended, and By-laws, to increase by one (1) the total number
of directors constituting the entire the Board of Directors of the Company and
to appoint Itau's President and Chief Executive Officer as a Class A Director to
fill such vacancy and to keep such vacancy available for the person nominated as
described below. The Company further agrees that for the two years following
the Effective Date and thereafter as long as (i) the Stockholders and their
Permitted Stockholder Affiliates together continue to hold at least 5/12ths of
the Shares and (ii) the Marketing Agreement remains in full force and effect, to
continue to nominate one person selected by the Stockholders as a director of
the Company at each annual or special meeting of the Company stockholders at
which directors are elected or pursuant to any written consents involving the
election of directors. Such person shall be either the then current President
or Chief Executive Officer of Itau for so long as the Board of Directors of the
Company includes (i) either the Chief Executive Officer or the Chief Operating
Officer of AOL and (ii) a person who is
27
a nominee of ODC, and thereafter may include one of the then current Senior Vice
Presidents who reports directly to either the President or the Chief Executive
Officer of Itau. Notwithstanding the foregoing, if any such nominee resigns in
mid-term for any reason other than death, serious illness or other incapacity or
separation of his or her employment with the Itau or removal from the qualifying
position set forth above, the Stockholders shall not be entitled to nominate any
replacement until the next annual meeting of the Company at which directors are
elected, and the Board of Directors of the Company may fill such vacancy
temporarily in accordance with the provisions of the Company's by-laws.
(b) The Company will take all action (if any) necessary in accordance with
the Delaware General Corporation Law, the Company's Restated Certificate of
Incorporation, as amended, and By-laws, to appoint an Advisory Committee and to
appoint the person nominated pursuant to Section 10.2(a) as a member of such
Advisory Committee.
(c) Each of AOL and ODC agrees to take all necessary action, including
voting all of the Common Stock and Common Stock Equivalents (as hereinafter
defined) of the Company now owned or hereafter acquired by such party (and
attend, in person or by proxy, all meetings of stockholders called for the
purpose of electing directors) and executing any necessary consents, and the
Company agrees to take all actions (including, but not limited to the nomination
and recommendation to its shareholders of the specified persons) to cause and
maintain the election of the person nominated pursuant to Section 10.2(a) to the
Board of Directors of the Company and the Advisory Committee in accordance with
the provisions of this Section 10.2.
Section 10.3 Right of Participation in Sales by AOL and ODC.
------------ ----------------------------------------------
(a) If at any time AOL and/or ODC wishes to sell, transfer, assign or
otherwise dispose of any shares of Common Stock or any securities of the Company
convertible into, exercisable for or exchangeable for shares of Common Stock
("Common Stock Equivalents") to any Person (the "Purchaser") in a single
-------------------------- ---------
transaction or series of transactions which would result in the transfer, either
individually or when combined with all other sales, transfers and other
dispositions of Common Stock and Common Stock Equivalents by the transferring
party in the immediately preceding 12 month period, of more than fifteen percent
(15%) of the shares of Common Stock of the Company held by AOL or ODC, as
applicable, immediately following consummation of the IPO and the transactions
contemplated hereby (as adjusted to reflect any stock splits, stock dividends,
reverse stock splits, recapitalizations and similar capital events), in each
case calculated on an as converted, fully diluted basis, it shall so notify the
Stockholders (the "Sale Notice"), and each Stockholder shall have the right to
-----------
require, as a condition to such sale or disposition, that the Purchaser purchase
from such Stockholder at the same price per share and on the same terms and
conditions as involved in such sale or disposition by AOL and/or ODC, as
applicable, the same percentage of the Available Shares then held by such
Stockholder as such sale or disposition represents with respect to the aggregate
number of shares of Common Stock and Common Stock Equivalents owned by whichever
of AOL and ODC is selling, calculated on an as converted, fully diluted basis
(the "Aggregate Stockholdings"), or, if both are selling, the same percentage as
-----------------------
such sale or disposition represents with respect to the Xxxxxxxxx
00
Xxxxxxxxxxxxx owned by whichever of AOL and ODC that is selling the greatest
percentage of its Aggregate Stockholdings; provided, that if the right to
--------
participate as provided in this Section accrues only after a combination of
transactions which together exceed such 15% threshold, then each Stockholder
shall have the right to require, as a condition to such sale or disposition,
that the Purchaser purchase from such Stockholder the same percentage of the
Available Shares then held by such Stockholder as such combined sales or
dispositions represent with respect to the Aggregate Stockholdings owned by
whichever of AOL and ODC is selling as of the first of such sales, or, if both
are selling, the same percentage as such combined sales or dispositions
represent with respect to the Aggregate Stockholdings owned by whichever of AOL
and ODC has sold the greatest percentage of its Aggregate Stockholdings as of
the first of such sales. If a Stockholder wishes so to participate in any such
sale or disposition it shall notify AOL and/or ODC, as applicable, of such
intention as soon as reasonably practicable after receipt of the Sale Notice,
and in all events within fifteen (15) days after receipt thereof, which
communication shall be delivered by hand or mailed to AOL and/or ODC, as
applicable, at the address set forth in Section 12.2 below. AOL and/or ODC, as
applicable, and the Stockholder(s) shall sell to the Purchaser all, or at the
option of the Purchaser, any part of the Common Stock proposed to be sold by
them at not less than the price and upon other terms and conditions, if any, not
more favorable to the Purchaser than those originally offered; provided,
however, that any purchase of less than all of such Common -------- -------
Stock by the Purchaser shall be made from AOL and/or ODC and the Stockholder pro
rata based upon the Available Shares held by the Stockholder(s) timely electing
to participate in such sales and the Aggregate Stockholdings of AOL and/or ODC,
as applicable. AOL and ODC, as applicable, shall each use its best efforts to
obtain the agreement of the Purchaser to the participation of the Stockholders
in the contemplated sale, and shall not sell any Common Stock to such Purchaser
if such Purchaser declines to permit the Stockholders to participate pursuant to
the terms of this Section 10.3.
(b) Notwithstanding the foregoing, the provisions of this Section 10.3
shall not apply to: (i) any transfer of Common Stock or Common Stock
Equivalents by gift; (ii) any transfer of Common Stock or Common Stock
Equivalents to any Person, not less than seventy-five percent (75%) of the
outstanding equity securities and Voting Power of which is held by the
transferring party or which holds not less than seventy-five percent (75%) of
the outstanding equity securities and Voting Power of the transferring party;
(iii) any sale of Common Stock in a public offering pursuant to a registration
statement filed with the Commission; (iv) any transfer of Common Stock or Common
Stock Equivalents by ODC to AOL at any time after the consummation of the IPO,
(v) any transfer of Common Stock or Common Stock Equivalents by ODC to any
member of the Xxxxxxxx Family (as such term is defined in the Restated
Certificate of Incorporation) and (vi) any bona-fide pledge, hypothecation or
other similar financing transaction in which the transferring party continues to
have the sole and exclusive authority and right to vote the shares subject to
such pledge, hypothecation or other financing transaction; provided that, in the
case of transfers effected pursuant to clauses (i), (ii) or (v) above, such
Person agrees to be bound by the provisions of this Section 10.3 with respect to
the Common Stock and Common Stock Equivalents so transferred.
(c) The provisions of this Section 10.3 shall be of no further force and
effect from and after the first to occur of (i) the date on which the Marketing
Agreement is terminated in
29
accordance with its terms other than by reason of a breach by the Company and/or
AOLB of the provisions thereof and (ii) the date that the aggregate number of
shares of Common Stock then held by the Stockholders and their Permitted
Stockholder Affiliates represents less than 5/24ths of the Shares (as adjusted
for stock splits, stock dividends, reclassifications, recapitalizations or other
similar events); provided, that if the Company and/or AOLB terminates the
--------
Marketing Agreement and the Stockholders timely challenge such termination in
accordance with the terms of the Marketing Agreement, the provisions of clause
(i) of this paragraph (c) shall not be effective unless and until there is a
final arbitration award issued pursuant to Section 13 of the Marketing Agreement
that the Company and/or AOLB, as applicable, was in fact entitled to terminate
such Agreement.
Section 10.4. Noncompetition Provisions (a) Each of AOL and ODC agrees
------------- -------------------------
that, for so long as the Stockholders and their Permitted Stockholder Affiliates
collectively hold shares of Common Stock representing not less than 6% of the
outstanding capital stock of the Company, calculated on a fully diluted basis,
the Stockholders shall be entitled to enforce the noncompetition obligations of
AOL and ODC (the "Existing Stockholders") contained in Sections 4.1 and 4.2 of
---------------------
the Stockholders' Agreement, dated as of _________, 2000, by and between the
Company, AOL and ODC (the "Existing Stockholders' Agreement"), on the terms and
--------------------------------
conditions set forth therein as if the Stockholders were parties thereto;
provided, that the provisions of the Existing Stockholders' Agreement that are
--------
effective only so long as each of AOL and ODC owns 20% of the issued and
outstanding Voting Stock, as such percentage is adjusted pursuant to the
Existing Stockholders' Agreement, shall be enforceable against AOL or ODC, as
the case may be, so long as such party owns 20% of the issued and outstanding
Voting Stock, as such percentage is adjusted pursuant to the Existing
Stockholders' Agreement.
(b) Each Stockholder covenants and agrees to be bound by and comply with
the provisions of Sections 4.1 and 4.2 of the Existing Stockholders' Agreement
that are applicable to ODC thereunder as if such Stockholder were a party
thereto, except that (i) such covenant and agreement shall expire at such time
as the Stockholders and their Permitted Stockholder Affiliates collectively own
less than six percent (6%) of the outstanding capital stock of the Company,
calculated on a fully diluted basis, (ii) such covenant and agreement shall not
be enforceable by any Existing Stockholder against whom the Existing
Stockholders' Agreement is not enforceable by the Stockholders, and (iii) all
references to "Xxxxxxxx Family Members," "RSL-LA" and "GLA" shall not apply with
respect to the Stockholders.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 10.4 shall expire on the first to occur of (i) the
date on which the Marketing Agreement is terminated in accordance with its terms
and (ii) the tenth anniversary of the date hereof. In addition, the parties
hereto agree that the provisions of Section 4.2(a) of the Existing Stockholders'
Agreement, as they apply to the Stockholders, shall be applied so that (i) the
repurchase obligations contained therein that are triggered upon a breach by AOL
or ODC shall apply, with respect to the Shares held by the Stockholders and
their Permitted Stockholder Affiliates, to whichever of AOL or ODC as shall have
breached the provisions of Section 4.1 of the Existing Stockholders' Agreement
and (ii) AOL shall have the right to repurchase the Shares held by the
Stockholders and any Permitted Stockholder Affiliates upon any breach by either
or
30
both of the Stockholders, or any Permitted Stockholder Affiliate then holding
any Shares, of the provisions of said Section 4.1.
(d) For the avoidance of doubt, with respect to PC Access Services, TV
Access Services and Wireless Access Services (as such terms are defined in the
Existing Stockholders' Agreement), neither Stockholder shall be deemed to be
engaging in a Restricted Activity (as such term is defined in the Existing
Stockholders' Agreement), unless (i) a Stockholder or any Permitted Stockholder
Affiliate then holding Shares is a Significant Competitor (as such term is
defined in the Existing Stockholders' Agreement), or the Stockholders and the
Permitted Stockholder Affiliates then holding Shares are an Aggregated
Significant Competitor (as such term is defined in the Existing Stockholders'
Agreement) or (ii)(A) a Stockholder has, or the Stockholders' and/or the
Permitted Stockholder Affiliates then holding Shares collectively have, a direct
and/or indirect ownership interest in any applicable Person or Persons of at
least thirty five percent (35%) and (B) such Person is a Significant Competitor
or a Stockholder together with the other Stockholder and the Permitted
Stockholder Affiliates then holding Shares and/or such other Person or Persons
are an Aggregated Significant Competitor.
Section 10.5 Participation in Registrations by AOL and ODC. Each of AOL
------------ ---------------------------------------------
and ODC agrees that the "piggy back" registration rights granted to the
Stockholders pursuant to Section 2.1 hereof shall be applicable to any demand or
Form S-3 registrations to be conducted by the Company on either of their behalf
pursuant to the provisions of the Registration Rights Agreement, dated as of
_______, 2000, by and between the Company, AOL and ODC, subject to the
provisions of Section 2.3 hereof.
Section 10.6 Right of Participation in Sales by the Company .
------------ ----------------------------------------------
(a) Right of Participation. Except as provided in Section 10.6(f) of this
----------------------
Agreement, the Company shall not issue, sell or exchange, agree or obligate
itself to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange (i) any debt or equity security of the Company (other than debt with no
equity feature) including without limitation, any debt security which by its
terms is convertible into or exchangeable for any equity security of the
Company, (iii) any security of the Company that is a combination of debt and
equity, or (iv) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any such equity, debt or combination security of the Company,
in any event solely for cash or cash equivalents, to any Person including any
Existing Stockholder or any Affiliate thereof (the "Offered Securities"), unless
------------------
in each case the Company shall have first offered to each Stockholder that
portion of such securities as the number of Shares then held by such Stockholder
bears to the total number of shares of Common Stock (including all shares of
capital stock convertible into Common Stock, on a fully-diluted basis) of the
Company then outstanding (each Stockholder's "Pro Rata Amount," and
----------------
collectively, the "Aggregate Pro Rata Amount"), at a cash price and on such
-------------------------
other terms as shall have been specified by the Company in writing delivered to
such Stockholder (the "Offer"), which Offer by its terms shall remain open and
-----
irrevocable for a period of ten (10) Business Days from receipt of the offer.
31
(b) Notice of Acceptance. Notice of each Stockholder's intention to
--------------------
accept, in whole or in part, any Offer made pursuant to Section 10.6(a) shall be
evidenced by a writing signed by such Stockholder and delivered to the Company
prior to the end of the 10 Business Day period of such Offer, setting forth such
of the Stockholder's Pro Rata Amount as such Stockholder elects to purchase (the
"Notice of Acceptance").
--------------------
(c) Conditions to Acceptances and Purchase .
--------------------------------------
(i) Permitted Sales. The Company shall have ninety (90) days from the
---------------
expiration of the period set forth in Section 10.6(a) to close the sale of all
or any part of such Offered Securities as to which a Notice of Acceptance has
not been given by the Stockholders, but only for cash at the per share price
and/or interest rates, as applicable, and otherwise in all respects upon terms
and conditions which are no less favorable, in the aggregate, to the Company
than those set forth in the Offer. If the number of Offered Securities to be
sold is reduced in any material amount, the Company shall again provide the
Stockholders with notice pursuant to the provisions of Section 10.6(a),
regardless of whether Notices of Acceptance previously have been delivered, and
the Purchasers shall have an additional five (5) Business Day period in which to
submit a Notice of Acceptance, if one has not been previously submitted, or
withdraw a previously submitted Notice of Acceptance, in any event with respect
to such reduced amount of Offered Securities.
(ii) Closing. Upon the closing, which shall include full payment to
-------
the Company, of the sale to another Person or Persons of all or less than all
the Offered Securities, the Stockholders shall purchase from the Company, and
the Company shall sell to the Stockholders, the number of Offered Securities
specified in the Notices of Acceptance. The purchase by the Stockholders of any
Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Stockholders of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance to the
Stockholders and their counsel and containing terms and conditions no less
favorable, in the aggregate, than those contained in the similar purchase
agreements entered into with the other purchasers of Offered Securities.
(d) Further Sale . In each case, any Offered Securities not purchased by
------------
the Stockholders or other Person or Persons in accordance with Section 6(c) may
not be sold or otherwise disposed of until they are again offered to the
Stockholders under the procedures specified in Sections 6(a), 6(b) and 6(c).
(e) Termination of Right of Participation. The rights of the Stockholders
-------------------------------------
under this Section 10.6 shall terminate immediately upon the first to occur of
(i) the date on which the Marketing Agreement is terminated in accordance with
its terms for any reason other than a breach by the Company and/or AOLB of the
provisions thereof and (ii) the date that is the fourth (4th) anniversary of the
consummation of the IPO, regardless of whether or not the Company is then
subject to the provisions of the Exchange Act with respect to any of its equity
or debt securities; provided, that if the Company and/or AOLB terminates the
--------
Marketing Agreement and the Stockholders timely challenge such termination in
accordance with the terms of the
32
Marketing Agreement, the provisions of clause (i) of this paragraph (e) shall
not be effective unless and until there is a final arbitration award issued
pursuant to Section 13 of the Marketing Agreement that the Company and/or AOLB,
as applicable, was in fact entitled to terminate such Agreement
(f) Exception. The rights of the Stockholders under this Section 10.6
---------
shall not apply to:
(i) Common Stock issued as a stock dividend to holders of Common Stock
or upon any subdivision or combination of shares of Common Stock,
(ii) shares of Preferred Stock issued as a dividend to holders of
Preferred Stock upon any subdivision or combination of shares of such series of
Preferred Stock,
(iii) shares of Common Stock issued or issuable pursuant to options,
warrants or other rights (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like) issued to employees, officers or
directors of, or consultants or advisors (other than AOL, ODC or their
Affiliates) to the Corporation or any subsidiary pursuant to stock purchase or
stock option plans or other arrangements that are approved by the Board of
Directors,
(iv) Common Stock offered to the public pursuant to a registration
statement filed under the Securities Act, and
(v) the issuance of Common Stock issued upon the exercise of options
or warrants to purchase Common Stock outstanding as of the date of execution of
the Stock Subscription Agreement.
(g) Waiver. The rights of the Stockholders under this Section 10.6 may be
------
waived in any instance, on behalf of all of the Stockholders, prospectively or
retroactively, by the written agreement of the holders of not less than sixty
six and two-thirds percent (66-2/3%) of the Common Stock owned beneficially or
of record by the Stockholders and or their Permitted Stockholder Affiliates.
Section 10.7 Repatriation. Each Stockholder covenants and agrees to use
------------ ------------
all commercially reasonable efforts, as and when requested by the Company, to
assist the Company in obtaining all required consents and approvals, if any, of
the Brazilian central bank and other Brazilian regulatory authorities in
connection with any contemplated repatriation or other movement or transfer of
funds from Brazil to a jurisdiction outside of Brazil in connection with the
transactions contemplated hereby. Any such assistance shall be provided without
cost or expense to the Stockholders, and each may require, as a condition to
providing such assistance, that the Company agree to indemnify and hold such
Stockholder harmless from and against any liability that may arise as a
consequence of the Stockholder providing such assistance other than as a result
of the Stockholder's illegal acts, gross negligence or bad faith.
33
Section 11. Term of Registration Rights
----------- ---------------------------
The rights of Holders with respect to the registration rights granted
pursuant to this Agreement shall remain in effect, subject to the terms hereof,
so long as there are Restricted Securities or Registrable Securities or
securities which are directly or indirectly convertible or exchangeable for
Restricted Securities or Registrable Securities issued and outstanding.
Section 12. Miscellaneous.
----------- -------------
Section 12.1. Entire Agreement; Amendments. This Agreement contains the
------------- ----------------------------
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with
respect to such matters.
Section 12.2. Notices. Any and all notices or other communications or
------------- -------
deliveries required or permitted to be provided pursuant to this Agreement shall
be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telex (with correct answer back received),
telecopy or facsimile (with transmission confirmation report) at the address or
number designated below, or such other address as may be designated in writing
hereafter, in the same manner, by such person (if delivered on a Business Day
during normal business hours where such notice is to be received), or the first
Business Day following such delivery (if delivered on a Business Day after
normal business hours where such notice is to be received) or (b) on the second
Business Day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for each Holder shall be maintained
by the Company.
The address for the Company shall be:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000, XXX
Attention: Chief Executive Officer
fax: (000) 000-0000
Copies of all notices shall be sent to:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000, XXX
Attention: General Counsel
fax: (000) 000-0000
34
And to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
The address for the Stockholders shall be:
c/o Banco Itau X.X.
Xxx Xxx Xxxxx 000
Xxx Xxxxx Xxxxxx
Attn: President and CEO
Fax No: (000) 00-00-000-0000
Copies of all notices shall be sent to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No: (000) 000-0000
The address for AOL shall be:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000, XXX
Attn: President, AOL International
Fax No.: (000) 000-0000
Copies of all notices shall be sent to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000, XXX
Attn: General Counsel
Fax No.: (000) 000-0000
35
The address for ODC shall be:
Riverview Media Corp.
000 Xxxxxxxxxx Xxxxx
Wickhams Cay
Road Town, Tortola
British Virgin Islands
Attn: Legal Department
Fax No.: (000) 000-0000
Copies of all notices shall be sent to:
Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000, XXX
Attn: Legal Department
Fax No.: (000) 000-0000
Section 12.3. Remedies. In the event of a breach by the Company or by a
------------ --------
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company and the Stockholders agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by any of
them of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
the breaching party or parties shall waive the defense that a remedy at law
would be adequate.
Section 12.4. No Inconsistent Agreements. Neither the Company nor any of
------------ --------------------------
its Subsidiaries has, as of the date hereof, nor shall the Company or any of its
Subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, the Company shall not grant to
any person the right to request the Company to register any securities of the
Company under the Securities Act unless the rights so granted are subject in all
respects to the prior rights in full of the Holders, and are not otherwise in
conflict or inconsistent with the provisions of this Agreement.
Section 12.5. Amendments and Waivers. No provision of this Agreement may
------------ ----------------------
be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Holders; or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission
36
of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter. Notwithstanding the
foregoing, no such amendment shall be effective to the extent that it applies to
less than all of the Holders. The Company shall not offer or pay any
consideration to a Holder for consenting to such an amendment or waiver unless
the same consideration is offered to each Holder and the same consideration is
paid to each Holder which consents to such amendment or waiver.
Section 12.6. Successors and Assigns. This Agreement shall inure to the
------------ ----------------------
benefit of and be binding upon the successors and permitted assigns of each of
the parties. The rights of each Holder hereunder, including the right to have
the Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder
together with the Registrable Securities, or the securities into which such
Registrable Securities are convertible or exchangeable into, to another Person
if: (a) the assigning Holder transfers or otherwise assigns to such Person at
least 1/12th of the shares of Registrable Securities originally acquired by the
Stockholders pursuant to the Stock Subscription Agreement (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits and the like), or, if the number of shares of
Registrable Securities so assigned is less than such number, the assignee is a
Permitted Stockholder Affiliate, (b) the Company is, within a reasonable time
after such transfer or assignment, furnished with written notice of (i) the name
and address of such transferee or assignee, and (ii) the number of securities
with respect to which such registration rights are being transferred or
assigned, (c) at or before the time the Company receives the written notice
contemplated by clause (b) of this Section, the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions of this Agreement
and the provisions of the Stock Subscription Agreement applicable to transfers
of Shares, and (d) such transfer shall have been made in accordance with the
applicable requirements of any agreement applicable to the transfer of such
shares. The rights to assignment shall apply to the Holders (and to subsequent)
successors and assigns. Notwithstanding the foregoing, the Stockholders shall
have no right to assign any of the rights granted to the Stockholders pursuant
to Sections 10.2, 10.3, 10.4 and 10.6 of this Agreement, each of which shall be
non-transferable and personal to the Stockholders, and any such assignment shall
be null and void, except that each Stockholder may assign such rights to its
Permitted Stockholder Affiliates in connection with transfers of Shares to such
Permitted Stockholder Affiliates, and from and after any such assignment, the
Permitted Stockholder Affiliate shall have the rights of the Stockholders
hereunder.
Section 12.7. No Third-Party Beneficiaries. This Agreement is intended
------------ ----------------------------
for the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 12.8. Cumulative Remedies. The remedies provided herein are
------------ -------------------
cumulative and not exclusive of any remedies provided by law.
Section 12.9. Severability. If any term, provision, covenant or
------------ ------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein
37
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
Section 12.10. Headings and Captions. The headings and captions of the
------------- ---------------------
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
Section 12.11 Arbitration of Disputes.
-------------
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or validity thereof ("Dispute"), shall be
-------
decided by arbitration administered by the American Arbitration Association
("AAA") in accordance with the International Arbitration Rules of the AAA
-----
("Rules"). For the purpose of any arbitration held pursuant to this Section
-------
12.11, the Company shall act as one party and the Holders shall act as one party
for the purpose of the appointment of arbitrators and for general conduct of the
arbitration. The arbitration shall be conducted and the award shall be rendered
in New York, New York in the English language. Any judicial proceeding by a
party seeking to set aside, vacate or modify an arbitral award issued hereunder
shall be filed in the United States District Court for the Southern District of
New York or the New York State Courts located in New York, New York and shall be
subject to the Federal Arbitration Act, 9 U.S.C. sec. 1 et seq. The parties
hereto consent to the exclusive jurisdiction of the aforesaid courts for any
action to vacate or set aside an arbitration award hereunder. Each arbitration
shall be commenced by, and on the date of, the serving of a statement of claim
by the claimant on the respondent ("Commencement"). The claimant shall
------------
simultaneously file such statement of claim with the AAA. The arbitral award
shall be final and binding and the prevailing party may enter such award in any
court having jurisdiction. The panel shall order all expenses and costs of an
arbitration, including reasonable counsel and consultant fees, to be paid by the
non-prevailing party. In a proceeding in which both parties prevail on
different issues in dispute, the panel shall provide in its award for an
apportionment of such expenses and costs reasonably reflecting the relative
significance of the issues decided. Any disputes as to the reasonableness of
counsel fees or other expenses or costs of the prevailing party shall be decided
by the same panel. The arbitral award shall incorporate the amount of costs and
fees to be paid by the non-prevailing party. By agreeing to arbitration, the
parties do not intend to deprive any court of its jurisdiction to issue a pre-
arbitral injunction, pre-arbitral attachment, or other order in aid of
arbitration proceedings and the enforcement of any award. Without prejudice to
such provisional remedies as may be available under the jurisdiction of a court,
the arbitral tribunal shall have full authority to grant provisional remedies or
to order any party or parties to request that a court modify or vacate any
temporary or preliminary relief issued by that court, and to award damages for
the failure of any party to respect the arbitral tribunal's orders to that
effect. The parties shall use commercially reasonable efforts to facilitate the
expeditious resolution of any Disputes.
38
(b) In connection with any Arbitration hereunder, the following specific
schedule and content of proceedings shall be adhered to by the parties unless
otherwise mutually agreed. There shall be three (3) neutral arbitrators, of whom
each party shall appoint one within thirty (30) days of the receipt by the
respondent of the statement of claim. If any arbitrator is not appointed within
the time limit provided herein, such arbitrator shall be appointed by the
American Arbitration Association. The two arbitrators so appointed shall select
the chair of the arbitral tribunal within thirty (30) days of the appointment of
the second arbitrator. If the third arbitrator is not appointed within the time
limit provided herein, such arbitrator shall be appointed by the American
Arbitration Association by providing the parties a list of ten (10) qualified
arbitrators and their relevant biographical data. Within ten (10) days after
receipt of such list, each party shall return said list to the AAA in which it
shall strike three (3) of the arbitrators and rank the remaining arbitrators 1
through 7, 1 being the party's first choice. Unless the parties agree to request
an additional list from the AAA, and thus to repeat the process with the same
timing, the AAA shall select the arbitrator as promptly as possible having the
highest combined preference based upon the rankings of the parties. Upon written
notice by the AAA to the parties of the third arbitrator selected, the panel
shall be seated. The arbitrator who shall serve as chair of the tribunal shall
not be a national of the United States or Brazil.
(c) In order to facilitate the comprehensive resolution of related
disputes, all claims between any of the parties to this Agreement that arise
under or in connection with this Agreement and/or any of the Related Agreements
(other than the Escrow Agreement) may be brought in a single arbitration. Upon
the request of any party to an arbitration proceeding constituted under this
Agreement, the arbitral tribunal shall consolidate the arbitration proceeding
with any other arbitration proceeding involving any of the parties hereto
relating to any of the Related Agreements (other than the Escrow Agreement) if
the arbitrators determine that (i) there are issues of fact or law common to the
proceedings so that a consolidated proceeding would be more efficient than
separate proceedings, and (ii) no party would be unduly prejudiced as a result
of such consolidation through undue delay or otherwise. In the case of all
arbitration proceedings hereunder, the award of the arbitrators shall be final
and fully effective as between the parties when the award is issued to the
parties without regard to the filing by any party of judicial proceedings
seeking to set aside, vacate or modify the award. If proceedings are filed as to
any award and a final judicial determination is made setting aside, vacating or
modifying the award, the parties shall take all appropriate actions to comply
with such determination, including the revocation or unwinding of any actions
taken or restoration of any payments made pursuant to the arbitral award with
interest thereon at the prevailing rate. In any consolidated arbitration held
pursuant to this Section 12.11(c), the procedures to be followed shall be the
arbitration procedures set forth in Sections 13.2 and 13.2 of the Marketing
Agreement.
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
AMERICA ONLINE LATIN AMERICA, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
BANCO ITAU, S.A.
WITNESS:
By:_________________________________
By: _________________ Name: Xxxxxxx Egydio Setubal
Name: Title: President and Chief Executive Officer
Title:
WITNESS:
By:_________________________________
By: _________________ Name: Xxxxxx Xxxx Xxxxx Xxxxxxxx
Name: Title: Executive Vice President
Title:
BANCO XXXXXX, X.X.
WITNESS:
By:_________________________________
By: _________________ Name: Xxxxxxx Egydio Setubal
Name: Title: President
Title:
WITNESS:
By:_________________________________
By: _________________ Name: Xxxxxx Xxxxx de Jongh
Name: Title: Executive Director
Title:
40
The parties signing below are signing for the limited purpose of joining the
covenants contained in Sections 10.2, 10.3, 10.4 and 10.5 of this Agreement.
AMERICA ONLINE, INC.
By:_____________________________
Name:___________________________
Title:__________________________
RIVERVIEW MEDIA CORP.
By:_____________________________
Name:___________________________
Title:__________________________
41
