INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "Agreement"), dated as of April 3, 2000, by
and among VODAFONE AIRTOUCH PLC, an English public limited company
("Vodafone"), XXXX ATLANTIC CORPORATION, a Delaware corporation ("Xxxx
Atlantic"), and CELLCO PARTNERSHIP, a Delaware general partnership ("Wireless"
or the "Partnership").
W I T N E S S E T H:
WHEREAS, Vodafone and Xxxx Atlantic are parties to that certain U.S.
Wireless Alliance Agreement, dated as of September 21, 1999 (as amended, the
"Alliance Agreement"), providing for a series of transactions involving, among
other things, the formation of, and contribution of certain wireless
communications assets to, Wireless; and
WHEREAS, in connection with the foregoing, Vodafone, Xxxx Atlantic and
Wireless desire to set forth herein certain terms regarding the possible
monetization of Vodafone's and Xxxx Atlantic's respective interests in
Wireless;
NOW, THEREFORE, Vodafone, Xxxx Atlantic and Wireless agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. (a) As used in this Agreement, the following terms
shall have the following meanings (unless indicated otherwise, all Article and
Section references are to Articles and Sections of this Agreement):
"1940 Act Opinion" shall mean an unqualified opinion of a nationally
recognized law firm with special expertise in regulation of entities under the
Investment Company Act of 1940 (the "1940 Act") to the effect that either (a)
it is not necessary for Pubco to register as an investment company under the
1940 Act or (b) if Pubco were to be required to so register, such registration
would not adversely affect the rights and obligations of Pubco, Wireless,
Vodafone and Xxxx Atlantic between and among each other.
"Affiliate" shall have the meaning set forth in the Alliance Agreement.
"Alliance Agreement" shall have the meaning set forth in the first recital
of this Agreement.
"Applicable Rate" shall mean, for purposes of determining accretion in
Market Value pursuant to Section 5.2(c)(ii)(A), (a) for the thirty-day period
following the Valuation Date, a rate per annum equal to the LIBO Rate (as
defined in the Alliance Agreement) plus 100 basis points and (b) thereafter
through the applicable Monetization Closing Date, a rate per annum equal to the
LIBO Rate plus 200 basis points.
"Xxxx Atlantic Backstop" shall mean,
(a) in the case of any exercise of the Phase I Option, (i) $5 billion,
minus (ii) the aggregate amount by which the Xxxx Atlantic Allocated
Amount shall have been increased pursuant to Section 5.1(c)(ii)(B) in
connection with all prior exercises of the Phase I Option (the "Phase
I Backstop Amount"); and
(b) in the case of any exercise of the Phase II Option, (i) the sum of $5
billion plus the amount of any remaining Phase I Backstop Amount,
minus (ii) the aggregate amount by which the Xxxx Atlantic Allocated
Amount shall have been increased pursuant to Section 5.1(c)(ii)(B) in
connection with all prior exercises of the Phase II Option.
"Xxxx Atlantic Common Stock" shall mean Xxxx Atlantic's Common Stock, par
value $0.10 per share.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any successor federal statute, and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
"GAAP" shall mean United States generally accepted accounting principles.
"Included Affiliate" means any Wholly Owned Subsidiary of Vodafone and any
Affiliate Transferee (as defined in the Partnership Agreement) to which
Vodafone transfers a Partnership Interest pursuant to Section 8.2(b)(ii) of the
Partnership Agreement.
"Interests" shall mean "Partnership Interests" as such term is defined in
the Partnership Agreement.
"Market Value" shall mean, subject to the following sentence, the
hypothetical aggregate, fully distributed market value as of the applicable
Valuation Date of Interests assuming (a) all Interests were of a single class
of common stock, (b) such common stock were publicly tradable, and (c) a
regular and active market existed for such common stock on the New York Stock
Exchange or the NASDAQ/NMS, whichever market would provide the greater
liquidity and value for such common stock. In the event Pubco has consummated
an IPO and the Public Common Stock trades in a regular and active market,
"Market Value" shall be based on the market price of the Public Common Stock
for which Interests are exchangeable, such market price shall equal the
volume-weighted average daily trading price on the principal exchange on which
the Public Common Stock is then traded for the ten consecutive trading day
period ending two days prior to the Valuation Date.
"Measurement Date" shall mean, for any Monetization Closing, the last day
of the month preceding such Monetization Closing.
"Monetization Amount" shall mean the U.S. dollar amount of Interests
specified by Vodafone in a Monetization Notice.
-2-
"Monetization Notice" shall mean a written notice delivered by Vodafone
pursuant to Section 5.1(a) or (b).
"Partnership Agreement" means the Amended and Restated Partnership
Agreement of Wireless Partnership to be entered into as of the Stage I Closing
as it may be amended from time to time.
"Person" shall mean any individual, partnership, limited liability
company, corporation, trust, unincorporated organization or other entity, or a
government or agency or political subdivision thereof.
"Realizable Value" means, with respect to any Xxxx Atlantic Common Stock
delivered to Vodafone in connection with any Monetization Closing, the cash
proceeds (net of all associated discounts, commissions, fees and other
transaction costs and expenses) that would reasonably be expected to be
realized, on a per-share basis, from a sale of all of such Xxxx Atlantic Common
Stock, in one or more block trades and in a manner designed to realize cash
proceeds as soon as possible following the applicable Monetization Closing
Date, taking into account (among other things) the then current trading price
and trading volume of Xxxx Atlantic Common Stock, the expected delay (if any)
following the Monetization Closing Date until such Xxxx Atlantic Common Stock
is disposed of, the amount of Xxxx Atlantic Common Stock to be sold, and the
transfer rights and transfer restrictions (whether imposed by contract or law)
applicable to Vodafone's ownership of such Xxxx Atlantic Common Stock.
"SEC" shall mean the Securities and Exchange Commission or its successor.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
any successor federal statute, and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
"Stage I Closing" shall have the meaning set forth in the Alliance
Agreement.
"Stage II Closing" shall have the meaning set forth in the Alliance
Agreement; provided that if the Stage II Closing shall not occur, it shall be
deemed to have occurred as of the Stage I Closing.
"Valuation Date" shall mean, with respect to any sale of Interests
pursuant to Section 5.1(a) or (b), the date of delivery of a Monetization
Notice with respect to such Interests.
"Wholly Owned Subsidiary" shall have the meaning set forth in the
Partnership Agreement.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Alternative Structure Section 5.3(e)
-3-
Appraiser's Certificate Section 5.2(a)(i)(B)(2)
Assumed Debt Section 5.3(d)
Assumed Debt Option Section 5.3(d)
Xxxx Atlantic Allocation Amount Section 5.1(c)
Xxxx Atlantic Appraiser Section 5.2(a)(i)(B)(1)
Consideration Notice Section 5.3(a)
Deferral Amount Section 5.3(d)
Exchanged Shares Section 6.1(a)
Higher Number Section 5.2(a)(i)(B)(2)
HSR Act Section 2.3
Initiating Party Section 6.1(c)
IPO Section 6.1(a)
IPO Notice Section 6.1(b)
IP Structure Section 6.1(c)
Lower Number Section 5.2(a)(i)(B)(2)
NIP Structure Section 6.1(c)
Non-Initiating Party Section 6.1(c)
Phase I Option Section 5.1(a)
Phase II Option Section 5.1(b)
Pubco Section 6.1(a)
Public Common Stock Section 6.1(a)
Monetization Closing Section 5.4
Monetization Closing Date Section 5.4
Monetizable Interests Percentage Section 5.2(a)
Tax Postponement Amount Section 5.3(e)
Third Appraiser Section 5.2(a)(i)(B)(4)
Third Number Section 5.2(a)(i)(B)(4)
Vodafone Appraiser Section 5.2(a)(i)(B)(1)
Wireless Allocated Amount Section 5.1(c)
(c) All references to dollar amounts herein are references to U.S.
dollars.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF VODAFONE
Vodafone hereby makes the following representations and warranties to Xxxx
Atlantic and Wireless:
2.1 Organization and Qualification. Vodafone is a corporation duly
organized and existing in good standing under the laws of England and has the
corporate power to own its properties and to carry on its business as now being
conducted.
2.2 Authorization; Enforcement. (a) Vodafone has full legal right, power
and authority to enter into and perform this Agreement, (b) the execution and
delivery of this Agreement by Vodafone and the consummation by it of the
transactions contemplated hereby have been duly authorized by it, (c) this
Agreement has been duly executed and delivered by
-4-
Vodafone and (d) this Agreement constitutes a valid and binding obligation of
Vodafone enforceable against Vodafone in accordance with its terms, except that
(i) such enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar law relating to, or
affecting generally the enforcement of, creditors' rights and remedies and (ii)
the remedies of specific performance and injunctive relief may be subject to
general principles of equity.
2.3 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by Vodafone of the transactions contemplated
hereby will not conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of Vodafone pursuant to any agreement, indenture or instrument to which
Vodafone is a party, or by which any property or asset of Vodafone is bound or
affected, or result in a violation of its charter and bylaws or any law, rule,
regulation, order, judgment or decree of any court or governmental agency
applicable to Vodafone or by which any property or asset of Vodafone is bound
or affected. Except for such filings as may be required by the Exchange Act,
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 0000 (xxx "XXX Xxx") or as
specifically contemplated hereby, no consent, authorization or order of, or
filing or registration with, any court or governmental agency is required for
the execution, delivery and performance by Vodafone of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXX ATLANTIC
Xxxx Atlantic hereby makes the following representations and warranties to
Vodafone and Wireless:
3.1 Organization and Qualification. Xxxx Atlantic is a corporation duly
organized and existing in good standing under the laws of the State of Delaware
and has the corporate power to own its properties and to carry on its business
as now being conducted.
3.2 Authorization; Enforcement. (a) Xxxx Atlantic has full legal right,
power and authority to enter into and perform this Agreement, (b) the execution
and delivery of this Agreement by Xxxx Atlantic and the consummation by it of
the transactions contemplated hereby have been duly authorized by it, (c) this
Agreement has been duly executed and delivered by Xxxx Atlantic and (d) this
Agreement constitutes a valid and binding obligation of Xxxx Atlantic
enforceable against Xxxx Atlantic in accordance with its terms, except that (i)
such enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar law relating to, or
affecting generally the enforcement of, creditors' rights and remedies and (ii)
the remedies of specific performance and injunctive relief may be subject to
general principles of equity.
-5-
3.3 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by Xxxx Atlantic of the transactions
contemplated hereby will not conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Xxxx Atlantic pursuant to any agreement, indenture or
instrument to which Xxxx Atlantic is a party, or by which any property or asset
of Xxxx Atlantic is bound or affected, or result in a violation of its charter
and by-laws or any law, rule, regulation, order, judgment or decree of any
court or governmental agency applicable to Xxxx Atlantic or by which any
property or asset of Xxxx Atlantic is bound or affected. Except for such
filings as may be required by the Exchange Act, the HSR Act or as specifically
contemplated hereby, no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
execution, delivery and performance by Xxxx Atlantic of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CELLCO PARTNERSHIP
Wireless hereby makes the following representations and warranties to
Vodafone and Xxxx Atlantic:
4.1 Organization and Qualification. Wireless is a general partnership duly
organized and existing under the laws of the State of Delaware and has the
power to own its properties and to carry on its business as now being
conducted.
4.2 Authorization; Enforcement. (a) Wireless has full legal right, power
and authority to enter into and perform this Agreement, (b) the execution and
delivery of this Agreement by Wireless and the consummation by it of the
transactions contemplated hereby have been duly authorized by it, (c) this
Agreement has been duly authorized, executed and delivered by Wireless and (d)
this Agreement constitutes a valid and binding obligation of Wireless
enforceable against Wireless in accordance with its terms, except that (i) such
enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar law relating to, or
affecting generally the enforcement of, creditors' rights and remedies and (ii)
the remedies of specific performance and injunctive relief may be subject to
general principles of equity.
4.3 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by Wireless of the transactions contemplated
hereby will not conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of
-6-
Wireless pursuant to any agreement, indenture or instrument to which Wireless
is a party, or by which any property or asset of Wireless is bound or affected,
or result in a violation of Wireless's Partnership Agreement or any law, rule,
regulation, order, judgment or decree of any court or governmental agency
applicable to Wireless or by which any property or asset of Wireless is bound
or affected. Except for such filings as may be required under the HSR Act or as
specifically contemplated hereby, no consent, authorization or order of, or
filing or registration with, any court or governmental agency is required for
the execution, delivery and performance by Wireless of this Agreement.
ARTICLE V
VODAFONE'S MONETIZATION OPTION
5.1 Monetization Option. Vodafone shall have the right to require that
Xxxx Atlantic and Wireless purchase Interests from Vodafone and its Included
Affiliates as follows:
(a) Phase I Option. Upon written notice from Vodafone delivered to Xxxx
Atlantic and Wireless during the period commencing thirty (30) days before, and
ending thirty (30) days after, either one or both of the third anniversary date
and the fourth anniversary date of the Stage II Closing (it being agreed that
no more than one such notice may be delivered with respect to either such
anniversary), Vodafone may elect to require that Wireless (subject to paragraph
(c) below) purchase from Vodafone or Included Affiliates of Vodafone specified
in the written notice, that percentage of Interests which have an aggregate
Market Value equal to the amount (stated in U.S. dollars) specified by Vodafone
in such written notice (the "Phase I Option"); provided that in no event shall
the aggregate amount actually paid to Vodafone and its Included Affiliates
pursuant to the Phase I Option exceed $10 billion.
(b) Phase II Option. Upon written notice from Vodafone delivered to Xxxx
Atlantic and Wireless during the period commencing thirty (30) days before, and
ending thirty (30) days after, any one or more of the fifth anniversary date,
the sixth anniversary date and the seventh anniversary date of the Stage II
Closing (it being agreed that no more than one such notice may be delivered
with respect to any such anniversary), Vodafone may elect to require that
Wireless (subject to paragraph (c) below) purchase from Vodafone or Included
Affiliates of Vodafone specified in the written notice that percentage of
Interests which have an aggregate Market Value equal to the amount (stated in
U.S. dollars) specified by Vodafone in such written notice (the "Phase II
Option"); provided that (i) in no event shall the aggregate amount actually
paid to Vodafone and its Included Affiliates pursuant to the Phase II Option
exceed (x) $20 billion, minus (y) the amount actually paid to Vodafone and its
Included Affiliates pursuant to the Phase I Option, and (ii) the Monetization
Amount specified in any Monetization Notice delivered with respect to any
single exercise of the Phase II Option shall not exceed $10 billion.
(c) Allocation of Obligations.
(i) Xxxx Atlantic shall have the right, exercisable by written notice to
Vodafone within thirty (30) days after a determination of the Monetizable
Interests Percentage pursuant to Section 5.2, to obligate itself or its
designee (for whose obligations Xxxx Atlantic shall be primarily liable) rather
than Wireless to purchase pursuant to the Phase I Option or the Phase II Option
some or all of the percentage of Interests covered by the applicable
Monetization Notice. Such written notice shall specify that portion of the
Monetization Amount as to which Xxxx
-7-
Atlantic is exercising the foregoing right and such notice may not be modified
or revoked by Xxxx Atlantic after it is delivered to Vodafone. That portion of
the Monetization Amount allocated to Wireless and Xxxx Atlantic after giving
effect to this Section 5.1(c) shall be the "Wireless Allocated Amount" and the
"Xxxx Atlantic Allocated Amount," respectively. In the event that the Wireless
Allocated Amount for all transactions effected pursuant to the Phase I Option
exceeds $5 billion, then a "Monetization Imbalance" shall be deemed to exist
for purposes of Section 7.1(c) of the Partnership Agreement.
(ii) Notwithstanding Xxxx Atlantic's proposed allocation of the
Monetization Amount pursuant to subparagraph (i) above, (A) at the option of
Vodafone, Wireless (and not Xxxx Atlantic) shall be obligated to purchase
pursuant to the Phase II Option a portion of the Monetization Amount, not to
exceed a total of $7.5 billion, in one or more transactions as provided in
Sections 5.3(d) and 5.3(e) and (B) in the event that Wireless defaults on its
obligations pursuant to the Phase I Option or Phase II Option to purchase some
or all of the Interests covered by a Monetization Notice, the Xxxx Atlantic
Allocated Amount shall be increased to the extent necessary to cure such
default, but in no event by more than the Xxxx Atlantic Backstop with respect
to the applicable Monetization Closing.
5.2 Determination of Monetizable Interests Percentage and Partnership
Interests in Wireless.
(a) Valuation. The percentage of Interests which have a Market Value as of
the applicable Valuation Date equal to the Monetization Amount (the
"Monetizable Interests Percentage") shall be determined (i) if Pubco has
consummated an IPO and Public Common Stock trades in a regular and active
market, in accordance with the last sentence of the definition of Market Value
set forth in Section 1.1 above or (ii) in circumstances where clause (i) is not
applicable, (A) by mutual agreement of the parties to such transaction or (B)
if no such agreement is reached within thirty (30) days of the Valuation Date,
as follows:
(1) Selection of Appraisers. Each of Vodafone and Xxxx Atlantic shall
designate by written notice to the other an internationally recognized
investment banking firm to serve as an Appraiser pursuant to this Section 5.2
(the firms designated by Vodafone and Xxxx Atlantic being referred to herein as
the "Vodafone Appraiser" and the "Xxxx Atlantic Appraiser," respectively)
within five business days after the failure to reach agreement in accordance
with the terms of Section 5(a)(ii)(B) above. In the event that either Vodafone
or Xxxx Atlantic fails to designate its Appraiser within the foregoing time
period, the other shall have the right to designate such Appraiser by notifying
the failing party in writing of such designation (and the Appraiser so
designated shall be the Vodafone Appraiser or the Xxxx Atlantic Appraiser, as
the case may be).
(2) Evaluation Procedures. Each Appraiser shall be directed to
determine the Monetizable Interests Percentage. Each Appraiser will also be
directed to deliver a certificate stating its determination of the Monetization
Interests Percentage (an "Appraiser's Certificate") to Vodafone and Xxxx
Atlantic on or before the 30th day after the date of designation of the
Vodafone Appraiser or the Xxxx Atlantic Appraiser, whichever is later (the
"Certificate Date"), upon the conclusion of its evaluation, and each
Appraiser's Certificate once delivered may not be retracted or modified in any
respect. Each Appraiser will keep confidential all information
-8-
disclosed by Wireless in the course of conducting its evaluation, and, to that
end, will execute such customary documentation as Wireless may reasonably
request with respect to such confidentiality obligation. Vodafone and Xxxx
Atlantic will cooperate in causing Wireless to provide each Appraiser with such
information within Wireless's possession that may be reasonably requested in
writing by such Appraiser for purposes of its evaluation hereunder. The
Appraisers shall consult with each other in the course of conducting their
respective evaluations. Each of Vodafone and Xxxx Atlantic shall have full
access to each Appraiser's work papers and shall be entitled to make
presentations to each such Appraiser. Each Appraiser will be directed to comply
with the provisions of this Section 5.2, and to that end each of Vodafone and
Xxxx Atlantic will provide to its respective Appraiser a complete and correct
copy of this Section 5.2 (and the definitions of capitalized terms used in this
Section 5.2 that are defined elsewhere in this Agreement.)
(3) Monetizable Interests Percentage Determination. The Monetizable
Interests Percentage shall be determined on the basis of the Appraisers'
Certificates in accordance with the provisions of this subparagraph (3). The
higher of the Monetizable Interests Percentage set forth on the Appraisers'
Certificates is hereinafter referred to as the "Higher Number" and the lower
Monetizable Interests Percentage set forth on the Appraisers' Certificates is
hereinafter referred to as the "Lower Number." If the Higher Number is not more
than 105% of the Lower Number, the Monetizable Interests Percentage will be the
arithmetic average of such two Numbers. If the Higher Number is more than 105%
of the Lower Number, a third appraiser shall be selected in accordance with the
provisions of subparagraph (4) below, and the Monetizable Interests Percentage
will be determined in accordance with the provisions of subparagraph (5) below.
(4) Selection of and Procedure for Third Appraiser. If the Higher
Number is more than 105% of the Lower Number, within seven days thereafter the
Vodafone Appraiser and the Xxxx Atlantic Appraiser shall agree upon and jointly
designate a third internationally recognized investment banking firm to serve
as an appraiser pursuant to this Section 5.2 (the "Third Appraiser"), by
written notice to each of Vodafone and Xxxx Atlantic. Vodafone and Xxxx
Atlantic shall direct the Third Appraiser to determine the Monetizable
Interests Percentage (the "Third Number") in accordance with the provisions of
subparagraph (2) above, and to deliver to Vodafone and Xxxx Atlantic an
Appraiser's Certificate on or before the 30th day after the designation of such
Appraiser hereunder. The Third Appraiser will be directed to comply with the
provisions of this Section 5.2, and to that end the parties will provide to the
Third Appraiser a complete and correct copy of this Section 5.2 (and the
definitions of capitalized terms used in this Section 5.2 that are defined
elsewhere in this Agreement).
(5) Alternative Determination of Monetizable Interests Percentage.
Upon the delivery of the Appraiser's Certificate of the Third Appraiser, the
Monetizable Interests Percentage will be determined as provided in this
subparagraph (5). The Monetizable Interests Percentage will be (w) the Higher
Number, if the Third Number is greater than the Higher Number, (x) the Lower
Number, if the Third Number is less than the Lower Number, (y) the arithmetic
average of the Third Number and the other Number (Higher or Lower) that is
closer to the Third Number if the Third Number falls within the range between
(and including) the Lower
-9-
Number and the Higher Number and (z) the Third Number, if the Lower Number and
the Higher Number are equally close to the Third Number.
(6) Costs.
(x) Each of Vodafone and Xxxx Atlantic will bear the cost of the
Appraiser designated by it or on its behalf. If the Higher Number is not
more than 110% of the Lower Number, or if the Higher Number and the Lower
Number are equally close to the Third Number, each of Vodafone and Xxxx
Atlantic shall bear 50% of the cost of the Third Appraiser; otherwise, the
party whose Appraiser's determination of the Monetizable Interests
Percentage is further away from the Third Number shall bear the entire
cost of the Third Appraiser.
(y) Vodafone and Xxxx Atlantic agree to pay when due the fees and
expenses of the Appraisers in accordance with the foregoing provisions.
(b) Conclusive Determination. To the fullest extent permitted by law, the
determination of the Monetizable Interests Percentage made pursuant to this
Section 5.2 shall be final and binding on Vodafone and Xxxx Atlantic, and such
determination shall not be appealable to or reviewable by any court or
arbitrator.
(c) Adjustments to Monetizable Interests Percentage and Partnership
Interests in Wireless.
(i) In the event that the Monetizable Interests Percentage determined
pursuant to this Section 5.2 exceeds the percentage of Interests held by
Vodafone (together with any Included Affiliates of Vodafone that were
specified as sellers of Interests in the Monetization Notice), the
Monetization Amount shall be reduced proportionately (based on the
percentage of Interests then held by Vodafone (and any such Included
Affiliates) and the Monetizable Interests Percentage determined pursuant
to this Section 5.2) and the Monetizable Interests Percentage to be sold
on the applicable Monetization Closing Date shall be reduced to equal the
percentage of Interests then held by Vodafone (and any such Included
Affiliates). In any such case, (A) the Monetization Amount shall be
increased during the period from the applicable Valuation Date to the
applicable Monetization Closing Date at a rate equal to the Applicable
Rate, less any distributions declared by Wireless and paid to Vodafone
subsequent to the applicable Valuation Date with respect to the Interests
being sold and (B) no adjustment in Market Value shall be made pursuant to
subparagraph (ii) below.
(ii) The Monetizable Interests Percentage to be sold on the
applicable Monetization Closing Date shall be reduced to reflect accretion
in the Market Value during the period from the applicable Valuation Date
to the applicable Monetization Closing Date at the Applicable Rate, less
any distributions declared by Wireless and paid to Vodafone subsequent to
the applicable Valuation Date with respect to the Interests being sold.
-10-
(iii) As of each Monetization Closing Date, the Partnership Interests
in Wireless shall be appropriately adjusted to reflect (A) the acquisition
of an additional Partnership Interest by Xxxx Atlantic from Vodafone and
its Included Affiliates in exchange for the Xxxx Atlantic Allocated Amount
and (B) the partial redemption of the Partnership Interest of Vodafone and
its Included Affiliates in exchange for the Wireless Allocated Amount (and
a resulting decrease in the value of the Partnership by an amount equal to
the Wireless Allocated Amount).
5.3 Form of Payment of Monetization Amount; Valuation of Consideration.
(a) Consideration Notice. Xxxx Atlantic shall indicate by written notice
to Vodafone (a "Consideration Notice") delivered within thirty (30) days after
each determination of a Monetizable Interests Percentage pursuant to Section
5.2, the form in which the Monetization Amount will be paid by Xxxx Atlantic
and Wireless, respectively, which may consist of (i) cash or (ii) shares of
legally issued, fully paid, non-assessable and unencumbered (except for
restrictions under applicable securities laws) Xxxx Atlantic Common Stock. The
Consideration Notice shall set forth the proportions of cash or Xxxx Atlantic
Common Stock to be delivered by Xxxx Atlantic, Wireless or any third party
designated in such notice by Xxxx Atlantic (and for whose obligations Xxxx
Atlantic shall be primarily liable), respectively.
(b) Xxxx Atlantic Common Stock. In the event that all or a portion of the
Xxxx Atlantic Allocated Amount will be satisfied in the form of Xxxx Atlantic
Common Stock, the number of shares of Xxxx Atlantic Common Stock to be
delivered on the Monetization Closing Date shall equal the portion of the Xxxx
Atlantic Allocated Amount to be satisfied with Xxxx Atlantic Common Stock,
divided by the Realizable Value of the Xxxx Atlantic Common Stock so delivered.
The Realizable Value of Xxxx Atlantic Common Stock shall be determined in a
process identical to that set forth in Section 5.2(a)(i) and (a)(ii) for the
determination of Monetizable Interests Percentage.
(c) Registration Rights. If Vodafone receives shares of Xxxx Atlantic
Common Stock as provided above, Vodafone shall have the rights to registration
of such shares as provided in Annex A attached hereto (the "Xxxx Atlantic
Registration Rights").
(d) Assumed Debt Option. In satisfaction of all or a portion of the Phase
II Option, Vodafone, at its election, shall have the right to require Wireless
to participate in a transaction described in this Section 5.3(d) (the "Assumed
Debt Option"). Vodafone shall indicate in any Monetization Notice with respect
to the Phase II Option, the portion of the Monetization Amount which it elects
to receive pursuant to the Assumed Debt Option (the "Deferral Amount"). The
aggregate amount covered by the Phase II Option that Vodafone may elect to
receive pursuant to the Assumed Debt Option shall not exceed $7.5 billion,
which amount may be allocated among one or more exercises of the Phase II
Option.
(i) At the applicable Monetization Closing Date, Wireless shall, at
Vodafone's election, either: (i) assume a debt obligation of Vodafone, an
Affiliate of Vodafone or a third party designated by Vodafone or (ii)
incur debt and distribute the proceeds to Vodafone, an Affiliate of
Vodafone or a third party designated by Vodafone (the "Assumed Debt") in a
principal amount equal to the Deferral Amount.
-11-
(ii) The Assumed Debt shall have a ten-year term, but shall be
callable by Wireless from and after the eighth anniversary of the
applicable Monetization Closing Date. The Assumed Debt shall be obtained
from a third-party lender and shall be nonrecourse to the partners of
Wireless or, at Vodafone's election, nonrecourse to the partners of
Wireless who are Affiliates of Xxxx Atlantic, but in each case, shall be
nonrecourse to the assets of Wireless. The Assumed Debt may, at Vodafone's
election, be guaranteed by Vodafone, an Affiliate specified by Vodafone
(including a newly formed subsidiary of Vodafone), or a third party
designated by Vodafone. Such guarantee shall be on such terms and
conditions as Vodafone in its sole discretion may determine.
(iii) Xxxx Atlantic shall cause Wireless to, and Wireless shall, keep
the Assumed Debt outstanding, with no payments of principal, until at
least the eighth anniversary of the applicable Monetization Closing Date.
The terms of the Assumed Debt shall provide that only interest is due
until such eighth anniversary, and Xxxx Atlantic and Wireless shall not,
and Xxxx Atlantic shall cause Wireless not to, make any prepayments with
respect to the Assumed Debt, voluntarily take any action which would
result in the acceleration of such Assumed Debt, or waive any rights or
provide any guarantee or similar credit enhancement if the effect of such
action would be to cause such Assumed Debt to be allocated under X.X.X.xx.
752 to Persons other than Persons from which the Assumed Debt was assumed;
provided that none of the foregoing restrictions shall limit the right of
Wireless, or of Xxxx Atlantic to cause Wireless, to call, prepay or
accelerate such Assumed Debt on or after the eighth anniversary of the
incurrence thereof.
(e) Alternative Structure. In lieu of the Assumed Debt Option, Vodafone
may elect to receive the Deferral Amount pursuant to an Alternative Structure
that would be tax-efficient for Vodafone (an "Alternative Structure"). Xxxx
Atlantic shall agree to utilize any Alternative Structure proposed by Vodafone
so long as (i) the proposed Alternative Structure would not have a material
adverse effect on Wireless (taking into account the effect on the structure,
operations or financial performance by Wireless) and (ii) Vodafone agrees to
compensate Xxxx Atlantic for any postponement in the realization of tax
benefits, that would have resulted from a step-up in the basis of the assets of
Wireless, caused by the change in structure. Such postponement of tax benefits
with respect to any Deferral Amount (the "Tax Postponement Amount") shall be
calculated as follows:
(i) The "Tax Postponement Amount" shall equal, with respect to any
Alternative Structure the excess, if any, of (A) the net present value of
the tax benefits to Xxxx Atlantic resulting from a step-up in the tax
basis of the depreciable assets of Wireless associated with the repayment
of the Assumed Debt on the eighth anniversary of the applicable
Monetization Closing Date over (B) the net present value of the tax
benefits to Xxxx Atlantic resulting from a step-up in the tax basis of the
depreciable assets of Wireless in connection with such Alternative
Structure. The Tax Postponement Amount shall be calculated based on the
following assumptions: (1) an assumed combined tax rate for Xxxx Atlantic
of 40%; (2) a step-up in Xxxx Atlantic's share of Wireless's depreciable
assets equal to the difference between the Deferral Amount and
-12-
the allocable portion of Vodafone's basis, if any, in the Partnership
Interest represented by the Monetization Interests Percentage (the "Basis
Offset"); (3) receipt of annual cash flows associated with a tax benefit
at the end of the sixth month following the Monetization Closing Date and
annually thereafter; (4) a depreciable life of 15 years, on a
straight-line basis; and (5) a discount rate of 6% with respect to cash
flows associated with tax benefits received. Each such net present value
calculation shall be made as of the applicable Monetization Closing Date.
(ii) In the event that the parties fail to agree upon the Tax
Postponement Amount, an independent arbitrator who is a recognized expert
in the field of partnership taxation shall be chosen in the following
manner to determine the Basis Offset (an "Arbitrator"). Xxxx Atlantic
shall in good faith choose an Arbitrator that it believes is independent.
If Vodafone accepts the Arbitrator, then Xxxx Atlantic and Vodafone shall
be bound by the decision of the Arbitrator. If Vodafone, in its reasonable
discretion, rejects the Arbitrator, then Vodafone shall in good faith
choose a second Arbitrator that it believes is independent (the "Second
Arbitrator"). If Xxxx Atlantic accepts the Second Arbitrator, then Xxxx
Atlantic and Vodafone shall be bound by the decision of such Second
Arbitrator. If Xxxx Atlantic, in its reasonable discretion, rejects the
Second Arbitrator, then the Arbitrator and the Second Arbitrator shall
choose a third Arbitrator (the "Third Arbitrator"). The parties shall be
bound by the decision of the Third Arbitrator.
(iii) The Deferral Amount receivable by Vodafone in connection with
an Alternative Structure shall be reduced by the full amount of any Tax
Postponement Amount with respect to such Alternative Structure, but the
Monetizable Interests Percentage shall be determined without taking the
foregoing reduction in the Deferral Amount into account.
Notwithstanding the foregoing, Xxxx Atlantic shall not be required to utilize
any Alternative Structure presented by Vodafone unless, upon request of Xxxx
Atlantic, Vodafone provides Xxxx Atlantic with a "more likely than not" opinion
of independent nationally recognized tax counsel that supports the availability
of the tax benefits that Vodafone is seeking in connection with the Alternative
Structure.
5.4 Closing. Each purchase and sale of Interests effected pursuant to this
Article V shall be consummated at a closing (a "Monetization Closing") on the
fifth business day following the later of (a) the receipt of a Consideration
Notice pursuant to Section 5.3(a) (or, if later, the determination of the
Realizable Value of any Xxxx Atlantic Common Stock to be delivered at the
Monetization Closing), and (b) receipt of any required governmental or
regulatory approvals (the date of a Monetization Closing being the
"Monetization Closing Date"); provided that, (i) at the option of Xxxx
Atlantic, the Monetization Closing Date shall be delayed until a date no later
than 180 days (unless Pubco shall have consummated an IPO, in which case no
later than 120 days) following the delivery of the applicable Monetization
Notice and (ii) at the option of Vodafone, the Monetization Closing Date shall
be extended for such period of time as shall be necessary in order to obtain
requisite governmental or regulatory approvals with respect to such
transaction, which Vodafone and Xxxx Atlantic shall use their commercially
reasonable efforts to obtain at the earliest practicable time. At each
Monetization
-13-
Closing, Xxxx Atlantic and/or Wireless shall pay (or cause any third party
designated in a Consideration Notice to pay) to Vodafone the Monetization
Amount in the form set forth in the applicable Consideration Notice and
Vodafone shall, pursuant to such instruments as may be reasonably requested by
Xxxx Atlantic, Wireless or any such third party, as the case may be, deliver to
Xxxx Atlantic, Wireless or such third party, as the case may be, the
Monetizable Interests Percentage in appropriate form for evidencing the
transfer, free and clear of any lien or other encumbrance and shall waive and
shall cause its Included Affiliates to waive any applicable right of first
refusal under the Partnership Agreement with respect to such transaction (but,
in any case, the restrictions set forth in Section 8.4 of the Partnership
Agreement shall apply to any designation of a third party by Xxxx Atlantic to
pay the Monetization Amount to Vodafone).
ARTICLE VI
CREATION OF PUBLICLY TRADED ENTITY
6.1 IPO Process.
(a) Initiation of IPO. Each of Vodafone and Xxxx Atlantic shall have the
right to cause Wireless to engage in a broadly dispersed firmly underwritten
initial public offering of its business on the terms and conditions set forth
in this Article VI (the "IPO"). The IPO shall be effected through the offering
to the public of a single class of common stock (the "Public Common Stock") of
a newly incorporated Delaware corporation ("Pubco") the sole assets of which
(other than assets incidental to its operation as a publicly held company)
would be Interests exchanged pursuant to Section 6.2 below by Xxxx Atlantic
and/or Vodafone or their respective Affiliates for the shares of Public Common
Stock to be so offered (the "Exchanged Shares") .
(b) Timing of IPO. The consummation of the IPO may occur at any time
following (i) the Stage II Closing, if Xxxx Atlantic is the initiating party,
or (ii) the third anniversary of the Stage I Closing, if Vodafone is the
initiating party. To exercise its right to cause the IPO, a party shall deliver
written notice to the other of such decision and indicating the approximate
date anticipated for the consummation of the IPO (the "IPO Notice"). No such
IPO Notice shall be delivered less than three nor more than six months in
advance of the anticipated date of consummation of the IPO.
(c) Determination of Pubco Structure.
(i) The party that initiates an IPO pursuant to Section 6.1(a) (the
"Initiating Party") shall designate a lead managing underwriter for the
IPO (the "IP Banker") in its IPO Notice. Within 15 days following the
delivery of an IPO Notice, the IP Banker shall deliver to the party that
did not initiate the IPO (the "Non-Initiating Party") a detailed
description of the proposed governance structure of Pubco and Wireless
following the IPO (the "IP Structure"), together with a 1940 Act Opinion
with respect to the IP Structure.
-14-
(ii) Within 15 days following its receipt of the IP Structure and
accompanying 1940 Act Opinion, the Non-Initiating Party shall either (A)
accept the IP Structure or (B) deliver to the Initiating Party a detailed
description of an alternative governance structure of Pubco and Wireless
following the IPO (the "NIP Structure") proposed by an investment banking
firm designated by the Non-Initiating Party (the "NIP Banker"), together
with a 1940 Act Opinion with respect to the NIP Structure.
(iii) Each of the IP Structure and the NIP Structure shall be
designed to preserve the partnership tax status of Wireless. Neither the
IP Structure nor the NIP Structure shall modify in any material respect
the allocation of governance or economic rights with respect to Wireless
held by Xxxx Atlantic and Vodafone prior to the proposed IPO; it being
understood that either such proposed structure may require (A) one or both
of the parties to exercise their respective governance rights with respect
to Wireless through ownership of separate classes of voting shares to be
issued by Pubco and (B) members of the board of representatives of
Wireless also to serve as members of the board of directors of Pubco and
executive officers of Wireless also to serve as the corresponding
executive officers of Pubco; provided that each of the IP Structure and
the NIP Structure shall provide that at least two of the Xxxx Atlantic
designees to Wireless's board of representatives shall be members of
Pubco's board of directors and at least one executive officer of Wireless
shall be an executive officer of Pubco.
(iv) Within five days following the delivery of an NIP Structure, the
IP Banker and the NIP Banker shall jointly select an internationally
recognized investment bank, which shall not have received more than
$250,000 in fees from either the Initiating Party or the Non-Initiating
Party (or their respective Affiliates) during the preceding two years (the
"Deciding Bank"). Within 15 days following its selection, the Deciding
Bank shall determine which of the IP Structure or the NIP Structure will
result in a higher value for the Public Company Stock, taking into account
(among other things) marketability, execution risks associated with the
IPO; IPO price; expected breadth, liquidity and pricing in the aftermarket
and expected investment community interest. The Deciding Bank shall not
modify the IP Structure or the NIP Structure in any respect. The structure
so selected by the Deciding Bank as resulting in the higher value for the
Public Company Stock shall be implemented by the parties as the
organizational structure for Pubco and Wireless following the IPO. In the
event that the Deciding Bank determines the IP Structure and the NIP
Structure result in equivalent values for the Public Common Stock, the IP
Structure shall be implemented as the organizational structure for Pubco
and Wireless following the IPO.
(d) The parties shall use good faith best efforts to finalize all
appropriate Pubco organizational documentation and amendments to the
Partnership Agreement, and form Pubco on a timetable consistent with the
anticipated IPO date specified in the notice.
(e) Neither Vodafone nor Xxxx Atlantic shall effect any direct or indirect
public offering (whether by spin-off or reverse spin-off, dividend, redemption,
exchange, merger or otherwise) of (i) Wireless or the business of Wireless or
(ii) any Person of whose assets Wireless (directly or indirectly) constitutes
75% or more of the fair market value, other than pursuant to this Section 6.1.
The preceding sentence shall not be deemed to prohibit the issuance by
-15-
Vodafone or Xxxx Atlantic of any of their respective capital stock, including
(without limitation) a "tracking stock" issued by Vodafone or Xxxx Atlantic
with respect to the operations of Wireless.
6.2 Exchange of Partnership Interests.
(a) Each holder (other than Pubco) of an Interest shall be entitled to
exchange, at any time and from time to time after the incorporation of Pubco,
any or all of such holder's Interests, or any or all of the shares of stock
held by such holder in one or more corporations with no assets or liabilities
other than such Interests (which exchange, at such Holder's election, will to
the extent possible be structured in a transaction qualifying as a
reorganization under I.R.C. ss. 368(a)), into a proportionate number of fully
paid and non-assessable shares of the Public Common Stock. Such right shall be
exercised by a written notice of the holder of such Interest to the transfer
agent of Pubco stating that such holder desires to exchange such Interests into
a proportionate number of shares of the Public Common Stock, and by instruments
of transfer to the transfer agent, in form satisfactory thereto, duly executed
by such holder or such holder's duly authorized attorney, and transfer tax
stamps or funds therefor, if required by Section 6.2(c) below. The number of
shares of Public Common Stock to be exchanged for a percentage of Interests
shall be subject to adjustment as provided in Section 6.2(e) below.
(b) As promptly as practicable following the surrender for exchange of
Interests in the manner provided in Section 6.2(a), and the payment in cash of
any amount required by the provisions of Section 6.2(c), Pubco will deliver or
cause to be delivered at the offices of Pubco's transfer agent, a certificate
or certificates representing the full number of shares of Public Common Stock
issuable upon such exchange, issued in such name or names as such holder may
direct. Subject to paragraph (g) below such exchange shall be deemed to have
been effected immediately prior to the close of business on the date of the
surrender of the Interests. Upon the date any such exchange is effected all
rights of the holder of such Interests shall cease, and the person or persons
in whose name or names the shares of Public Common Stock are to be issued shall
be treated for all purposes as having become the record holder or holders of
such shares of Public Common Stock; provided, however, that if any such
surrender and payment accrue on any date when the stock transfer books of Pubco
shall be closed, the person or persons in whose names or names the certificate
or certificates representing shares of Public Common Stock are to be issued
shall be deemed the record holder or holders thereof for all purposes
immediately prior to the close of business on the next succeeding day on which
the stock transfer books are open.
(c) The issuance of certificates for shares of Public Common Stock upon
exchange of Interests shall be made without charges to the holders of Interests
for any stamp or other similar tax in respect of the issuance; provided,
however, that if any such certificate is to be issued in a name other than that
of the holder of the Interests exchanged, Person or Persons requesting the
issuance thereof shall pay to Pubco the amount of any such tax that may be
payable in respect of any transfer involved in such issuance or shall establish
to the satisfaction of Pubco that such tax has been paid or is not payable.
(d) In the event of a reclassification or other similar transaction as a
result of which the shares of Public Common Stock are converted into another
security, then a holder of Interests shall be entitled to receive upon exchange
the amount of such security that such holder would have received if such
exchange had occurred immediately prior to the record date of such
-16-
reclassification or other similar transaction. No adjustments in respect of
dividends shall be made upon the exchange of any Interests; provided, however,
that if an Interest shall be exchanged subsequent to the record date for the
payment of a dividend or other distribution on shares of Interests but prior to
such payment, then the registered holder of such Interest at the close of
business on such record date shall be entitled to receive the dividend or other
distribution payable on such Interest on such date notwithstanding the exchange
thereof or the default in payment of the dividend or distribution due on such
date.
(e) The exchange rights for Interests shall be adjusted proportionately if
there is: (i) any subdivision (by any Interest split, Interest distribution,
reclassification, recapitalization or otherwise), combination (by reverse
Interest split, reclassification, recapitalization or otherwise) or
distribution of the Interests that is not accompanied by an identical
subdivision or combination of the Public Common Stock; or (ii) any subdivision
(by any stock split, stock dividend, reclassification, recapitalization or
otherwise), combination (by reverse stock split, reclassification,
recapitalization or otherwise) or distribution of the Public Common Stock that
is not accompanied by an identical subdivision or combination of the Interests.
(f) In the event Pubco (i) issues or otherwise distributes options, rights
or warrants, (ii) merges or consolidates with or into another entity, (iii)
sells or transfers or otherwise disposes of all or substantially all of its
assets, or (iv) engages in any other, similar transaction affecting the Public
Common Stock, the exchange mechanism described in this Section 6.2 shall be
appropriately adjusted.
(g) Vodafone and Xxxx Atlantic shall have with respect to shares of Pubco
Common Stock issued or issuable in exchange for Interests pursuant hereto the
registration rights set forth on Annex B attached hereto, which is incorporated
herein by reference and made a part hereof as if included in full herein (the
"Wireless Registration Rights"). Concurrently with the formation of Pubco, the
parties will cause Pubco to enter into a registration rights agreement with
Vodafone and Xxxx Atlantic incorporating the Wireless Registration Rights. Upon
delivery of the IPO Notice, the rights and obligations of the parties in
connection with the IPO shall be governed by the Wireless Registration Rights
hereto as if it were a demand registration, except to the extent inconsistent
with Section 6.1 hereof. The parties agree that any such exchange of Interests
for shares of Pubco Common Stock shall occur, at the option of the exchanging
holder, contemporaneously with the registration of the Public Common Stock to
be received, or the consummation of the sale of such Public Common Stock
pursuant to such registration, or at such other time as Vodafone shall request
in writing.
6.3 Monetization Efforts. Each of Xxxx Atlantic and Wireless will use its
reasonable best efforts to support Vodafone's efforts in monetizing its
interest in any Pubco or Xxxx Atlantic securities it receives pursuant to
Article V, Section 6.1 or Section 6.2 hereof. Such efforts by Xxxx Atlantic and
Wireless will include, without limitation, participation of one executive
officer of Xxxx Atlantic (in the case of a monetization of Xxxx Atlantic
securities) or two executive officers of Wireless (in the case of Pubco
Securities) in "roadshow" and other investor presentations and credit rating
agency presentations; support of securities analyst coverage; preparation and
disclosure of financial information; other support in satisfying Pubco's public
disclosure obligations regarding Wireless; and ongoing investor relations
support, in each case whether in connection with a public offering or
otherwise. Vodafone may request additional
-00-
Xxxx Xxxxxxxx executive officer and Wireless executive officer participation in
"roadshow" and other investor presentations, and Xxxx Atlantic and Wireless
will consider each such request in good faith and will not unreasonably refuse
any such request. Wireless's or Xxxx Atlantic's obligations to make public
disclosure (including through participation in "road show" and other investor
presentations) shall be suspended during any period that it would be entitled
to defer under Section 2.2 of the Xxxx Atlantic Registration Rights or Section
4 of the Wireless Registration Rights, respectively, the filing of a
registration statement.
ARTICLE VII
COOPERATION TO ACHIEVE TAX EFFICIENCIES
7.1 Cooperation to Achieve Tax Efficiencies.
(a) Except as otherwise expressly provided herein, in the event that
Vodafone provides written notice to Xxxx Atlantic and/or Wireless that a change
in the structure of the transfer of Vodafone's or its Affiliates' Interests
pursuant to Article V or Article VI is desirable because such changed structure
would have more desirable tax consequences for Vodafone, then Xxxx Atlantic
and/or Wireless shall take all reasonable steps necessary to accomplish such
change to the extent that it would not adversely affect such party. A party
that would be adversely affected by such change in structure shall nevertheless
agree to such change in structure if Vodafone agrees to fully indemnify (on an
after-tax basis using an assumed tax rate of 40%) the party adversely affected
for losses and other expenses directly caused by the change in structure unless
such party in good faith determines that the change in structure would have a
material adverse effect for which economic compensation would be inadequate.
(b) If Xxxx Atlantic elects to deliver Xxxx Atlantic Common Stock in
satisfaction of all or a portion of the Phase I Option or the Phase II Option,
then, at Vodafone's election, the parties will use reasonable best efforts to
structure Vodafone's acquisition of Xxxx Atlantic Common Stock as a tax-free
reorganization or a tax-free incorporation (a "Tax-Free Transaction"). Vodafone
will compensate, by the mechanism set forth in the last sentence of this
Section 7.1(b), Xxxx Atlantic for the net present value of tax benefits that
would have been available to Xxxx Atlantic if Xxxx Atlantic had purchased the
portion of the Monetizable Interests Percentage acquired in a Tax-Free
Transaction in a taxable sale on the applicable Monetization Closing Date (the
"Tax-Free Transaction Amount"). Any Xxxx Atlantic Common Stock received by
Vodafone in a Tax-Free Transaction shall not be valued for purposes of Section
5.3(b) at its Realizable Value, but instead shall be valued at a price (the
"Trading Price") equal to the volume-weighted average daily trading price of
the Xxxx Atlantic Common Stock on the New York Stock Exchange (or such other
principal exchange on which Xxxx Atlantic Common Stock is then traded) for the
ten consecutive trading day period ending two days prior to the applicable
Monetization Closing Date. The number of shares of Xxxx Atlantic Common Stock
to be delivered by Xxxx Atlantic in connection with any Tax-Free Transaction
shall be reduced by an amount equal to (i) the Tax-Free Transaction Amount,
divided by (ii) the Trading Price, but the Monetizable Interests Percentage
shall be determined without taking the foregoing reduction into account.
-18-
ARTICLE VIII
MISCELLANEOUS
8.1 Severability. If any term, provision, covenant or restriction of this
Agreement is determined to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect, unless such action would substantially impair
the benefits to either party of the remaining provisions of this Agreement.
8.2 Specific Enforcement. The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which they may be
entitled by law or equity.
8.3 Entire Agreement; Amendments. Except to the extent that other
agreements are specifically referred to herein, this Agreement between
Vodafone, Xxxx Atlantic and Wireless contains the entire understanding of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein, neither Vodafone nor Xxxx Atlantic nor Wireless makes any
representation, warranty, covenant or undertaking with respect to such matters.
This Agreement may be amended only by an agreement in writing executed by the
parties hereto. The parties hereto may amend this Agreement without notice to
or the consent of any third party.
8.4 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) when personally
delivered or transmitted by telecopier on a business day during normal business
hours where such notice is to be received at the address or number designated
below or (b) on the business day following the date of mailing by overnight
courier, fully prepaid, addressed to such address, whichever shall first occur.
The addresses for such communications shall be:
If to Vodafone: Vodafone AirTouch Plc
Xxx Xxxxxxxxx
0-0 Xxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx XX00 0XX
XXXXXXX
Telecopier: 011-44-1635-580761
Attention: Xxxxxxx Xxxxx,
Company Secretary
-19-
With a copy to: Pillsbury Madison & Sutro LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx III
If to Xxxx Atlantic: Xxxx Atlantic Corporation
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Vice President and General Counsel
With a copy to: Xxxx Atlantic Network Services, Inc.
0000 Xxxx Xxxxxx, 00X
Xxxxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxx,
General Attorney - Mergers and
Acquisitions
and: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: N. Xxxxxxx Xxxxxxx
If to Wireless: Cellco Partnership
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: S. Xxxx Xxxxxx, Vice President - Legal
and External Affairs, General
Counsel, Secretary
Any party hereto may from time to time change its address for notices under
this Section 8.4 by giving at least 10 days' notice of such changed address to
the other parties hereto.
8.5 Waivers. No waiver by any party 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 thereof or a waiver of any other provision,
condition or requirement of this Agreement; except as otherwise specifically
provided herein, no delay or omission of any party to exercise any right
hereunder shall in any manner impair the exercise of any such right accruing to
it thereafter.
8.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions of this Agreement.
8.7 Successors and Assigns.
-20-
(a) This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and legal representatives. The parties hereto may
amend this Agreement without notice to or the consent of any third party.
Except as provided in Article VIII of the Partnership Agreement, neither
Vodafone nor Xxxx Atlantic shall assign this Agreement or any rights hereunder
without the prior written consent of the other (which consent may be withheld
for any reason in the sole discretion of the party from whom consent is
sought).
(b) In the event that Xxxx Atlantic shall propose to enter into an
agreement of merger, consolidation or other business combination with any
Person pursuant to which Xxxx Atlantic either becomes a subsidiary of another
Person or is not the surviving corporation, Xxxx Atlantic will not enter into
such agreement unless such Person (or the parent of such Person if Xxxx
Atlantic shall become a subsidiary of such parent) assumes the rights and
obligations of Xxxx Atlantic set forth in this Agreement. If, as a result of
the transactions contemplated by any such agreement of merger, consolidation or
other business combination, Xxxx Atlantic will no longer have a class of equity
securities having substantially the same rights as the Xxxx Atlantic Common
Stock registered pursuant to Section 12(b) or 12(g) of the Exchange Act, then
the right of Xxxx Atlantic to satisfy its obligations under Article V with Xxxx
Atlantic Common Stock shall cease; provided that if in connection with any such
agreement of merger, consolidation or other business combination, Xxxx Atlantic
shall become a subsidiary of a Person ("Newco") having a class of equity
securities with substantially the same rights as the Xxxx Atlantic Common Stock
registered pursuant to Section 12(b) or Section 12(g) of the Exchange Act
("Newco Common") and the Newco Condition (as defined below) is satisfied
immediately following the consummation of such merger, consolidation or other
business combination, thereafter the obligations of Xxxx Atlantic under Article
V may be satisfied with Newco Common to the same extent and in the same manner
as such obligations may be satisfied with Xxxx Atlantic Common Stock prior to
the consummation of any such merger, consolidation or other business
combination; it being understood that any shares of Newco Common so received by
Vodafone and its Included Affiliates shall be "Registrable Securities" under
the Xxxx Atlantic Registration Rights. The "Newco Condition" shall be satisfied
if the following conditions are met: (i) Newco Common is one of the 40 most
actively traded stocks (in terms of dollar trading volume) on the New York
Stock Exchange and the Nasdaq Market, on a combined basis; (ii) Newco has an
equity market capitalization of at least $100 billion; (iii) the assets of
Wireless do not constitute more than 33% of the fair market value of the total
assets of Newco; and (iv) Newco is not a Vodafone Restricted Entity (as defined
in the Partnership Agreement) or any successor thereof (by virtue of merger,
consolidation or other business combination).
(c) In the event that Xxxx Atlantic shall transfer or otherwise dispose of
all or substantially all of its businesses other than its interest in Wireless
without consideration, Xxxx Atlantic shall cause the transferred or disposed
businesses to become, effective as of the time of such disposition, jointly and
severally liable for Xxxx Atlantic's obligations under Article V hereof, unless
the following conditions shall be satisfied following the consummation of such
disposition: (i) Xxxx Atlantic shall have a market capitalization and a public
market float for its equity securities, in each case of no less than $100
billion; (ii) the assets of Wireless do not constitute more than 50% of the
fair market value of the total assets of Xxxx Atlantic; and (iii) the credit
rating of Xxxx Atlantic shall be no less than BBB as determined by Standard &
Poor's
-21-
Rating Service (and its successors) and Baa as determined by Xxxxx'x Investors
Services, Inc. (and its successors).
8.8 No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision of this Agreement
be enforced by, any other person.
8.9 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws.
8.10 Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
-22-
[SIGNATURE PAGE OF THE INVESTMENT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
VODAFONE AIRTOUCH PLC
By /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: Chief Executive Officer
XXXX ATLANTIC CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Senior Executive Vice President
and Chief Financial Officer
CELLCO PARTNERSHIP
By /s/ S. Xxxx Xxxxxx
---------------------------------------
Name: S. Xxxx Xxxxxx
Title: Chief Executive Officer
-23-
Annex A
Registration Rights
Section 1. Definitions.
Section 1.1 Capitalized terms used herein without definition have the
meanings assigned to such terms in the Investment Agreement, of which this
Annex A is a part. As used in this Annex A, the following terms shall have the
following meanings:
"Holder" means any Person who owns Registrable Securities.
"Monetizing Securities" means any security which is convertible into or
exchangeable for shares of Xxxx Atlantic Common Stock that are Registrable
Securities.
"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.
"Registrable Securities" means shares of Xxxx Atlantic Common Stock issued
or issuable in exchange for Interests pursuant to the Investment Agreement and
any Xxxx Atlantic Common Stock issued as a dividend on such shares or into
which such shares of Xxxx Atlantic Common Stock are exchanged or converted
(pursuant to a stock split or otherwise); provided, however, that the
outstanding shares of Xxxx Atlantic Common Stock that are Registrable
Securities shall cease to be Registrable Securities (x) upon the consummation
of any sale of those shares pursuant to an effective Registration Statement
under the Securities Act or Rule 144 promulgated thereunder, (y) at such time
as those shares of Xxxx Atlantic 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, or (z) at such
time as those shares of Xxxx Atlantic Common Stock cease to be outstanding.
Notwithstanding the foregoing, the shares of Xxxx Atlantic Common Stock issued
in connection with any Monetization Closing Date, shall cease to be Registrable
Securities at such time as all such shares may be offered or sold by the
Holders thereof pursuant to Rule 144 in any 90-day period.
"Registration Statement" means any Registration Statement 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 Annex A.
"Rule 144" means Rule 144 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Rule 158" means Rule 158 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Rule 415" means Rule 415 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Underwritten Registration or Underwritten Offering" means a registration
in connection with which securities of Xxxx Atlantic are sold to an underwriter
for reoffering to the public pursuant to an effective Registration Statement.
Section 2. Registrations.
Section 2.1 In the event that Registrable Securities are to be issued to a
Holder or Holders at any Monetization Closing, Xxxx Atlantic shall prepare and
file with the SEC a Registration Statement on Form S-3 under the Securities Act
(or a comparable or successor form or forms permitting registration of the
resale of securities on a continuous or delayed basis) or, if Xxxx Atlantic is
ineligible to use Form S-3, on another appropriate form, for the resale by such
Holder or Holders of such Registrable Securities and containing (in addition to
the other information required to be contained therein) a description of the
intended method or methods of disposition of such Registrable Securities, which
Xxxx Atlantic acknowledges may involve, among other things, the offering of
Registrable Securities underlying Monetizing Securities (the description of
which shall be provided to Xxxx Atlantic by such Holder or Holders) which
Monetizing Securities are subject to acquisition by holders of such Monetizing
Securities upon exchange or conversion thereof. Xxxx Atlantic shall use its
best efforts to cause such Registration Statement to be declared effective by
the SEC on or before the Monetization Closing at which such Registrable
Securities are to be issued. Xxxx Atlantic will use its best efforts to qualify
for registration on Form S-3 during the term of the registration rights granted
pursuant to this Annex A; provided that the foregoing obligation shall not be
construed to restrict the right of Xxxx Atlantic to enter into any merger,
consolidation or other business combination permitted pursuant to Section
8.6(a) of the Partnership Agreement.
Section 2.2 Notwithstanding anything to the contrary contained herein,
Xxxx Atlantic may, by written notice to each Holder, suspend for up to 45
consecutive days the right of a Holder to sell Registrable Securities pursuant
to an effective Registration Statement if the Board of Directors or Chief
Executive Officer of Xxxx Atlantic determines, in its reasonable, good faith
judgment, that sales of Registrable Securities under such Registration
Statement (a) would have a material adverse effect on, or interfere in any
material respect with, a material business opportunity of Xxxx Atlantic,
including, without limitation, any proposal or plan by Xxxx Atlantic to engage
in any financing or any material pending corporate development or transaction
such as a material acquisition of assets (other than in the ordinary course of
business), any tender offer or any merger, consolidation or other similar
transaction material to Xxxx Atlantic and its
A-2
subsidiaries taken as a whole, or (b) would require disclosure of any other
material non-public information that Xxxx Atlantic is not otherwise required to
disclose; provided, however, that such suspension shall be lifted, and the
Holders shall be permitted to sell Registrable Securities under the
Registration Statement forthwith, if (x) in the case of a suspension pursuant
to clause (a), the material business opportunity is disclosed by Xxxx Atlantic
or is terminated, or (y) in the case of clause (b), the material non-public
information is made public; provided further, however, that (i) in no event may
a Holder's right to sell Registrable Securities pursuant to a Registration
Statement be suspended during the 135-day period following the later of (A) a
Monetization Closing at which Xxxx Atlantic issued Registrable Securities to
Holders or (B) the date of effectiveness of the Registration Statement filed
with respect to such Registrable Securities; and provided further, however,
that the number of days in all such periods of suspension pursuant to this
Section 2.2 in any consecutive twelve months shall not exceed 60 days in the
aggregate.
Section 3. Registration Procedures.
In the case of each registration with respect to Registrable Securities
contemplated by Section 2 hereof, Xxxx Atlantic shall:
(a) (i) prepare and file with the SEC 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 until the Holder or Holders have
completed the distribution described in such Registration Statement; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement (including, among other things, as a result of any change or changes
after the effective date of the Registration Statement in the plan of
distribution contemplated by the Holders), and as so supplemented or amended to
be filed pursuant to Rule 424 promulgated under the Securities Act (or any
similar provisions then in force); (iii) respond as promptly as possible to any
comments received from the SEC with respect to each 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 SEC relating to the
Registration Statement; provided, however, that any information for which Xxxx
Atlantic requests confidential treatment from the SEC shall be kept
confidential by the Holders, unless (A) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (B) disclosure of such information, in the
opinion of counsel to such Holders, is required by law; (C) such information
becomes generally available to the public other than as a result of a
disclosure or negligent failure to safeguard by such Holders; or (D) such
information becomes available to such Holders from a source other than Xxxx
Atlantic and such source is not known by such Holders to be bound by a
confidentiality agreement with Xxxx Atlantic; 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 each
Registration Statement in accordance with the intended methods of disposition
by the Holders as set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented;
(b) (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,
A-3
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 due
diligence investigation within the meaning of the Securities Act. Xxxx Atlantic
shall not file a Registration Statement with respect to Registrable Securities
to which the Holder or Holders of a majority of such Registrable Securities
covered thereby or their counsel or any managing underwriters shall reasonably
object in writing within three (3) Business Days of their receipt thereof;
(c) notify the Holders of Registrable Securities to be sold, their
counsel and any managing underwriters as promptly as possible (and in the case
of (i), below, not less than five (5) days prior to such filing) and confirm
such notice in writing no later than one (1) Business Day following the day:
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed;
(ii) when the SEC notifies Xxxx Atlantic whether there will be a
"review" of a Registration Statement and whenever the SEC comments in writing
on such Registration Statement;
(iii) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective;
(iv) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to each Registration
Statement or Prospectus or for additional information;
(v) of the issuance by the SEC of any stop order suspending the
effectiveness of each Registration Statement covering any or all of the
Registrable Securities or the initiation of any proceedings for that purpose;
(vi) if at any time any of the representations and warranties of Xxxx
Atlantic contained in any agreement (including any underwriting agreement)
contemplated hereby in connection with the registration of Registrable
Securities ceases to be true and correct in all material respects;
(vii) of the receipt by Xxxx Atlantic 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
any 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 such 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
A-4
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) use its best 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;
(e) if requested by any managing underwriter of Registrable Securities
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 Xxxx Atlantic reasonably agrees
should be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as practicable
after Xxxx Atlantic has received notification of the matters to be incorporated
in such Prospectus supplement or post-effective amendment; provided, however,
that Xxxx Atlantic shall not be required to take any action pursuant to this
clause (e) that would, in the opinion of counsel for Xxxx Atlantic, violate
applicable law or not be required to be taken by applicable securities laws and
be detrimental to the business prospects of Xxxx Atlantic;
(f) 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 SEC;
(g) 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
Xxxx Atlantic hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the Holders and any underwriters in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto;
(h) use its best 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 until the
Holder or Holders have completed the distribution of such Registrable
Securities 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 Xxxx Atlantic
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 Xxxx Atlantic to any material tax in any such jurisdiction
where it is not then so subject;
A-5
(i) 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
selling Holders may request at least two Business Days prior to any sale of
Registrable Securities pursuant to such Registration Statement;
(j) upon the occurrence of any event contemplated by Section
3(c)(viii) of this Annex A, as promptly as reasonably practicable, 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 any other document required to be filed in connection therewith 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;
(k) use its best efforts to cause all Registrable Securities relating
to each Registration Statement to be listed on the securities exchange,
quotation system, market or over-the-counter bulletin board on which similar
securities issued by Xxxx Atlantic are then listed;
(l) 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 whether or not an underwriting
agreement is entered into) to:
(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 Xxxx Atlantic 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 Holders 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 each 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 Xxxx Atlantic (and, if necessary, any
other independent certified public accountants of any subsidiary of Xxxx
Atlantic or of any business acquired by Xxxx Atlantic for which financial
statements and financial data is, or
A-6
is required to be, included in any such 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, if any, than those set forth in
Section 6 of this Annex A (or such other provisions and procedures
acceptable to the managing underwriters, if any); 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 Xxxx Atlantic;
(m) comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders an
earnings statement covering a period of twelve months beginning within three
months after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
(n) make available executive officers of Xxxx Atlantic for
participation in a reasonable number of "road show" and other investor
presentations requested by the Holders offering Registrable Securities in an
Underwritten Offering; and
(o) 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 Xxxx Atlantic and its subsidiaries, and
cause the officers, directors, agents and employees of Xxxx Atlantic and its
subsidiaries to supply all information in each case reasonably requested by any
such Holder, representative, underwriter, attorney or accountant in connection
with each Registration Statement; provided, however, that any information that
is determined in good faith by Xxxx Atlantic in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential
by such Persons, unless (i) disclosure of such information is required by court
or administrative order or is necessary to respond to inquiries of regulatory
authorities; (ii) disclosure of such information, in the opinion of counsel to
such Person, is required by law; (iii) such information becomes generally
available to the public other than as a result of a disclosure or negligent
failure to safeguard by such Person; or (iv) such information becomes available
to such Person from a source other than Xxxx Atlantic and such source is not
known by such Person to be bound by a confidentiality agreement with Xxxx
Atlantic.
A-7
Section 4. Stockholder Covenants.
Each Holder hereby covenants and agrees that:
(a) it will not sell any Registrable Securities under any Registration
Statement until it has received notice from Xxxx Atlantic that such
Registration Statement and any post-effective amendments thereto have become
effective;
(b) it and its officers, directors and 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;
(c) by its acquisition of such Registrable Securities that, upon
receipt of a notice from Xxxx Atlantic of the occurrence of any event of the
kind described in Section 3(c)(iv), (v), (vi), (vii) and (viii) of this Annex
A, such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until the Holder is advised in writing by Xxxx Atlantic that the use of the
applicable Prospectus may be resumed;
(d) If an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to Xxxx
Atlantic and the underwriters, if any, than those set forth in Section 6.2; and
(e) Xxxx Atlantic may require each selling Holder to furnish to Xxxx
Atlantic information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in each
Registration Statement, and Xxxx Atlantic may exclude from such registration
the Registrable Securities of any such Holder who unreasonably fails to furnish
such information within a reasonable time after receiving such request. If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of Xxxx Atlantic, 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 each
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Section 5. Registration Expenses.
All fees and expenses incident to the performance of or compliance with
this Annex A by Xxxx Atlantic shall be borne by Xxxx Atlantic 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, fees and disbursements of counsel for the
selling Holders in
A-8
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 shall
request, if any); (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 Xxxx Atlantic; (v) Securities Act
liability insurance, if Xxxx Atlantic so desires such insurance; (vi) fees and
expenses of all other Persons retained by Xxxx Atlantic in connection with the
consummation of the transactions contemplated by this Annex A; and (vii) all
internal expenses of Xxxx Atlantic incurred in connection with the consummation
of the transactions contemplated by this Annex A, 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 any counsel, accountants or other persons
retained by the Holders in connection with the consummation of the transactions
contemplated by this Annex A.
Section 6. Indemnification and Contribution.
Section 6.1 Indemnification by Xxxx Atlantic. Xxxx Atlantic agrees to
indemnify, to the fullest extent permitted by law, each Holder, each person who
controls any such Holder, (within the meaning of either the Securities Act or
the Exchange Act), and their respective directors and officers against any and
all losses, claims, damages, liabilities (or actions or proceedings in respect
thereof) and expenses (including reasonable attorneys' fees) caused by any
untrue or alleged untrue statement of material fact contained in any
Registration Statement, prospectus or preliminary prospectus (each as amended
and/or supplemented, if Xxxx Atlantic shall have furnished any amendments or
supplements thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, in the light of the circumstances under
which they were made) not misleading; provided that Xxxx Atlantic shall not be
required to indemnify such Holder, such controlling persons or their respective
officers or directors for any losses, claims, damages, liabilities (or actions
or proceedings in respect thereof) or expenses resulting from any such untrue
statement or omission if such untrue statement or omission is made in reliance
on and conformity with any information with respect to such Holder or the
underwriters furnished to Xxxx Atlantic by such Holder expressly for use
therein; provided, further, that Xxxx Atlantic shall not be required to
indemnify any Holder to the extent that any such loss, claim, damage, liability
(or actions or proceedings in respect thereof) or expense arises out of or is
based upon an untrue or alleged untrue statement or omission or alleged
omission made in any preliminary Prospectus if (i) in the case of any offering
other than an Underwritten Offering, having previously been furnished by or on
behalf of Xxxx Atlantic with copies of the final Prospectus, such Holder failed
to send or deliver a copy of the final Prospectus with or prior to the delivery
of written confirmation of the sale of the Registrable Securities by the Holder
to the person asserting the claim from which such loss, claim, damage,
liability (or actions or proceedings in respect thereof) or expense arises and
(ii) the final Prospectus would have corrected in all material
A-9
respects such untrue statement or alleged untrue statement or omission or
alleged omission; and provided, further, that Xxxx Atlantic shall not be
required to indemnify any Holder to the extent that any such loss, claim,
damage, liability (or actions or proceedings in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement,
omission or alleged omission in the Prospectus if (x) such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in all
material respects in an amendment or supplement to the Prospectus and (y) in
the case of any offering other than an Underwritten Offering, having previously
been furnished by or on behalf of Xxxx Atlantic with copies of the Prospectus
as so amended or supplemented, such Holder thereafter fails to deliver such
Prospectus as so amended or supplemented, prior to or concurrently with the
sale of Registrable Securities. In connection with an Underwritten Offering,
Xxxx Atlantic will indemnify each underwriter thereof, the officers and
directors of such underwriter, and each person who controls such underwriter
(within the meaning of either the Securities Act or Exchange Act) to the same
extent as provided above with respect to the indemnification of Holders;
provided that such underwriter agrees to indemnify Xxxx Atlantic to the same
extent as provided below with respect to the indemnification of Xxxx Atlantic
by such Holders.
Section 6.2 Indemnification by Holders. In connection with any
registration in which any Holder is participating, such Holder will furnish to
Xxxx Atlantic in writing such information with respect to it and its Affiliates
as Xxxx Atlantic reasonably requests for use in connection with any such
registration, Prospectus, or preliminary Prospectus and agrees to indemnify
Xxxx Atlantic, its directors, its officers who sign the Registration Statement,
each person, if any, who controls Xxxx Atlantic (within the meaning of either
the Securities Act or the Exchange Act), each other Holder and any prospective
underwriters, as the case may be, and any of their respective affiliates,
general partners, officers, employees, agents and controlling persons to the
same extent as the foregoing indemnity from Xxxx Atlantic to such Holder, but
only with respect to information relating to such Holder furnished to Xxxx
Atlantic in writing by such Holder expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary Prospectus.
Section 6.3 Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 6.1 or
Section 6.2 of this Agreement, such person (hereinafter called the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (hereinafter called the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and the indemnified party shall have been advised by counsel that
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
the indemnifying party shall not,
A-10
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the indemnified parties, such firm shall
be designated in writing by all of the indemnified parties. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent (which consent will not be unreasonably withheld), but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the third sentence of this
Section 6.3, the indemnifying party agrees that the indemnifying party shall be
liable for any settlement of any proceeding effected without the indemnifying
party's written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not either have reimbursed the indemnified party
in accordance with such request or reasonably objected in writing, on the basis
of the standards set forth herein, to the propriety of such reimbursement prior
to the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes as an unconditional term
thereof a release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
Section 6.4 Contribution. If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 6, then the 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, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties 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 to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 6.3, any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.4, no Holder shall
be
A-11
required to contribute any amount in excess of the amount of total net proceeds
received by such Holder from sales of the Registrable Securities sold by such
Holder pursuant to the offering that gave rise to such losses, claims, damages,
liabilities or expenses. 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.
If indemnification is available under this Section 6, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 6.1 and 6.2 without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 6.4.
Section 7. Term of Registration Rights.
The rights of Holders with respect to the registration rights granted
pursuant to this Annex A shall remain in effect, subject to the terms hereof,
so long as Xxxx Atlantic Common Stock may be acquired by a Holder pursuant to
the Investment Agreement or there are Registrable Securities issued and
outstanding.
Section 8. Miscellaneous.
Section 8.1 Entire Agreement; Amendments. This Annex A contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with
respect to such matters.
Section 8.2 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided pursuant to this Annex A 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 (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 address for Xxxx Atlantic shall be: Xxxx
Atlantic, [address]; Attention: _______________; fax: _____________. The
addresses for each Holder shall be maintained by Xxxx Atlantic. Copies of all
notices to any Holder shall be sent to Pillsbury Madison & Sutro LLP, 00
Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attn: Xxxxxxxxx X. Xxxxxxxx III; fax:
(000) 000-0000. Any such person's address or number set forth above may be
changed to such other address or number as may be designated in writing
hereafter, in the same manner, by such person.
Section 8.3 Remedies. In the event of a breach by Xxxx Atlantic or by a
Holder, of any of their obligations under this Annex A, each Holder or Xxxx
Atlantic, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Annex A, including recovery of damages,
will be entitled to specific performance of its rights under this Annex X. Xxxx
Atlantic and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this
A-12
Annex A and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
Section 8.4 No Inconsistent Agreements. Neither Xxxx Atlantic nor any of
its subsidiaries has, as of the date hereof, nor shall Xxxx Atlantic or any of
its subsidiaries, on or after the date of this Annex A, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Annex A or otherwise conflicts with the
provisions hereof. Neither Xxxx Atlantic nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person. Without limiting the generality
of the foregoing, Xxxx Atlantic shall not grant to any Person the right to
request Xxxx Atlantic to register any securities of Xxxx Atlantic 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 Annex A.
Section 8.5 Amendments and Waivers. No provision of this Annex A may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both Xxxx Atlantic and the Holders (or, prior to the first date
that any Xxxx Atlantic Common Stock has been issued at any Monetization
Closing, Vodafone); 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 Annex A shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any 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. Xxxx Atlantic 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 8.6 Successors and Assigns. This Annex A 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
Xxxx Atlantic register for resale Registrable Securities in accordance with the
terms of this Annex A, shall be automatically assignable by each Holder
together with the to which such rights relate if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to Xxxx Atlantic within a reasonable time after
such assignment, (ii) Xxxx Atlantic is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment the further disposition of such
securities by the transferee or assignees is restricted under the Securities
Act and applicable state securities laws, and (iv) at or before the time Xxxx
Atlantic receives the written notice contemplated by clause (ii) of this
Section, the transferee or assignee agrees in writing with Xxxx Atlantic to be
bound by all of the provisions of this Annex A.
Section 8.7 No Third-Party Beneficiaries. This Annex A is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and the other persons specified in Section 8 and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
A-13
Section 8.8 Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
Section 8.9 Severability. If any term, provision, covenant or restriction
of this Annex A is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
A-14
Annex B
Registration Rights
Section 1. Definitions.
Section 1.1 Capitalized terms used herein without definition have the
meanings assigned to such terms in the Investment Agreement, of which this
Annex B is a part. As used in this Annex B, the following terms shall have the
following meanings:
"Holder" means any Person who owns Registrable Securities.
"Monetizing Securities" means any security which is convertible into or
exchangeable for shares of Public Common Stock that are Registrable Securities.
"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.
"Registrable Securities" means Exchanged Shares issued or issuable in
exchange for Interests pursuant to the Investment Agreement and any Public
Common Stock issued as a dividend on such Exchanged Shares or into which such
Exchanged Shares are exchanged or converted (pursuant to a stock split or
otherwise); provided, however, that the outstanding shares of Public Common
Stock that are Registrable Securities shall cease to be Registrable Securities
(x) upon the consummation of any sale of those shares pursuant to an effective
Registration Statement under the Securities Act or Rule 144 promulgated
thereunder, (y) at such time as those shares of Public 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
or (z) at such time as those shares cease to be outstanding. Notwithstanding
the foregoing, the shares of Public Common Stock held by any Holder shall not
be considered Registrable Securities so long as all such shares may be offered
or sold pursuant to Rule 144 in any 90-day period.
"Registration Statement" means any Registration Statement 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 Annex B.
"Rule 144" means Rule 144 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Rule 158" means Rule 158 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Rule 415" means Rule 415 promulgated by the SEC 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 SEC having substantially the same
effect as such Rule.
"Underwritten Registration or Underwritten Offering" means a registration
in connection with which securities of Pubco are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
Section 2. "Piggy-Back" Registrations.
Section 2.1 If at any time Pubco shall determine to register for its own
account or the account of others under the Securities Act (including in
connection with (i) a public offering by Pubco or (ii) the IPO or a demand for
registration made by any person who owns or has the right to acquire equity
securities of Pubco 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), it
shall send to each Holder written notice of such determination and if, within
30 days after receipt of such notice, such Holder shall so request in writing,
Pubco shall use its best efforts to include in such Registration Statement all
or any part of the Registrable Securities such Holder has so requested to be
registered. If such registration involves an Underwritten Offering, each such
Holder must sell its shares to the underwriters on the same terms and
conditions as apply to Pubco or the person demanding such registration, as
applicable.
Section 2.2 If, in connection with any registration described in Section
2.1 of this Annex B with respect to an Underwritten Offering, the managing
underwriter of such Underwritten Offering shall impose a limitation on the
number of shares of such Pubco Common Stock which may be included in the
Registration Statement because in its judgment, such limitation is necessary to
effect an orderly public distribution, then, upon written notice from such
managing underwriter to that effect, Pubco shall include in such Registration
Statement only such portion of the Registrable Securities with respect to which
such Holders have requested inclusion pursuant hereto as such limitation
permits, after the inclusion of all shares of common stock to be registered by
Pubco for its own account. Any exclusion of Registrable Securities shall be
made pro rata among such Holders seeking to include such shares, in proportion
to the number of shares of Registrable Securities issued or issuable (pursuant
to exchange rights provided for in Section 6.2 of the Investment Agreement) to
each such Holder.
Section 2.3 If, at any time after giving written notice of its intention
to register any securities and prior to the effective date of the registration
statement filed in connection with such registration, Pubco or the person
demanding such registration, as applicable, determines for any reason not to
proceed with the proposed registration, Pubco shall give written notice of such
B-2
determination to each Holder requesting registration of Registrable Securities
in connection therewith and thereupon Pubco will be relieved of its obligation
to register any Registrable Securities in connection with such registration.
Section 3. "Demand" Registrations.
Section 3.1 At any time, each Holder (a "Demand Holder") may make a
written request to Pubco (with a copy to Wireless) (each a "Demand Request")
for registration under the Securities Act (a "Demand Registration") of all or
part of the Registrable Securities issued or issuable to 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 $200 million, before calculation of underwriting discounts and
commissions. Each Demand Request shall specify the number of Registrable Shares
proposed to be sold by such Demand Holder, as well as the intended method or
methods of disposition of such Registrable Securities.
Section 3.2 Within 15 days after receipt of each Demand Request, Pubco
shall give written notice of such Demand Request to all non-requesting Holders
and Pubco (and Wireless to the extent that its participation as a co-registrant
is necessary) shall use their respective best efforts to cause a Registration
Statement on Form S-3 under the Securities Act (or any comparable or successor
form permitting resale of securities on a continuous or delayed basis pursuant
to Rule 415), or, if Pubco is ineligible to use Form S-3, on another
appropriate form, for the resale of such Registrable Securities as may be
requested by any Holders thereof (including the Holder or Holders giving the
initial notice of intent to offer (collectively, the "Demand Holders")) to be
filed with the SEC not later than 30 days after receipt of a Demand Request
(the "Demand Filing Date"). Such Registration Statement shall contain (in
addition to the other information required to be contained therein) a
description of the intended method or methods of distribution of the
Registrable Securities, which Pubco and Wireless acknowledge may involve, among
other things, the offering of Registrable Securities underlying Monetizing
Securities (the description of which shall be provided to Pubco by such Holder
or Holders), which Monetizing Securities are subject to acquisition by holders
of such Monetizing Securities upon exchange or conversion thereof. Each of
Pubco (and Wireless to the extent that its participating as a co-registrant is
necessary) shall use its best efforts to cause any such Registration Statement
to be declared effective by the SEC as promptly as practicable after such
filing. Pubco (and Wireless to the extent that its participation as a
co-registrant is necessary) shall use its best efforts to qualify for
registration on Form S-3 during the term of the registration rights granted
pursuant to this Annex B.
Section 3.3 Notwithstanding any other provision set forth in this Section
3, no Holder shall be entitled to deliver a Demand Request within 180 days
after the effectiveness of the Registration Statement filed with respect to the
IPO.
Section 4. Suspension of Obligations Under Certain Circumstances.
Notwithstanding anything to the contrary contained herein, either Pubco or
Wireless may, by written notice to each Holder, suspend for up to 45
consecutive days the filing (but not the preparation of) a Registration
Statement (other than the Registration Statement with respect to the IPO) or
the right of a Holder to sell Registrable Securities pursuant to an effective
Registration Statement (other than the Registration Statement with respect to
B-3
the IPO) if the Board of Directors of Pubco or the Board of Representatives of
Wireless, as the case may be, determines, in its reasonable, good faith
judgment, that such filing or such sales of Registrable Securities under such
Registration Statement (a) would have a material adverse effect on, or
interfere in any material respect with, a material business opportunity of
Pubco or Wireless, as the case may be, including, without limitation, any
proposal or plan by Pubco or Wireless, as the case may be, to engage in any
financing or any material pending corporate development or transaction such as
a material acquisition of assets (other than in the ordinary course of
business), any tender offer or any merger, consolidation or other similar
transaction material to Pubco or Wireless, as the case may be, and its
subsidiaries taken as a whole, or (b) would require disclosure of any other
material non-public information that Pubco or Wireless, as the case may be, is
not otherwise required to disclose; provided, however, that such suspension
shall be lifted, and Pubco (and Wireless to the extent that is participation as
a co-registrant is necessary) shall file and the Holders shall be permitted to
sell Registrable Securities under an effective Registration Statement
forthwith, if (x) in the case of a suspension pursuant to clause (a), the
material business opportunity is disclosed by Pubco or Wireless or is
terminated, or (y) in the case of clause (b), the material non-public
information is made public; and provided further, however, that the number of
days in all such periods of suspension pursuant to this Section 4 in any
consecutive twelve months shall not exceed 60 days in the aggregate.
Section 5. Registration Procedures.
Whenever any Holder has requested that any Registrable Securities be
registered pursuant to this Annex B, Pubco and, to the extent necessary or
desirable to fulfill the purposes of this Annex B, Wireless shall use their
respective reasonable best efforts to effect the registration of such
Registrable Securities and in furtherance thereof Pubco and, where so necessary
or desirable, Wireless shall:
(a) (i) prepare and file with the SEC 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 until the Holder or Holders have
completed the distribution described in such Registration Statement; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement (including, among other things, as a result of any change or changes
after the effective date of the Registration Statement in the plan of
distribution contemplated by the Holders), and as so supplemented or amended to
be filed pursuant to Rule 424 promulgated under the Securities Act (or any
similar provisions then in force); (iii) respond as promptly as possible to any
comments received from the SEC with respect to each 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 SEC relating to the
Registration Statement; provided, however, that any information for which Pubco
or Wireless requests confidential treatment from the SEC shall be kept
confidential by the Holders, unless (A) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (B) disclosure of such information, in the
opinion of counsel to such Holders, is required by law; (C) such information
becomes generally available to the public other
B-4
than as a result of a disclosure or negligent failure to safeguard by such
Holders; or (D) such information becomes available to such Holders from a
source other than Pubco and such source is not known by such Holders to be
bound by a confidentiality agreement with Pubco or Wireless; 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 each Registration Statement in accordance with the intended methods
of disposition by the Holders as set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented;
(b) (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 due diligence
investigation within the meaning of the Securities Act. Pubco shall not file a
Registration Statement with respect to Registrable Securities to which the
Holder or Holders of a majority of such Registrable Securities covered thereby
or their counsel or any managing underwriters shall reasonably object in
writing within three (3) Business Days of their receipt thereof;
(c) notify the Holders of Registrable Securities to be sold, their
counsel and any managing underwriters as promptly as possible (and in the case
of (i), below, not less than five (5) days prior to such filing) and confirm
such notice in writing no later than one (1) Business Day following the day:
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed;
(ii) when the SEC notifies Pubco or Wireless whether there will be a
"review" of a Registration Statement and whenever the SEC comments in
writing on such Registration Statement;
(iii) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective;
(iv) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to each Registration
Statement or Prospectus or for additional information;
(v) of the issuance by the SEC of any stop order suspending the
effectiveness of each Registration Statement covering any or all of the
Registrable Securities or the initiation of any proceedings for that
purpose;
(vi) if at any time any of the representations and warranties of
Pubco or Wireless contained in any agreement (including any underwriting
agreement) contemplated hereby in connection with the registration of
Registrable Securities ceases to be true and correct in all material
respects;
B-5
(vii) of the receipt by Pubco or Wireless 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 any 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 such 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;
(d) use its best 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;
(e) if requested by any managing underwriter of Registrable Securities
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 Pubco or Wireless reasonably agrees
should be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as practicable
after Pubco or Wireless has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that neither Pubco nor Wireless shall be required to take
any action pursuant to this clause (e) that would, in the opinion of counsel
for Pubco or Wireless, violate applicable law or not be required to be taken by
applicable securities laws and be detrimental to the business prospects of
Pubco or Wireless;
(f) 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 SEC;
(g) 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
Pubco and Wireless hereby consent to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders and any underwriters in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto;
(h) use its best efforts to register or qualify or cooperate with the
selling Holders, any underwriters and their counsel in connection with the
registration or qualification
B-6
(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 until the Holder or Holders have completed the
distribution of such Registrable Securities 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 neither Pubco nor Wireless shall 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 Pubco or Wireless to
any material tax in any such jurisdiction where it is not then so subject;
(i) 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
selling Holders may request at least two Business Days prior to any sale of
Registrable Securities pursuant to such Registration Statement;
(j) upon the occurrence of any event contemplated by Section
5(c)(viii) of this Annex B, as promptly as reasonably practicable, 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 any other document required to be filed in connection therewith 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;
(k) use its best efforts to cause all Registrable Securities relating
to each Registration Statement to be listed on the securities exchange,
quotation system, market or over-the-counter bulletin board recommended by the
managing underwriters, in the case of the IPO, as that which would optimize the
liquidity and value of the Public Common Stock or, following the IPO, on which
Public Common Stock is then listed;
(l) 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 whether or not an underwriting
agreement is entered into) to:
(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;
B-7
(ii) in the case of an Underwritten Offering, obtain and deliver
copies thereof to the managing underwriters, if any, of opinions of
counsel to Pubco and Wireless 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 Holders 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 each 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 Pubco and Wireless (and, if necessary, any
other independent certified public accountants of any subsidiary of Pubco
or Wireless or of any business acquired by Pubco or Wireless for which
financial statements and financial data is, or is required to be, included
in any such 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, if any, than those set forth in
Section 8 of this Annex B (or such other provisions and procedures
acceptable to the managing underwriters, if any); 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 Pubco and Wireless;
(m) comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders an
earnings statement covering a period of twelve months beginning within three
months after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
(n) make available executive officers of Pubco and Wireless for
participation in a reasonable number of "road show" and other investor
presentations requested by the Holders selling Registrable Securities in an
Underwritten Offering; and
(o) 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 Pubco, Wireless and their respective
subsidiaries, and cause the officers, directors, agents and employees of Pubco,
Wireless and their respective subsidiaries to supply all information in each
case reasonably requested by any such Holder,
B-8
representative, underwriter, attorney or accountant in connection with each
Registration Statement; provided, however, that any information that is
determined in good faith by Pubco or Wireless in writing to be of a
confidential nature at the time of delivery of such information shall be kept
confidential by such Persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (ii) disclosure of such information, in
the opinion of counsel to such Person, is required by law; (iii) such
information becomes generally available to the public other than as a result of
a disclosure or negligent failure to safeguard by such Person; or (iv) such
information becomes available to such Person from a source other than Pubco or
Wireless and such source is not known by such Person to be bound by a
confidentiality agreement with Pubco or Wireless.
Section 6. Stockholder Covenants.
Each Holder hereby covenants and agrees that:
(a) it will not sell any Registrable Securities under any Registration
Statement until it has received notice from Pubco that such Registration
Statement and any post-effective amendments thereto have become effective;
(b) it and its officers, directors and 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;
(c) by its acquisition of such Registrable Securities that, upon
receipt of a notice from Pubco of the occurrence of any event of the kind
described in Section 5(c)(iv), (v), (vi), (vii) and (viii) of this Annex B,
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until the Holder is advised in writing by Pubco and Wireless that the use of
the applicable Prospectus may be resumed;
(d) if an underwriting agreement is entered into, the same shall
contain indemnification provisions no less favorable to Pubco and the
underwriters, if any, than those set forth in Section 8.2; and
(e) Pubco may require each selling Holder to furnish to Pubco
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in each Registration
Statement, and Pubco may exclude form such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request. If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of Pubco, 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 each
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
B-9
Section 7. Registration Expenses.
All fees and expenses incident to the performance of or compliance
with this Annex B, including all fees and expenses which are incurred by, or
are obligations of, Pubco, shall be borne by Wireless 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, fees and disbursements of counsel for the selling 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 shall
request, if any); (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 Pubco and Wireless; (v) Securities Act
liability insurance, if Pubco or Wireless so desire such insurance; (vi) fees
and expenses of all other Persons retained by Pubco or Wireless in connection
with the consummation of the transactions contemplated by this Annex B; and
(vii) all internal expenses of Pubco or Wireless incurred in connection with
the consummation of the transactions contemplated by this Annex B, 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 any counsel, accountants or other persons
retained by the Holders in connection with the consummation of the transactions
contemplated by this Annex B.
Section 8. Indemnification and Contribution.
Section 8.1 Indemnification by Pubco and Wireless. Each of Pubco and
Wireless, jointly and severally, agrees to indemnify to the fullest extent
permitted by law, each Holder, each person who controls any such Holder,
(within the meaning of either the Securities Act or the Exchange Act), and
their respective directors and officers against any and all losses, claims,
damages, liabilities (or actions or proceedings in respect thereof) and
expenses (including reasonable attorneys' fees) caused by any untrue or alleged
untrue statement of material fact contained in any Registration Statement,
prospectus or preliminary prospectus (each as amended and/or supplemented, if
Pubco or Wireless shall have furnished any amendments or supplements thereto),
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case
of a Prospectus, in the light of the circumstances under which they were made)
not misleading; provided that neither Wireless nor Pubco shall be required to
indemnify such Holder, such controlling persons or their respective officers or
directors for any losses, claims, damages, liabilities (or actions or
proceedings in respect thereof) or expenses resulting from any such untrue
statement or omission if such untrue statement or omission is made in reliance
on and conformity with any information with respect to such Holder or the
underwriters furnished to Pubco by such Holder expressly for use therein;
provided, further, that neither Pubco nor Wireless shall be required to
indemnify any Holder to the extent that any such loss, claim, damage, liability
(or actions or proceedings in respect thereof) or expense arises out of or is
based upon an untrue or alleged untrue statement or omission or alleged
omission made in any preliminary Prospectus if (i) in the case of any offering
other than an Underwriting Offering, having previously been furnished by or on
behalf of Pubco and Wireless with copies of the final Prospectus, such Holder
failed to send or deliver a copy of the final Prospectus with or prior to the
delivery of written confirmation of the sale of the Registrable Securities by
the Holder to the person asserting the claim from which such loss, claim,
damage, liability (or actions or proceedings in respect thereof) or expense
arises and (ii) the final Prospectus would have corrected in all material
respects such untrue statement or alleged untrue statement or omission or
alleged omission; and provided, further, that neither Pubco nor Wireless shall
be required to indemnify any Holder to the extent that any such loss, claim,
damage, liability (or actions or proceedings in
B-10
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement, omission or alleged omission in the Prospectus if
(x) such untrue statement or alleged untrue statement, omission or alleged
omission is corrected in all material respects in an amendment or supplement to
the Prospectus and (y) in the case of any offering other than an Underwritten
Offering, having previously been furnished by or on behalf of Pubco and
Wireless with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Securities.
In connection with an Underwritten Offering, each of Pubco and Wireless,
jointly and severally, agrees to indemnify each underwriter thereof, the
officers and directors of such underwriter, and each person who controls such
underwriter (within the meaning of either the Securities Act or Exchange Act)
to the same extent as provided above with respect to the indemnification of
Holders; provided that such underwriter agrees to indemnify Pubco and Wireless
to the same extent as provided below with respect to the indemnification of
Pubco and Wireless by such Holders.
Section 8.2 Indemnification by Holders. In connection with any
registration in which any Holder is participating, such Holder will furnish to
Pubco in writing such information with respect to it and its Affiliates as
Pubco reasonably requests for use in connection with any such registration,
Prospectus, or preliminary Prospectus and agrees to indemnify each of Pubco,
Wireless, their respective directors and officers who sign the Registration
Statement, each person, if any, who controls Pubco or Wireless (within the
meaning of either the Securities Act or of the Exchange Act), each other Holder
and any prospective underwriters, as the case may be, and any of their
respective affiliates, general partners, officers, employees, agents and
controlling persons, to the same extent as the foregoing indemnity from Pubco
and Wireless to such Holder, but only with respect to information relating to
such Holder furnished to Pubco in writing by such Holder expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any preliminary Prospectus.
Section 8.3 Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which
B-11
indemnity may be sought pursuant to Section 8.1 or Section 8.2 of this
Agreement, such person (hereinafter called the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought
(hereinafter called the "indemnifying party") in writing and the indemnifying
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and the indemnified party
shall have been advised by counsel that representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the indemnified parties, such firm shall
be designated in writing by all of the indemnified parties. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent (which consent will not be unreasonably withheld), but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the third sentence of this
Section 8.3, the indemnifying party agrees that the indemnifying party shall be
liable for any settlement of any proceeding effected without the indemnifying
party's written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not either have reimbursed the indemnified party
in accordance with such request or reasonably objected in writing, on the basis
of the standards set forth herein, to the propriety of such reimbursement prior
to the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes as an unconditional term
thereof a release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
Section 8.4 Contribution. If the indemnification provided for in this
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 8, then the 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, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such
B-12
indemnifying party and indemnified parties 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 to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8.3, any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.4 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.4, no Holder shall
be required to contribute any amount in excess of the amount of the total net
proceeds received by such Holder from sales of the Registrable Securities sold
by such Holder pursuant to the offering that gave rise to such losses, claims,
damages, liabilities or expenses. 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.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 8.1 and 8.2 without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 8.4.
Section 9. Term of Registration Rights.
The rights of Holders with respect to the registration rights granted
pursuant to this Annex B shall remain in effect, subject to the terms hereof,
so long as Pubco Common Stock may be acquired by a Holder pursuant to the
Investment Agreement or there are Registrable Securities issued and
outstanding.
Section 10. Miscellaneous.
Section 10.1 Entire Agreement; Amendments. This Annex B contains the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters.
Section 10.2 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided pursuant to this Annex B 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 (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,
B-13
whichever shall first occur. The address for Wireless shall be: Wireless,
[address]; Attention: _______________; Fax: _____________. The address for
Pubco shall be: ________________ _________________. The addresses for each
Holder shall be maintained by Pubco. Copies of all notices sent to any Holder
shall be sent to Pillsbury Madison & Sutro LLP, 00 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000, Attention: Xxxxxxxxx X. Xxxxxxxx III; Fax: (000) 000-0000.
Any such person's address or number set forth above may be changed to such
other address or number as may be designated in writing hereafter, in the same
manner, by such person.
Section 10.3 Remedies. In the event of a breach by Pubco, Wireless or by a
Holder, of any of their respective obligations under this Annex B, each Holder
or Pubco or Wireless, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Annex B, including recovery
of damages, will be entitled to specific performance of its rights under this
Annex B. Each of Pubco, Wireless and each Holder agrees that monetary damages
would not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Annex B and hereby further agrees
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
Section 10.4 No Inconsistent Agreements. Neither Pubco nor Wireless nor
any of their respective subsidiaries on or after the date of this Annex B,
shall enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Annex B or
otherwise conflicts with the provisions hereof. Without limiting the generality
of the foregoing, Pubco shall not grant to any Person the right to request that
Pubco register any securities of Pubco 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 Annex B.
Section 10.5 Amendments and Waivers. No provision of this Annex B may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both all of the parties hereto 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 Annex B shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any 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. Neither Pubco nor
Wireless shall 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 10.6 Successors and Assigns. This Annex B 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
Pubco and Wireless register for resale Registrable Securities in accordance
with the terms of this Annex B, shall be automatically assignable by each
Holder together with the to which such rights relate if: (i) the Holder agrees
in writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to Pubco and Wireless within a reasonable time
after such assignment, (ii) Pubco and Wireless are,
B-14
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act or applicable state securities laws, and
(iv) at or before the time Pubco and Wireless receive the written notice
contemplated by clause (ii) of this Section, the transferee or assignee agrees
in writing with Pubco and Wireless to be bound by all of the provisions of this
Annex B.
Section 10.7 No Third-Party Beneficiaries. This Annex B is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and the other persons specified in Section 8 and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
Section 10.8 Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
Section 10.9 Severability. If any term, provision, covenant or restriction
of this Annex B is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
B-15
