PROPOSAL 1 APPROVAL OF THE SALE PURSUANT TO THE PURCHASE AGREEMENT
|
We
are asking you to approve a proposal to authorize the Sale, in the form of a sale of substantially all of the assets of NII, through a sale of NII Brazil to AMX, on the terms and
conditions of the Purchase Agreement. At the closing of the Sale, NII Brazil will own 100% of the equity of Nextel Holdings, which is the entity that, indirectly through its wholly owned subsidiaries,
owns all of the remaining operating assets of the Company. In connection with the Sale, NII and AI Brazil also entered into the Side Letter, which is summarized below under
"
Summary of Side Letter
" beginning on page 64.
A
copy of the Purchase Agreement is attached to this proxy statement as
Annex A
. A copy of the Side Letter is attached to this proxy statement as
Annex C
. You are urged to read the Purchase Agreement and the Side Letter carefully in their entirety.
We
provide wireless communication services under the Nextel
TM
brand in Brazil through our subsidiary Nextel Brazil. Nextel Brazil's principal operations are located in
major urban and suburban centers with high population densities and related transportation corridors of that country where there is a concentration of Brazil's population and economic activity,
including primarily Rio de Janeiro and São Paulo. Nextel Brazil operates a wideband code division multiple access, or WCDMA, network, which has been upgraded to offer long-term
evolution, or LTE, services in certain areas. Nextel Brazil's network enables us to offer a wide range of products and services supported by that technology. We are also a party to a roaming agreement
that allows us to offer our subscribers nationwide voice and data services outside of our network's footprint. Our target market is individual consumers who use our services to meet both professional
and personal needs. Our target subscribers generally exhibit above average usage, revenue and loyalty characteristics. We believe our target market is attracted to the services and pricing plans we
offer, as well as the quality of and data speeds provided by our network. NII's registered office is at 12110 Sunset Hills Road, Suite 600, Reston, VA 20190, and its telephone number is
(703) 390-5100.
NII INTERNATIONAL HOLDINGS S.À R.L.
|
NIIH
is a private limited liability company (
société à responsabilité
limitée
) organized under the Laws of the Grand Duchy of Luxembourg and a wholly owned subsidiary of NII that owns all of the issued and outstanding shares of NII
Brazil. NIIH's registered office is at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and is registered with the Luxembourg Trade and Companies Register under the
number B 149229. NIIH's telephone number is (703) 390-5100.
NII BRAZIL HOLDINGS S.À R.L.
|
NII
Brazil is a private limited liability company (
société à responsabilité
limitée
) organized under the Laws of the Grand Duchy of Luxembourg and an indirect wholly owned subsidiary of NII that holds approximately 70% of the equity
interests of Nextel Holdings. NII Brazil's registered office is at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and is registered with the Luxembourg Trade and
Companies' Register under the number B 230537. NII Brazil's telephone number is (703) 390-5100.
Nextel
Holdings is a private limited liability company (
société à responsabilité
limitée
) organized under the Laws of the Grand Duchy of Luxembourg and an indirect subsidiary of NII that indirectly through its wholly owned subsidiaries holds
all of the
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issued
and outstanding equity of Brazil Parent. Brazil Parent and McCaw International (Brazil), LLC, a limited liability company organized under the Laws of Virginia and a direct wholly owned
subsidiary of Nextel Holdings, own all of the issued and outstanding equity of Nextel Brazil. Nextel Holdings' registered office is at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand
Duchy of Luxembourg and is registered with the Luxembourg Trade and Companies Register under the number B 214361. Nextel Holdings' telephone number is (703) 390-5100.
AMÉRICA MÓVIL, S.A.B. de C.V.
|
AMX
is a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. AMX's principal executive offices are located
at Lago Zurich 245, Plaza Carso / Edificio Telcel, Colonia Ampliación Granada, Delegación Miguel Hidalgo, 11529 Mexico City, Mexico. AMX's telephone number at this
location is (5255) 2581-4449. AMX provides telecommunications services in 25 countries. AMX is a leading telecommunications services provider in Latin America, ranking first in wireless, fixed-line,
broadband and Pay TV services based on the number of revenue generating units ("RGUs"). AMX's largest operations are in Mexico and Brazil, which together account for over half of AMX's total RGUs and
where AMX has the largest market share based on RGUs. AMX also has operations in 16 other countries in the Americas and seven countries in Central and Eastern Europe.
AI
Brazil is a corporation existing under the Laws of The Netherlands. AI Brazil's executive offices are located at Prins Bernhardplein 200, 1097 JD Amsterdam, the Netherlands and
its telephone number is +31 (0) 205 214 777. AI Brazil currently owns approximately 30% of the outstanding equity interests of Nextel Holdings. Other than the holding of its ownership interest
in Nextel Holdings and matters ancillary thereto, or in connection with the transactions contemplated by the Purchase Agreement, AI Brazil does not conduct any other business operations.
NII's
senior management and Board, with the assistance of financial and legal advisors, regularly review and assess the Company's long-term strategy, financial performance, short-
and long-term prospects, and the Company's business objectives in light of ongoing developments in the Brazilian economy and telecom industry, international capital market conditions, regulatory
developments and the Company's liquidity needs. In connection with these reviews and assessments, NII's senior management and Board have periodically evaluated potential strategic alternatives
relating to NII and its business, including possible acquisitions, divestitures and business combination transactions. In that regard, during the fall of 2015, NII's Board determined to explore the
range and feasibility of strategic alternatives regarding the Company and its telecommunications business in Brazil conducted through Nextel Brazil. As detailed below, over the past three and a half
years, the Company, through its advisors, conducted a comprehensive auction process pursuant to which a total of 38 potential bidders were contacted, which included for a number of these interested
parties, management presentations and extensive due diligence reviews of the Nextel Brazil Business and the Company. As a result, we completed an investment transaction in 2017 and, in the process
between 2018 and 2019, received two non-binding indications of interest, including the proposal from AMX that resulted in the current proposed Sale.
In
October 2015, following a comprehensive strategic review by NII's Board, NII determined to explore a possible sale of an equity interest in or other strategic transaction involving Nextel Brazil.
As part of this review, NII's Board determined to evaluate, in a structured manner, the level of interest in a potential strategic transaction or equity investment involving Nextel Brazil. In December
2015, NII entered into an engagement letter with Rothschild & Co to advise NII on a potential sale, merger or other business transaction involving NII or the Nextel Brazil Business.
Between
November 2015 and January 2016, based on discussions among members of NII's Board, senior management and Rothschild & Co, NII's senior management and Rothschild & Co began
contacting a number of telecom operators and private equity firms, in order to determine whether any of those entities would be interested in acquiring NII or the Nextel Brazil Business.
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Following
a comprehensive process conducted between November 2015 and April 2017, which included outreach to 26 potential strategic and financial bidders, including a subsidiary of AMX and an
affiliate of AI Brazil, AINMT Holdings AB ("ice group"), most potential bidders determined not to pursue a transaction primarily due to the existing Brazilian regulatory framework and other issues,
including the existing economic challenges in Brazil, and the only remaining proposal was an investment transaction proposed by ice group. NII's Board was regularly updated on progress and status of
the process, including at several meetings with NII's senior management and legal and financial advisors where they reviewed, among other things, the business and liquidity outlook for Nextel Brazil,
updates regarding the availability of funds from the Mexico Escrow and updates regarding discussions and next steps with Nextel Brazil's lenders and updates regarding the lack of interest among the
parties contacted during the process, other than ice group, which had submitted a non-binding offer to invest $50 million for 30% of Nextel Holdings, the indirect owner of Nextel Brazil, with
an option to acquire additional equity.
Between
April 2017 and June 4, 2017, NII's senior management, representatives of ice group, and their respective financial and legal advisors continued to negotiate terms for the investment
transaction and worked to finalize the revised transaction agreements, including an Investment Agreement and a Shareholders Agreement.
On
June 5, 2017, ice group's Board of Directors approved the transaction with NII. On the same day, NII's Board convened a meeting to discuss the proposed terms of the transaction and the
proposed Investment Agreement and Shareholders Agreement and related documents. Following a detailed discussion with NII's senior management and legal and financial advisors, who were also present at
this meeting, regarding the risks and advantages of the transaction and lack of viable alternatives, NII's Board unanimously approved the Investment Agreement and Shareholders Agreement, and on
June 5, 2017, NII entered into the Investment Agreement with ice group, which provided for NII and ice group to partner in the ownership of Nextel Brazil through an initial investment by ice
group of $50 million for 30% ownership of Nextel Holdings, which indirectly owns Nextel Brazil. This initial investment was completed on July 20, 2017. The Investment Agreement also
granted ice group an option, exercisable on or before November 15, 2017, to invest an additional $150 million in Nextel Holdings for a combined 60% controlling stake in Nextel Holdings.
Concurrently with the execution of the Investment Agreement, we also entered into a Shareholders Agreement with ice group, which provided for certain transfer restrictions of the equity interests in
Nextel Holdings and drag along and tag along rights in the event of a direct or indirect sale of NII's equity interests in Nextel Brazil. (A summary of the Investment Agreement and Shareholders
Agreement can be found in NII's Current Report on Form 8-K filed with the SEC on June 6, 2017).
On
November 15, 2017, ice group's option to acquire additional equity in Nextel Holdings pursuant to the Investment Agreement expired. That same day, NII's Board met with NII's senior
management team to discuss the impact of ice group's failure to exercise the option to acquire additional equity in Nextel Holdings. In addition to discussing NII's right to terminate the Investment
Agreement with ice group and ice group's rights under the Shareholders Agreement, NII's senior management also updated the Board on recent communications with ice group regarding a potential 60-day
extension of ice group's option, including the likelihood that ice group would be able to secure funding to exercise any extended option, the benefits and drawbacks of terminating the Investment
Agreement, and the impact to Nextel Brazil's budget and business plan of ice group not exercising its option and making the $150 million investment. Following these discussions, the Board
directed management to continue discussions with ice group on a possible extension of the option, and directed management to prepare an alternative budget for 2018 that assumed ice group would not
exercise the option and invest an additional $150 million.
Between
November 15, 2017 and February 2018, members of NII's senior management team continued discussions with representatives of ice group regarding a potential extension of ice group's
option, issues relating to ice group's ability to fund the option and a path forward to completing the transaction with ice group, as well as certain matters relating to the Investment Agreement.
Management regularly updated the Board regarding these discussions throughout the period, and the Board regularly discussed with management the benefits and drawbacks of the Company exercising its
right to terminate the Investment Agreement given the anticipated funding needs of Nextel Brazil and ice group's failure to exercise the option.
At
a meeting of the Board on February 13, 2018, NII's Board and senior management discussed the status of the ice group transaction, including that little progress had been made with ice group
regarding negotiation of suitable terms for extending the option, and the possibility that other strategic partnerships could materialize if there were a change in Brazil's regulatory framework with
respect to spectrum caps and the use of spectrum. Following a discussion with senior management, the Board authorized management to terminate the Investment Agreement if ice group did not provide a
reasonable proposal for completing the additional investment in Nextel Holdings within a reasonable time period.
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On
February 23, 2018, ice group delivered to Mr. Shindler, a member of NII's Board, a written proposal to acquire all of NII's remaining equity interests in the Nextel Brazil Business
for $1, plus the assumption of certain liabilities, a potential earn-out for a change in control that exceeded a certain threshold value for ice group and ice group's agreement that NII would be
entitled to retain any funds released from the Mexico Escrow, for an aggregate purported purchase price of approximately $325 million.
On
February 27, 2018, after reviewing the proposal with NII's senior management, Mr. Shindler notified ice group, in writing, that the transaction proposal from ice group was
insufficient and, as previously disclosed in the Current Report on Form 8-K filed with the SEC on February 27, 2018, because ice group had failed to exercise its option and make the
additional investment pursuant to the terms of the Investment Agreement, NII terminated the Investment Agreement.
Since
the termination of the Investment Agreement by the Company, the Board and senior management have regularly evaluated the Company's business and operations, the Company's long-term strategic
goals and alternatives and risks to our continuing operations with a goal of maximizing stockholder value. NII has regularly assessed trends and conditions impacting the Company, its operations and
its industry, changes in the marketplace, other applicable laws, the competitive environment, regulatory environment in Brazil and the risks to the Company's continuing operations in Brazil. As part
of these
ongoing reviews, the Board regularly considered the strategic alternatives available to the Company. In connection with these reviews, the Board has assessed the Company's liquidity needs and
uncertainty regarding our future revenue and operating profitability and the Company's ability to obtain additional capital to execute the Company's business strategy.
Between
March 2018 and July 2018, based on discussions among members of the Board, NII's senior management and representatives of Rothschild & Co, NII's senior management and representatives of
Rothschild & Co contacted 26 potential bidders (including several potential bidders that had been contacted and expressed some interest during the process in late 2015 through early 2017) in
order to determine whether any of those entities would be interested in acquiring NII or the Nextel Brazil Business. Five potential strategic bidders (Party A, Party B, Party C, Party D and AMX) and
two financial bidders (Party E and Party F) expressed interest, signed NDAs (or already had NDAs in place from the prior process) and were granted access to due diligence materials and began
engaging in a due diligence review of the Company and its operations. During this time period, Party D withdrew from the process, and Party C and Party F engaged in very limited due diligence and,
other than a few informal conversations with NII's senior management early in the process, did not actively engage in the formal process. The other potential bidders either did not respond to
preliminary outreach materials or indicated that they were not interested in a transaction at this time.
On
April 25, 2018, representatives from Rothschild & Co and Mr. Freiman, NII's Vice President, Chief Financial Officer, met with management from Party A regarding a potential
business combination, a mobile virtual network operator ("MVNO") agreement or other strategic transactions. That same day representatives from Rothschild & Co met with management of Party E to
discuss Party E's interest in a potential transaction and Nextel Brazil's business plan. Party E indicated that they would review the materials and respond to NII in a couple of weeks.
At
a meeting of the Board on May 3, 2018, following a review of the Company's current financial position and operations and the outlook regarding Nextel Brazil's business and funding needs,
management updated the Board on recent discussions with potential strategic and financial partners and discussed next steps to transition transaction discussions to a more formal process.
Between
May 2018 and July 2018, representatives of NII held various telephonic and in person management meetings and due diligence meetings with each of the four confirmed interested
parties Party A, Party B, Party E and AMX. Each of the parties were actively engaged in a review of the virtual data room during this time period.
On
or about June 26, 2018, ice group sold its 30% equity interest in Nextel Holdings to its affiliate, AI Brazil.
On
July 6, 2018, AMX submitted a written proposal to representatives of NII, with terms reflecting an implied enterprise value of $800 million, on a debt-free and cash-free basis, and
requested exclusivity. The written proposal did not include information regarding acquisition structure, contingencies or regulatory process.
Effective
as of July 9, 2018, the Company engaged Greenhill as a second financial advisor to advise NII on a potential sale, merger or other business transaction involving NII or the Nextel
Brazil Business.
At
a meeting of the Board on July 20, 2018, management updated the Board on recent discussions with potential strategic and financial partners and the current status of due diligence and legal
work for each potential partner. The Board agreed that management should continue to negotiate terms of the proposal received from AMX, but that exclusivity was not appropriate at this time on the
basis of the non-binding proposal.
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On
July 25, 2018, representatives of Party B communicated to representatives of the Company that Party B would be withdrawing from the process.
On
July 27, 2018, representatives of Party A had a conference call with Mr. Shindler to propose a two-part transaction (involving an initial investment for an agreed equity percentage,
to be followed by an acquisition of the remaining equity), with a proposed implied enterprise value in the range of BRL3.0 billion to BRL3.5 billion (or approximately $800 million
to $925 million, determined using a Brazilian real to U.S. dollar exchange rate of 3.82 Brazilian reais to 1.00 U.S. dollar, the average exchange rate over the 30-day
period ending July 27, 2018). Mr. Shindler requested that Party A submit a written proposal outlining the terms of the proposal.
On
August 2, 2018, NII's Board held a meeting to review the financial and operational results of the Company. At that meeting, Mr. Freiman also presented an update on the strategic
review process, including a review of discussions with the potential
bidders, the recent due diligence activity and next steps and potential timelines. Senior management also presented information comparing the written and oral proposals from the remaining two
potential bidders, AMX and Party A. No proposal had been submitted by Party E as of this date and through the course of July and August 2018, Party E reduced its engagement in the process.
During
August and September 2018, AMX and Party A each continued to engage in due diligence review. During this period, Party A communicated with representatives of NII that it was awaiting approval
from its parent company to move forward with the transaction before it could submit a written proposal.
On
September 24, 2018, after hearing rumors in the market regarding the sale process, a member of Party B's executive management team contacted representatives of NII to discuss the
current status of the sale process. Party B's executive management team did not provide further information or indicate renewed interest in a transaction.
On
September 26, 2018, representatives of Company A proposed a revised transaction, which included a one-step transaction structure and the same proposed implied enterprise value in the range
of BRL3.0 billion to BRL3.5 billion (or approximately $730 million to $850 million, determined using a Brazilian real to U.S. dollar exchange rate of 4.10 Brazilian
reais to 1.00 U.S. dollar, the average exchange rate over the 30-day period ending September 26, 2018).
At
a meeting of NII's Board on September 28, 2018, senior management provided an update to the Board regarding recent discussions with potential strategic partners, next steps and potential
timelines. Mr. Freiman confirmed that Party A had received approval to submit an updated written proposal. He then reviewed the potential terms and structure that had been discussed with Party
A. Mr. Freiman also reviewed the status of discussions with Party B and AMX, noting that management believed that AMX was working on a formal proposal.
On
October 12, 2018, AMX submitted a revised written proposal, which proposed an implied enterprise value of $805 million and requested exclusivity. During the next several days, NII and
AMX exchanged letters regarding questions about the proposal, and on October 18, 2018, representatives of AMX and NII held a conference call to discuss AMX's October 12 proposal.
On
October 25, 2018, NII sent a letter to AMX, in which NII expressed an interest in exploring all areas that could impact AMX's valuation of Nextel Brazil.
On
November 4 and 5, 2018, the Board held a meeting to discuss, among other things, the financial and operating results of the Nextel Brazil Business and the Company's consolidated liquidity
plan for the next four years, the potential cumulative cash funding shortfall that might occur in 2020 in the event that funds were not released from the Mexico Escrow in 2019, the longer term
potential cumulative cash funding shortfall that might occur in mid-2021 and the potential incremental actions that could be taken. Senior management also reviewed with the Board potential tower
sales, amendments to certain commercial agreements and the potential cost and timeline for a 5G spectrum auction. Senior management also provided an update regarding the strategic review process. As
part of this discussion, senior management summarized AI Brazil's rights under the Shareholders Agreement and NII's right to drag-along AI Brazil in a sale transaction. Senior management and the Board
also discussed potential synergies, costs and other factors that may impact purchase prices offered in a strategic transaction and other factors that the Board should consider. The Board and senior
management also discussed the expected timeline of a transaction, the Company's four-year financial outlook and potential sources of funding for the Company, including capital contributions,
refinancing of the current debt arrangements, additional financing options that might be available and potential tax credits in Brazil that could be used over time to fund the business, as well as the
timeline and risks
associated with those tax credits. Senior management then reviewed with the Board the current terms and potential value of the proposals from AMX and Party A. The Board also discussed the feedback
from NII's financial and legal advisors, potential
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value
available to the Company's stockholders under the initial proposals given tax and other closing costs, and benefits and drawbacks of different transaction structures. Following these discussions
regarding the current terms and structure, and in light of the Company's consolidated four-year financial outlook and liquidity, the Board authorized management to continue negotiations with AMX and
Party A with respect to their proposals.
On
November 8, 2018, Mr. Freiman sent a letter to AMX, in which Mr. Freiman outlined NII's view of the economic terms outlined in AMX's prior proposal for the acquisition of the
Nextel Brazil Business through the direct acquisition of Nextel Brazil. In the letter, Mr. Freiman communicated an alternative structure, pursuant to which AMX would acquire Nextel Brazil
indirectly, through the acquisition of the direct parent entity of Nextel Holdings and the shares in Nextel Holdings held by AI
Brazil. In addition, Mr. Freiman requested that AMX consider increasing the proposed enterprise value for the acquisition to $1.0 billion.
On
November 12, 2018, members of NII's senior management met with representatives of Party A in New York, New York. At that meeting, representatives of Party A presented an unsigned written
proposal, which reflected a one-step structure, but reduced the proposed implied enterprise value to BRL3.0 billion (or approximately $800 million, determined using a Brazilian real to
U.S. dollar exchange rate of 3.75 Brazilian reais to 1.00 U.S. dollar, the average exchange rate over the 30-day period ending November 12, 2018). The proposal also added a
closing condition that required NII to renegotiate the terms of Nextel Brazil's outstanding loans to decrease the cumulative outstanding balance through a partial loan forgiveness. On
November 15, 2018, Mr. Freiman sent a letter to Party A's management team regarding Party A's proposal. In the letter, Mr. Freiman stated that NII was not in a position to accept
the terms as proposed and suggested ways that Party A could make the proposal more attractive, including by increasing the proposed implied enterprise value to BRL4.0 billion. NII did not
receive a response from Party A to this letter.
On
November 23, 2018, AMX responded to NII's letter from November 8, agreeing to the proposed alternative structure for the acquisition (subject to NII undertaking certain restructuring
of intercompany agreements and organizational structure of other NII subsidiaries) and agreeing to amend the proposal by increasing the implied enterprise value for the proposed transaction from
$805 million to $905 million. AMX also specified that the definitive agreements in connection with the proposed transaction should include indemnification provisions related to tax
liabilities or contingencies associated with the entities to be acquired. In the letter, AMX also requested an exclusivity agreement to facilitate negotiation of definitive agreements for the proposed
transaction.
On
November 25, 2018, the Board held a meeting with NII's senior management to receive a strategic transaction update. Representatives from Rothschild & Co, Greenhill and Jones Day also
attended the meeting. Mr. Freiman updated the board on the revised transaction proposal received from AMX to acquire the Nextel Brazil Business, which reflected an increase in the implied
enterprise value of $100 million. Mr. Freiman also indicated that the parties were continuing to discuss transaction structure and other factors. The Board also discussed the benefits
and drawbacks of entering into a short-term exclusivity arrangement with AMX. Mr. Freiman then provided an update regarding the discussions with Party A and the unsigned written proposal that
Party A had provided at the last in-person meeting. The Board further discussed the terms of the proposal from Party A and management's response. Representatives from Rothschild & Co indicated
that, based on discussions with representatives of Party A, a change in management at Party A had adversely impacted Party A's participation in discussions regarding a potential transaction and
it was unclear whether Party A would be able to proceed in any future discussions regarding a possible transaction. The Board next discussed AMX's proposed purchase price in the revised AMX proposal
as compared to the then current trading price of NII common stock and discussed whether a transaction below trading value would be in the best interests of NII's stockholders, including taking into
consideration the Company's recent operational results, business plan, stand-alone value and long-range forecast; the competitive wireless market in Brazil and future spectrum needs and move to 5G;
cash utilization and funding needs; drivers of value of the Company's equity; and the Company's liquidity forecast. The Board compared the proposals from AMX and Party A and discussed the benefits and
drawbacks of each, and also discussed the options available to the Company and the benefits and drawbacks of entering into a transaction at this time. The Board finally discussed the potential amount
distributable to NII's stockholders and items that could impact this amount, as well as the public assessment of the business and market risk. Following these discussions, the Board authorized
management to pursue a transaction with AMX if AMX was able to proceed with NII's proposed transaction structure, and subject to the Board receiving favorable opinions from NII's financial advisors
and the parties reaching agreement on definitive documentation for a transaction. The Board also authorized management to enter into a limited term exclusivity arrangement with AMX to facilitate
further discussions with AMX.
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On
November 29, 2018, members of NII's senior management team and NII's financial advisors and legal counsel held an organizational call with AMX and its legal counsel to discuss the process
for formal negotiations of definitive agreements related to a potential transaction and proposed that as part of the transaction, AMX reimburse NII for cash investments made in the Nextel Brazil
Business between signing and closing of the transaction.
On
December 3, 2018, NII and AMX entered into a short-term exclusivity agreement, which provided for a term through December 31, 2018. The parties also entered into an updated
confidentiality agreement that same day.
On
December 4, 2018, NII's legal counsel delivered an initial draft of the Purchase Agreement to legal counsel to AMX, which contemplated the formation of NII Brazil as a wholly owned
subsidiary of NIIH and an internal reorganization of NII to be completed before execution of the Purchase Agreement that would, among other things, result in NII Brazil directly holding NII's
approximately 70% equity interest in Nextel Holdings.
On
December 6 and December 7, 2018, members of NII's senior management team, together with NII's financial advisors and legal counsel, held in person meetings in New York, New York with
members of management from AMX and its legal representatives to discuss the draft Purchase Agreement and due diligence matters. The parties discussed issues relating to the transaction structure and
AMX's proposals on indemnification, purchase price adjustment, tax matters and other matters.
On
December 13, 2018, representatives from NII and its financial advisors and legal counsel held a telephonic meeting with representatives from AMX and its legal counsel to further negotiate
terms in the Purchase Agreement.
On
December 14, 2018, representatives of NII and AMX, together with their respective regulatory counsel, held a telephonic meeting to discuss regulatory process matters.
On
December 15, 2018, AMX's legal counsel delivered a markup of the draft Purchase Agreement, which presented a number of deal value issues, including that NII provide indemnification for
breach of non-fundamental representations and warranties of up to a cap of $175 million and uncapped indemnification for tax and certain other matters and that NII would be required to
terminate certain intercompany obligations and bear all associated costs and risks related to such termination.
On
December 18, 2018, members of NII's senior management team, together with NII's financial advisors and legal counsel, held in person meetings in New York, New York with members of management
from AMX and its legal representatives to continue negotiations of the Purchase Agreement and to discuss due diligence matters.
Following
the outcome of these discussions between AMX and NII and the nature of the open issues in the Purchase Agreement, on December 21, 2018, NII and AMX amended the exclusivity agreement
to provide for a term through January 31, 2019 to facilitate continued discussions between the parties.
Between
December 20, 2018 and early January 2019, NII continued its discussions with AMX regarding due diligence and the terms of the purchase price adjustment.
On
January 9 and January 10, 2019, members of NII's senior management team, together with NII's financial advisors and legal counsel, held in person meetings in New York, New York with
members of management from AMX and its legal representatives to continue negotiations of the Purchase Agreement, in particular relating to the scope of indemnification and the size of the
indemnification cap, termination fees and certain purchase price adjustment matters.
On
January 17, 2019, the Board held a meeting with NII's senior management to discuss updates regarding the Nextel Brazil Business and the Company's liquidity. Representatives from
Rothschild & Co, Greenhill and Jones Day also attended the meeting. At the meeting, members of senior management also updated the Board on the recent meetings with AMX and the proposed
transaction. Mr. Freiman reviewed with the Board the changes from AMX's prior proposal to the current proposed terms, including proposed indemnification requirements, key termination rights,
termination payments, the ability to use certain tax credits, purchase price adjustment mechanism and other key terms, and the impact of changes from AMX's original proposal on the estimated
distributable proceeds to the Company's stockholders. The Board then discussed the Company's current trading price, information available in the market regarding the Company's strategic process, the
transaction value and potential range of distributable value available to the Company's stockholders after closing costs and other leakage. The Board also discussed the benefits and drawbacks of the
proposed transaction. The Board then discussed potential options to improve the distributable value per share, focusing on the purchase price, factors in the purchase price adjustment and
indemnification. The Board also discussed AI Brazil's rights under the Shareholders Agreement, and the possibility of negotiating an agreed-upon transaction instead of using the drag-along mechanism
under the Shareholders Agreement. Finally, the Board discussed the Company's stand-alone business plan and access to cash. Following these
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discussions,
the Board directed management to negotiate an improvement on the distributable value available to the Company's stockholders in connection with the proposed transaction by increasing the
purchase price and minimizing leakage.
Through
the remainder of January 2019 and beginning of February 2019, representatives of NII and its legal and financial advisors and representatives of AMX and its legal advisor continued discussions
regarding the purchase price adjustment provisions, indemnification and other open issues in the draft Purchase Agreement. Discussions also continued with respect to due diligence.
While
representatives of NII had informed and provided updates to representatives of AI Brazil in the preceding months of a potential transaction involving Nextel Brazil, on February 6, 2019,
representatives of NII met formally with representatives of AI Brazil to discuss the proposed transaction with AMX, including the current draft of the Purchase Agreement, and to discuss the
possibility of an agreement for AI Brazil to sell its interest in the Nextel Brazil Business as part of the proposed transaction with AMX in lieu of NII exercising its drag-along rights under the
Shareholders Agreement. Representatives of NII and AI Brazil also discussed the obligations of AI Brazil under the terms of the draft Purchase Agreement.
On
February 7, 2019, the Board held a meeting with NII's senior management, with NII's financial advisors and legal counsel also in attendance. Mr. Freiman reviewed the status of
negotiations with AMX regarding the proposed transaction. Mr. Freiman also reviewed with the Board the status of discussions with AI Brazil regarding an alternative to the drag-along mechanism
under the Shareholders Agreement and key issues raised in those discussions, including the need to resolve a disagreement relating to the treatment of funds to be released from the Mexico Escrow. The
Board then discussed AI Brazil's ability and any interest in funding Nextel Brazil on an ongoing basis and that no commitment for long-term funding had been made. The Board also discussed the benefits
and drawbacks of various proposals for AI Brazil's sale of its equity in Nextel Brazil and the
expected impact of these proposals on distributable value to the Company's stockholders. The Board then discussed options for Nextel Brazil to continue as a stand-alone business and potential
commercial agreements with certain telecom providers. In light of the discussions, the Board confirmed that management should continue to engage with AI Brazil on the alternative arrangement for the
sale of AI Brazil's equity in Nextel Holdings in lieu of NII exercising the drag-along rights under the Shareholders Agreement.
On
February 8, 2019, as directed by the Board, members of NII's senior management team continued to negotiate terms of an alternative arrangement with AI Brazil for the sale of AI Brazil's
equity in Nextel Holdings in connection with the proposed transaction with AMX in lieu of NII exercising drag-along rights under the Shareholders Agreement. Also on February 8, 2019, NII
submitted an updated proposal in writing to AI Brazil to outline terms regarding AI Brazil's participation in the Sale and matters relating to the treatment of any funds released from the Mexico
Escrow.
Also
on February 8, 2019, at the direction of the senior management of the Company, legal counsel to NII had a conference call with legal counsel to AMX to discuss open issues in the draft
Purchase Agreement.
On
February 13, 2019, representatives of NII and representatives of AMX held a conference call to continue negotiations on the terms of the purchase price adjustment in the Purchase Agreement.
On
February 14, 2019, a representative of Party A called Mr. Rittes, Nextel Brazil's chief executive officer, to explain events that resulted in Party A disengaging from the process in
recent months. The parties also discussed whether there was interest in revisiting a potential MVNO transaction with Nextel Brazil and potential resolution of the key issues raised in the prior
discussions regarding an MVNO transaction. Party A did not engage in further discussions with NII following this discussion with Mr. Rittes.
On
February 14 and February 15, 2019, members of NII's senior management team, together with NII's financial advisors and legal counsel, held in person meetings in New York, New York
with members of management from AMX and its legal representatives to continue negotiations of the Purchase Agreement, including issues relating to indemnification matters, purchase price adjustment,
tax matters and treatment of AI Brazil under the Purchase Agreement.
On
February 17, 2019, members of NII's senior management held a conference call with representatives from AI Brazil to discuss AI Brazil's concerns with respect to the purchase price
adjustment, its participation in the regulatory process and termination right under the draft Purchase Agreement and certain issues presented in the draft Side Letter.
On
February 17, 2019, Mr. Rittes was contacted by representatives from a strategic bidder, Party G, who had been among the potential bidders contacted earlier in the process but that had
previously failed to pursue a bid. The representatives
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expressed
an interest in talking to Nextel Brazil about a strategic transaction. Party G did not engage in further discussions with NII following this discussion with Mr. Rittes.
On
February 18, 2019, AI Brazil contacted NII's senior management to express disagreement with certain terms reflected in the most recent draft of the Purchase Agreement, in particular relating
to the purchase price adjustment, tax matters and the scope of obligations applicable to AI Brazil. Over the course of the next several days, representatives of NII and AI Brazil continued to discuss,
by email correspondence and telephone calls, the terms of the Side Letter and the Purchase Agreement.
Also
on February 18, 2019, the Board held a meeting to receive an update from NII's senior management team regarding the proposed transaction with AMX. Mr. Freiman provided an update on
the current terms presented in the draft Purchase Agreement from AMX, including that the current terms required the Company to indemnify AMX after closing for non-fundamental representations and
warranties and disclosed tax matters up to a cap of $30 million and for undisclosed tax matters up to an additional cap of $50 million, which represented a total indemnification
obligation of $80 million. Mr. Freiman also updated the Board regarding discussions with AI Brazil, noting that AI Brazil raised a number of issues with respect to the draft Purchase
Agreement and certain terms under the Side Letter, including retaining a right of first refusal in the event a Superior Proposal is presented to NII and the waiver of NII's drag-along rights in the
context of a Superior Proposal. Mr. Freiman also discussed the Company's offer with respect to resolving the disagreement between AI Brazil and NII with respect to the treatment of any funds
released from the Mexico Escrow. Mr. Rittes then updated the Board on his recent discussions with representatives of Party A, and the Board discussed the low likelihood of this party being able
to proceed with and close a strategic transaction on a timely basis and the benefits and drawbacks of a potential MVNO agreement with this party, including the feasibility of closing such a
transaction. Mr. Rittes also updated the Board on his discussions with representatives of Party G, and the Board discussed the benefits and drawbacks of exploring a strategic transaction with
Party G and the feasibility of Party G being able to close a transaction on a timely basis. The Board then also reviewed other
opportunities to improve Nextel Brazil's business as a stand-alone business, including potential commercial opportunities and a potential capital markets transaction by the Company in 2019. The Board
and management discussed the Company's liquidity, viability of the stand-alone alternative versus undertaking a strategic transaction, risks relating to the potential that funds held in the Mexico
Escrow might not be recovered in 2019 and the benefits and drawbacks of pursuing an alternative transaction to what has been presented by AMX. Following a discussion of the benefits and drawbacks of
the various alternatives, the Board indicated that it was willing to proceed with a transaction with AMX if the transaction value could be improved and downside risks reduced, and the Board directed
management to seek improved transaction value from AMX.
On
February 19, 2019, at the direction of the Board, Mr. Shindler contacted Daniel Hajj, the Chief Executive Officer of AMX, to propose a purchase price increase of $75 million.
During the discussion, Mr. Hajj indicated that he would consider the proposal. Mr. Hajj asked Mr. Shindler to consider if there were other alternatives that would improve the
overall value of the transaction to the Company. Later that same day, Mr. Hajj called Mr. Shindler and indicated that AMX was unwilling to increase the purchase price, and suggested
instead that NII consider whether the transaction value could be increased through a revision to the indemnification provisions or through changes in the treatment and use of tax credits.
Mr. Hajj suggested that if NII could agree to some alternative to increase the transaction value to the Company, he would present that revised proposal to members of the AMX Board of Directors.
Later that same day, members of AMX's management team contacted Mr. Freiman to communicate a similar message and that AMX would provide a proposal on February 21, 2019.
On
February 21, 2019, NII's Board held a meeting to receive an update on the status of the discussions regarding the potential transaction. NII's senior management and representatives from
Rothschild & Co and Greenhill also attended the meeting. Mr. Freiman updated the Board regarding recent discussions with AMX regarding NII's request that AMX increase the purchase price
for the transaction. He noted that while AMX had indicated a willingness to discuss improvements to the value of the transaction they were not willing to change the purchase price. He then confirmed
that management expected to receive the details of AMX's proposed changes later in the day. Mr. Shindler confirmed that he had received a consistent message from AMX's Chief Executive Officer.
Mr. Freiman and Ms. Smith then updated the Board on discussions with AI Brazil regarding the draft Side Letter. The Board discussed the open issues regarding the Side Letter and the
potential timeline for resolving these matters. The Board then discussed what would constitute adequate incremental compensation in connection with the transaction and what changes to the terms in the
transaction with AMX would achieve this adequate incremental compensation.
On
the evening of February 21, 2019, representatives of AMX delivered an updated written proposal in response to NII's request to increase the value of the transaction. As part of the proposal,
AMX confirmed that it would not increase the
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purchase
price, but proposed to eliminate the requirement that a portion of the purchase price be placed in an escrow to cover indemnification claims related to breach of non-fundamental
representations and warranties and disclosed tax matters, though the indemnification cap for such claims would remain the same. AMX also proposed to reduce the special indemnification cap for
undisclosed tax matters by $25 million and to reduce the survival period for such indemnification.
On
February 22, 2019, members of NII's senior management held a call with management from AMX to discuss the terms of the updated proposal from AMX. NII communicated that they did not view the
modifications to the escrow requirement and the $25 million reduction for indemnification for the undisclosed taxes to be a sufficient increase in value. Management from AMX reiterated that AMX
was not willing to increase the purchase price, directly or indirectly, but suggested that AMX might consider other changes to the indemnification package and the treatment of the intercompany notes.
Following the discussion, NII's senior management provided an update to the Board regarding this discussion and suggested a meeting on February 25, 2019 to review the current terms as proposed
by AMX and management's recommendation regarding a counterproposal.
On
February 25, 2019, NII's Board held a meeting to receive an update from senior management regarding the February 21 proposal from AMX. Representatives from Rothschild & Co,
Greenhill and Jones Day were also in attendance. Mr. Freiman reviewed with the Board the discussions with AMX with respect to AMX's proposal. Mr. Freiman also explained the impact of
AMX's proposal on the implied distributable value to NII's stockholders. The Board discussed the updated proposal from AMX and the potential timing of distributions to NII's stockholders.
Representatives from Rothschild & Co and Greenhill reviewed with the Board their preliminary financial analysis based on the revised proposal from AMX. The Board then discussed the Company's
near-term ability to raise cash and the benefits and drawbacks of potential methods of obtaining capital previously discussed with the Board. The Board also discussed the expected timeline for the
release of funds from the Mexico Escrow. The Board then discussed the recent discussions with AI Brazil regarding the transaction and their proposed terms and the impact of those terms on the
distributable value available to NII's stockholders. The Board then discussed whether the offer from AMX in the context of all these factors was appropriate consideration for Nextel Brazil and whether
the Board
was willing to proceed with the transaction as currently contemplated and potential additional requests to improve or protect the distributable value available to NII's stockholders. The
representatives from Rothschild & Co and Greenhill then left the meeting. The members of the Board then discussed that the AMX revised offer did not provide the increase in value that the Board
was trying to achieve and discussed the benefits and drawbacks of making additional requests to AMX to improve the value. The Board then discussed potential fundraising options and stand-alone options
for Nextel Brazil, including an MVNO agreement and other commercial opportunities. After discussion, the Board determined that it was willing to move forward with the transaction and directed
management to notify AMX and to suggest potential recommended changes to the proposed transaction to protect distributable value for the Company's stockholders.
Later
in the day on February 25, 2019, representatives of NII submitted a revised markup of the Purchase Agreement to representatives of AMX reflecting an updated proposal from NII in response
to the terms proposed by AMX, including a proposal to eliminate the special indemnity for undisclosed tax matters and cap indemnification for all tax matters (other than certain matters related to
transfer taxes) and breach of non-fundamental representations and warranties to the $30 million escrow.
On
February 28, 2019, Mr. Hajj of AMX contacted Mr. Shindler by email regarding the results of his consultation with members of the AMX Board of Directors. He indicated that AMX
was willing to eliminate the special indemnification for undisclosed taxes and that all indemnification for breach of non-fundamental representations and warranties and pre-closing taxes would be
subject to a $30 million cap, which would be placed in escrow. Later that same day, NII's senior management team updated the Board regarding the latest discussions with AMX, and explained that
AMX's latest proposal represented an overall $50 million reduction in potential indemnification obligations of NII.
From
March 1 through March 12, 2019, NII and its representatives conducted negotiations and exchanged drafts of the Purchase Agreement with representatives of AI Brazil and AMX. NII and
AI Brazil continued to negotiate and exchange drafts of the Side Letter. During the course of negotiations, NII's Board was advised of the status of the negotiations and the proposed terms.
On
March 12, 2019, the Board met to consider developments in the transaction process, including the current status of negotiations with AMX and AI Brazil with respect to the proposed Purchase
Agreement and the Side Letter. Representatives of Jones Day, Rothschild & Co and Greenhill also attended the meeting. Management of the Company presented the current terms of the transaction
and reviewed with the Board the current outstanding issues to be negotiated with AMX and AI Brazil, including with respect to the treatment of certain tax contingencies under the purchase price
adjustment. The Board also
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discussed
the increase in the purchase price from the original proposal, the reduction in the indemnification cap, and purchase price adjustment factors that have resulted in an improvement of the
overall transaction value of approximately $250 million from AMX's original proposal in July 2018. The Board discussed these matters and authorized management to continue its discussions with
AMX and AI Brazil.
Between
March 13 and March 17, 2019, representatives of the Company, AI Brazil and AMX continued to negotiate and discuss final issues related to the proposed transaction, including
resolution of outstanding issues relating to the treatment of tax contingencies included in the calculation of the working capital adjustment under the Purchase Agreement. They also discussed the
timing of signing of the definitive agreements, and representatives of the Company urged AI Brazil and AMX to be ready to sign the definitive agreements as soon as possible.
On
March 17, 2019, the Board met to consider the proposed Sale. Representatives of Rothschild & Co, Greenhill, Jones Day and Williams Mullen, securities counsel for NII, attended the
meeting at the request of the Board. Representatives of Jones Day reviewed the status of the transaction, the resolution of outstanding issues and the fiduciary duties of the Board in connection with
its evaluation of the proposed Sale. Representatives of Rothschild & Co and Greenhill then reviewed and discussed their financial analysis with respect to the proposed Transactions. Thereafter,
Rothschild & Co and Greenhill each rendered to the Board their respective opinions to the effect that, as of that date and based on and subject to the assumptions, procedures, factors,
qualifications and limitations set forth in Rothschild & Co's and Greenhill's respective written opinions, the Consideration payable in the Transactions pursuant to the Purchase Agreement was
fair, from a financial point of view, to NII. For a detailed discussion of the respective opinions of Rothschild & Co and Greenhill, please see the section of this proxy statement captioned
"
Opinions of NII's Financial Advisors
" beginning on page 45. The meeting concluded with the passing of resolutions by the Board approving the
proposed Sale and adopting the definitive Purchase Agreement with AI Brazil and AMX, approving the Side Letter with AI Brazil and approving certain related matters.
At
the March 17, 2019 meeting, the Board also considered next steps for NII in the event the Sale was approved and completed. Williams Mullen reviewed a plan of dissolution with the Board.
Recognizing the Company would have no
operating assets following the completion of the Sale, the Board determined it would be in the best interests of the Company and its stockholders to approve a plan of dissolution but provide the Board
discretion following such approval to determine when and if to implement such a plan, and to provide further discretion to abandon or amend such a plan, if the Board determined it was in the best
interests of the Company and its stockholders to do so.
Following
the meeting, on March 18, 2019, the Company, NIIH, AI Brazil and AMX signed the definitive Purchase Agreement, and the Company, NII Brazil, NIIH and AI Brazil signed the Side Letter.
Thereafter, the Company issued a press release announcing the execution of the definitive Purchase Agreement with AMX and AI Brazil and the definitive Side Letter with AI Brazil.
On
April 24, 2019, the Company filed a preliminary proxy statement with the Securities and Exchange Commission with respect to the Sale and the Plan of Dissolution.
RECOMMENDATION OF THE BOARD AND REASONS FOR THE SALE
|
After
careful consideration, NII's Board unanimously determined that the Purchase Agreement, the Sale and the other transactions contemplated by the Purchase Agreement were advisable
and fair to, and in the best interests of, the Company and the Company's stockholders, unanimously approved the Purchase Agreement and the consummation of the transactions contemplated thereby, and
determined to recommend approval and authorization of the Purchase Agreement and the transactions contemplated thereby to NII's stockholders. In reaching its decision, NII's Board consulted
with senior management, outside legal counsel and outside financial advisors. The Board also consulted with outside legal counsel regarding its fiduciary duties, legal due diligence matters, and the
terms of the Purchase Agreement, the Side Letter and related agreements. The Board also considered a number of factors, including the following material factors (which are not necessarily presented in
order of relative importance), which the Board viewed as supporting its decision to approve and declare advisable the Purchase Agreement and the consummation of the transactions contemplated thereby
and to
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recommend
approval and authorization of the Purchase Agreement and the Sale and the other pending transactions contemplated thereby to NII's
stockholders:
-
-
Financial information concerning the Company's business and the business of Nextel Brazil (including
the financial position of NII, its available cash and outstanding debt, and information relating to the financial condition and prospects of Nextel Brazil), the risk that NII might not recover funds
from the Mexico Escrow on a timely basis, the risk that NII might not be able to raise sufficient capital to fund the business;
-
-
The current competitive, economic, regulatory, and international and local Brazilian market
conditions relating to Nextel Brazil's business and the telecom industry in Brazil and the impact such market conditions could have on Nextel Brazil's business;
-
-
The fact that ice group did not exercise the option under the Investment Agreement to make the second
investment to acquire additional equity in Nextel Holdings, which resulted in liquidity and funding challenges for the Nextel Brazil Business that required initiating a process to identify strategic
alternatives;
-
-
That if NII does not undertake the Sale, we will be required to make additional investment in the
Nextel Brazil Business to maintain our ability to fund our operations without any assurances that those investments will yield positive results and sufficient returns in the future;
-
-
That significant financing would be required to pursue ongoing business development efforts and the upcoming Brazilian
5G spectrum auction;
-
-
The three-and-a-half-year strategic review process undertaken by NII, with the advice and assistance of recognized
legal and financial advisors, which included a solicitation and Sale process and ultimately resulted in the agreement with AMX;
-
-
The alternatives available if we were not to undertake the Sale, including retaining NII's 70% ownership of Nextel
Brazil and continuing to operate Nextel Brazil on a stand-alone basis, which involves meaningful risks and uncertainties and, in the view of NII's Board, is less favorable to NII and NII's
stockholders than the Sale;
-
-
That the Purchase Agreement and related agreements were agreed to only after a comprehensive auction process pursuant
to which a total of 38 potential strategic and financial buyers were contacted over the course of over three years, which included, for a number of these interested parties, management presentations
and due diligence sessions;
-
-
The fact that we held discussions with several other potential strategic partners and that the sale process had been
publicly disclosed, but no parties submitted written Acquisition Proposals that were as favorable to NII as AMX's proposal;
-
-
The opinion of each of Rothschild & Co and Greenhill rendered to the Board to the effect that, as of
March 17, 2019, and based on and subject to the assumptions, procedures, factors, qualifications and limitations set forth in Rothschild & Co and Greenhill's respective written opinions,
the Consideration payable in the Transactions pursuant to the Purchase Agreement was fair, from a financial point of view, to NII, as more fully described in the section of this proxy statement
captioned "
Opinions of NII's Financial Advisors
" beginning on page 45;
-
-
The fact that AMX has agreed to reimburse the Company for certain cash expenditures between signing and closing as part
of the purchase price adjustment and agreed to accept the costs of terminating certain intercompany loans;
-
-
The Board's belief that the terms of the Purchase Agreement were consistent with market practice and would not preclude
or deter a willing and financially capable third party, were one to exist, from making a Superior Proposal following the announcement of the Purchase Agreement;
and
-
-
The reasonable likelihood of the consummation of the Sale in light of the relatively limited conditions to AMX's
obligations to consummate the Sale, including the fact that the consummation of the Sale is not contingent on AMX's ability to secure financing commitments and regulatory approvals are not expected to
pose a significant hurdle to the consummation of the Sale.
NII's
Board also identified and considered a number of uncertainties, risks, and potentially negative factors in its deliberations concerning the Sale,
including:
-
-
The requirement that NII conduct the business of Nextel Brazil only in the ordinary course prior to completion of the
Sale, subject to specific limitations or AMX's consent, which may delay or prevent the Company from undertaking business opportunities that may arise pending completion of the Sale;
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-
-
The restrictions on NII's Board's ability to solicit or engage in discussions or negotiations with a third party
regarding alternative transactions for Nextel Brazil, and the requirement that, in the event of a related termination of the Purchase Agreement, NII pay AMX a termination fee of $25 million;
-
-
The risk that the Company could be exposed to future indemnification obligations, as a result of certain tax and other
matters or a breach or violation of the representations, warranties and covenants contained in the Purchase Agreement;
-
-
The risk that unforeseen liabilities and expenses may be incurred that may limit the ultimate benefit realized from the
Sale;
-
-
Changes in the Brazilian economic and regulatory environment that could allow NII to pursue alternative transactions
involving Nextel Brazil's rights to use spectrum; and
-
-
The significant costs involved in consummating the Sale, including financial advisory fees, legal, accounting, and
other costs.
After
careful and due consideration, the Board unanimously concluded that overall, the risks, uncertainties, restrictions, and potentially negative factors associated with the Sale were outweighed by
the potential benefits of the Sale and that many of these risks could be managed or mitigated prior to the consummation of the Sale or were unlikely to have a material adverse effect on the Company.
The Board unanimously approved and declared advisable the Purchase Agreement and the consummation of the transactions contemplated thereby, determined that the Purchase Agreement and the transactions
contemplated thereby were fair to, advisable and in the best interests of the Company and the Company's stockholders, and directed that the Purchase Agreement and the transactions contemplated thereby
be submitted to NII's stockholders for approval. The Board unanimously recommends that you vote "FOR" the proposal to approve and authorize the Sale and "FOR" each of the other proposals described in
the accompanying proxy statement.
The
foregoing information and factors considered by the Board are not intended to be exhaustive but are believed to include all of the material factors considered by the Board. In view of the variety
of factors and the amount of information considered, the Board did not find it practicable to, and did not, quantify, rank, or otherwise assign relative weights to the specific factors it considered
in authorizing the Sale. In addition, individual members of the Board may have given different weights to different factors. The Board considered all of these factors as a whole, and overall
considered them to be favorable to and to support its determination.
OPINIONS OF NII'S FINANCIAL ADVISORS
|
NII
retained Rothschild & Co and Greenhill to act as its financial advisors in connection with a potential sale, merger or other business combination involving NII. Each of
Rothschild & Co and Greenhill considered the fairness, from a
financial point of view, to NII of the Consideration, consisting of the Cash Consideration, together with the capital lease obligations of Nextel Brazil, carried at December 31, 2018 at a value
of approximately $69 million in the aggregate, to be indirectly assumed by AMX, which will not be deducted from the Cash Consideration and was deemed indirect, further consideration payable in
the Transactions for purposes of the opinion and analyses of each of Rothschild & Co and Greenhill. The Cash Consideration is subject to certain adjustments (including to reflect capital
expenditures, net working capital, outstanding indebtedness, cash and their equivalents and transaction expenses) and a portion of the Cash Consideration will be funded into escrow, in each case, as
set forth in the Purchase Agreement. Rothschild & Co and Greenhill did not take into account any such adjustments or escrow arrangements in connection with their respective opinions and
analyses described below.
NII
retained Rothschild & Co to act as its financial advisor in connection with a potential sale, merger or other business combination involving NII. In connection with
Rothschild & Co's engagement, the Board requested that Rothschild & Co evaluate the fairness, from a financial point of view, to NII of the Consideration payable in the Transactions
pursuant to the Purchase Agreement. On March 17, 2019, at a meeting of the Board held to evaluate the Transactions, Rothschild & Co rendered to the Board its opinion to the effect that,
as of that date and based on and subject to the assumptions, procedures, factors, qualifications and limitations set forth in Rothschild & Co's written opinion, the Consideration payable in the
Transactions pursuant to the Purchase Agreement was fair, from a financial point of view, to NII.
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The
full text of Rothschild & Co's written opinion, dated March 17, 2019, to the Board, which sets forth, among other things, the assumptions, procedures, factors, qualifications and
limitations on the review undertaken by Rothschild & Co in connection with such opinion, is attached to this proxy statement as
Annex F
.
The description of Rothschild & Co's opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of Rothschild & Co's opinion.
Rothschild & Co's opinion was provided to the Board in connection with the Board's evaluation of the Transactions and was limited to the fairness, from a financial point of view, to NII of the
Consideration payable in the Transactions pursuant to the Purchase Agreement, and Rothschild & Co did not express any opinion as to any underlying decisions which NII would make to engage in
the Transactions or any alternative transaction, or the relative merits of the Transactions as compared to any alternative transaction. Rothschild & Co's opinion did not constitute a
recommendation to the Board as to whether to approve the Transactions or a recommendation as to how any holder of common stock of NII should vote or otherwise act with respect to the Transactions or
any other matter. Rothschild & Co's opinion did not address the Dissolution and did not constitute a recommendation to the Board as to whether to approve the Dissolution or a recommendation as
to how any holder of common stock of NII should vote or otherwise act with respect to the Dissolution.
In
arriving at its opinion, Rothschild & Co, among other things:
-
-
reviewed a draft of the Purchase Agreement dated March 16, 2019;
-
-
reviewed certain publicly available business and financial information that Rothschild & Co deemed to be
generally relevant concerning NII Brazil and the industry in which it operates;
-
-
compared the proposed financial terms of the Transactions with the publicly available financial terms of certain
transactions involving companies Rothschild & Co deemed generally relevant and the consideration received in such transactions;
-
-
compared the financial and operating performance of NII Brazil with publicly available information concerning certain
other public companies Rothschild & Co deemed generally relevant, including data related to public market trading levels and implied trading multiples;
-
-
reviewed certain internal financial and operating information with respect to the business, operations and prospects of
NII Brazil, including certain financial forecasts relating to Nextel Holdings prepared by the management of NII and Nextel Brazil, which are defined as the Nextel Holdings Projections and summarized
in the section entitled "
Nextel Holdings Projections
" beginning on page 53; and
-
-
performed such other financial studies and analyses and considered such other information as Rothschild & Co
deemed appropriate for the purposes of its opinion.
In
addition, Rothschild & Co held discussions with certain members of the management of NII and Nextel Brazil regarding the Transactions, the past and current business operations and financial
condition and prospects of NII Brazil, the Nextel Holdings Projections and certain other matters Rothschild & Co believed necessary or appropriate to its inquiry.
In
arriving at Rothschild & Co's opinion, Rothschild & Co, with the Board's consent, relied upon and assumed, without independent verification, the accuracy and completeness of all
information that was publicly available or was furnished or made available to Rothschild & Co by NII, Nextel Brazil and their associates, affiliates and advisors, or otherwise reviewed by or
for Rothschild & Co, and Rothschild & Co did not assume any responsibility or liability therefor. Rothschild & Co did not conduct any valuation or appraisal of any assets or
liabilities of NII Brazil (including, without limitation, real property owned by NII Brazil or to which NII Brazil holds a leasehold interest), nor were any such valuations or appraisals provided to
Rothschild & Co, and Rothschild & Co did not express any opinion as to the value of such assets or liabilities. Rothschild & Co did not evaluate the solvency or fair value of NII,
NIIH, NII Brazil, Nextel Holdings, Nextel Brazil, AI Brazil or AMX under any state, federal or
other laws relating to bankruptcy, insolvency or similar matters, and it did not express any view or opinion as to the impact of the Transactions on the solvency or the viability of NII or its ability
to pay its obligations when they come due. Rothschild & Co did not perform a liquidation analysis with respect to the assets of NII. In addition, Rothschild & Co did not assume any
obligation to conduct any physical inspection of the properties or the facilities of NII Brazil. At the direction of the management of NII, Rothschild & Co used and relied upon the Nextel
Holdings Projections for purposes of Rothschild & Co's opinion. In relying on the Nextel Holdings Projections, Rothschild & Co assumed, at the direction of NII, that the Nextel Holdings
Projections were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by the management of NII and Nextel Brazil as to the expected future results
of operations and financial condition of NII Brazil and that the financial results reflected in such Nextel Holdings Projections would be achieved at the times and in
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the
amounts projected. Rothschild & Co did not express a view as to the reasonableness of the Nextel Holdings Projections or the assumptions on which they were based.
For
purposes of rendering its opinion, Rothschild & Co assumed that the transactions contemplated by the Purchase Agreement would be consummated as contemplated in the Purchase Agreement
without any waiver or amendment of any
terms or conditions, including, among other things, that the parties would comply with all material terms of the Purchase Agreement and that in connection with the receipt of all necessary
governmental, regulatory or other approvals and consents required for the Transactions, no material delays, limitations, conditions or restrictions would be imposed. Rothschild & Co assumed
that there would not be any payments by NII, NIIH, AI Brazil or any of their affiliates (directly or indirectly) pursuant to any indemnification obligations under the Purchase Agreement. For purposes
of rendering its opinion, Rothschild & Co also assumed that there had not occurred any material change in the assets, financial condition, results of operations, business or prospects of NII
Brazil since the date of the most recent financial statements and other information, financial or otherwise, relating to NII Brazil made available to Rothschild & Co, and that there was no
information or any facts that would make any of the information reviewed by Rothschild & Co incomplete or misleading. Rothschild & Co did not express any opinion as to any tax or other
consequences that may result from the Transactions, nor did Rothschild & Co's opinion address any legal, tax, regulatory or accounting matters. Rothschild & Co relied as to all legal,
tax and regulatory matters relevant to rendering its opinion upon the assessments made by NII and its other advisors with respect to such issues. In arriving at Rothschild & Co's opinion,
Rothschild & Co did not take into account any litigation, regulatory or other proceeding that was pending or may be brought against NII Brazil or any of its affiliates. In addition,
Rothschild & Co relied upon and assumed, without independent verification, that the final form of the Purchase Agreement would not differ in any material respect from the draft of the Purchase
Agreement reviewed by Rothschild & Co.
Rothschild &
Co's opinion was necessarily based on securities markets, economic, monetary, financial and other general business and financial conditions as they existed and could be evaluated
on, and the information made available to Rothschild & Co as of, the date of its opinion and the conditions and prospects, financial and otherwise, of NII Brazil as they were reflected in the
information provided to Rothschild & Co and as they were represented to Rothschild & Co in discussions with the management of NII and Nextel Brazil, including with respect to exchange
rates. Rothschild & Co assumed that such exchange rates were reasonable for purposes of its analyses and that any currency or exchange rate fluctuations would not be meaningful in any respect
to its analyses or opinion. Rothschild & Co did not express any opinion as to the price at which the common stock of NII will trade at any future time. Rothschild & Co's opinion is
limited to the fairness, from a financial point of view, to NII of the Consideration payable in the Transactions pursuant to the Purchase Agreement, and Rothschild & Co did not express any
opinion as to any underlying decisions which NII would make to engage in the Transactions or any alternative transaction. Rothschild & Co did not express any opinion, nor was it asked by the
Board to express any opinion, as to the relative merits of the Transactions as compared to any alternative transaction. Rothschild & Co was not asked to, nor did Rothschild & Co offer,
any opinion as to the terms, other than the Consideration to the extent expressly set forth in its opinion of the Transactions, the Purchase Agreement or any other agreement entered into in connection
with the Transactions.
Rothschild &
Co's opinion was given and speaks only as of its date. Subsequent developments may affect Rothschild & Co's opinion and the assumptions used in preparing it, and
Rothschild & Co does not have any obligation to update, revise, or reaffirm its opinion. Rothschild & Co's opinion was approved by the Global Advisory Commitment Committee of
Rothschild & Co.
Rothschild &
Co's opinion was provided for the benefit of the Board in connection with and for the purpose of its evaluation of the Transactions. Rothschild & Co's opinion should not be
construed as creating any fiduciary duty on Rothschild & Co's part to any party. In addition, the Board did not ask Rothschild & Co to address, and its opinion does not address,
(i) the fairness to, or any other consideration of, the holders of any class of securities (other than NII and then only to the extent expressly set forth in its opinion) or creditors or other
constituencies of NII, (ii) the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of NII Brazil, NIIH, Nextel Holdings,
NII or AI Brazil, or any class of such persons, whether relative to the Consideration pursuant to the Purchase Agreement or otherwise or (iii) the fairness of the allocation of the
Consideration as between NIIH and AI Brazil (on a relative basis or otherwise).
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NII
retained Greenhill to act as its financial advisor in connection with a potential sale, merger or other business combination involving NII. In connection with Greenhill's
engagement, the Board requested that Greenhill evaluate the fairness, from a financial point of view, to NII of the Consideration payable in the Transactions pursuant to the Purchase Agreement. On
March 17, 2019, at a meeting of the Board held to evaluate the Transactions, Greenhill rendered to the Board its opinion to the effect that, as of that date and based on and subject to the
assumptions, procedures, factors, qualifications and limitations set forth in Greenhill's written opinion, the Consideration payable in the Transactions pursuant to the Purchase Agreement was fair,
from a financial point of view, to NII.
The
full text of Greenhill's written opinion, dated March 17, 2019, to the Board, which sets forth, among other things, the assumptions, procedures, factors, qualifications and limitations on
the review undertaken by Greenhill in connection with such opinion, is attached to this proxy statement as
Annex G
. The description of
Greenhill's opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of Greenhill's opinion. Greenhill's opinion was provided to the Board in connection
with the Board's evaluation of the Transactions and was limited to the fairness, from a financial point of view, to NII of the Consideration payable in the Transactions pursuant to the Purchase
Agreement, assumed that the terms of the Transactions were the most beneficial terms from NII Brazil's perspective that could under the circumstances be negotiated among the parties to the
Transactions, and no opinion was expressed as to whether any alternative transaction might produce consideration for NII in an amount in excess of the Consideration. Greenhill's opinion was not
intended to be and did not constitute a recommendation to the members of the Board as to whether they should approve the Transactions or the Purchase Agreement or take any other action in connection
therewith, nor did it constitute a recommendation as to how any stockholder of NII should vote or otherwise act with respect to the Transactions. Greenhill's opinion did not address the Dissolution
and was not intended to be and did not constitute a recommendation to the members of the Board as to whether they should approve the Dissolution or take any other action in connection therewith, nor
did it constitute a recommendation as to how any stockholder of NII should vote or otherwise act with respect to the Dissolution.
In
arriving at its opinion, Greenhill, among other things:
-
-
reviewed the draft of the Purchase Agreement dated March 16, 2019 and certain related documents;
-
-
reviewed certain publicly available business and financial information relating to NII Brazil;
-
-
reviewed certain information, including financial forecasts and other financial and operating data, concerning Nextel
Holdings supplied to or discussed with Greenhill by the management of NII and Nextel Brazil, including the Nextel Holdings Projections;
-
-
discussed the past and present operations and financial condition and the prospects of NII Brazil with senior
executives of NII and Nextel Brazil;
-
-
compared the Consideration with values derived based on the financial terms, to the extent publicly available, of
certain transactions that Greenhill deemed relevant;
-
-
compared the Consideration with values derived based on certain financial information and trading valuations of certain
publicly traded companies that Greenhill deemed relevant;
-
-
compared the Consideration to present values derived by discounting future cash flows and a terminal value for Nextel
Holdings at discount rates Greenhill deemed appropriate;
-
-
participated in discussions and negotiations among representatives of NII and Nextel Brazil and their legal and
financial advisors and representatives of AMX and its legal and financial advisors;
-
-
considered that NII publicly announced that it would explore strategic alternatives and the results of efforts on
behalf of NII to solicit, at the direction of NII, expressions of interests from other parties with respect to a possible sale of NII Brazil or its subsidiaries; and
-
-
performed such other analyses and considered such other factors as Greenhill deemed appropriate.
Greenhill
assumed and relied upon, without independent verification, the accuracy and completeness of the information and data publicly available, supplied or otherwise made available to, or reviewed
by or discussed with, Greenhill. With respect to
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the
Nextel Holdings Projections, Greenhill assumed that they were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the management of NII and
Nextel Brazil, and Greenhill relied upon the Nextel Holdings Projections in arriving at its opinion. Greenhill did not express any opinion with respect to the Nextel Holdings Projections or the
assumptions upon which they were based. Greenhill did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of NII Brazil, nor was Greenhill furnished
with any such evaluation or appraisal.
Greenhill
assumed that the Transactions would be consummated in accordance with the terms set forth in the final, executed Purchase Agreement, which Greenhill further assumed would be identical in all
material respects to the latest draft thereof Greenhill reviewed, and without waiver or modification of any terms or conditions the effect of which would be in any way meaningful to Greenhill's
analysis. Greenhill further assumed that all governmental, regulatory and other consents and approvals necessary for the consummation of the Transactions would be obtained without any effect on NII
Brazil or the Transactions in any way meaningful to Greenhill's analysis. Greenhill assumed that there would not be any payments by NII, NIIH, AI Brazil or any of their affiliates (directly or
indirectly) pursuant to any indemnification obligations under the Purchase Agreement. Greenhill is not a legal, regulatory, accounting or tax expert and relied on the assessments made by NII, AI
Brazil and AMX and their respective advisors with respect to such issues.
Greenhill's
opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Greenhill as of, the date of its opinion, including
with respect to exchange rates. Greenhill assumed that such exchange rates were reasonable for purposes of its analyses and that any currency or exchange rate fluctuations would not be meaningful in
any respect to its analyses or opinion. It should be understood that subsequent developments may affect Greenhill's opinion, and Greenhill does not have any obligation to update, revise, or reaffirm
its opinion.
Greenhill's
opinion was for the information of the Board and was rendered to the Board in connection with Greenhill's consideration of the Transactions, and, except as provided in Greenhill's
engagement letter with NII Brazil, may not be used
for any other purpose without Greenhill's prior written consent. Greenhill's opinion addressed only the fairness from a financial point of view to NII, as of the date of Greenhill's opinion, of the
Consideration payable in the Transactions pursuant to the Purchase Agreement. Greenhill did not express any view or opinion as to any other terms or aspect of the Purchase Agreement or the
Transactions or any agreement or instrument contemplated by the Purchase Agreement or entered into or amended in connection with the Transactions, including as to the fairness of the Transactions to,
or any consideration to be received directly or indirectly in connection with the Transactions by, holders of any class of securities, any creditors or any other constituencies of NII. Greenhill also
did not express any view or opinion as to the impact of the Transactions on the solvency or the viability of NII, AI Brazil or AMX or their ability to pay their respective obligations when they come
due. Greenhill did not perform a liquidation analysis with respect to the assets of NII. Greenhill expressed no view or opinion with respect to the amount or nature of any compensation to any
officers, directors or employees of NII, or any class of such persons, relative to the Consideration pursuant to the Purchase Agreement in the Transactions or with respect to the fairness of any such
compensation. In addition, the Board did not ask Greenhill to address, and Greenhill's opinion did not address, the fairness of the allocation of the consideration as between NII Brazil and AI Brazil.
Greenhill also expressed no view or opinion regarding matters that require legal, regulatory, accounting, insurance, tax, environmental, executive compensation or other similar professional advice,
and Greenhill assumed that opinions, counsel and interpretations regarding such matters had been or would be obtained from the appropriate professional sources. Greenhill's opinion was approved by
Greenhill's fairness committee.
SUMMARY OF MATERIAL FINANCIAL ANALYSES
|
The
following represents a summary of the material financial analyses performed by Rothschild & Co and Greenhill and jointly presented to the Board in connection with
providing their respective opinions, dated March 17, 2019, to the Board. The summary of these analyses is not a comprehensive description of all analyses and factors considered by
Rothschild & Co or Greenhill. The preparation of a fairness opinion is a complex analytical process that involves various
determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and, therefore, a fairness opinion is not
readily susceptible to summary description. Selecting portions of the analyses or of the summary set forth herein, without considering the analyses or the summary as a whole, could create an
incomplete view of the processes underlying each of Rothschild & Co and Greenhill's opinions. In arriving at each of their
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respective
fairness determinations, each of Rothschild & Co and Greenhill considered the results of all of their analyses and did not attribute any particular weight to any factor or analysis
considered. Rather, each of Rothschild & Co and Greenhill made their respective determination as to fairness on the basis of its experience and professional judgment after considering the
results of all of its analyses. In their analyses, Rothschild & Co and Greenhill performed certain analyses using Brazilian real and converted enterprise values and the net present value of
Nextel Brazil's net operating losses from Brazilian real to U.S. dollars using an exchange rate of 3.76 Brazilian reais to 1.00 U.S. dollar, the average exchange rate over the 30 day period
ending March 15, 2019.
Discounted Cash Flow Analysis
Each of Rothschild & Co and Greenhill performed a discounted cash flow analysis of Nextel Holdings, which calculates an implied enterprise value of
Nextel Holdings by discounting to the present, based on a mid-year discounting convention, the value of estimated unlevered free cash flow for calendar years 2019 to 2022, which was calculated by
Rothschild & Co. and Greenhill based on the Nextel Holdings Projections as EBITDA, minus taxes (calculated based on EBITDA minus depreciation and amortization at an illustrative aggregate Brazilian
tax rate of 34%), minus capital expenditures, and minus change in working capital, and adding thereto a terminal year value for Nextel Holdings calculated using a terminal year EBITDA (based on the
Nextel Holdings Projections and certain assumptions provided to Rothschild & Co and Greenhill by the management of NII and a terminal year EBITDA multiple range of 4.5x to 5.5x). In their
analyses, Rothschild & Co and Greenhill utilized a discount rate range of 12.3% to 14.3%, which was selected based on the estimated weighted average cost of capital of Nextel Holdings
(calculated using the capital asset pricing model). To the resulting value, Rothschild & Co and Greenhill added the net present value of the estimated value of the cash tax savings associated
with Nextel Holdings' net operating losses, calculated using a 17.0% discount rate (based on Nextel Holdings' estimated cost of equity), which equaled $47 million. The foregoing analysis
indicated an approximate implied enterprise value reference range of Nextel Holdings of $756 million to $982 million, as compared to the Consideration of $974 million.
Selected Trading Comparables Analysis
Rothschild & Co and Greenhill reviewed and considered financial and stock market information of the following selected publicly traded companies (the
"Trading Comparables"), which Rothschild & Co and Greenhill in their professional judgment considered generally relevant for comparative purposes as publicly traded companies in the Brazilian
and Latin American mobile wireless telecommunications industry:
-
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América Móvil, S.A.B. de C.V.
-
-
Millicom International Cellular S.A.
-
-
Telefônica Brasil S.A.
-
-
TIM Participações S.A.
For
purposes of their analyses of the Trading Comparables, Rothschild & Co and Greenhill reviewed, among other things, enterprise value, calculated as the market capitalization of equity,
adjusted for net debt, minority investments and investments in associates, as of March 15, 2019 (referred to as EV), as multiples of each of projected consolidated revenue (referred to as
EV/Revenue) and projected consolidated EBITDA (referred to as EV/EBITDA), in each case, for calendar year 2019. This analysis indicated the following:
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Low
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Mean
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High
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EV/Revenue
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1.44x
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1.82x
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2.13x
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EV/EBITDA
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4.7x
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5.1x
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5.7x
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Based
on their professional judgment, Rothschild & Co and Greenhill applied multiples of 1.25x to 1.75x to Nextel Holdings' projected consolidated revenue for calendar year 2019. The foregoing
analysis indicated an approximate implied enterprise value reference range of Nextel Holdings of $788 million to $1,104 million, as compared to the Consideration of $974 million.
Based
on their professional judgment, Rothschild & Co and Greenhill applied multiples of 4.5x to 5.5x to Nextel Holdings' projected consolidated EBITDA for calendar year 2019. The foregoing
analysis indicated an approximate implied enterprise value reference range of Nextel Holdings of $324 million to $396 million, as compared to the Consideration of $974 million.
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No
company utilized in the comparable companies analysis is identical to Nextel Holdings. In evaluating the Trading Comparables, Rothschild & Co and Greenhill made judgments and assumptions
with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of NII, such as the impact of competition on
the businesses of Nextel Holdings and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of Nextel Holdings or the industry
or in the financial markets in general. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using trading comparables data.
Financial
data of the Trading Comparables were based on publicly available research analysts' consensus estimates, public filings and other publicly available information. Financial data of Nextel
Holdings was based on the Nextel Holdings Projections.
Selected Precedent Transactions Analysis
Rothschild & Co and Greenhill reviewed and considered publicly available financial information of the following eight selected transactions (the
"Precedent Transactions"), which Rothschild & Co and Greenhill in their professional judgment considered generally relevant for comparative purposes involving Brazilian and Latin American
mobile wireless telecommunications companies:
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Date Announced
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Target
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Acquirer
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Country
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% Acquired
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February 2019
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Telefónica Móviles Panamá, SA; Telefónica de Costa Rica TC, S.A.; Telefónica Celular de Nicaragua, S.A.
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Millicom International Cellular S.A.
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Panama / Costa Rica / Nicaragua
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100%
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January 2019
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Telefónica Móviles Guatemala, S.A.; Telefónica Móviles El Salvador
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America Móvil, S.A.B. de C.V.
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Guatemala / El Salvador
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100%
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June 2018
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Nextel Holdings
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AI Media Holdings (referred to as Access Industries)
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Brazil
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30%
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June 2017
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Nextel Holdings
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AINMT Holdings AB
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Brazil
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30%
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April 2015
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Nextel Mexico
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AT&T Inc.
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Mexico
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100%
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November 2014
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GSF Telecom Holdings, S.A.P.I de C.V. (referred to as Iusacell)
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AT&T Inc.
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Mexico
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100%
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November 2013
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Orange Dominicana S.A.
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Altice VII S.á r.l.
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Dominican Republic
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100%
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April 2013
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Nextel del Peru S.A.
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Empresa Nacional de Telecomunicaciones S.A. (Entel)
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Peru
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100%
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Rothschild &
Co and Greenhill reviewed, among other things, EV as multiples of each of revenue for the latest reported twelve months (referred to as EV/LTM Revenue) and EBITDA for the latest
reported twelve months (referred to as EV/LTM EBITDA). This analysis indicated the following:
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Low
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Mean
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High
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EV/LTM Revenue
(1)
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1.01x
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1.78x
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2.41x
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EV/LTM Revenue (Excluding Iusacell)
(1)
(2)
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1.01x
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1.81x
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2.41x
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EV/LTM EBITDA
(3)
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6.3x
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9.6x
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15.8x
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EV/LTM EBITDA (Excluding Iusacell)
(2)
(3)
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6.3x
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7.6x
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9.7x
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-
(1)
-
The
data for the transactions involving the following companies were not available: (i) Telefónica Móviles
Guatemala, S.A. / Telefónica Móviles El Salvador and America Móvil, S.A.B. de C.V. and (ii) Nextel Holdings and Access Industries.
-
(2)
-
Multiples
exclude the transaction involving Iusacell and AT&T Inc. because the transaction EBITDA multiple was an outlier given Iusacell's low profitability.
-
(3)
-
The
data for the transactions involving the following companies were not available: (i) Nextel Holdings and Acces Industries, (ii) Nextel Holdings and
AINMT Holdings AB, (iii) Nextel Mexico and AT&T Inc. and (iv) Nextel del Peru S.A. and Entel.
Based
on their professional judgment, Rothschild & Co and Greenhill applied multiples of 1.00x to 2.00x to Nextel Holdings' consolidated revenue for calendar year 2018. The foregoing analysis
indicated an approximate implied enterprise value reference range of Nextel Holdings of $598 million to $1,195 million, as compared to the Consideration of $974 million.
Based
on their professional judgment, Rothschild & Co and Greenhill applied multiples of 6.0x to 9.0x to Nextel Holdings' projected consolidated EBITDA for calendar year 2019, and discounted
such figures to the present, based on a mid-year discounting convention, using a discount rate of 13.3%, which was selected based on the estimated weighted average cost of capital of Nextel Holdings.
The foregoing analysis indicated an approximate implied enterprise value reference range of Nextel Holdings of $406 million to $609 million, as compared to the Consideration of
$974 million.
No
target company utilized in the selected precedent transaction analysis is identical to Nextel Holdings. In evaluating the Precedent Transactions, Rothschild & Co and Greenhill made judgments
and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of NII, such as the impact of
competition on the businesses of Nextel Holdings and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of Nextel Holdings
or the industry or in the financial markets in general. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using selected precedent transactions
data.
Financial
data for the Precedent Transactions, and the target companies therein, were based on public filings and other publicly available information. Financial data of Nextel Holdings was based on
the Nextel Holdings Projections.
Rothschild &
Co and Greenhill prepared the analyses described herein for purposes of providing each of their opinions to the Board as to the fairness, from a financial point
of view, to NII as of the date of such opinions, of the Consideration payable in the Transactions pursuant to the Purchase Agreement. These analyses do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold. Rothschild & Co and Greenhill's analyses were based in part upon the Nextel Holdings Projections and other third party
research analyst estimates, which are not necessarily indicative of actual future results, and which may be significantly more or less favorable than suggested by Rothschild & Co and
Greenhill's analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties to the Purchase Agreement or their
respective advisors, none of NII, NIIH, NII Brazil, Nextel Holdings, Nextel Brazil, AI Brazil, AMX, Rothschild & Co, Greenhill or any other person assumes responsibility if future results are
materially different from those forecasted by the management of NII and Nextel Brazil.
As
described above, the opinions of Rothschild & Co and Greenhill to the Board were two of many factors taken into consideration by the Board in making its determination to approve the
Transactions. Rothschild & Co and Greenhill were not asked to, and did not, recommend the specific consideration provided for in the Purchase Agreement, which consideration was determined
through arms-length negotiations between NII, AI Brazil and AMX. Neither Rothschild & Co nor Greenhill recommended any specific amount of consideration to NII, the Board or holders of NII
common stock or that any specific amount of consideration constituted the only appropriate consideration for the Transactions.
Rothschild &
Co and Greenhill are acting as financial advisors to NII in connection with the Transactions. Rothschild & Co received an initial retainer fee of $250,000, was entitled to
receive additional fees of $1,250,000 upon the delivery of its
opinion and will receive $7,650,000 upon consummation of the Transactions. In addition, NII agreed to reimburse Rothschild & Co's expenses and indemnify Rothschild & Co against certain
liabilities that may arise out of its engagement. Greenhill was entitled to receive fees of $1,250,000 upon the delivery of its opinion and will receive $1,350,000 upon consummation of the
Transactions. In addition, NII agreed to reimburse Greenhill's expenses and indemnify Greenhill against certain liabilities that may arise out of its engagement. Rothschild & Co, Greenhill or
their respective affiliates may, in the
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ordinary
course of their business from time to time, in the future provide financial services to NII, AI Brazil, AMX and/or their respective affiliates and may receive fees for the rendering of such
services.
Rothschild &
Co, Greenhill and their respective affiliates are engaged in a wide range of financial advisory and investment banking activities. In 2017, Rothschild & Co acted as
financial advisor to NII in connection with a prior investment in Nextel Holdings by ice group and received a fee of $1,000,000 for its services. Except as set forth above, neither Rothschild &
Co nor Greenhill had received any fees for services from NII, NIIH, NII Brazil, Nextel Holdings, Nextel Brazil, AI Brazil or AMX during the two years prior to the date of their respective opinions.
In
the ordinary course of their asset management, merchant banking and other business activities, Rothschild & Co, Greenhill and their respective affiliates may trade in the securities of NII,
AI Brazil, AMX and any of their respective affiliates, for their own accounts or for the accounts of their affiliates and customers, and may at any time hold a long or short position in such
securities.
NEXTEL HOLDINGS PROJECTIONS
|
STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS
|
Stockholder
proposals intended for consideration for inclusion in our proxy statement for the 2019 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act
must have been forwarded in writing and received at our principal executive office at 12110 Sunset Hills Road, Suite 600, Reston, Virginia 20190 no later than December 5, 2018, directed
to the attention of our Vice President, General Counsel and Secretary. Please note that if we hold our regular annual stockholders meeting more than 30 days after May 3, 2019 (the
one-year anniversary date of the 2018 Annual Meeting of Stockholders), such stockholder proposals will have to be received a reasonable time before we begin to print and send our proxy materials for
our 2019 Annual Meeting of Stockholders.
With
respect to any proposal by a stockholder not seeking to have a proposal included in our proxy statement but seeking to have a proposal considered at the 2019 Annual Meeting, the stockholder must
have notified our Vice President, General Counsel and Secretary in the manner set forth above before February 15, 2019. Please note that if we hold our regular annual stockholders meeting more
than 30 days after May 3, 2019, such notice by the stockholder must be delivered no later than the close of business on the later of the 45th calendar day prior to such annual
meeting, or the 10th calendar day following the day on which public disclosure of the date of such meeting is first made. In no event shall the public disclosure of an adjournment of an annual
meeting commence a new time period for giving of a stockholder's notice as described above. With respect to proposals in this latter category, the persons who are appointed as proxies may exercise
their discretionary voting authority with respect to that proposal, if the proposal is considered at the 2019 Annual Meeting, even if stockholders have not been advised of the proposal in the proxy
statement for the 2019 Annual Meeting.
Any
proposals submitted by stockholders must comply in all respects with the rules and regulations of the SEC then in effect, including Rule 14a-8 of the Exchange Act, Delaware law and our
Fifth Amended and Restated Bylaws. Additional details regarding the process to be followed by stockholders wishing to make a proposal are included in NII's Fifth Amended and Restated Bylaws, which are
available on the Investor Relations page of our website at
www.nii.com
.
90
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
|
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's website at www.sec.gov.
Any
person, including any beneficial owner, to whom this proxy statement is delivered may request copies of this proxy statement and any of the documents incorporated by reference in this document or
other information concerning us, without charge, by writing or telephoning us at the following address: 12110 Sunset Hills Road, Suite 600, Reston, VA 20190, telephone (703) 390-5200, or
from the SEC through the SEC's website at the address provided above. Documents incorporated by
reference are available without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents.
The
SEC allows us to "incorporate by reference" into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information.
Information in documents that is deemed, in accordance with SEC rules, to be furnished and not filed will not be deemed to be incorporated by reference into this proxy statement. We incorporate by
reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement, and before the date
of the Special Meeting:
-
-
NII's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as amended on April 30,
2019;
-
-
NII's Current Reports on Form 8-K, to the extent filed and not furnished with the SEC on March 28, 2019
and April 19, 2019.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY
SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL
MEETING.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT.
THIS PROXY STATEMENT IS DATED MAY 6, 2019. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE,
AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
91
Annex A
PURCHASE AGREEMENT
BY AND AMONG
AMÉRICA MÓVIL, S.A.B. de C.V.,
AS PURCHASER,
NII INTERNATIONAL HOLDINGS S.À R.L.,
AS SELLER,
AI BRAZIL HOLDINGS B.V.,
AND
NII HOLDINGS, INC.
Dated March 18, 2019
TABLE OF CONTENTS
A-i
A-ii
A-iii
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "
Agreement
"), dated March 18, 2019, is by and among
América Móvil, S.A.B. de C.V., a corporation (
sociedad anónima bursátil de capital
variable
) existing under the Laws of Mexico ("
Purchaser
"), NII International Holdings S.à r.l., a private limited
liability company (
société à responsabilité limitée
) organized under the Laws
of the Grand Duchy of Luxembourg having its registered office at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade and
Companies Register under the number B 149229 ("
NIIH
" or "
Seller
"), AI Brazil
Holdings B.V., a corporation existing under the Laws of The Netherlands ("
AI Brazil
") and NII Holdings, Inc., a Delaware corporation
("
Parent
").
PRELIMINARY STATEMENTS
A. NIIH
is the owner of 15,002 ordinary shares (
parts sociales
) of NII Brazil Holdings S.à r.l., a private
limited liability company (
société à responsabilité limitée
) organized under
the Laws of the Grand Duchy of Luxembourg, having its registered office at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade
and Companies' Register under the number B 230537 (the "
Company
", and such shares, together with any shares of the Company issued to NIIH after
the date hereof, the "
Acquired Equity Interests
"). The Acquired Equity Interests shall at all times constitute all of the issued and outstanding equity
interests of the Company.
B. As
of the date of this Agreement, (i) the Company holds 125,156,369 ordinary shares of Nextel Holdings S.à r.l., a private limited liability company
(
société à responsabilité limitée
) organized under the Laws of the Grand
Duchy of Luxembourg, having its registered office at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade and Companies Register
under the number B 214361 ("
Nextel Holdings
"), which ordinary shares constitute 70.0000003% of the equity interests of Nextel Holdings (such
shares, together with any shares of Nextel Holdings issued to the Company after the date hereof, the "
Company Shares
"), and (ii) AI Brazil holds
3,638,443 ordinary shares of Nextel Holdings and 50,000,000 preferred shares of Nextel Holdings, which, together, constitute 29.9999997% of the equity interests of Nextel Holdings (such shares,
together with any shares of Nextel Holdings issued to AI Brazil after the date hereof, the "
AI Brazil Shares
"). The Company Shares and the AI Brazil
Shares shall at all times constitute the only issued and outstanding equity interests of Nextel Holdings. At the Closing, following the Nextel Holdings Transaction (as defined below), the Company
shall be the owner of 100% of the issued and outstanding equity interests of Nextel Holdings.
C. Nextel
Holdings indirectly owns all of the issued and outstanding equity of Nextel Participações Ltda., a limited liability company
organized under the laws of Brazil ("
Brazil Parent
"), and Brazil Parent and McCaw International (Brazil), LLC, a limited liability company
organized under the Laws of Virginia and a direct wholly owned subsidiary of Nextel Holdings ("
McCaw
"), own all of the issued and outstanding equity of
Nextel Telecomunicações Ltda., a limited liability company organized under the Laws of Brazil ("
Nextel Brazil
").
D. Concurrent
to, and as a condition of, the Closing, AI Brazil will sell and deliver to the Company, and the Company will purchase and accept delivery from AI Brazil of,
the AI Brazil Shares (the "
Nextel Holdings Transaction
"), subject to the terms and conditions of this Agreement and pursuant to the Nextel Holdings
Share Transfer Agreement.
E. Purchaser
desires to purchase, and NIIH desires to sell, all of the Acquired Equity Interests on the terms set forth in this Agreement.
AGREEMENT
The Parties agree as follows:
ARTICLE 1. DEFINITIONS
1.1.
Definitions.
For purposes of this Agreement, the following terms and variations on them have the
meanings specified below.
"
2019 Transaction Budget
" means the budget for the Entities for the year 2019 set forth on Section 1.1(a) of the Company Disclosure
Schedule.
"
2020 Transaction Budget
" means the budget for the Entities for the year 2020 agreed to in writing by Purchaser and Parent pursuant to and
in accordance with
Section
3.4(a)
.
"
Acceptable Confidentiality Agreement
" means a confidentiality agreement (i) containing terms no less restrictive to the third
party that is party to such agreement and its Affiliates and Representatives than the terms set forth in the Confidentiality Agreements with respect to Purchaser and its Affiliates and
Representatives, and (ii) which does not contain any provision that would prevent Parent from complying with its obligations under
Section 8.13
.
"
Accounting Principles
" means the accounting principles, methodologies, procedures and classifications set forth on
Exhibit A
hereto.
"
Accrued Tax Contingencies
" means, as of any specified date, an amount equal to the aggregate contingent Tax liabilities of the Entities
as reflected in (i) Attachment D to Section 6.13 of the Company Disclosure Schedule or (ii) any contingent Tax liability accounts of the Entities (including the accounts 2129-ICMS
a Recolher Assinatura, 2614-ContingenciesTax (Assessed) and
2615-ContingenciesTax (Unassessed)), in each case of clauses (i) and (ii), only to the extent accrued or required to be accrued in accordance with the Accounting Principles on a
consolidated balance sheet of the Entities as of such date.
"
Accrued Tax Contingencies Adjustment
" means the Dollar Equivalent of an amount equal to the absolute value of the difference between
(i) the Target Accrued Tax Contingences and (ii) the Closing Accrued Tax Contingencies;
provided
that the Accrued Tax Contingencies
Adjustment shall not exceed the Accrued Tax Contingencies Adjustment Cap.
"
Accrued Tax Contingencies Adjustment Cap
" means $20,000,000.
"
Acquired Equity Interests
" is defined in the Preliminary Statements.
"
Acquisition Proposal
" means any Brazil Proposal or Parent Takeover Proposal.
"
Action
" means any claim, action, demand, notice of infraction or breach, audit, litigation, suit, assessment, arbitration, mediation or
inquiry, or any Legal Proceeding.
"
Adjustment Date
" means the day immediately preceding the Closing Date.
"
Adjustment Time
" means 11:59 p.m., New York City time, on the Adjustment Date.
"
Adverse Recommendation Change
" is defined in
Section 8.13(c)
.
"
Affiliate
" means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such Person, and the term "
control
" (including the terms "
controlled
by
" and "
under common control with
") means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through ownership of voting securities, by Contract or otherwise.
A-2
"
Agreement
" means this Agreement, as it may be amended, modified or supplemented from time to time.
"
AI Brazil
" is defined in the Preamble.
"
AI Brazil Disclosure Schedule
" is defined in
ARTICLE 5
.
"
AI Brazil Fundamental Representations
" means the representations and warranties set forth in
Section
5.1
(Organization of AI Brazil),
Section 5.2
(Authorization of Agreement) and
Section
5.4
(Title to AI Brazil Shares).
"
AI Brazil Payment
" means an amount equal to (i) the AI Brazil Preferred Return
plus
(ii) the product of (A) the AI Brazil Percentage
multiplied by
(B) the excess
of (1) the Purchase Price over (2) the AI Brazil Preferred Return.
"
AI Brazil Percentage
" means 29.9999997%, unless Purchaser has received a written notice pursuant to
Section
2.2(c)
, executed by each of AI Brazil and NIIH, specifying a different percentage, in which case the "AI Brazil Percentage" shall be the percentage specified in such notice.
"
AI Brazil Preferred Return
" means the Preferred Share Investment Return (as defined in the Nextel Holdings Articles) required to be paid
to AI Brazil pursuant to Sections 8.1 and 8.2 of the Nextel Holdings Articles in respect of the preferred shares of Nextel Holdings held by AI Brazil, determined as of the Adjustment Time.
"
AI Brazil Shares
" is defined in the Preliminary Statements.
"
Alternative Acquisition Agreement
" is defined in
Section 8.13(c)
.
"
ANATEL
" means the Brazilian Telecommunications Agency (
Agência Nacional de
Telecomunicações
).
"
ANATEL Financing
" means the payment plan entered into between Nextel Brazil and ANATEL in December 2016 for the 1.8GHz Sao Paulo spectrum
with a principal balance of R$409,500,000, plus accrued interest of 1% per month and annual inflationary adjustments, amortizing in six annual installment payments beginning in July 2019 and maturing
in July 2024.
"
Ancillary Agreements
" is defined in
Section 4.2
.
"
Anti-Corruption and Anti-Money Laundering Laws
" means all anti-corruption, anti-bribery and anti-money laundering Laws of the
jurisdictions where the Parties conduct business, including Law No. 12.846/2013 and regulations thereunder (Anti-corruption Law), Decree-Law No. 2.848/1940 (Brazilian Criminal Code), Law
No. 9.613/1998 (Anti-Money Laundering Law), Law No. 8429/1992 (Administrative Improbity Law), Law No. 8666/1993 (Public Biddings Law), the US Foreign Corrupt Practices Act of
1977, each as amended, Decree (
Decreto
) 4,410 of October 7, 2002 (Interamerican Convention Against Corruption) of Brazil, Decree
(
Decreto
) 5,687 of January 31, 2006 (United Nations Convention Against Corruption) of Brazil, or any applicable law of similar effect.
"
Antitrust Approval
" means the authorization of the transactions contemplated by this Agreement by the Brazilian Antitrust Authority
pursuant to the Antitrust Statutes, which shall be deemed to have been obtained upon the earlier to occur of: (i) the expiration of the 15-day period following the publication in the Official
Gazette, as set forth in Articles 162 and 172 of Resolution No. 1, dated May 29, 2012 (as updated by Resolution No. 20/2017), of the final opinion approving the
transactions contemplated hereby by CADE's General Superintendence; (ii) the publication in the Official Gazette of a final decision on the transactions contemplated hereby by CADE's
Administrative Tribunal; or (iii) the expiration of all applicable time limitations under the Antitrust Statutes without the objection or issuance of a final decision by the Brazilian Antitrust
Authority.
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"
Antitrust Statutes
" means, as applicable, all Brazilian antitrust Laws, including Brazilian Law 12,529/2011, and its related
decrees, resolutions and statutes.
"
ATC
" means
American Tower do BrasilCessão de
Infraestrutura Ltda
.
"
ATC Agreements
" means the (i) Amended and Restated Master Use of Space Agreement, dated as of March 22, 2005 (and effective
as of January 1, 2004), entered into by and among Nextel Brazil, ATC and the other grantor and grantee entities thereunder; (ii) Asset Purchase Agreement, dated as of March 22,
2005 (and effective as of January 1, 2004), entered into by and among Nextel Brazil and ATC, (iii) Master Purchase and Sale Agreement, dated as of August 8, 2013, entered into by
and among Nextel Brazil, ATC, and ATC II, (iv) Guaranty and Subordination Agreement, dated as of June 26, 2015, entered into by the Company in favor of ATC, and
(v)
Acordo Comercial sobre o uso de itens de Insfraestructura da ATC pela Nextel
, dated as of December 22, 2016, entered into by and
between ATC and Nextel Brazil; including all of their schedules, ancillary documents and agreements, and related guaranties.
"
ATC Guaranty
" means the Guaranty and Subordination Agreement, dated as of June 26, 2015, by NII International Telecom S.C.A. in
favor of ATC.
"
ATC II
" means
America Tower do Brasil IICessão
Infraestruturas Ltda.
(formerly
Nextel Torres e Equipamentos Ltda.
).
"
Audited Brazil Financial Statements
" is defined in
Section 6.4(a)(iii)
.
"
BACEN
" means the Central Bank of Brazil (
Banco Central do Brasil
).
"
Balance Sheet Date
" means September 30, 2018.
"
Basket Amount
" is defined in
Section 10.5(a)
.
"
BdB
" means
Banco do Brasil S.A.
"
BdB Credit Facility
" means the R$400,000,000 credit agreement n. 307.0001.181 (
Cédula de
Crédito Bancário n. 307.0001.181
) dated as of October 31, 2012, as amended by that certain Amendment No. 1, dated as of
February 13, 2015, that certain Amendment No. 2, dated as of June 25, 2015, that certain Amendment No. 3, dated as of February 24, 2017, that certain Amendment
No. 4, dated as of July 28, 2017, and that certain Amendments No. 5 and No.6, both dated as of on October 31, 2017, and as may be amended from time to time among Nextel
Brazil, the guarantors thereunder and BdB as administrative agent and lender.
"
Board of Trade
" means the
Junta Comercial
of each applicable Brazilian State.
"
Brazil
" means the Federative Republic of Brazil.
"
Brazil Credit Facilities
" means, collectively, the BdB Credit Facility, the Caixa Credit Facility, the CDB Credit Facility, ANATEL
Financing and Sunbird Financing.
"
Brazil Entities
" means the Brazil Parent and its Subsidiaries.
"
Brazil Parent
" is defined in the Preliminary Statements.
"
Brazil Proposal
" means any bona fide proposal or offer from a third party (other than Purchaser or its Affiliates) relating to, in any
single transaction or series of related transactions, any (i) merger, consolidation, business combination or other similar transaction with respect to the Company or any Company Subsidiary
(ii) acquisition in any manner, directly or indirectly, of any of the Acquired Equity Interests or any other equity interests of the Company or any Company Subsidiary, or
(iii) acquisition of any of the assets of Nextel Brazil, other than a disposition of assets permitted in accordance with
Section 8.2(b)(viii)
.
A-4
"
Brazilian Antitrust Authority
" means CADE, or any successor Governmental Authority from which approval of the transactions contemplated
by this Agreement is required under the Antitrust Statutes.
"
Brazilian GAAP
" means generally accepted accounting principles (
Princípios Fundamentais de
Contabilidade
) accepted in Brazil in accordance with the Brazilian Federal Accounting Council (
Conselho Federal de
Contabilidade
), including those adopted by regulations issued by the CVM, BACEN and any other applicable Governmental Authority, as the case may be, applied in the manner and
on a basis consistent in all material respects as that applied in Brazil Parent's and the Brazil Entities' financial statements.
"
BRL Indebtedness
" means all Indebtedness denominated in Reais, including Indebtedness under the BdB Credit Facility, the Caixa Credit
Facility, ANATEL Financing and Sunbird Financing.
"
Burdensome Condition
" means any condition, qualification, limitation, restriction or requirement (each, a
"
Condition
") that, individually or in the aggregate, is or would reasonably be expected to be material to the Entities, taken as a whole (with it being
further understood that, for purposes of this definition, (i) if a Governmental Authority has granted approval of the transactions contemplated by this Agreement, which approval is subject to
satisfaction of any Condition any terms of which are to be determined after the Closing, then such Condition will be deemed automatically to be material to the Entities, taken as a whole,
(ii) any Condition to any Governmental Authority's approval of the transactions contemplated by this Agreement that is imposed on Purchaser or any of its Affiliates shall be deemed to have been
imposed directly on the Entities for purposes of determining whether a Burdensome Condition exists and (iii) any Condition to any Governmental Authority's approval of the transactions
contemplated by this Agreement that is imposed on AI Brazil or any of its Affiliates shall be deemed to have been imposed directly on the Entities for purposes of determining whether a Burdensome
Condition exists).
"
Business Day
" means any day of the year that is not a Saturday, a Sunday or any other day on which commercial banks are authorized or
required by Law to be closed in the City of New York, New York or São Paulo, Brazil.
"
CADE
" means
Conselho Administrativo de Defesa Econômica.
"
Caixa
" means
Caixa Econômica Federal.
"
Caixa Credit Facility
" means the R$640,000,000 credit agreement n. 21.3150.777.0000001-97 (
Cédula
de Crédito Bancário n.
21.3150.777.0000001-97) dated as of December 8, 2011, as amended by that certain Amendment No. 1, dated as of
February 13, 2015, that certain Amendment No. 2, dated as of June 25, 2015, that certain Amendment No. 3, dated as of February 24, 2017, that certain Amendment
No. 4, dated as of August 3, 2017, and that certain Amendments No. 5 and No.6, both dated as of on October 31, 2017, and as may be amended from time to time among Nextel
Brazil, the guarantors thereunder and Caixa as administrative agent and lender.
"
Capex Spend
" means, without duplication, the Dollar Equivalent of the aggregate amount of capital expenditures of Nextel Brazil and its
Subsidiaries, determined on an accrual basis, during the Transaction Budget Period;
provided
that in no event shall Capex Spend exceed the Capex
Transaction Budget Amount.
"
Capex Transaction Budget Amount
" means the aggregate amount of capital expenditures contemplated by the 2019 Transaction Budget and, if
applicable, the 2020 Transaction Budget to have been incurred through the Transaction Budget Period;
provided
that, for any partial month included in
the Transaction Budget Period, the Capex Transaction Budget Amount shall include a prorated amount for such month equal to (i) the total amount of capital expenditures budgeted for such month
multiplied by
(ii) a fraction, the numerator of which is the number of days in such month included in
A-5
the
Transaction Budget Period, and the denominator of which is the total number of days in such month.
"
Cash
" means, with respect to the Entities, as of any time, the aggregate amount of cash on hand in any of the Entities' bank accounts,
plus the fair market value of marketable securities owned by any of the Entities with maturities within 90 days and classified as cash and cash equivalents pursuant to U.S. GAAP and the
Accounting Principles;
provided
that "Cash" (i) shall not include: deposits in escrow with third parties (including Governmental Authorities);
cash, cash equivalents or marketable securities securing letters of credit or other payment obligations; deposits or sureties held by third parties (including Governmental Authorities) for the benefit
of or as security for any obligation of any of the Entities; or other restricted cash (as determined in accordance with paragraphs (b) and (c) of the Accounting Principles);
(ii) shall be calculated net of all issued but un-cleared checks (but if any such issued but un-cleared checks relate to an account payable included in the calculation of Net Working Capital or
Indebtedness, only to the extent such corresponding account payable has been relieved for purposes of calculating Net Working Capital or Indebtedness), drafts, wires or transfers as of such time; and
(iii) shall include the investments listed in Section 1.1(b) of the Company Disclosure Schedule (including such investments with maturities greater than 90 days), less the
aggregate amount of all fees and costs, if any, required to be paid in order to convert such investments into cash (assuming such conversion occurred on the Closing Date).
"
CDB
" means the China Development Bank Corporation.
"
CDB Credit Facility
" means, collectively: (i) the $250,000,000 Amended and Restated Sinosure Credit Agreement, dated as of
October 31, 2017, and as may be amended from time to time among Nextel Brazil, the guarantors thereunder and CDB, as administrative agent, arranger and lender; and (ii) the $250,000,000
Amended and Restated Non-Sinosure Credit Agreement, dated as of October 31, 2017, and as may be amended from time to time, among Nextel Brazil, the guarantors thereunder and CDB, as
administrative agent, arranger and lender (including the Parent Guaranty).
"
Cell Site Standards
" is defined in
Section 6.14(f)
.
"
Closing
" is defined in
Section 3.1
.
"
Closing Accrued Tax Contingencies
" means the Accrued Tax Contingencies, as of the Adjustment Time.
"
Closing AI Brazil Payment
" means an amount equal to (i) the AI Brazil Preferred Return
plus
(ii) the product of (A) the AI Brazil Percentage
multiplied by
(B) the excess
of (1) the Estimated Purchase Price over (2) the AI Brazil Preferred Return.
"
Closing BRL Cash
" means, as of the Adjustment Time, the aggregate amount of all Cash in Reais of the Entities, determined on a
consolidated basis.
"
Closing BRL Indebtedness
" means, as of the Adjustment Time, the aggregate amount of all BRL Indebtedness of the Entities, determined on a
consolidated basis.
"
Closing Cash Adjustment
" means an amount equal to (i) Closing USD Cash
plus
(ii) the Dollar Equivalent of Closing BRL Cash.
"
Closing Date
" means the date on which the Closing occurs.
"
Closing Indebtedness Adjustment
" means an amount equal to (i) Closing USD Indebtedness
plus
(ii) the Dollar Equivalent of Closing BRL Indebtedness, subject to
adjustment in accordance with
Section 8.15
.
"
Closing Net Working Capital
" means the Dollar Equivalent of Net Working Capital, as of the Adjustment Time.
A-6
"
Closing NIIH Payment
" means an amount equal to (i) the Estimated Purchase Price,
(ii)
minus
the Closing AI Brazil Payment, (iii)
minus
the Escrow Amount,
(iv)
minus
the Estimated Unpaid Transaction Expenses, (v)
minus
the Estimated Accrued Tax
Contingencies Adjustment (if Estimated Closing Accrued Tax Contingencies exceed the Target Accrued Tax Contingencies) or
plus
the Estimated Accrued Tax
Contingencies Adjustment (if the Target Accrued Tax Contingencies exceed the Estimated Closing Accrued Tax Contingencies), (vi)
minus
the
Convertible Notes Escrow Amount, if such amount is required to be deposited at Closing in accordance with the Indenture and such amount has not been previously deposited by Parent in accordance with
Section 8.20(b)
.
"
Closing Statement
" is defined in
Section 2.4(a)
.
"
Closing Statement Dispute Notice
" is defined in
Section 2.4(b)
.
"
Closing USD Cash
" means, as of the Adjustment Time, the aggregate amount of all Cash in Dollars of the Entities, determined on a
consolidated basis.
"
Closing USD Indebtedness
" means an amount in Dollars equal to the aggregate amount, as of the Adjustment Time, of all USD Indebtedness of
the Entities, determined on a consolidated basis.
"
Code
" means the U.S. Internal Revenue Code of 1986, as amended.
"
COFINS
" means the Brazilian Contribution for the Financing of Social Security
(
Contribuição para o Financiamento da Seguridade Social
).
"
Company
" is defined in the Preliminary Statements.
"
Company Break-Up Fee
" is defined in
Section 3.6(b)
.
"
Company Disclosure Schedule
" is defined in
ARTICLE 4
.
"
Company Employee Plan
" means any Employee Plan sponsored or maintained by any Entity exclusively for the benefit of the current or former
employees of any Entity.
"
Company Intellectual Property
" means any and all Intellectual Property that is owned or purported to be owned by the Entities.
"
Company Percentage
" means 70.0000003%, unless Purchaser has received a written notice pursuant to
Section
2.2(c)
, executed by each of AI Brazil and NIIH, specifying a different percentage, in which case the "Company Percentage" shall be the percentage specified in such notice.
"
Company Shares
" is defined in the Preliminary Statements.
"
Company Share Transfer Agreement
" means a share transfer agreement between Purchaser and Seller, in the presence of the Company, to
effect the transfer of the Acquired Equity Interests to Purchaser substantially in the form of
Exhibit C
hereto.
"
Company Subsidiaries
" means each of the direct and indirect Subsidiaries of the Company, including Nextel Holdings and its Subsidiaries.
"
Company Telecommunication Licenses
" is defined in
Section 6.14(c)
.
"
Condition
" is defined in the definition of "Burdensome Condition."
"
Confidentiality Agreements
" means, collectively, (i) the confidentiality agreement between Parent and América
Móvil, S.A.B. de C.V., dated December 3, 2018 and (ii) the confidentiality agreement between Parent and Claro S.A. dated April 23, 2018.
"
Contract
" means any legally binding contract, license, indenture, note, bond, lease, commitment or other agreement or arrangement.
A-7
"
Convertible Notes Escrow Amount
" means the "Escrow Amount" as defined in the Indenture, together with any corresponding fees of the
applicable escrow agent.
"
CSLL
" means the Brazilian Social Contribution on Net Profits (
Contribuição Social
Sobre o Lucro Líquido
).
"
CVM
" means the Brazilian Securities and Exchange Commission (
Comissão de Valores
Mobiliários
).
"
Damages
" is defined in
Section 10.2
.
"
De Minimis
" is defined in
Section 10.5(a)
.
"
DGCL
" means the General Corporation Law of the State of Delaware.
"
Direct Claim
" is defined in
Section 10.4(f)
.
"
Direct Claim Notice
" is defined in
Section 10.4(f)
.
"
Discharge Tax Decision
" is defined in
Section 8.15
.
"
Disputed Item
" is defined in
Section 2.4(b)
.
"
Dollar Equivalent
" means, for any amount denominated in Reais, such amount converted into Dollars using the arithmetic average of the
last-published PTAX Rate for each Business Day during the 30 calendar day period ending on and including the day immediately prior to the Estimated Closing Statement Delivery Date (or such other date
as Parent and Purchaser may mutually agree).
"
Effect
" is defined in the definition of "Seller Material Adverse Effect."
"
Employee Plan
" means any employee benefit plan, program, policy, agreement, commitment or arrangement, and any incentive, equity or
equity based, severance, termination, employment, individual consulting, pension, retirement, profit sharing, medical (including retiree medical), savings, life, accident, disability, health, dental,
and vision insurance, welfare, loan, vacation, fringe benefit, bonus and/or profit sharing plans, retention, change in control or deferred compensation plan, program, policy, agreement, commitment or
arrangement, in each case, whether or not in writing and whether or not funded.
"
Enterprise Value
" means $905,000,000.
"
Entities
" means the Company and the Company Subsidiaries.
"
Entity-Employee Parent Employee Plan
" is defined in
Section 6.12(a)
.
"
Environmental Laws
" means any Laws that (a) relate to pollution, the protection or cleanup of the environment, natural resources,
radioactive emission, occupational safety and health, land use or the management, manufacture, generation, labeling, registration, use, treatment, storage, transportation, handling, disposal or
release of or exposure to hazardous substances and solid waste, or (b) regulate, impose liability (including for enforcement, investigatory costs, cleanup, removal or response costs, natural
resource damages, contribution, injunctive relief, personal injury or property damage), or establish standards of care with respect to any of the foregoing.
"
ERISA
" means the Employee Retirement Income Security Act of 1974, as amended.
"
Escrow Account
" means the deposit account of the Escrow Agent that is governed by the Escrow Agreement and into which the Escrow Amount
is deposited.
"
Escrow Agent
" means an escrow agent mutually acceptable to Parent and Purchaser.
A-8
"
Escrow Agreement
" means an escrow agreement, in form and substance reasonably satisfactory to Parent, NIIH and Purchaser, entered into on
the Closing Date among Parent, NIIH, Purchaser and the Escrow Agent.
"
Escrow Amount
" means an amount in Dollars equal to $30,000,000.
"
Escrow Election
" is defined in
Section 8.20(b)
.
"
Estimated Accrued Tax Contingencies Adjustment
" means the Dollar Equivalent of an amount equal to the absolute value of the difference
between (i) Target Accrued Tax Contingencies and (ii) Estimated Closing Accrued Tax Contingencies;
provided
that the Estimated Accrued Tax
Contingencies Adjustment shall not exceed the Accrued Tax Contingencies Adjustment Cap;
provided
that, if Target Accrued Tax Contingencies exceed the
Estimated Closing Accrued Tax Contingencies, then (A) if the Net Working Capital Adjustment Cap exceeds Estimated Net Working Capital Adjustment, the Estimated Accrued Tax Contingencies
Adjustment shall not exceed an amount equal to the lesser of (1) the difference between the Net Working Capital Adjustment Cap and the Estimated Net Working Capital Adjustment and
(2) the Accrued Tax Contingencies Adjustment Cap or (B) if the Estimated Net Working Capital Adjustment exceeds the Net Working Capital Adjustment Cap, then the Estimated Accrued Tax
Contingencies Adjustment shall be $0.
"
Estimated Capex Spend
" is defined in
Section 2.2(c)
.
"
Estimated Closing Accrued Tax Contingencies
" is defined in
Section 2.2(c)
.
"
Estimated Closing BRL Cash
" is defined in
Section 2.2(c)
.
"
Estimated Closing BRL Indebtedness
" is defined in
Section 2.2(c)
.
"
Estimated Closing Cash Adjustment
" means an amount equal to (i) Estimated Closing USD Cash
plus
(ii) the Dollar Equivalent of Estimated Closing BRL Cash.
"
Estimated Closing Indebtedness Adjustment
" means an amount equal to (i) Estimated Closing USD Indebtedness
plus
(ii) the Dollar Equivalent of Estimated
Closing BRL Indebtedness, subject to adjustment in accordance with
Section 8.15
.
"
Estimated Closing Net Working Capital
" is defined in
Section 2.2(c)
.
"
Estimated Closing Statement
" is defined in
Section 2.2(c)
.
"
Estimated Closing Statement Delivery Date
" means the date that the Estimated Closing Statement is delivered to Purchaser.
"
Estimated Closing USD Cash
" is defined in
Section 2.2(c)
.
"
Estimated Closing USD Indebtedness
" is defined in
Section 2.2(c)
.
"
Estimated Net Working Capital Adjustment
" means the Dollar Equivalent of an amount equal to the absolute value of the difference between
(i) Estimated Closing Net Working Capital and (ii) Target Net Working Capital;
provided
that, if Estimated Closing Net Working Capital
exceeds Target Net Working Capital, the Estimated Net Working Capital Adjustment shall not exceed the Net Working Capital Adjustment Cap.
"
Estimated Purchase Price
" means an amount in Dollars equal to (i) the Enterprise Value,
(ii)
plus
the Estimated Capex Spend, (iii)
minus
the Estimated Selling and Marketing Cost
Adjustment Amount, (iv)
plus
the Estimated Net Working Capital Adjustment (if Estimated Closing Net Working Capital exceeds Target Net Working
Capital) or
minus
the Estimated Net Working Capital Adjustment (if Estimated Closing Net Working Capital is less than Target Net Working Capital),
(v)
minus
the Estimated Closing Indebtedness Adjustment, (vi)
plus
the Estimated Closing
Cash Adjustment.
A-9
"
Estimated Selling and Marketing Cost Adjustment Amount
" is defined in
Section 2.2(c)
.
"
Estimated Unpaid Transaction Expenses
" is defined in
Section 2.2(c)
.
"
Exchange Act
" means the U.S. Securities Exchange Act of 1934, as amended.
"
FGTS
" means the Employee's Severance Guarantee Fund of Brazil (
Fundo de Garantia por Tempo de
Serviço
).
"
Final Accrued Tax Contingencies Adjustment
" is defined in
Section 2.4(d)
.
"
Final AI Brazil Payment
" means an amount equal to (i) the AI Brazil Preferred Return
plus
(ii) the product of (A) the AI Brazil Percentage
multiplied by
(B) the excess
of (1) the Final Purchase Price over (2) the AI Brazil Preferred Return.
"
Final Closing Statement
" means the Closing Statement, as (i) mutually agreed in writing by Purchaser and NIIH (whether during the
Resolution Period or otherwise), (ii) made final, binding and conclusive due to the failure of Seller to timely deliver a Closing Statement Dispute Notice pursuant to
Section 2.4(b)
, or
(iii) made final by the Independent Accountant pursuant to
Section 2.4(d)
.
"
Final Purchase Price
" is defined in
Section 2.4(d)
.
"
Final Unpaid Transaction Expenses
" is defined in
Section 2.4(d)
.
"
Financial Statements
" is defined in
Section 6.4(a)(iv)
.
"
General Claim
" is defined in
Section 10.5(b)
.
"
Governmental Authority
" means any government, any political subdivision thereof, or any governmental or quasi-governmental authority of
any nature, including any administrative, judicial, legislative, executive or regulatory body, agency, department, instrumentality, court, tribunal or other authority, whether supranational,
international, national, federal, state, regional or local, and whether U.S. or non-U.S.
"
Guaranteed Obligations
" is defined in
Section 13.11
.
"
Holding Companies
" means the following Entities: Airfone Holdings, LLC; Brazil Parent; Nextel Holdings; NII International Mobile
S.à r.l.; NII International Mobile S.à r.l., Inc. (Virginia Branch); and McCaw.
"
ICC
" is defined in
Section 13.2(b)
.
"
ICC Rules
" is defined in
Section 13.2(b)
.
"
Indebtedness
" means, with respect to the Entities, as of any time, without duplication: (i) all liabilities for borrowed money,
whether current or funded, secured or unsecured (including, for the avoidance of doubt, under the Brazil Credit Facilities and all annual payments under the ANATEL Financing and Sunbird Financing),
(ii) all obligations evidenced by bonds, debentures, notes or similar instruments or securities, (iii) all net payment obligations under swap, derivative, hedging or similar arrangements
(including any interest rate or foreign exchange hedging arrangements) that would be payable upon termination, prepayment, novation, assignment or assumption thereof (assuming they were terminated on
the date of determination); (iv) all due and unpaid liabilities in respect of any Tower Leases of the Entities relating to leases that would have been classified or accounted for as capital
leases or tower financing obligations, in each case, under U.S. GAAP as in effect on December 31, 2018; (v) all liabilities for the deferred purchase price for assets, equity,
goods, property, services or other rights, including "earn-outs" and "seller notes" (but excluding any trade payables arising in the Ordinary Course of Business that are included in the calculation of
Closing Net Working Capital), purchase price adjustments or other contingent consideration; (vi) all liabilities for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction
A-10
to
the extent drawn upon or payable or to the extent an event has occurred that, with or without notice or lapse of time or both, would result in a draw thereon or thereunder or any amount being due
and payable thereunder as of the Closing Date, in each case calculated net of any cash or cash equivalents specifically set aside by the Entities to secure such payment obligations to the extent such
cash or cash equivalents can be used to pay for such payment obligations and are not otherwise included in the calculation of Cash; (vii) all obligations in respect of any leases entered into
on or after January 1, 2019 that, if such leases had been entered into on or prior to December 31, 2018, would have been classified or accounted for as capital leases or tower financing
obligations, in each case, under U.S. GAAP as in effect on December 31, 2018; (viii) all obligations reflected, or required to be reflected in accordance with U.S. GAAP, as
indebtedness on a consolidated balance sheet of the Entities (other than (A) Tower Leases and (B) leases that would not be classified or accounted for as capital leases or tower
financing obligations, in each case, under U.S. GAAP as in effect on December 31, 2018); (ix) all indebtedness referred to above which is directly or indirectly guaranteed by the
Company or any of its Subsidiaries or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire, or in respect of which it has otherwise assured a creditor against
loss; (x) all interest, penalties, fees, expenses, breakage costs, prepayment premiums and other payment obligations owed with respect to the indebtedness referred to above (assuming the
repayment in full of such indebtedness as of the Closing Date) or payable with respect to such indebtedness upon the consummation of the transactions contemplated by this Agreement, as applicable;
(xi) any Taxes (including any withholding Tax gross up) reimbursable to or payable for the benefit of the creditor in respect of the indebtedness referred to above or otherwise directly related
to such indebtedness; and (xii) to the extent not included in the calculation of Net Working Capital, the aggregate unpaid amount of all Liabilities of the Entities, on a consolidated basis, to
directors, officers or employees under FGTS or any severance, retirement or pensions plans (including any penalties for termination without cause), or for other termination, retirement,
post-employment or post-retirement indemnities, payments or benefits, in each case to the extent (A) incurred prior to the Closing and (B) such amount exceeds any cash deposited in
accounts with respect to such plans that are utilized by the Entities to satisfy such Liabilities. Notwithstanding the foregoing, "Indebtedness" will not include intercompany indebtedness, obligations
or liabilities exclusively between or among the Company and any wholly owned Company Subsidiary.
"
Indemnifying Party
" is defined in
Section 10.4(a)
.
"
Indenture
" means that certain Indenture (including form of notes) with respect to the Parent Convertible Notes, dated as of
August 14, 2018, between Parent and Wilmington Trust, National Association, as trustee.
"
Independent Accountant
" is defined in
Section 2.4(d)
.
"
Independent Tax Professional
" is defined in
Section 12.8
.
"
INSS
" means the National Institute of Social Security of Brazil (
Instituto Nacional de Seguridade
Social
).
"
Insurance Policies
" is defined in
Section 6.17
.
"
Intellectual Property
" means, collectively, all intellectual property rights and other similar proprietary rights, whether registered or
unregistered, protected, created or arising under the Laws of any jurisdiction or under any international convention, including such rights in and to the following: (i) patents and patent
applications, including continuations, divisions, divisionals, continuations-in-part, provisionals, and patents issuing on any of the foregoing, and all reissues, reexaminations, substitutions,
renewals and extensions of any of the foregoing, (ii) Trademarks, (iii) copyrights, works of authorship, all registrations, applications, renewals, extensions and reversions of any of,
and all moral rights in, the foregoing, (iv) trade secrets, proprietary know-how, other proprietary information (including inventions) and any other information or data protectable in any
jurisdiction by the statutory or contractual right to
A-11
limit
the disclosure thereof by any Person ("
Trade Secrets
"), (v) social media accounts and (vi) Software.
"
Intentional Breach
" means, with respect to any representation, warranty, covenant or agreement, an action or omission (including a
failure to cure circumstances) taken or omitted to be taken that the breaching Party intentionally takes (or intentionally fails to take) and knows (or reasonably should have known) would, or would
reasonably be expected to, cause a material breach of such representation, warranty, agreement or covenant.
"
Intercompany Notes
" is defined in
Section 8.15
.
"
Intercompany Notes Modification
" is defined in
Section 8.2(b)(xxvi)
.
"
Intercompany Obligations
" means, as of any specified time, any Liabilities (i) owed by any Entity to Seller or AI Brazil or any of
their respective Affiliates (other than the Entities) or by Seller or AI Brazil or any of their respective Affiliates (other than the Entities) to any of the Entities, or (ii) between any of
the Entities, in each case at such specified time.
"
Intervening Event
" means any Effect that has not arisen as a result of an Intentional Breach of this Agreement by Parent or any of its
Affiliates, that (i) is material to Parent and its Subsidiaries, taken as a whole, (ii) that was not known or reasonably foreseeable to the Parent Board on or prior to the date of this
Agreement, and (iii) becomes known to the Parent Board prior to the Parent Stockholder Approval;
provided
that in no event shall any Effect
arising from or relating to any of the following give rise to an Intervening Event: (i) an Acquisition Proposal or (ii) any of the Effects described in clauses (A) through
(G) of the definition of Seller Material Adverse Effect.
"
IOF
" means the Brazilian tax on financial transactions (
Imposto sobre Operações
Financeiras
).
"
IT Systems
" is defined in
Section 6.8(f)
.
"
Key Employment Agreement
" means the employment agreement, dated as of April 24, 2017, by and between Nextel Brazil and Roberto
Rittes de Oliveira Silva, as amended from time to time.
"
Knowledge of the Company
" means (i) the actual knowledge of the Persons listed on Section 1.1(c) of the Company Disclosure
Schedule and (ii) the actual knowledge the Persons listed on Section 1.1(c) of the Company Disclosure Schedule would have had after reasonable inquiry in such Person's functional area of
responsibility.
"
Labor Laws
" is defined in
Section 6.10(d)
.
"
Law
" means any U.S. or non-U.S. federal, state or local law, statute, treaty, code, ordinance, common law, rule or regulation, as
applicable.
"
Leased Property
" means all real property leased or subleased by the Entities.
"
Legal Proceeding
" means any judicial, administrative or arbitral action, suit, investigation or proceeding commenced, conducted or heard
by or before a Governmental Authority or arbitrator.
"
Liabilities
" means any and all debts, liabilities, commitments and obligations of any kind, whether fixed, contingent or absolute,
matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, whether or not required to be reflected as such in a balance sheet of a Person prepared in
accordance with U.S. GAAP, known or unknown, determined or determinable, whenever or however arising.
"
Licenses
" is defined in
Section 6.8(a)
.
"
Lien
" means any lien, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement,
servitude, voting trust or agreement, transfer restriction (including under any shareholder or similar Contract) or other encumbrance.
A-12
"
Limitation Date
" is defined in
Section 10.1(b)
.
"
Liquidation Certificate Date
" is defined in
Section 13.2(b)
.
"
Luxembourg GAAP
" means Luxembourg accounting standards for private enterprises (
Normes comptables internationales
pour les entreprises
).
"
Material Contracts
" is defined in
Section 6.9(a)
.
"
McCaw
" is defined in the Preliminary Statements.
"
Monthly Management Report
" is defined in
Section 8.1(b)
.
"
Net Working Capital
" means, as of any specified date and without duplication, an amount equal to (i) the aggregate amount of
(a) the accounts receivable (net of allowance for doubtful accounts), inventory and other current assets of the Entities reflected in the asset accounts included in the illustrative calculation
of Net Working Capital set forth in
Exhibit A
,
plus
(b) the noncurrent assets identified
in the asset accounts under the subheading "Other Noncurrent Assets" in the illustrative calculation of Net Working Capital set forth in
Exhibit A
,
minus
(ii) the aggregate amount of (a) the accounts payable, accrued
expenses and other current liabilities of the Entities reflected in the liability accounts included in the illustrative calculation of Net Working Capital set forth in
Exhibit A plus
(b) the
noncurrent liabilities identified in the liability accounts under the subheading "Other Noncurrent Liabilities" in
the illustrative calculation of Net Working Capital set forth in
Exhibit A
, in each case
calculated on a consolidated basis in accordance with the Accounting Principles;
provided
that, for the avoidance of doubt, for purposes of calculating
Net Working Capital: (A) Net Working Capital shall exclude (1) any tax assets other than the tax assets identified in the asset accounts included in the illustrative calculation of Net
Working Capital set forth in
Exhibit A
, and (2) deferred income tax liabilities and any Accrued Tax Contingencies; (B) current
liabilities shall include (1) any amounts required to be paid in respect of accrued vacation for any period prior to the Closing, (2) the unpaid amount of any annual bonuses or
13th salary payments for any period prior to the Closing, whether or not accrued, earned or payable and (3) all current Tax liabilities (including all employment, payroll or similar
Taxes in respect of the amounts described in the foregoing clauses (B)(1) and (B)(2)) other than those described in clause (A)(2) above; (C) current liabilities shall exclude any
balances to the extent included in the calculation of Transaction Expenses; (D) Net Working Capital shall be adjusted pursuant to and in accordance with
Section
8.15
, if applicable, to account for current liabilities for Taxes payable as a result of any Requested Notes Modification; and (E) current liabilities shall exclude any
amounts payable under the Retention Plan.
Exhibit A
also sets forth, for illustrative purposes only, an illustrative calculation of Net Working
Capital and Purchase Price as if it were calculated as of February 28, 2019.
"
Net Working Capital Adjustment
" means the Dollar Equivalent of an amount equal to the absolute value of the difference between
(i) Closing Net Working Capital and (ii) Target Net Working Capital;
provided
that, if Closing Net Working Capital exceeds Target Net
Working Capital, the Net Working Capital Adjustment shall not exceed the Net Working Capital Adjustment Cap.
"
Net Working Capital Adjustment Cap
" means the Dollar Equivalent of the amount in Reais under the line item "Net Working Capital
Adjustment Cap" set forth in Section 1.1(a) of the Company Disclosure Schedule that corresponds to the last full calendar month ended immediately prior to the Closing Date;
provided
that, for any
partial month included in the Transaction Budget Period, the Net Working Capital Adjustment Cap shall also include a prorated
amount for such month equal to (i) the difference between (A) the Dollar Equivalent of the amount in Reais under the line item "Net Working Capital Adjustment Cap" set forth in
Section 1.1(a) of the Company Disclosure Schedule that corresponds to the calendar month in which the Closing occurs and (B) the Dollar Equivalent of the amount in Reais under the line
item "Net Working Capital Adjustment Cap" set forth in Section 1.1(a) of the Company Disclosure Schedule that corresponds to the last full calendar month ended
A-13
immediately
prior to the Closing Date
multiplied by
(ii) a fraction, the numerator of which is the number of days in such month that are prior to
the Closing Date, and the denominator of which is the total number of days in such month;
provided
,
further
, that, for purposes of this definition, if the
Closing Occurs after December 31, 2019, the Net Working Capital Adjustment Cap shall be
deemed to be the Dollar Equivalent of the amount in Reais under the line item "Net Working Capital Adjustment Cap" set forth in in Section 1.1(a) of the Company Disclosure Schedule that
corresponds to December 2019.
"
Nextel Brazil
" is defined in the Preliminary Statements.
"
Nextel Holdings
" is defined in the Preliminary Statements.
"
Nextel Holdings Articles
" means the consolidated articles of association (
statuts
coordonnés
) of Nextel Holdings dated as of November 15, 2018.
"
Nextel Holdings Financial Statements
" is defined in
Section 6.4(a)(i)
.
"
Nextel Holdings SHA
" means the Shareholders Agreement, dated as of June 5, 2017, by and among Nextel Holdings, AI Brazil, the
Company, AI Brazil Holdings AB and Parent.
"
Nextel Holdings Share Transfer Agreement
" means a share transfer agreement between the Company and AI Brazil, in the presence of Nextel
Holdings, to effect the transfer of the AI Brazil Shares to the Company substantially in the form of
Exhibit B
hereto.
"
Nextel Holdings Transactions
" is defined in the Preliminary Statements.
"
NII Internal Reorganization
" is defined in
Section 6.2(c).
"
NIIH
" is defined in the Preamble.
"
NIIM Financial Statements
" is defined in
Section 6.4(a)(ii)
.
"
Non-Paying Party
" is defined in
Section 12.3
.
"
Order
" means any temporary, preliminary or permanent order, injunction, restraining order, executive order, judgment, decree, ruling,
writ, assessment or arbitration award of a Governmental Authority or arbitrator.
"
Ordinary Course of Business
" means the ordinary course of business consistent with past practice.
"
Owned Property
" means all real property owned by the Entities.
"
Parent
" is defined in the Preamble.
"
Parent Board
" means the board of directors of Parent.
"
Parent Board Recommendation
" is defined in
Section 4.2
.
"
Parent Common Stock
" means the shares of common stock, par value $0.001 per share, of Parent.
"
Parent Convertible Notes
" means Parent's 4.25% Convertible Senior Notes due 2023.
"
Parent Employee Plan
" means any Employee Plan (i) entered into, contributed to, sponsored or maintained by Parent or any of its
Subsidiaries and under which any current or former director, officer, employee, individual consultant or other individual service provider of Parent or any of its Subsidiaries or of any Person to
which Parent or any of its Subsidiaries is a successor (or any dependent or beneficiary of any such former director, officer, employee, individual consultant or other individual service provider) has
any right to any payment or benefit or (ii) with respect to which Parent or any of its Subsidiaries has or may have any liability or obligation, in each case excluding any Company Employee
Plan.
A-14
"
Parent Guaranty
" means that certain Parent Guaranty, dated as of October 31, 2017, among Next Holdings, as parent guarantor, and
CDB, as administrative agent under the CDB Credit Facility.
"
Parent Liquidation Event
" is defined in
Section 10.1(b)
.
"
Parent SEC Reports
" means any Report on Form 8-K, Form 10-Q or Form 10-K filed by Parent with the SEC since
December 31, 2017.
"
Parent Stockholder
" means each holder of Parent Common Stock.
"
Parent Stockholder Approval
" means the affirmative vote of a majority of the votes entitled to be cast by the holders of the outstanding
voting power of Parent at the Parent Stockholders Meeting in favor of authorizing this Agreement and the transactions contemplated hereby.
"
Parent Stockholders Meeting
" is defined in
Section 8.12(c
).
"
Parent Takeover Proposal
" means any bona fide proposal or offer from a third party (other than Purchaser or its Affiliates) relating to,
in a single transaction or series of related transactions, any (i) merger, consolidation, business combination or other similar transaction involving Parent that, if consummated, would result
in such third party owning, directly or indirectly, 20% or more of the consolidated assets, net revenues or net income of Parent and its Subsidiaries, taken as a whole, (ii) acquisition in any
manner, directly or indirectly, of more than 20% of the outstanding equity interests of Parent or any resulting parent company of Parent, or (iii) acquisition in any manner, directly or
indirectly, of assets of Parent or its Subsidiaries representing more than 20% of the consolidated assets of Parent.
"
Parties
" means, collectively, Purchaser, Seller, AI Brazil and Parent.
"
Pay-Off Amount
" means the aggregate amount specified in the Pay-Off Letters as required to pay in full all principal and interest
outstanding and all other amounts owed under each of the Brazil Credit Facilities (including any penalties, fees, prepayment premiums or other amounts due upon a prepayment of all principal and
interest outstanding at the Closing), calculated as of the Closing Date.
"
Pay-Off Letters
" is defined in
Section 3.2(a)(vi)
.
"
Paying Party
" is defined in
Section 12.3
.
"
Payout Schedule
" is defined in
Section 2.2(c)
.
"
Permits
" means any approvals, authorizations, homologations, accreditations, consents, licenses, permits or certificates issued by a
Governmental Authority, but excluding Telecommunication Licenses.
"
Permitted Liens
" means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies
of title insurance which have been made available to Purchaser, (ii) statutory liens for any Taxes, assessments or other governmental charges not yet due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with U.S. GAAP, (iii) mechanics', carriers',
workers', repairmen's and similar Liens arising or incurred in the Ordinary Course of Business, (iv) zoning, entitlement and other land use and environmental regulations, (v) liens
securing debt as disclosed in the Financial Statements and that will be released at Closing, (vi) title of a lessor under a capital or operating lease, (vii) the items listed on
Section 1.1(d) of the Company Disclosure Schedule and (viii) such other imperfections in title, charges, easements, restrictions and encumbrances that are not material in amount or
effect on the business of Nextel Brazil and its Subsidiaries.
"
Person
" means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Authority or other entity.
A-15
"
PII
" is defined in
Section 6.8(h)
.
"
PIS/COFINS Credits Claims
" means one or more lawsuits and/or administrative proceedings filed or initiated by a Brazilian Entity to
obtain from applicable Governmental Authorities and/or Tax Authorities a final and non-appealable recognition of such Brazilian Entity's right to credits of PIS/COFINS arising from the exclusion of
ICMS Tax from the basis of calculation of PIS/COFINS in previous tax periods, such as lawsuit (Mandado de Segurança) 2007.61.00.031047-1 filed by Nextel
Telecomunicações S.A. before the Federal Courts of Sao Paulo.
"
PIS/PASEP
" means the Brazilian Social Contributions (
Contribuição para o Programa
de Integração Social
and
Programa de Formação do Patrimônio do Servidor
Público
).
"
Postpay Subscribers
" means the aggregate number of Subscribers that are in active service, excluding Prepaid Subscribers.
"
Pre-Closing Straddle Period
" means the portion of the Straddle Period ending on the Closing Date.
"
Pre-Closing Straddle Period Taxes
" means Taxes of any Entity (or for which any Entity is liable), allocable to the Pre-Closing Straddle
Period pursuant to
Section 11.2
.
"
Pre-Closing Tax Period
" means any taxable period (or a portion thereof) ending on or prior to the Closing Date and shall include the
Pre-Closing Straddle Period.
"
Pre-Closing Taxes
" means any Taxes of any Entity (or for which any Entity is liable) relating or attributable to any Pre-Closing Tax
Period and shall include any Pre-Closing Straddle Period Taxes.
"
Prepaid Subscribers
" means the aggregate number of Subscribers that are in active service with telephone numbers assigned pursuant to
prepaid Contracts.
"
Proxy Statement
" is defined in
Section 8.12(a)
.
"
PTAX Rate
" means the Reais/Dollar exchange rate, expressed as the amount of Reais per one Dollar, as reported by BACEN on its website
(which, as of the date of this Agreement, is located at https://www.bcb.gov.br/?TXCOTACAO) or, if such source is unavailable, its equivalent successor source or any other authoritative source as may
be mutually agreed between Parent and Purchaser.
"
Purchase Price
" is defined in
Section 2.2(a)
.
"
Purchaser
" is defined in the Preamble.
"
Purchaser Indemnitees
" is defined in
Section 10.2
.
"
Purchaser Material Adverse Effect
" means any Effect that would prevent, materially delay or materially impair the ability of Purchaser to
consummate the transactions contemplated by this Agreement on a timely basis.
"
Purchaser Released Persons
" is defined in
Section 13.12
.
"
Radiofrequencies Licenses
" means any authorizations issued by ANATEL for the granting of the right of use of radiofrequency spectrum
necessary for the provision of telecommunication services in Brazil, subject to the terms and conditions set forth under the relevant Brazilian laws and regulations.
"
Regulatory Approval
" means the approval of ANATEL and any other Governmental Authority (excluding the Antitrust Approval) for the change
of control of the Entities that is required to be received for the consummation of the transactions contemplated by this Agreement, which shall be deemed to have been obtained upon the later to occur
of: (i) the publication of such approval in the Official Gazette and (ii) the fulfillment of all conditions or obligations that may be imposed by ANATEL for such approval to come into
effect.
"
Related Party Contract
" is defined in
Section 6.21
.
A-16
"
Related Person
" means, with respect to any Person: (i) each Affiliate of such Person; and (ii) any director or executive
officer of such Person or any of its Affiliates.
"
Representatives
" means, with respect to any Person, such Person's and each of its respective Subsidiaries' directors, officers,
employees, investment bankers, financial advisors, attorneys, accountants or other advisors, agents or representatives.
"
Requested Notes Modification
" is defined in
Section 8.15
.
"
Resolution Period
" is defined in
Section 2.4(c)
.
"
Retention Plan
" means the retention plan described on Section 1.1(e) of the Company Disclosure Schedule.
"
RFB
" means Brazilian Federal Revenue Service (
Receita Federal do Brasil
).
"
SEC
" means the U.S. Securities and Exchange Commission.
"
Seller
" is defined in the Preamble.
"
Seller Fundamental Representations
" means the representations and warranties set forth in
Section 4.1
(Organization of NIIH and Parent),
Section 4.2
(Authorization of Agreement),
Section 4.4
(Title to Acquired Equity Interests), the first sentence of
Section 6.1
(Organization
of the Entities),
Section 6.2
(Capitalization of the Entities) and
Section 6.22
(Holding
Companies).
"
Seller Material Adverse Effect
" means (i) any fact, circumstance, event, development, change, occurrence or effect (each, an
"
Effect
") that has a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Entities, taken
as a whole, or (ii) any Effect that would prevent, materially delay or materially impair the ability of Seller, AI Brazil or Parent to consummate the transactions contemplated by this
Agreement;
provided
,
however
, that for purposes of the foregoing clause (i) only, no Effect will
be taken into account in determining whether there has been, or would reasonably be expected to be, a Seller Material Adverse Effect to the extent resulting from: (A) changes in conditions
generally affecting the industry in which the Entities operate, (B) changes in Brazilian GAAP (or official interpretations thereof) or changes in the regulatory or accounting requirements
applicable to the industry in which the Entities operate, (C) any failure by the Entities to meet any projections of revenues, earnings or other operational or financial measures for any period
ending on or after the date of this Agreement (
provided
,
however
, that the exception in this
clause (C) will not prevent or otherwise affect a determination that any underlying cause of such failure has resulted in, or contributed to, a Seller Material Adverse Effect),
(D) changes in the financial or securities markets (including the cost or availability of debt or equity financing), applicable Law, or general economic, regulatory or political conditions, in
each case, globally, in Brazil or in any other jurisdiction, (E) acts of war (whether or not declared), armed hostilities, acts of terrorism or any natural disasters, (F) any change
directly resulting from the announcement or consummation of the transactions contemplated by this Agreement, including any employee departures and any actions taken by customers or suppliers of the
Entities to terminate, discontinue or not renew their Contracts with the Entities or otherwise withhold any consent necessary in respect of such Contracts
(
provided
,
however
, that the exception in this clause (F) will not apply to the representations
set forth in
Sections 4.3
,
5.3
,
6.3
,
6.10(b)
and
6.12(f)
and, to the extent related thereto, the condition set forth in
Section 9.1(a)
) and (G) any matter to the extent disclosed in the Company
Disclosure Schedule or the AI Brazil Disclosure Schedule;
provided
,
further
, that with respect to clauses (A), (B), (D), or (E), such matters will be
considered to the extent that they disproportionately affect the Entities as compared to similarly situated businesses operating in the telecommunications industry in Brazil.
"
Seller Releasing Persons
" is defined in
Section 13.12
.
A-17
"
Selling and Marketing Budget Amount
" means the aggregate amount of selling and marketing expenses contemplated by the 2019 Transaction
Budget to have been incurred during the Transaction Budget Period;
provided
that if the Closing occurs after December 31, 2019, the Selling and
Marketing Budget Amount shall be increased for each month between January 1, 2020 and the Closing Date by the
budgeted amount for the corresponding month(s) in the 2019 Transaction Budget;
provided
,
further
, that
for any partial month included in the Transaction Budget Period, the Selling and Marketing Expense Budget Amount shall include a prorated amount for such month equal to (i) the total amount of
selling and marketing expenses budgeted for such month multiplied by (ii) a fraction, the numerator of which is the number of days in such month included in the Transaction Budget Period, and
the denominator of which is the total number of days in such month.
"
Selling and Marketing Cost Adjustment Amount
" means the Dollar Equivalent of the amount, if any, by which the Selling and Marketing
Budget Amount exceeds Selling and Marketing Costs.
"
Selling and Marketing Costs
" means, without duplication, the Dollar Equivalent of the aggregate amount of selling and marketing expenses
of Nextel Brazil and its Subsidiaries, determined on an accrual basis, during the period from March 1, 2019 to the Closing Date.
"
Software
" means any and all (i) software and computer programs and applications, including any and all software implementations of
algorithms, models and methodologies, and application programming interfaces, whether in source code or object code, (ii) databases and compilations, including any and all data, data files and
collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing,
(iv) screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (v) all documentation including user manuals and other training
documentation related to any of the foregoing.
"
Solvent
" means, when used with respect to any Person, as of any date of determination: (i) the amount of the "fair saleable value"
of the assets of such Person shall, as of such date, exceed: (A) the value of all "liabilities of such Person, including contingent and other liabilities," as of such date, as such quoted terms
are generally determined in accordance with applicable Laws governing determinations of the insolvency of debtors; and (B) the amount that shall be required to pay the probable liabilities of
such Person on its existing debts (including contingent liabilities) as such debts become absolute and matured; (ii) such Person shall not have, as of such date, an unreasonably small amount of
capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date; and (iii) such Person shall be able to pay its liabilities, including
contingent and other liabilities, as they mature. For the purpose of this definition, "not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or
proposed to be engaged" and "able to pay its liabilities, including contingent and other liabilities, as they mature" means that such Person shall be able to generate enough cash from operations,
asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.
"
Straddle Period
" means a taxable period beginning on or before, and ending after, the Closing Date.
"
Subscriber
" means a mobile telephone number maintained by any Entity and assigned to an end user of the Entities' mobile wireless voice
or data services that is paying any Entity for such service
(regardless of whether such end user is current or delinquent in the payment at any given date of calculation).
"
Subsidiary
" of any Person means another Person, with respect to which the first Person owns an amount of voting securities, other voting
ownership or voting partnership interests that is sufficient to elect at least a majority of the board of directors or other governing body (or, if there are no such
A-18
voting
interests, 50% or more of the equity interests) of such other Person, whether directly or indirectly.
"
Sunbird Financing
" means the payment plan entered into between Sunbird Telecomunicações Ltda. and ANATEL in
October 2013 for the use of radiofrequency channels in the cities of Porto Alegre, Florianópolis, Campinas, São José dos Campos, Niterói and
Rio de Janeiro until October 6, 2024.
"
Superior Proposal
" means (i) a Brazil Proposal that would result in the third party making such proposal owning (A) 100% of
the equity interests or assets of NIIH or the Company, (B) all of the equity interests of Nextel Holdings that are owned by the Company, (C) all of the assets of Nextel Holdings or
(D) 100% of the equity interests or assets of Brazil Parent or Nextel Brazil or (ii) a Parent Takeover Proposal that would result in the third party making such proposal owning 80% or
more of the equity interests or assets of Parent or NIIH, in each case, that Parent's Board determines in good faith, after consultation with Parent's outside legal counsel and its financial advisor,
(A) is more favorable to the Parent Stockholders than the transactions contemplated by this Agreement (after taking into account the Company Break-Up Fee and any revised proposal offered by
Purchaser pursuant to
Section 8.13(d)
), (B) is not conditioned on the receipt of financing and (C) is reasonably likely to be consummated
on the terms proposed.
"
Target Accrued Tax Contingencies
" means $15,808,720.
"
Target Net Working Capital
" means$28,465,308.
"
Tax
" or "
Taxes
" means (i) any and all taxes, however denominated, including any
deficiencies, assessments, governmental charges, duties (including custom duties), fees, imposts, levies, interest, additions to tax or, fines, penalties or additional amounts that may become payable
in respect thereof, imposed by any U.S. or non-U.S. national, state, federal, provincial, county or local Governmental
Authority responsible for the imposition of any such tax (each, a "
Tax Authority
"), which taxes will include, without limiting the generality of the
foregoing, all income taxes, alternative or add-on minimum, escheat, capital, ad valorem, profits, license, privilege, inventory, capital stock, capital gain taxes, IOF, PIS/PASEP, COFINS, CSLL,
social contribution taxes, payroll taxes and employee withholding taxes (INSS), FGTS, value added customs, unemployment insurance, social security, service taxes, sales and use taxes, excise taxes,
environmental taxes, franchise taxes, gross receipts taxes, occupation taxes, real and personal property taxes, estimated taxes, stamp taxes, documentary taxes, transfer taxes, withholding taxes, and
other obligations of the same or of a similar nature, and (ii) any liability in respect of any item described in clause (i) payable by reason of contract, transferee liability, operation
of Law or otherwise.
"
Tax Authority
" is defined within the definition of "Tax".
"
Tax Claim
" is defined in
Section 12.4(a)
.
"
Tax Return
" means all returns, declarations, reports, estimates, claims for refunds, information returns, elections and statements
required to be filed with any Governmental Authority in respect of any Taxes, including any amendments thereto and requests for the extension of time in which to file any such return, declaration,
report, estimate, information return, election or statement.
"
Telecommunication Licenses
" means any concession, permit, authorization or registration granted by ANATEL for the operation of any kind
of telecommunications services, exploitation of satellite or satellite capacity, numbering resources, equipment, stations, network (or any element thereof), band-width, as well as Radiofrequencies
Licenses.
"
Telefônica
" means
Telefônica Brasil S.A
.
A-19
"
Telefônica Agreements
" means the (i)
Contrato de Exploração
Industrial de Rede Móvel,
dated as of December 26, 2013, by and between Telefônica and Nextel Brazil, as amended, including all its
schedules and ancillary documents, and (ii) the
Contrato de Compartilhamento de RedeRan Sharing
, dated as of May 22, 2016, by
and between Telefônica and Nextel Brazil, as amended, including all its schedules and ancillary documents.
"
Termination Date
" is defined in
Section 3.4(a).
"
Third Party Claim
" is defined in
Section 10.4(a)
.
"
Third Party Claim Notice
" is defined in
Section 10.4(a)
.
"
Tower Leases
" means any leases of (and other arrangements conveying the right to use) real or personal property, or a combination
thereof, in respect of or related to transmission tower sites.
"
Trade Secrets
" is defined in the definition of "Intellectual Property".
"
Trademark License Agreement
" means the Fourth Amended and Restated Trademark License Agreement, dated July 27, 2011, by and
between the Trademark Licensor and Parent, as amended on July 9, 2013, as further amended on September 15, 2014 and as further amended on June 1, 2015.
"
Trademark Licensor
" means Nextel Communications, Inc.
"
Trademark Sublicense Agreement
" means the Trademark License Agreement, effective as of January 1, 2012, by and between Parent and
Nextel Brazil, as amended on October 12, 2012 and as further amended on October 28, 2013.
"
Trademarks
" means trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, internet domain names,
corporate names, together with the goodwill associated with any of the foregoing, and all applications, registrations, renewals and extensions of the foregoing.
"
Transaction Budget Period
" means (i) the period of full calendar months beginning March 1, 2019 and ending on or prior to
the Closing Date
plus
(ii) if applicable, the part of the calendar month in which the Closing Date occurs that is prior to the Closing Date.
"
Transaction Expenses
" means, without duplication, all fees, costs and expenses incurred by or on behalf of Seller, AI Brazil or any of
their respective Affiliates or the Company or any of its Subsidiaries in connection with any sales process involving Nextel Brazil or Parent or any of its other Subsidiaries, the negotiation and
execution of this Agreement, and the performance and consummation of the transactions contemplated by this Agreement, in each case solely to the extent required to be paid or
reimbursed by, or an obligation of, any of the Entities at or following the Closing, including: (i) the fees and expenses of outside counsel; (ii) accounting, investment banking,
professional advisory or consulting fees and expenses; (iii) all change of control, closing or signing bonuses, transaction bonuses and/or severance or retention or similar payments payable or
benefits provided to any employee, officer or director of the Company or other independent consultant employed by the Company or any other Entity, including, for the avoidance of doubt, the amount (if
any) of any transaction bonuses that become payable prior to the Closing under the Retention Plan (
provided
that this clause (iii) shall not
include any amounts payable as a result of actions taken by Purchaser or its Affiliates after the Closing); (iv) any Taxes due in respect of (A) any Transaction Expenses referred to in
the foregoing clause (iii) or (B) any equity or equity-based awards held by any employee, officer, director or other individual service provider of the Company or any other Entity under
any Parent Employee Plan or Company Employee Plan; and (v) any amounts payable to Seller or its Related Persons in connection with this Agreement or the transactions contemplated hereby,
including any amounts payable under the Related Party Contracts;
provided, however,
that, for the avoidance of doubt, Transaction Expenses shall not
include (A) any amounts included in the calculation of Net Working Capital, Closing BRL
A-20
Indebtedness
or Closing USD Indebtedness or (B) amounts that become payable following the Closing in accordance with the Retention Plan.
"
Transaction Litigation
" is defined in
Section 8.8(a)
.
"
Transfer Taxes
" means any and all transfer Taxes (excluding Taxes measured in whole or in part by net income) and similar Taxes, fees,
duties, levies, customs, tariffs, imposts, assessments, obligations and charges payable to a Governmental Authority by reason of the purchase and sale of the Entities.
"
Transmission Tower Standards
" is defined in
Section 6.14(g)
.
"
Unaudited Financial Statements
" is defined in
Section 6.4(a)(iv)
.
"
Unpaid Transaction Expenses
" means Transaction Expenses that are unpaid as of immediately prior to the Closing.
"
Unresolved Items
" is defined in
Section 2.4(d)
.
"
U.S.
" means the United States of America.
"
U.S. GAAP
" means United States Generally Accepted Accounting Principles.
"
USD Indebtedness
" means all Indebtedness denominated in Dollars, including Indebtedness under the CDB Credit Facility.
1.2.
Construction Rules and Interpretative Matters.
The following rules of construction and
interpretation will apply:
(a) when
calculating the period of time in which any act is to be performed pursuant to this Agreement, (i) the date that is the reference date in calculating the
beginning of such period will be excluded and (ii) if the last day of such period is a non-Business Day, the period in question will end on the next succeeding Business Day
(
provided
that, for the avoidance of doubt, this
Section 1.2(a)
shall not be construed to modify the
definition of Transaction Budget Period);
(b) any
reference to a "day" means a calendar day unless specified as a Business Day;
(c) any
reference in this Agreement to "$" or "Dollars" will mean U.S. dollars and any reference to "Reais" or "R$" means Brazilian Reais;
(d) the
Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement;
(e) any
reference in this Agreement to gender will include all genders, and words imparting the singular number only will include the plural and vice versa;
(f) the
division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and will not affect or
be utilized in construing or interpreting this Agreement;
(g) all
references in this Agreement to any "Section" or "Article" are to the corresponding Section or Article of this Agreement unless otherwise specified;
(h) words
such as "herein", "hereinafter", "hereof" and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the
context otherwise requires;
(i) the
word "including" or any variation thereof means "including, without limitation" and will not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it;
(j) any
reference to the "date hereof" means the date of this Agreement;
A-21
(k) references
to Laws mean a reference to (i) such Laws as the same may be amended, modified, supplemented from time to time and (ii) all rules and
regulations promulgated thereunder, unless the context requires otherwise;
(l) the
word "or" is not exclusive and the words "will", "will not", "shall" and "shall not" are expressions of command and not merely expressions of future intent or
expectation, in each case, unless the context otherwise requires;
(m) covenants
that require the Entities (or the officers, employees, consultants, agents, accountants, attorneys and other Representatives of the Entities) to take or not
take an action mean that NIIH shall cause the Entities to take or not take such action and NIIH shall cause the Brazil Entities (or the officers, employees, consultants, agents, accountants, attorneys
and other Representatives of the Brazil Entities) to take or not take such action; and
(n) the
Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises,
this Agreement will be construed as jointly drafted by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision of
this Agreement.
ARTICLE 2. SALE AND PURCHASE OF ACQUIRED EQUITY INTERESTS
2.1.
Sale and Purchase of Acquired Equity Interests.
Subject to the terms and
conditions contained herein, at the Closing, (a) NIIH will sell and deliver to Purchaser, and Purchaser will purchase and accept
delivery from NIIH of, all of the Acquired Equity Interests, free and clear of all Liens, and (b) AI Brazil will sell and deliver to the Company, and the Company will purchase and accept
delivery from AI Brazil of, all of the AI Brazil Shares, free and clear of all Liens.
2.2.
Consideration.
(a) The aggregate consideration for the Acquired Equity
Interests shall be an amount in Dollars (the "
Purchase
Price
") equal to the following, as finally adjusted pursuant to
Section 2.4
:
(i) Enterprise
Value,
(ii)
plus
the Capex Spend,
(iii)
minus
the Selling and Marketing Cost Adjustment Amount,
(iv)
plus
the Net Working Capital Adjustment (if Closing Net Working Capital exceeds Target Net Working Capital) or
minus
the Net Working Capital Adjustment (if Closing Net
Working Capital is less than Target Net Working Capital),
(v)
minus
the Closing Indebtedness Adjustment,
(vi)
plus
the Closing Cash Adjustment.
(b) The
aggregate consideration for the AI Brazil Shares is an amount in cash equal to the AI Brazil Payment, as finally adjusted pursuant to
Section
2.4
.
(c) At
least five and no more than ten Business Days prior to the Closing Date, Parent will prepare and deliver to Purchaser and AI Brazil a certificate executed by an
executive officer of Parent setting forth: (i) a statement (the "
Estimated Closing Statement
") specifying in reasonable detail Parent's good
faith estimates of Closing Net Working Capital (the "
Estimated Closing Net Working Capital
") and the Estimated Net Working Capital Adjustment resulting
therefrom and Parent's good faith estimates of Capex Spend (the "
Estimated Capex Spend
"), the Selling and Marketing Cost Adjustment Amount (the
"
Estimated Selling and Marketing Cost Adjustment Amount
"), Closing USD Indebtedness ("
Estimated Closing USD
Indebtedness
"), Closing BRL Indebtedness ("
Estimated Closing BRL Indebtedness
"), Estimated Closing Indebtedness Adjustment,
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Closing
USD Cash ("
Estimated Closing USD Cash
"), Closing BRL Cash ("
Estimated Closing BRL Cash
") and the
Estimated Closing Cash Adjustment, together with the calculation of the Estimated Purchase Price resulting therefrom, and specifying in reasonable detail Parent's good faith estimate of Unpaid
Transaction Expenses (the "
Estimated Unpaid Transaction Expenses
") and Parent's good faith estimate of Closing Accrued Tax Contingencies (the
"
Estimated Closing Accrued Tax Contingencies
") and the Estimated Accrued Tax Contingencies Adjustment resulting therefrom; and (ii) a schedule
(the "
Payout Schedule
") showing the AI Brazil Percentage, the Company Percentage, the Closing AI Brazil Payment and Closing NIIH Payment resulting
therefrom. For the avoidance of doubt, each of Seller and AI Brazil acknowledges and agrees that, unless the Payout Schedule is accompanied by a written notice executed by each of NIIH and AI Brazil
specifying different percentages (which percentages shall aggregate to 100%), the AI Brazil Percentage shall be deemed to be 29.9999997% and the Company Percentage shall be deemed to be 70.0000003%
for all purposes under this Agreement. The Estimated Closing Statement and the Payout Schedule shall be prepared in good faith and the Estimated Closing Statement shall be prepared in accordance with
the Accounting Principles. Parent shall consider in good faith any objections of Purchaser to the Estimated Closing Statement and, if Parent has determined in good faith that any revisions are
required in order to cause the Estimated Closing Statement to comply with the terms of this Agreement, Parent will reissue an Estimated Closing Statement no later than 5:00 p.m., New York City
time, on the last Business Day immediately prior to the Closing Date, reflecting such revisions. Each of Parent, Seller and AI Brazil acknowledges and agrees that, in making the payments required to
be made by Purchaser pursuant to this
ARTICLE 2
, Purchaser shall be entitled to rely on the accuracy of the AI Brazil Percentage, the Company
Percentage, the Closing AI Brazil Payment and Closing NIIH Payment set forth in the Payout Schedule, and neither Purchaser nor, following the Closing, the Company shall have any liability to Seller or
AI Brazil with respect to any claim that the amounts payable to Seller or AI Brazil, as the case may be, as set forth on the Payout Schedule are incomplete or inaccurate or that Seller or AI Brazil,
as the case may be, was entitled to receive payment of any different amount, in each case with respect to the Acquired Equity Interests or AI Brazil Shares transferred by Seller or AI Brazil, as the
case may be, subject to any adjustment thereto in accordance with
Section 2.4(g)
and to the actual payment of the amounts set forth in the Payout
Schedule to Seller or AI Brazil, as the case may be. For the avoidance of doubt, none of the Estimated Closing Statement, the Payout Schedule or any constituent part thereof shall include and in no
event shall the Closing AI Brazil Payment be reduced as a result of, any reserve, set aside, deduction or similar amount in respect of any potential claim by Purchaser of any breach or purported
breach by Parent, Seller or the Entities of any of their respective representations and warranties or obligations under this Agreement, in the understanding that any reduction in the Final Purchase
Price made pursuant to the third sentence of
Section 2.4(a)
shall be entirely allocated to, and borne by, Seller.
2.3.
Payment of Purchase Price.
On the Closing Date, Purchaser will:
(a) pay
the Closing NIIH Payment to NIIH, by wire transfer of immediately available funds to the account designated by NIIH in writing no later than two Business Days prior
to the Closing Date;
(b) on
behalf of the Company, pay the Closing AI Brazil Payment to AI Brazil by wire transfer of immediately available funds to an account designated in writing by AI Brazil
no later than two Business Days prior to the Closing Date;
(c) deposit
the Escrow Amount with the Escrow Agent, by wire transfer of immediately available funds, to be held in the Escrow Account in accordance with the Escrow
Agreement;
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(d) deposit
the Convertible Notes Escrow Amount with the escrow agent for the Parent Convertible Notes, by wire transfer of immediately available funds, in the event that
the Indenture has not been amended in accordance with
Section 8.20(a)
or Parent has not made the escrow deposit contemplated by
Section 8.20(b)
; and
(e) on
behalf of Nextel Brazil, pay the Pay-Off Amount to each of the recipients specified in each of the Pay-Off Letters by wire transfer of immediately available funds to
the accounts specified in such Pay-Off Letters.
2.4.
Purchase Price Adjustment.
(a) As
promptly as practicable following the Closing Date (but in any event within 45 days thereafter), Purchaser will prepare, or cause to be prepared, and deliver
to Parent and AI Brazil a certificate executed by a duly authorized representative of Purchaser (the "
Closing Statement
") consisting of
Purchaser's calculation of Closing Net Working Capital, Net Working Capital Adjustment, Capex Spend, the Selling and Marketing Cost Adjustment Amount, Closing USD Indebtedness, Closing BRL
Indebtedness, Closing Indebtedness Adjustment, Closing USD Cash, Closing BRL Cash and Closing Cash Adjustment, together with the calculation of the Final Purchase Price and Final AI Brazil
Payment resulting therefrom, and Purchaser's calculation of Unpaid Transaction Expenses, Closing Accrued Tax Contingencies and the Accrued Tax Contingencies Adjustment resulting therefrom. The Closing
Statement will be prepared in good faith and in accordance with the Accounting Principles. For the avoidance of doubt, if the Final Purchase Price would be lower but for the breach by Seller of any of
its obligations hereunder, Purchaser may present such lower Final Purchase Price in the Closing Statement, in the understanding that any resulting reduction in the Final Purchase Price shall be
entirely allocated to, and borne by, Seller. Parent and NIIH represent and warrant that Parent or its
applicable Subsidiary has classified contingent Tax liabilities of the Entities as "probable", "possible" or "remote" in accordance with the Accounting Principles for purposes of determining Target
Accrued Tax Contingencies, and each of Parent and Purchaser agrees that it shall not change such classifications for purposes of determining Estimated Closing Accrued Tax Contingencies or Closing
Accrued Tax Contingencies, respectively, except as expressly set forth in the Accounting Principles.
(b) The
Closing Statement will become final, binding and conclusive upon Parent, Seller, AI Brazil and Purchaser on the 45th day following Purchaser's delivery
of the Closing Statement unless, prior to such 45th day, Parent (on behalf of Seller and AI Brazil) delivers to Purchaser a written notice (a "
Closing Statement
Dispute Notice
") stating that Parent disputes one or more items contained in the Closing Statement (a "
Disputed Item
") and
describing in reasonable detail each Disputed Item based on information then available to Parent.
(c) If
Parent delivers a Closing Statement Dispute Notice, then Purchaser and Parent, on behalf of Seller and AI Brazil, will seek in good faith to resolve the
Disputed Items during the 30-day period beginning on the date Purchaser receives the Closing Statement Dispute Notice (the "
Resolution Period
"). If
Purchaser and Parent reach agreement with respect to any Disputed Items, Purchaser will revise the Closing Statement to reflect such agreement.
(d) If
Purchaser and Parent are unable to resolve all Disputed Items during the Resolution Period, then Purchaser and Parent will jointly engage and submit the unresolved
Disputed Items (the "
Unresolved Items
") to PricewaterhouseCoopers or, if such firm is unwilling or unable to serve, to Deloitte &
Touche LLP (any such Person, the "
Independent Accountant
"). Purchaser and Parent will use their respective reasonable best efforts to cause the
Independent Accountant to issue its written determination regarding the Unresolved Items within 30 days after such items are submitted for review. The scope of the disputes to be resolved by
the Independent Accountant will be to make a determination with respect to the Unresolved Items in accordance with the
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Accounting
Principles and this
Section 2.4(d)
, and the Independent Accountant is not to make any other determination. The Independent
Accountant's decision will be based solely on written submissions by Purchaser and Parent. Each of Purchaser's and Parent's written submission to the Independent Accountant will also be provided to
the other Party. For each Unresolved Item, the Independent Accountant shall assign a value equal to either the value for such item claimed by Purchaser or the value claimed by Parent, and no other
value, as the resolution of such item. Purchaser and Parent each will be afforded the opportunity to present to the Independent Accountant any material such Party deems relevant to the Independent
Accountant's determination. Each of Purchaser and Parent will use
its commercially reasonable efforts to furnish to the Independent Accountant such work papers and other documents and information pertaining to the Unresolved Items as the Independent Accountant may
request. The determination of the Independent Accountant will be final, binding and conclusive on the Parties absent manifest error. The "
Final Purchase
Price
" means the Purchase Price as calculated based upon the Closing Net Working Capital, Net Working Capital Adjustment, Capex Spend, the Selling and Marketing Cost Adjustment
Amount, Closing USD Indebtedness, Closing BRL Indebtedness, Closing USD Cash, Closing BRL Cash, in each case, as and when finally determined in accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
, as the case may be; the "
Final Unpaid Transaction Expenses
" means Unpaid
Transaction Expenses as and when finally determined in accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section
2.4(d)
; and the "
Final Accrued Tax
Contingencies Adjustment
" means the Accrued Tax Contingencies Adjustment as calculated based upon the Closing Accrued Tax Contingencies as and when finally determined in
accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
;
provided
that, if Target Accrued Tax Contingencies exceed the Closing Accrued Tax
Contingencies (as and when finally determined in accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
), then (A) if the Net Working Capital
Adjustment Cap exceeds Net Working Capital Adjustment (as and when finally determined in accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
), the Final Accrued Tax Contingencies Adjustment
shall not exceed an amount equal to the lesser of (1) the difference between the Net Working Capital Adjustment Cap and the Net Working Capital Adjustment (as and when finally determined in
accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
) and (2) the
Accrued Tax Contingencies Adjustment Cap or (B) if the Net Working Capital Adjustment (as and when
finally determined in accordance with
Section 2.4(b)
,
Section 2.4(c)
or this
Section 2.4(d)
)
exceeds the Net Working Capital Adjustment Cap, then the Final Accrued Tax Contingencies Adjustment shall be $0.
(e) The
fees, expenses and costs of the Independent Accountant will be borne by Purchaser, on the one hand, and Parent, on the other hand, in the same proportion as the
aggregate amount of the Unresolved Items that is unsuccessfully disputed by each of Purchaser and Parent (as finally determined by the Independent Accountant) bears to the total amount of the
Unresolved Items submitted to the Independent Accountant.
(f) Seller
will provide Purchaser and its Representatives, upon reasonable advance notice and during normal business hours, such access to the books and records of Seller
(and, prior to the Closing, the Entities) and the employees and other service providers (including accountants and other advisors) to Seller (and, prior to the Closing, the Entities), including work
papers, schedules, memoranda and other documents, as may be reasonably requested by Purchaser in connection with the review of the Estimated Closing Statement;
provided
that such access will be subject
to the limitations described in the penultimate sentence of
Section 8.1(a)
. From and after Closing, Purchaser will provide AI Brazil, Parent and Seller and their respective Representatives,
upon
reasonable advance notice and during normal business hours, such access to the books and records of the Entities and the employees and other service providers (including accountants and other
advisors) to the Entities, including work papers, schedules, memoranda and other documents, as may be reasonably requested by Parent in connection with Parent's or Seller's review of the
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Closing
Statement;
provided
that such access will be subject to the limitations described in the penultimate sentence of
Section
8.1(a)
(it being understood that, for purposes of this proviso, all references to Parent and Seller in such sentence shall be deemed to refer to Purchaser).
(g) Following
the determination of the Final Closing Statement:
(i) (A)
if the Final Purchase Price exceeds the Estimated Purchase Price, then Purchaser will pay (1) to AI Brazil an amount equal to such excess
multiplied by
the AI Brazil Percentage, and
(2) to NIIH an amount equal to the remaining amount of such excess, or (B) if the
Estimated Purchase Price exceeds the Final Purchase Price, then (1) AI Brazil will pay to Purchaser an amount equal to such excess
multiplied
by
the AI Brazil Percentage, and (2) NIIH will pay to Purchaser the remaining amount of such excess;
(ii) (A)
if the Estimated Unpaid Transaction Expenses exceed the Final Unpaid Transaction Expenses, then Purchaser shall pay to NIIH the amount of such excess, or
(B) if the Final Unpaid Transaction Expenses exceed the Estimated Unpaid Transaction Expenses, then NIIH shall pay to Purchaser the amount of such excess; and
(iii) (A)
if the Final Accrued Tax Contingencies Adjustment exceeds the Estimated Accrued Tax Contingencies Adjustment, then Purchaser shall pay to NIIH the amount of such
excess, or (B) if the Estimated Accrued Tax Contingencies Adjustment exceeds the Final Accrued Tax Contingencies Adjustment, then NIIH shall pay to Purchaser the amount of such excess.
The
Party that is required to make a payment pursuant to this
Section 2.4(g)
will make such payment within two Business Days after
the determination of the Final Closing Statement. Any payment under this
Section 2.4(g)
will be made in cash in Dollars, by wire transfer of
immediately available funds to an account of the recipient designated in advance. At Purchaser's option and in its sole discretion, any amount owed to Purchaser by NIIH pursuant to this
Section 2.4(g)
may be recovered from the Escrow Amount.
(h) Any
amount paid pursuant to
Section 2.4(g)
will be treated as an adjustment to the Final Purchase Price for Tax
reporting purposes.
(i) Notwithstanding
anything to the contrary contained in this Agreement, in no event shall the calculation of the Final AI Brazil Payment be reduced for, or by
reason of, any claim by Purchaser of any breach or purported breach by Parent, Seller or the Entities of any of their respective representations and warranties or obligations under this Agreement, in
the understanding that any reduction in the Final Purchase Price made pursuant to the third sentence of
Section 2.4(a)
shall be entirely
allocated to, and borne by, Seller.
ARTICLE 3. CLOSING AND TERMINATION
3.1.
Closing Date.
Subject to the satisfaction of the conditions set forth
in
Section 9.1, Section 9.2
and
Section 9.3
or the waiver thereof by the Party
entitled to waive that condition, the closing of the purchase and sale of the Acquired Equity Interests and the AI Brazil Shares (the "
Closing
")
will take place at, or be directed from, the offices of Jones Day located at 250 Vesey Street, New York, New York 10281, or at such other place as Seller may designate in writing, at 10:00 a.m.
New York City time, on the date that is two Business Days following the satisfaction or waiver of the conditions set forth in
ARTICLE 9
, other than
conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions, unless another time or date, or both, are agreed to in writing by the
Parties. The Parties agree that the closing of the purchase and sale of the Acquired Equity Interests shall not take place hereunder unless the closing of the Nextel Holdings Transaction occurs prior
thereto or substantially simultaneously therewith, unless the condition set forth in
Section 9.1(f)
with respect to the consummation of the
Nextel Holdings Transaction has been waived by
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Purchaser;
provided
that Purchaser shall not waive such condition unless AI Brazil shall have breached or failed to perform any of its respective
covenants or other agreements set forth in this Agreement which inaccuracy, breach or failure to perform would give rise to the failure of any of the conditions set forth in
Section 9.1(b)
or
Section 9.1(d)
to be satisfied or AI Brazil is in breach of its obligations to make or is
incapable of making the closing deliveries required of AI Brazil under
Section 3.2(b)
.
3.2.
Closing Deliveries by Seller and AI Brazil.
(a) At
the Closing, NIIH will deliver, or cause to be delivered, to Purchaser the following:
(i) the
Acquired Equity Interests and all such necessary documentation, duly executed by NIIH (and the Company, where applicable), required under Luxembourg Law to sell and
transfer the Acquired Equity Interests to Purchaser and to register such transfer in the shareholder register of the Company, including a counterpart to the Company Share Transfer Agreement, duly
executed by NIIH and the Company and a counterpart to the Nextel Holdings Share Transfer Agreement, duly executed by the Company and Nextel Holdings;
(ii) the
officer's certificate required to be delivered pursuant to
Section 9.1(a)
,
Section 9.1(c)
and
Section 9.1(e)
;
(iii) executed
resignation letters, in form and substance reasonably acceptable to Purchaser, of the managers and officers (or individuals in similar positions, such as
gérants
) of the Entities (other than any
managers and officers described in
Section 3.2(b)(iii)
) designated in writing by Purchaser at least five Business Days prior to the Closing, solely in their capacity as officers or
gérants
of each Entity, in which the corresponding Entity and the officers shall grant a mutual release in respect of their obligations
and duties in relation to each other;
(iv) executed
shareholder resolutions of each of the Company, Nextel Holdings and NII International Mobile S.à r.l. (A) acknowledging the resignations
of the managers or officers (or individuals in similar positions) designated in writing by Purchaser pursuant to
Sections 3.2(a)(iii)
or
3.2(b)(iii)
,
(B) granting the discharge (
quitus
) of the obligations and duties of such managers
or officers, (C) appointing new managers or officers nominated by the Purchaser and (D) approving the change of the registered office, in each case in relation to each of the Company,
Nextel Holdings and NII International Mobile S.à r.l.;
(v) the
original shareholder register of the Company duly updated as of Closing;
(vi) customary
pay-off letters, in form and substance reasonably satisfactory to Purchaser and duly executed by each of BdB, Caixa, CDB and ANATEL, respectively (the
"
Pay-Off Letters
"), confirming that, upon receipt by the party or parties identified therein of the Pay-Off Amounts, the Brazil Credit Facilities shall
have been paid in full and all Liens provided thereunder shall have been released;
(vii) evidence
of termination of the Nextel Holdings SHA; and
(viii) a
counterpart to the Escrow Agreement, duly executed by Parent and NIIH.
(b) At
the Closing, AI Brazil will deliver, or cause to be delivered, to the Company and Purchaser:
(i) the
AI Brazil Shares and all such necessary documentation, duly executed by AI Brazil, required under Luxembourg Law to sell and transfer the AI Brazil Shares to
the Company and to register such transfer in the shareholder register of Nextel Holdings, including a counterpart to the Nextel Holdings Share Transfer Agreement, duly executed by AI Brazil;
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(ii) the
officer's certificate required to be delivered pursuant to
Section 9.1(b)
and
Section 9.1(d)
;
(iii) executed
resignation letters, in form and substance reasonably acceptable to Purchaser, of any managers or officers (or individuals in similar positions, such as
gérants
) of the Entities who were
appointed by AI Brazil to serve in such capacity, as designated in writing by Purchaser at least
five Business Days prior to the Closing, solely in their capacity as officers or
gérants
of each Entity, in which the corresponding
Entity and the officers shall grant a mutual release in respect of their obligations and duties in relation to each other; and
(iv) evidence
of termination of the Nextel Holdings SHA.
3.3.
Closing Deliveries by Purchaser.
At the Closing, Purchaser will deliver, or
cause to be delivered, to Seller and AI Brazil the following:
(a) the
officer's certificate required to be delivered pursuant to
Section 9.2(a)
and
Section 9.2(b)
;
(b) the
consideration specified in
Section 2.3
;
(c) a
counterpart to the Escrow Agreement, duly executed by Purchaser; and
(d) a
counterpart to the Company Share Transfer Agreement, duly executed by Purchaser.
3.4.
Termination of Agreement.
This Agreement may be terminated before the Closing
as follows:
(a) (i)
by Purchaser or Parent, if the Closing has not occurred by 5:00 p.m., New York City time, on December 31, 2019 (such date, as it may be extended
pursuant to this
Section 3.4(a)
, the "
Termination Date
");
provided
that if, as of 5:00 p.m., New
York City time, on December 31, 2019, (A) any of the conditions to Closing set forth in
Section
9.1(h)
,
Section
9.3(a)
(in the case of
Section
9.3(a)
, if the failure of such condition to be satisfied is the result of an action by a Governmental Authority charged with
jurisdiction over granting the Regulatory Approval or the Antitrust Approval),
Section
9.3(b)
or
Section
9.3(c)
has not been satisfied or waived by all Parties entitled to the benefit of such condition
or Purchaser has determined to contest or resist such action as contemplated in
Section
8.4(c)
or
Section
8.5(c)
, as applicable, (B) all conditions to the respective obligations of the Parties to
close set forth in
ARTICLE 9
(other than (1) those conditions that by their nature are to be satisfied at the Closing,
but which conditions are then capable of being satisfied if the Closing were to occur and (2) any condition described in the foregoing clause (A), subject to the terms of such clause)
have been satisfied or waived by all Parties entitled to the benefit of such condition and (C) Purchaser and Parent shall have agreed in writing to the 2020 Transaction Budget, whereupon the
CapEx Transaction Budget Amount shall include the capital expenditures contemplated by the 2020 Transaction Budget to have been incurred through the Transaction Budget Period (inclusive of any
prorated amount for a partial month as contemplated in the definition "Capex Transaction Budget Amount"), then the Termination Date shall be automatically extended to March 31, 2020;
provided, further
, that if the Closing has not occurred and Purchaser and Parent shall not have agreed in writing to the 2020 Transaction Budget prior
to 5:00 p.m., New York City time, on December 31, 2019, then this Agreement shall terminate automatically as of such time; or (ii) by Purchaser, AI Brazil or Parent, if the
Closing has not occurred by 5:00 p.m., New York City time, on March 31, 2020;
(b) by
mutual written consent of the Parties;
(c) by
Purchaser, if any condition to the obligations of Purchaser set forth in
Section 9.1
or
Section 9.3
has become incapable of being satisfied by
the Termination Date, other than as a result of a breach by Purchaser of any of its
representations, warranties, covenants or agreements contained in this Agreement, and such condition is not waived by Purchaser;
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(d) by
Parent, if any condition to the obligations of Seller set forth in
Section 9.2
or
Section 9.3
has become incapable of being satisfied by the
Termination Date, other than as a result of a breach by Seller of any of its
representations, warranties, covenants or agreements contained in this Agreement, and such condition is not waived by Seller;
(e) by
Purchaser, if (i) there has been an inaccuracy in, or breach of, any representation, warranty, covenant or agreement of AI Brazil, Seller or Parent contained
in this Agreement, which breach would result in a failure of a condition set forth in
Sections 9.1(a)
through
9.1(d)
to be satisfied, and
(ii) such inaccuracy or breach has not been cured by the earlier of (A) 10 Business Days after the giving of
written notice by Purchaser to Parent of such breach and (B) the Termination Date;
(f) by
Parent, if (i) there has been an inaccuracy in, or breach of, any representation, warranty, covenant or agreement of Purchaser contained in this Agreement,
which breach would result in a failure of a condition set forth in
Section 9.2(a)
or
Section 9.2(b)
to be satisfied, and (ii) such
inaccuracy or breach has not been cured by the earlier of (A) 10 Business Days after
the giving of written notice by Parent to Purchaser of such breach and (B) the Termination Date;
(g) by
Parent or Purchaser, if there is in effect any Law or final non-appealable Order of a Governmental Authority of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(h) by
Parent or Purchaser, if the authorization of this Agreement in accordance with Section 271 of the DGCL has been submitted to a vote of the Parent Stockholders
at a duly convened Parent Stockholders Meeting (including any adjournment or postponement thereof) and the Parent Stockholder Approval was not obtained at such meeting (including any adjournment or
postponement thereof);
(i) by
Parent, at any time after the date of this Agreement and prior to the receipt of the Parent Stockholder Approval, if (i) the Parent Board, in compliance with
and subject to the terms and conditions of
Section 8.13
, shall have authorized Parent or any of its Subsidiaries to enter into a definitive
agreement with respect to a Superior Proposal, and, (ii) concurrently with such termination, Parent pays or causes to be paid to Purchaser the Company Break-Up Fee pursuant to
Section 3.6(b)
and
Parent enters into such definitive agreement providing for the implementation of the transactions contemplated by such Superior
Proposal; or
(j) by
Purchaser, at any time after the date of this Agreement and prior to the receipt of the Parent Stockholder Approval, if (i) an Adverse Recommendation Change
shall have occurred or (ii) Parent or NIIH shall have committed an Intentional Breach of their obligations contained in
Section 8.13
.
3.5.
Procedure Upon Termination.
If either Purchaser or Parent desires to terminate
this Agreement pursuant to
Section 3.4
(other than pursuant to
Section 3.4(b)
), such termination
shall be effective upon delivery of written notice thereof by Purchaser to Parent and AI Brazil or by Parent to Purchaser and AI Brazil, as applicable, and this Agreement will terminate without
further action by Purchaser, Parent, Seller or AI Brazil. Termination pursuant to
Section 3.4(b)
shall be effective upon the effectiveness of such
mutual written consent.
3.6.
Effect of Termination.
(a) If termination pursuant to
Section 3.4
occurs,
(i) each of the Parties will be relieved of its duties and obligations arising under this Agreement after the date of
such termination, and (ii) subject to
Section 3.6(b)
such termination will be without liability to Purchaser, Parent, Seller or AI Brazil;
provided
,
however
, that the provisions of
Section 3.5
,
this
Section 3.6
,
Section 8.9
and
ARTICLE 13
(other than
Section 13.2)
and, to the extent necessary to effectuate the foregoing enumerated provisions,
ARTICLE
1
, will survive any such termination and will be enforceable hereunder;
provided
,
further
, that nothing in this
Section 3.6
will be deemed to release any Party from
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liability
for any Intentional Breach of its obligations under this Agreement arising prior to such termination;
provided
,
further
, that all confidential information
received by Purchaser with respect to Parent, Seller, AI Brazil and the Entities or any of their Affiliates,
and any of their respective businesses, will be treated in accordance with the Confidentiality Agreements, which will remain in full force and effect in accordance with their terms notwithstanding the
termination of this Agreement. Notwithstanding anything in this Agreement to the contrary, AI Brazil will be relieved of its duties and obligations arising under this Agreement after the date of such
termination, without liability to Purchaser, Parent or Seller, other than any liability for any Intentional Breach of its obligations under this Agreement arising prior to such termination.
(b) Parent
will pay, or cause to be paid, to Purchaser by wire transfer of immediately available funds an amount equal to $25,000,000 (the "
Company
Break-Up Fee
") if this Agreement is terminated:
(i) by
Parent pursuant to
Section 3.4(i)
(such payment to be made before or concurrently with such termination and,
in the absence of such payment, any such purported termination will be invalid);
(ii) by
Purchaser pursuant to
Section 3.4(j
) (such payment to be made within two Business Days of such termination);
or
(iii) pursuant
to
Section 3.4(a)
,
Section 3.4(e)
or
Section 3.4(h)
and, (A) after the date of this Agreement and
prior to such termination any Person makes an Acquisition Proposal and (B) at
any time on or prior to the twelve-month anniversary of such termination, Parent or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, a transaction
contemplated by an Acquisition Proposal (
provided
that, solely for purposes of this
Section 3.6(b)(iii)
,
50% shall replace 20% in the definition of Parent Takeover Proposal) (such payment to be made on the same day as the earlier of the entry into a definitive agreement and consummation of such a
transaction).
(c) If
this Agreement is terminated by Parent pursuant to
Section 3.4(h)
, then Parent shall pay or cause to be paid to
Purchaser an amount equal to the documented out-of-pocket expenses of Purchaser and its Affiliates incurred in connection with this Agreement and the transactions contemplated hereby (such payment to
be made within five Business Days of such termination), up to $2,000,000. The amount of any expenses reimbursed to Purchaser pursuant to this
Section
3.6(c)
shall be credited against any future payment of the Company Break-Up Fee, if payable, pursuant to
Section 3.6(b)(iii)
.
(d) Notwithstanding
anything in this Agreement to the contrary, Parent will not be required to pay the other Party the amount due pursuant to
Section 3.6(b)
more than once. The Parties acknowledge and agree that the
Company Break-Up Fee constitutes liquidated damages and is not a
penalty and will be the sole and exclusive remedy, including on account of punitive damages, for recovery by Purchaser, in the event of the termination of this Agreement by Parent pursuant to
Section 3.4(i
) or by Purchaser pursuant to
Section 3.4(j)
(in the case where Purchaser is paid the
Company Break-Up Fee pursuant to
Section 3.6(b)
). Upon payment of the Company Break-Up Fee, Parent, Seller, the Company and AI Brazil and each of their
respective Representatives and Affiliates will be fully released and discharged from any liability under or resulting from this Agreement, and neither Purchaser, nor Parent, as applicable, nor any
other Person will have any other remedy or cause of action under or relating to this Agreement or any applicable Law, including for reimbursement of expenses or otherwise;
provided
that payment of the
Company Break-Up Fee shall not release Seller, Parent or AI Brazil from liability for any Intentional Breach of its
obligations hereunder arising prior to such payment. For the avoidance of doubt, termination of this Agreement shall not relieve Parent, Seller or their respective Affiliates from any liability or
obligation under the Nextel Holdings SHA.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF NIIH AND PARENT
Except as set forth in the disclosure schedule delivered by NIIH and Parent to Purchaser concurrently with the execution of this Agreement (each
section of which qualifies the correspondingly numbered and lettered Section of this
ARTICLE 4
or
ARTICLE
6
, as applicable, and any other Section of this
ARTICLE 4
or
ARTICLE 6
to the
extent the responsiveness of the relevant disclosure to such other Section is reasonably apparent on its face) (the "
Company Disclosure Schedule
"), each
of NIIH and Parent hereby represents and warrants to AI Brazil and Purchaser, as of the date of this Agreement and as of the Closing Date, that:
4.1.
Organization of NIIH and Parent.
Each of NIIH and Parent is an entity duly
organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has the requisite power and authority to hold directly and indirectly stakes in
Luxembourg and/or foreign undertakings or, as the case may be, own, lease and operate its properties and to carry on its businesses as now conducted.
4.2.
Authorization of Agreement.
Each of NIIH and Parent has the requisite power
and authority to execute and deliver this Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party (the "
Ancillary
Agreements
") and, subject to the receipt of the Parent Stockholder Approval, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of NIIH and
Parent, subject to receipt of the Parent Stockholder Approval. The Parent Board, at a meeting duly called and held, has unanimously (i) determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of Parent and the Parent Stockholders, (ii) approved and declared advisable the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, and (iii) resolved to recommend that the Parent Stockholders vote in favor of authorizing the transactions contemplated by this
Agreement (such recommendation, the "
Parent Board Recommendation
"), and directed that such matter be submitted for consideration by the Parent
Stockholders at the Parent Stockholders Meeting. This Agreement and each Ancillary Agreement has been duly and validly executed and delivered by NIIH and Parent and (assuming the due authorization,
execution and delivery by Purchaser) this Agreement and each Ancillary Agreement constitute legal, valid and binding obligations of NIIH and Parent, enforceable against them in accordance with its
respective terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
4.3.
Conflicts; Consents of Third Parties.
(a) The execution and delivery by
NIIH and Parent of this Agreement and each Ancillary Agreement, the consummation of the transactions contemplated hereby and thereby and compliance by NIIH and Parent with any of the provisions hereof
or thereof do not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under any
provision of (i) the articles of association, certificate of incorporation and by-laws or any comparable organizational documents of NIIH or Parent, (ii) any Contract or Permit to which
NIIH or Parent is a party or by which any of the properties or assets of NIIH or Parent are bound, (iii) any Order of any Governmental Authority applicable to NIIH or Parent or any of the
properties or assets of NIIH or Parent, or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or
cancellations that would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
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(b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Authority is required on
the part of NIIH, Parent or any Entity in connection with the execution and delivery of this Agreement or any Ancillary Agreement, the compliance by NIIH and Parent with any of the provisions hereof
or thereof, the consummation of the transactions contemplated hereby or thereby or the taking by NIIH or Parent of any other action contemplated hereby or thereby, except for (i) the Regulatory
Approval, (ii) the Antitrust Approval, (iii) the filing with the SEC of the Proxy Statement relating to the Parent Stockholders Meeting, and (iv) such other consents, waivers,
approvals, Orders, Permits, authorizations, declarations, filings and notifications the failure of which to obtain or make would not reasonably be expected to result, individually or in the aggregate,
in a Seller Material Adverse Effect.
4.4.
Title to Acquired Equity Interests.
NIIH is (or will be, when issued) the sole
record, legal and beneficial owner of, and has (or will have, when issued) good, valid and marketable title to, all of the Acquired Equity Interests, free and clear of all Liens.
4.5.
Opinion of Financial Advisors.
The Parent Board has received the written
opinions of each of Rothschild & Co. US Inc. and Greenhill & Co., LLC, on or prior to the date of this Agreement, to the effect that, as of the date of such
opinion, and subject to the limitations, qualifications and assumptions set forth therein, the consideration payable in the transactions contemplated by this Agreement is fair, from a financial point
of view, to Parent. Complete and executed copies of such opinions will be delivered to Purchaser solely for informational purposes promptly after the execution of this Agreement. Such opinions have
not been withdrawn or materially modified.
4.6.
Solvency.
Each of Parent and NIIH is Solvent and, immediately after giving
effect to all of the transactions contemplated by this Agreement, including payment of any and all fees and expenses relating to the transactions contemplated by this Agreement, each of Parent and
NIIH will be Solvent. Neither Parent nor NIIH is entering into this Agreement with the intent to hinder, delay or defraud either present or future creditors of Parent, NIIH or any of their respective
Subsidiaries.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF AI BRAZIL
Except as set forth in the Company Disclosure Schedule or in the disclosure schedule delivered by AI Brazil to Purchaser concurrently with the
execution of this Agreement (each section of which qualifies the correspondingly numbered and lettered Section of this
ARTICLE 5
and any other Section
of this
ARTICLE 5
to the extent the responsiveness of the relevant disclosure to such other Section is reasonably apparent on its face) (the
"
AI Brazil Disclosure Schedule
"), AI Brazil hereby represents and warrants to Purchaser, as of the date of this Agreement and as of the Closing Date,
that:
5.1.
Organization of AI Brazil.
AI Brazil is an entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its organization and has the requisite power and authority to own, lease and operate its properties and to carry on its businesses
as now conducted.
5.2.
Authorization of Agreement.
AI Brazil has the requisite power and authority to
execute and deliver this Agreement and any Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement
and each Ancillary Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of
AI Brazil. This Agreement and each Ancillary Agreement to which it is a party has been duly and validly executed and delivered by AI Brazil and (assuming the due authorization, execution and delivery
by the other Parties hereto) this Agreement and each such Ancillary Agreement constitute legal, valid and binding obligations of AI Brazil, enforceable against AI Brazil in accordance with its
respective terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
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5.3.
Conflicts; Consents of Third Parties.
(a) The execution and delivery by AI
Brazil of this Agreement and each Ancillary Agreement to which it is a party, the consummation of the transactions contemplated hereby and thereby and compliance by AI Brazil with any of the
provisions hereof or thereof do not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or
cancellation under any provision of (i) the articles of association, certificate of incorporation and by-laws or any comparable organizational documents of AI Brazil, (ii) any Contract
or Permit to which AI Brazil is a party or by which any of the properties or assets of AI Brazil are bound, (iii) any Order of any Governmental Authority applicable to AI Brazil or any of the
properties or assets of AI Brazil, or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or
cancellations that would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
(b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Authority is required on
the part of AI Brazil in connection with the execution and delivery of this Agreement or any Ancillary Agreement, the compliance by AI Brazil with any of the provisions hereof or thereof, the
consummation of the transactions contemplated hereby or thereby or the taking by AI Brazil of any other action contemplated hereby or thereby, except for (i) the Regulatory Approval,
(ii) the Antitrust Approval and (iii) such other consents, waivers, approvals, Orders, Permits, authorizations, declarations, filings and notifications the failure of which to obtain or
make would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
5.4.
Title to AI Brazil Shares.
AI Brazil is, and at all times between the date of
this Agreement and prior to the closing of the Nextel Holdings Transaction shall be, the sole record, legal and beneficial owner of the AI Brazil Shares, and has, and at all times between the date of
this Agreement and the closing of the Nextel Holdings Transaction shall have, good, valid and marketable title to, the AI Brazil Shares, free and clear of all Liens other than in respect of
obligations under the Nextel Holdings Share Transfer Agreement and the Nextel Holdings SHA.
5.5.
No Other Representations or Warranties; Schedules.
Except for the
representations and warranties contained in this
ARTICLE 5
(as modified by the Company Disclosure Schedule or the AI Brazil Disclosure Schedule), AI
Brazil does not make any other express or implied representation or warranty with respect to the Entities, the Entities' businesses, the Acquired Equity Interests, the AI Brazil Shares, or the
transactions contemplated by this Agreement, and AI Brazil disclaims any other representations or warranties, whether made by Parent, Seller, AI Brazil or any Affiliate of Parent, Seller or AI Brazil,
or any of Parent's, Seller's or AI Brazil's or their Affiliates' respective officers, directors, employees, agents or other Representatives. AI Brazil does not make any representations or warranties
to Purchaser regarding the probable success or profitability of the Entities. Except for the representations and warranties contained in
ARTICLE 5
(as
modified by the AI Brazil Disclosure Schedule), AI Brazil (a) expressly disclaims and negates any representation or warranty, expressed or implied, at law, by statute, or otherwise, relating to
the condition of the AI Brazil Shares and (b) disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or
furnished (orally or in writing) to Purchaser or its Affiliates or Representatives (including any opinion, information, projection, or advice that may have been or may be provided to Purchaser by any
director, officer, employee, agent, consultant, or other Representative of Parent, Seller, AI Brazil or any of their Affiliates). The
disclosure of any matter or item in any schedule hereto will not be deemed to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter would
reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, nothing
in this Agreement shall relieve AI Brazil or its Affiliates of any liability for actual fraud.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF NIIH AND PARENT IN RESPECT OF THE ENTITIES
Except as set forth in the Company Disclosure Schedule (each section of which qualifies the correspondingly numbered and lettered Section of
ARTICLE
4
or this
ARTICLE 6
, as applicable, and any other Section of
ARTICLE
4
or this
ARTICLE 6
to the extent the responsiveness of the relevant disclosure to such other Section is reasonably apparent on
its face), each of NIIH and Parent hereby represents and warrants to Purchaser, as of the date of this Agreement and as of the Closing Date, that:
6.1.
Organization of the Entities.
Each Entity is duly qualified or authorized to
do business under the Laws of its jurisdiction of organization and has the requisite corporate power and authority to hold directly and indirectly stakes in Luxembourg and/or foreign undertakings or,
as the case may be, own, lease and operate its assets and to carry on its business as now conducted, except where the failure to be so qualified or authorized would not reasonably be expected to be,
individually or in the aggregate, material to the Entities, taken as a whole. Seller has made available to Purchaser true and complete copies of the constituent documents and operating agreements of
each of the Entities, and none of the Entities is in default or in violation in any material respect of any provision set forth therein. Each Entity has complied with all notice periods, corporate
formalities and other requirements imposed by applicable Law for calling, calling to order and holding meetings of shareholders or quotaholders and adopting resolutions and all corporate documents of
the Entities (including shareholders' or quotaholders' meeting minutes, call notices, registries, books, amendments to the articles of association and bylaws, etc.) comply with applicable Law and are
duly updated, accurate, complete and registered before the competent Governmental Authority, in each case, except for such non-compliance as would not reasonably be expected to be material to the
Entities, taken as a whole.
6.2.
Capitalization of the Entities.
(a) As of the date of this Agreement, the
share capital of the Company consists of 15,002 shares with a nominal value of USD 1 each, of which 15,002 shares are issued and outstanding and constitute the Acquired Equity Interests. The AI
Brazil Shares and the Company Shares comprise, and at all times prior to the Closing shall comprise, all of the outstanding share capital of Nextel Holdings. The Acquired Equity Interests and
the equity interests of each Company Subsidiary are (or will be, when issued) duly authorized, validly issued, fully paid and non-assessable, and have been (or will be, when issued) issued and granted
in compliance with all applicable Law. The Acquired Equity Interests comprise, and at all times prior to the Closing shall comprise, all of the outstanding share capital of the Company. Subject to the
issuance of new equity securities pursuant to and in accordance with
Section 8.2(c)
, the number and type of issued and outstanding capital stock of each
Company Subsidiary, the record owners thereof and the jurisdiction of organization or formation of each Company Subsidiary are listed in Section 6.2(a) of the Company Disclosure Schedule. All of the
equity interests of each Company Subsidiary (other than the AI Brazil Shares) are, and at all times prior to the Closing shall be, owned by the Company or a wholly owned Company Subsidiary, in each
case free and clear of all Liens. At the Closing, all of the equity interests of each Company Subsidiary will be owned by the Company or a wholly owned Company Subsidiary, in each case free and clear
of all Liens. Except for any consent rights listed in Section 6.2(a) of the Company Disclosure Schedule, there are no bonds, debentures, notes or other Indebtedness of any Entity that entitle holders
thereof to vote (or to a veto or any similar type of negative control) on any matters on which holders of the equity interests of any of the Entities may vote.
(b) There
is no existing preemptive or other outstanding right, option, warrant, call or Contract of any character to which an Entity is a party requiring, and there are no
securities of any Entity outstanding which upon conversion or exchange would require, the issuance of any shares, quotas or other securities convertible into, exchangeable for or evidencing the right
to subscribe for or purchase shares or quotas of any Entity.
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(c) Prior
to the date of this Agreement, Parent and certain of its Subsidiaries, including Seller, completed the transactions described on Section 6.2(c) of the Company
Disclosure Schedule (the "
NII Internal Reorganization
") in accordance with the steps set forth in such description.
(d) No
Entity owns any equity interest or investment in any Person other than (i) the Company Subsidiaries identified in Section 6.2(a) of the Company Disclosure
Schedule, and (ii) short-term financial investments in marketable securities made in the Ordinary Course of Business. No Entity has agreed or is obligated to directly or indirectly make any
future investment in or capital contribution or advance to any other Person.
6.3.
Conflicts; Consents of Third Parties.
The execution and delivery by Seller or
AI Brazil of this Agreement and each Ancillary Agreement, the consummation of the transactions contemplated hereby and thereby and compliance by Seller or AI Brazil with any of the provisions hereof
or thereof do not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, acceleration or cancellation
under any provision of, or result in the modification of any right or obligation of any
Entity under, (a) the articles of association, certificate of incorporation and by-laws or any comparable organizational documents of the Entities, (b) any Contract or Permit to which
any Entity is a party or by which any of the properties or assets of the Entities are bound, (c) any Order of any Governmental Authority applicable to any Entity or any of the properties or
assets of any Entity, or (d) any applicable Law, other than, in the case of clauses (b), (c) and (d), such conflicts, violations, defaults, terminations, cancellations or
modifications of any rights or obligations that would not reasonably be expected to be material to the Entities, taken as a whole.
6.4.
Financial Statements.
(a) Seller has delivered to Purchaser true, correct and
complete copies of:
(i) the
unaudited balance sheets of Nextel Holdings as at December 31, 2017, and the related statement of profit and loss for the years then ended, together with the
notes thereto (the "
Nextel Holdings Financial Statements
");
(ii) the
unaudited balance sheets of NII International Mobile S.à r.l. as at December 31, 2016 and December 31, 2017, and the related statements
of profit and loss for the years then ended, together with the notes thereto (the "
NIIM Financial Statements
");
(iii) the
audited balance sheets of each of Brazil Parent and Nextel Brazil, in each case, as at December 31, 2016 and December 31, 2017, and the related
statements of profit and loss and of cash flows of each of Brazil Parent and Nextel Brazil for the years then ended, together with the notes thereto (collectively, the "
Audited
Brazil Financial Statements
"); and
(iv) the
unaudited balance sheets for each of Nextel Holdings and its Subsidiaries as at December 31, 2016, December 31, 2017 and September 30, 2018,
and the related unaudited statements of income of Nextel Holdings and its Subsidiaries for the years then ended (collectively, the "
Unaudited Financial
Statements
" and, together with the Nextel Holdings Financial Statements, the NIIM Financial Statements, and the Audited Brazil Financial Statements, the
"
Financial Statements
").
(b) Each
of the Audited Brazil Financial Statements have been derived from the books of account and other financial records of Brazil Parent and Nextel Brazil, as
applicable, have been prepared in accordance with Brazilian GAAP, consistently applied, and present fairly in all material respects the financial position, results of operations and cash flows of the
applicable Entities as at the dates and for the periods indicated therein. Each of the Nextel Holdings Financial Statements and the NIIM Financial Statements have been derived from the books of
account and other financial records of the applicable Entities, have been prepared in accordance with Luxembourg GAAP, consistently applied, and present fairly in all material respects the financial
position of the applicable Entities as at the dates and for the periods indicated therein. Each of the Unaudited
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Financial
Statements have been derived from the books of account and other financial records of the applicable Entities, have been prepared in accordance with U.S. GAAP, consistently applied,
and present fairly in all material respects the financial position of the Entities included therein. All registries and publications required by applicable Law have been complied with, in all material
respects, in regard to the Audited Brazil Financial Statements.
(c) Each
Entity maintains (i) books and records reflecting its assets and liabilities that are accurate in all material respects and (ii) except as disclosed
in Parent's reports filed with the SEC, adequate and effective internal accounting controls which provide reasonable assurance that (A) the control objectives have minimized the risk of
material financial misstatement, (B) all material information concerning the Entities is made known on a timely basis to the individuals at the Entities responsible for the preparation of the
Financial Statements, (C) all material transactions are executed with management's authorization and accurately recorded in the correct period as necessary to permit the preparation of the
Financial Statements and disclosures in conformity with applicable generally accepted accounting principles, and (D) the recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any material differences.
(d) All
customer accounts receivable of the Entities as set forth in the Audited Brazil Financial Statements or subsequently created through the Closing Date and included
within Closing Net Working Capital are, or will be, valid obligations arising from bona fide sale transactions in the Ordinary Course of Business on terms consistent with the past practices of Nextel
Brazil and its Subsidiaries relating to their customers.
6.5.
Undisclosed Liabilities.
The Entities do not have any Liabilities except for
(a) Liabilities reflected or reserved against on the balance sheet included in the Audited Financial Statements or on the latest balance sheets included in the Unaudited Financial Statements
and not heretofore paid or discharged or (b) Liabilities incurred since the date of the Audited Financial Statements in the Ordinary Course of Business that would not reasonably be expected to
result, individually or in the aggregate, in a Seller Material Adverse Effect.
6.6.
Taxes.
(a) Except
as otherwise provisioned in the Financial Statements: (i) neither the Company nor any other Entity is currently subject to any collection or pending legal
action, procedure or claim for Taxes that could result in a material liability to the Company or such other respective Entity; (ii) neither the
Company nor any other Entity has been notified in writing of any Tax delinquency notice, proceedings, claim of levy, collection or court or administrative pending matter with regard to Taxes against
the Company or such Entity; (iii) neither the Company nor any other Entity has adhered to any program for payment of Tax debts in installments; and (iv) no income Tax Return of the
Company or of any other Entity is under current examination by any Taxing Authority.
(b) (i)
Each Entity has timely filed all material Tax Returns required to be filed by it under applicable Law or requests for extensions to file such Tax Returns have been
timely filed, granted and have not expired, and all material Taxes required to be paid by it have been paid by it, except for those that are being contested in good faith by appropriate proceedings
and which are reflected as a contingency for Taxes on the most recent balance sheet of such Entity included in the Financial Statements; (ii) all such Tax Returns are true, correct and complete
in all material respects; and (iii) none of the Entities has waived any statute of limitations in respect of a material amount of Taxes, which waiver is currently in effect.
(c) All
material Taxes required to be collected or withheld by an Entity with respect to its employees, independent contractors, creditors, stockholders or other third
parties have been
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collected
or withheld and have been (or will be) duly and timely paid to the proper Governmental Authority.
(d) No
written claim has ever been made by a Governmental Authority in any jurisdiction where the Company or an Entity does not file Tax Returns that the Company or such
Entity is or may be subject to taxation by such jurisdiction.
(e) There
are no Liens for Taxes upon any assets of any of the Entities other than Permitted Liens.
(f) No
deficiencies for any Taxes have been proposed, asserted or assessed against any Entity that are still pending and no requests for waivers of the time to assess any
such Taxes have been made that are still pending.
(g) None
of the Company or any other Entity is a party to any Tax indemnification, Tax allocation or Tax sharing agreements pursuant to which such Entity will have any
obligation to make any payments after the Closing Date, except for any agreement the primary purpose of which is not Tax.
(h) There
are no Tax rulings, requests for rulings or closing agreements relating to or with respect to the income and/or assets of any of the Entities that could affect the
liability for Taxes of any of the Entities for any period (or portion thereof) ending on or after the Closing Date.
(i) None
of the Company or any other Entity is or will be required to include a material item of income, or exclude a material item of deduction, for any period (or portion
thereof) ending on or after the Closing Date, as a result of, on or before the Closing Date, any (i) transaction treated as an installment sale or open transaction for any Tax purpose,
(ii) receipt of a prepaid amount or deposit, (iii) change in method of accounting or similar adjustment that any of the Company or any other Entity has agreed to, requested, or was
required to make or (iv) agreement entered into with any Governmental Authority.
(j) None
of the Company or any other Entity has made any entity classification election for U.S. federal income tax purposes or any other U.S. federal income tax election.
(k) None
of the Company or any other Entity has been a member of a consolidated, joint, unitary or combined group for any U.S. or non-U.S. Tax purposes (other than such
group the common parent of which was the Company).
(l) Section 6.6(l)
of the Company Disclosure Schedule sets forth, as of February 28, 2019, the amount of accrued liabilities of the Entities related to
contingent Tax liabilities. Parent or its applicable Subsidiary has classified all contingent Tax liabilities of the Entities as "probable", "possible" or "remote" in accordance with U.S. GAAP,
including the Financial Accounting Standards Board's authoritative guidance on accounting for contingencies.
6.7.
Real Property.
(a) Section 6.7(a) of the Company Disclosure Schedule
contains a complete and correct list and description (including registration and title number, address, area, and owner's name) of each Owned Property. The Entities lawfully acquired and have duly
registered the Owned Property, and have good, valid and marketable title to all Owned Property, free and clear of Liens except for Liens set forth in Section 6.7 of the Company Disclosure Schedule and
Permitted Liens. All Owned Property is duly reflected in the Financial Statements, except for those properties and assets sold since the Balance Sheet Date in the Ordinary Course of Business. Seller
has made available to Purchaser true and complete copies of (i) each deed for each Owned Property and all title insurance policies and surveys, if any, relating to the Owned Property and
(ii) all documents evidencing all Liens upon the Owned Property.
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(b) The
Entities have valid leasehold interests in all Leased Property and all other leased property and assets (whether real, personal, tangible or intangible), and are not
in material default under the leases of any such property and assets, each of which is in full force and effect. To the Knowledge of the Company, no circumstance, event, condition, or act has occurred
that would, by notice or the lapse of time, or both, constitute a breach of the terms and conditions of any of such leases, in each case, except as would not reasonably be expected to be, individually
or in the aggregate, material to the Entities, taken as a whole.
(c) To
the Knowledge of the Company, as of the date of this Agreement, except as would not reasonably be expected to result, individually or in the aggregate, in a Seller
Material Adverse Effect: (i) there are no special assessments or any planned public improvements that may result in a special assessment with respect to any Owned Property, (ii) there is
no special proceeding pending or threatened in writing in which any Governmental Authority having jurisdiction over any of the Owned Property is seeking to increase the assessed value thereof and
(iii) there is no expropriation proceeding with regards to any Owned Property. To the Knowledge of the Company, there is no pending or threatened in writing condemnation proceeding with respect
to any of the Owned Property or Leased Property that would reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
(d) All
building, structures, and improvements located on the Owned Property and Leased Property are in good state of repair and use, subject to normal wear and tear, and
are adequate and appropriate for their intended present use in accordance with the Ordinary Course of Business of each Entity, except as would not reasonably be expected to materially impair the
ability of the Entities to conduct their business as presently conducted.
(e) There
are no debts or obligations owed in connection with any of the Owned Property to any Government Authority or any third party, including debts related to urban
property tax (IPTU), immovable property transmission tax (ITBI), emphyteutic fees and rents (foros e laudêmios), applicable contributions, and applicable condominium obligations and
charges, except for immaterial debts and obligations.
(f) All
Tower Leases to which any Entity is a party provide solely for monthly payments. Other than Tower Leases, none of the Entities are parties to any leases (or other
similar arrangements) with respect to real or personal property that would be classified as capital leases under U.S. GAAP as in effect as of December 31, 2018.
6.8.
Intellectual Property.
(a) Section 6.8(a) of the Company Disclosure Schedule
sets forth a true and complete list of all Intellectual Property owned by the Entities as of the date of this Agreement for which a patent, trademark, copyright or other registration exists or has
been applied for by or on behalf of the Entities and all material licenses or other covenants or rights under Intellectual Property which the Company or any of the other Entities has been granted from
any Person (other than commercially available off-the-shelf Software with aggregate fees of less than $250,000 per year) or which the Entities have granted to any Person
("
Licenses
"). Each item of material Company Intellectual Property is subsisting, in full force and effect, valid and, to the Knowledge of the Company,
enforceable.
(b) An
Entity is the sole and exclusive owner of all right, title and interest in and to each item of Company Intellectual Property material to the operation of the
businesses of the Entities, free and clear of any Liens other than Permitted Liens. The Entities own or have the right to use all Intellectual Property used in or necessary to conduct the businesses
of the Entities as presently conducted. Seller, AI Brazil and their Affiliates (other than the Entities) do not own any material Intellectual Property that is used in the businesses of the Entities.
(c) (i)
The material Intellectual Property owned or used by the Company or any of the other Entities is not the subject of any Legal Proceeding or any challenge received by
the Company in
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writing,
including with respect to its ownership, validity or enforceability and (ii) the Company has not received since the Balance Sheet Date any written notice of any default or breach under
any material
Intellectual Property license to which the Company or any other Entity is a party or by which it is bound.
(d) The
conduct and operation of the businesses of the Entities, including their products or services, do not, and have not in the previous five years, infringe(d),
misappropriate(d), dilute(d) or otherwise violate(d) any Intellectual Property of any third Person. No Legal Proceeding is currently pending or, to the Knowledge of the Company, threatened (including
through any "cease and desist" letters, indemnification claims or invitations to license) by any Person that alleges the Entities infringe, misappropriate, dilute or otherwise violate the Intellectual
Property of any third Person. To the Knowledge of the Company, no Person is infringing, misappropriating, diluting or otherwise violating any Company Intellectual Property.
(e) The
Entities have taken commercially reasonable steps to protect the confidentiality of all Trade Secrets owned or held by the Entities. The Entities require all of
their employees to, upon their hiring, execute a customary written non-disclosure agreement and to acknowledge that they have received the relevant Entity's Code of Conduct. There has been no
unauthorized disclosure, misappropriation or loss of any Trade Secret owned or held by the Entities that would reasonably be expected to result, individually or in the aggregate, in a Seller Material
Adverse Effect or in the loss of ownership, validity or enforceability of any Trade Secrets. All Persons who have contributed to the creation or development of any material Intellectual Property for
or on behalf of the Entities have validly assigned their entire right, title and interest in such contributions to an Entity.
(f) The
Entities own or have rights to use all items of hardware (including computers, servers, databases, peripheral devices and telecommunications devices and related
systems) and Software that are necessary to operate their businesses as currently conducted (such hardware and Software, the "
IT Systems
"), except where
the failure to do so would not reasonably be expected to be material to the business of any Entity. To the Knowledge of the Company, the IT Systems operate and function in accordance with their
applicable specifications in all material respects and perform the functions necessary to effectively carry on the Entities' businesses as currently conducted. There have been (i) in the
previous five years, no failures, defects, bugs, viruses or other causes for substandard performance of any IT Systems which have caused any material disruption to the business of any Entity, and
(ii) no material unauthorized intrusions or breaches of the security of the IT Systems. The Entities have a disaster recovery plan, procedures and facilities in place for network elements, and
have taken all reasonable steps to safeguard the IT Systems.
(g) No
material Software owned or distributed by the Entities is subject to any agreement that requires making available source code, prohibits or limits the ability to
charge fees or other consideration, grants any right to any Person to decompile or otherwise reverse-engineer such Software or requires the licensing of any Software for the purpose of making
derivative works.
(h) (i)
The Entities have complied and are in compliance with, in all material respects, all Laws, privacy policies, terms of use, other public statements of the Entities,
authorizations given by relevant individual natural Persons, when such authorizations are required by Law, and contractual obligations applicable to the collection, storage, processing, use, transfer,
disposal and disclosure of personally
identifiable information ("
PII
") by or on behalf of the Entities; (ii) the Entities have provided all necessary disclosures and information to
the applicable natural Persons prior to and during the processing of PII as required by Law; (iii) the Entities have taken commercially reasonable measures appropriate for the nature of the
applicable PII to ensure the confidentiality, privacy and security thereof and (iv) there have been no losses, thefts, misuses or inadvertent disclosures thereof or any unauthorized access
thereto that would reasonably be expected to be
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material
to the business of any Entity or result in an obligation to notify any Person or Governmental Authority. No Entity has made or been required to make any notification with respect to the
foregoing to any Person or Governmental Authority. Except for disclosures of information required or permitted by applicable Law or authorized by the individual who is the subject of the PII (when
such authorization is a valid legal basis for disclosure), the Entities have not shared, sold, rented or otherwise made available to any third Person any PII. As of the date of this Agreement, there
is not and has not been any written complaint to, or Legal Proceeding against, the Entities by any Person or Governmental Authority with respect to the collection, storage, processing, use, transfer,
disposal or disclosure of PII, or any other Action related to PII or privacy, and, to the Knowledge of the Company there are no facts or events that could cause any such Action or challenges to be
expected.
6.9.
Material Contracts.
(a) Section 6.9(a) of the Company Disclosure Schedule sets
forth a list of the following Contracts (other than any statements of work, purchase, project, change or similar orders issued pursuant to any such Contracts to the extent consistent with the terms
and conditions, and not constituting an amendment, of the applicable Contract) to which, as of the date of this Agreement, the Entities are party and under which the Entities have any remaining rights
or obligations (collectively, the "
Material Contracts
"):
(i) Contracts
for the sale of any assets of an Entity, other than in the Ordinary Course of Business, or the sale of any equity interest in any Entity;
(ii) any
Contract that relates to the acquisition or disposition of any business or a material amount of the equity or assets of any Person (whether by merger, sale of
stock, sale of assets or otherwise);
(iii) any
Contract evidencing Indebtedness for borrowed money having an aggregate principal amount outstanding in excess of $1,000,000, including the Brazil Credit
Facilities;
(iv) the
ATC Agreements;
(v) the
Telefônica Agreements;
(vi) the
Key Employment Agreement;
(vii) Contracts
relating to research and/or development or establishing any joint venture, partnership or similar arrangement;
(viii) Contracts
that waive any material rights, grant any material release, or settle any material Legal Proceeding with (A) any Governmental Authority or
(B) any Person (other than a Governmental Authority) involving an aggregate amount in excess of $2,000,000 and, in each case, have not been terminated or expired by their terms;
(ix) all
Licenses;
(x) any
Contract related to the formation, operation, management or control of any joint venture, partnership or similar arrangement or any profit-sharing, management
services, strategic alliance or similar Contract;
(xi) any
lease (whether of real or personal property, including tower site leases and leases for ports, links, leased lines and leased capacity) providing for annual rentals
of $2,000,000 or more, in each case that cannot be terminated by an Entity on 60 days' notice or less without payment of any material penalty;
(xii) any
Contract for the purchase of materials, supplies, goods, services (including operational maintenance services), equipment or other assets involving an aggregate
spend by
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the
Entities of $2,000,000 or more on an annual basis, in each case that cannot be terminated by an Entity on 60 days' notice or less without payment of any material penalty;
(xiii) any
sales, distribution (including airtime re-charge distribution agreements) or other similar Contract providing for the sale by any Entity of materials, supplies,
goods, services, equipment or other assets that provides for annual payments to the Entities of $2,000,000 or more, in each case that cannot be terminated by an Entity on 60 days' notice or
less without payment of any material penalty;
(xiv) any
agency, dealer, sales representative, marketing, sponsorship or other similar Contract providing for aggregate payments by the Entities of $2,000,000 or more on an
annual basis, in each case that cannot be terminated by an Entity on 60 days' notice or less without payment of any material penalty;
(xv) any
Contract involving the payment or receipt of royalties or other amounts calculated based upon the revenues or income of the Entities or income or revenues related
to any product or service of the Entities;
(xvi) any
Contract that contains any material commitment to (A) provide wireless services coverage in a particular geographic area, (B) build out tower sites
in a particular geographic area, (C) pay for a specified number of minutes of voice service, or (D) acquire video content to be placed on or accessed over a mobile wireless device or
otherwise;
(xvii) any
Contracts to resell bulk air time with any Person;
(xviii) any
Contracts which relate to the provision of any interconnection or other material telecommunications services, but excluding any Contracts with aggregate fees of
less than $1,000,000 per year;
(xix) any
Contract that (A) purports to restrict an Entity from engaging in any line of business or competing with any Person or in any geographical area or to create
any exclusive relationship restricting the business or operations of any Entity, (B) could require the disposition of any material
assets or line of business of any Entity; or (C) contains a "most-favored-nation" clause or similar term that grants preferential pricing or treatment;
(xx) any
other Contracts which involve the expenditure of more than $5,000,000 in the aggregate by any party for more than one year; and
(xxi) any
other Contract not made in the Ordinary Course of Business that is material to the Entities, taken as a whole.
(b) Seller
has made available to Purchaser true and correct copies of each of the Material Contracts and all amendments, exhibits, annexes and schedules thereto and, other
than Material Contracts that have terminated at their scheduled termination date in accordance with their terms, each of the Material Contracts, as amended, is in full force and effect and is a legal,
valid and binding obligation of the Entity party thereto, enforceable against such Entity in accordance with its terms. None of the Entities is in breach or violation of, or default under, any
Material Contract in any material respect. To the Knowledge of the Company, as of the date of this Agreement, no event has occurred that is reasonably likely to result in a breach or default by any
Person under, require any consent or other action by any Person under, or give rise to any penalty or right of termination, cancellation, acceleration or other change of any right or obligation of any
Entity or a loss of any benefit that any Entity is entitled under (in each case, with or without notice or lapse of time, or both) any Material Contract, except as would not reasonably be expected to
result, individually or in the aggregate, in a Seller Material Adverse Effect. Since the Balance Sheet Date, the Entities have not received any written notice of any default or breach by such Entities
under
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any
Material Contract, except for defaults or breaches that would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
6.10.
Labor.
(a) Section 6.10(a) of the Company Disclosure Schedule lists each
labor or collective bargaining convention or agreement to which an Entity is a party or otherwise bound by as of the date of this Agreement. For the five years prior to the date hereof, neither Parent
nor any of its Subsidiaries has, with respect to any current or former employee of any Entity, materially violated any such labor or collective bargaining convention or agreement.
(b) Prior
to the Closing Date, Parent and its Subsidiaries shall have (i) fulfilled all consultation, bargaining and notification requirements to any union, works
councils or other similar labor organization if required in connection with the negotiation and consummation of the transactions contemplated by this Agreement and (ii) obtained all approvals
from such unions, works councils or other labor organizations, as applicable, as are required for the consummation of the transactions contemplated by this Agreement, except in each case as would not
reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
(c) There
is no, and has been no, labor strike, slowdown, picketing or work stoppage affecting any Entity or any employees of any Entity, except in each case as would not
reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
(d) The
Entities and, with respect to the current and former employees of any Entity, Parent and its other Subsidiaries are, and in the past five years have been, in
compliance in all material respects with all applicable Laws relating to labor and employment, including provisions (individual, collective or otherwise) relating to terms and conditions of
employment, wages, labor remuneration and charges on the due dates, profit sharing, benefits, pension plans, commissions, bonus, 13
th
salaries, vacation, FGTS, social security
contributions, taxes, hours and control of workday, overtime payments, remunerated weekly day off, employee and worker classifications and registrations, employment of minors, intern and apprentices,
employment of disabled employees, mass layoffs, plant closings, collective bargaining, unions, labor relations, harassment, sexual harassment, equal pay, retaliation, contingent workers,
discrimination, safety and health, and immigration (collectively, "
Labor Laws
"). There is no material Legal Proceeding pending or, to the Knowledge of
the Company, threatened, against the Entities or with respect to any current or former employee or other individual service provider of any Entity brought by or on behalf of any current or former
employee or other individual service provider relating to any Labor Laws. To the Knowledge of the Company, there are no audits, inquiries or investigations existing, pending or threatened by any
Governmental Authority relating to any Labor Laws against the Entities or, with respect to any current, former or prospective employee or other individual service provider of any Entity.
(e) Each
employment agreement between any employee of any Entity, on the one hand, and any Entity, on the other hand, may be terminated unilaterally by such Entity without
cause and without incurring any penalty or liability other than the mandatory labor and employment obligations established by applicable Law.
6.11.
Employees.
Section 6.11 of the Company Disclosure Schedule lists the names
and titles of all officers of the Entities and all employees who are the direct reports of the Chief Executive Officer of Nextel Brazil. No individual service providers of Parent and its Subsidiaries
other than the individual service providers of the Entities are necessary to independently conduct and operate the business of the Entities in the manner as it is currently conducted.
6.12.
Employee Benefit Plans.
(a) Section
6.12(a) of the Company Disclosure Schedule sets forth a true and complete list of each material Parent Employee Plan in which any current or former employee of
any Entity
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participates
(each of such plans an "
Entity-Employee Parent Employee Plan
") and each Company Employee Plan.
(b) With
respect to each Entity-Employee Parent Employee Plan and each Company Employee Plan, Seller has made available to Purchaser copies of (i) such Employee Plan,
and (ii) the most recent summary plan description for such Employee Plan for which such summary plan description is required. None of Parent or any of its Subsidiaries has announced any
intention to adopt, enter into, amend, modify, suspend or terminate any Employee Plan, in each case in a manner that, if implemented, would reasonably be expected to result in any material liability
or obligation of the Entities or the Purchaser.
(c) Except
as would not reasonably be expected to be material to the Entities, taken as a whole: (i) each Company Employee Plan and each Entity-Employee Parent
Employee Plan has been maintained, contributed to, funded, operated and administered in accordance with its terms and all applicable Laws; (ii) all contributions, expenses and premiums required
to be made with respect to any Company Employee Plan or Entity-Employee Parent Employee Plan on or before the date hereof have been made or, to the extent not yet required to be made, have been
adequately accrued under applicable accounting standards in the Financial Statements; and (iii) each Company Employee Plan and Entity-Employee Parent Employee Plan has been maintained in good
standing with applicable regulatory authorities.
(d) No
Company Employee Plan is subject to Title IV of ERISA, and no Entity has or may have any direct or indirect liability (whether contingent or otherwise) with respect
to any plan subject to Title IV of ERISA. No Entity has any liability in respect of, or obligation to provide, post-employment or post-retirement health, medical or life insurance benefits, whether
under a Company Employee Plan, an Entity-Employee Parent Employee Plan or otherwise, except as required under applicable Law.
(e) With
respect to the Company Employee Plans and the Entity-Employee Parent Employee Plans, (i) no Legal Proceedings (other than routine claims for benefits in the
ordinary course) is pending or threatened in writing, and (ii) no facts or circumstances exist that would reasonably be expected to give rise to any such Legal Proceeding.
(f) Neither
the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement, either alone or in combination with any
other event (whether contingent or otherwise), will (i) entitle any current or former employee or other individual service provider of any Entity to any payment or benefit other than any
payments or benefits accruing to any such current or former employee under applicable Brazilian Law, (ii) accelerate the time of payment, funding or vesting, or trigger any payment of,
compensation or benefits to any such individual under, or increase the amount payable to any such individual or trigger any other material obligation with respect to any such individual pursuant to,
any Company Employee Plan or Entity-Employee Parent Employee Plan or (iii) result in the payment of any amount that would, individually or in combination with any other such payment, constitute
an "excess parachute payment," as defined in Section 280G(b)(1) of the Code. No Entity is a party to, or is otherwise obligated under, any plan, policy, or Contract that provides for, and no
current or former employee or other individual service provider of any Entity has any right to receive, a gross-up or reimbursement of Taxes.
(g) None
of the Entities has or, as of the Closing, is reasonably expected to have incurred or assumed, and none of the Purchaser or any of the Entities will incur or
assume, by reason of the transactions contemplated by this Agreement, any Liability in respect of any Employee Plan other than the Company Employee Plans.
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(h) To
the Knowledge of the Company, all the employees and Persons who provide services to and/or work for the Entities are paid by each respective Entity, as applicable,
and their remuneration is appropriately reflected in the consolidated Financial Statements from time to time. Since December 31, 2017, the Entities have not made any material change in their
employment policies, including those related to salary, compensation, workday, severance payments or retirement plans for employees, directors and/or officers, except for those cases in which such a
change was made in order to comply with applicable Law and/or applicable collective bargaining conventions or agreements. To the Knowledge of the Company, since December 31, 2017, the Entities
have not entered into any Employee Plan.
6.13.
Litigation.
There are no Actions pending or, to the Knowledge of the Company,
threatened against any Entity other than (i) those that, if adversely determined, would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse
Effect, and (ii) those that arise in the Ordinary Course of Business after the date hereof.
6.14.
Compliance with Laws; Permits.
(a) Each Entity is in compliance with all Laws
applicable to its business or operations, except where the failure to be in compliance would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse
Effect. No Entity has received any written notice of or been charged with the violation of any Laws, except where such violation would not reasonably be expected to result, individually or in the
aggregate, in a Seller Material Adverse Effect.
(b) Each
Entity currently has all Permits that are required for the operation of its business as presently conducted, except where the failure to have such Permits would not
reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect. No Entity is in default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition or provision of any Permit to which it is a party, except where such default or violation would not reasonably be
expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
(c) Section
6.14(c) of the Company Disclosure Schedule sets forth a true and complete list of (i) all Telecommunication Licenses held by the Entities (the
"
Company Telecommunication Licenses
") and the holder of each such Company Telecommunication License, (ii) all pending applications for
Telecommunication Licenses that would be Company Telecommunication Licenses if issued or granted, and (iii) all pending applications by the Entities for modification, extension or renewal of
any Company Telecommunication License.
(d) None
of the Entities is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation), in
any material respects, of any term, condition or provision of any Company Telecommunication License granted to any Entity. There is no pending or, to the Knowledge of the Company, threatened before
ANATEL or any other Governmental Authority any proceeding, notice of violation, order of forfeiture or complaint or investigation, requisition, confiscation, revocation, nullification, rescue and/or
seizure against any Entity relating to any of the Permits or Company Telecommunication Licenses that would, individually or in the aggregate, reasonably be expected to result in the suspension,
revocation, cancellation, termination, forfeiture, or adverse modification of any material Company Telecommunication License or any material Permit. ANATEL's actions granting all
Company Telecommunication Licenses, together with all underlying construction permits, have not been reversed, stayed, enjoined, annulled or suspended, and, as of the date hereof, there is not pending
or, to the Knowledge of the Company, threatened any application, petition, objection or other pleading with ANATEL or any other Governmental Authority that challenges or questions the validity of any
rights of the holder under any such Company Telecommunication License or Permit, in each case, except as would not reasonably be expected, individually or in the aggregate, to be material to the
Entities, taken as a whole.
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(e) The
Entities have valid, binding and enforceable rights to the Company Telecommunication Licenses. The Company Telecommunication Licenses have not been sold,
transferred, alienated, leased or encumbered in any other manner. The right of the Entities to use and enjoy ownership or possession of the Company Telecommunication Licenses has not been restricted,
transferred or surrendered since the initial award thereof, and the Entities' title to all the Company Telecommunication Licenses is free and clear of any Liens. The Entities have complied with all
applicable Law in connection with obtaining each Company Telecommunication License and each Company Telecommunication License (i) has been legally and duly granted by the appropriate granting
authority, (ii) is fully and unconditionally vested in an Entity (except to the extent vesting is conditioned upon payment in full for such license), and (iii) is in full force and
effect and paid for in full (other than payments being made in installments). None of the Entities owes any material fees or duties in connection with, or arising from, any Company Telecommunication
Licenses, in each case, that are due and payable, other than fees paid in installments. The Entities do not own or use any license of the Federal Communications Commission of the U.S. No Entity holds
any Telecommunications Licenses through a partnership, joint venture or other Person that is not an Entity.
(f) All
of the currently operating cell sites and microwave paths owned by the Entities in respect of which a filing with ANATEL was required have been constructed and are
currently operated as represented to ANATEL in currently effective filings, and modifications to such cell sites and microwave paths have been preceded by the submission to ANATEL of all required
filings (the "
Cell Site Standards
"), in each case, except as would not reasonably be expected to be, individually or in the aggregate, material to the
Entities, taken as a whole.
(g) All
transmission towers owned by the Entities are obstruction-marked and lighted by an Entity to the extent required by, and in accordance with, the rules and
regulations of ANATEL, in each case, except as would not reasonably be expected to be, individually or in the aggregate, material to the Entities, taken as a whole. Appropriate notification to ANATEL
has been made for each transmission
tower owned or leased by the Entities to the extent required to be made by an Entity by, and in accordance with, the rules and regulations of ANATEL (the "
Transmission Tower
Standards
"), in each case, except as would not reasonably be expected to be, individually or in the aggregate, material to the Entities, taken as a whole.
(h) All
of the currently operating cell sites and microwave paths and transmission towers leased by the Entities (i) are subject to contractual arrangements with the
lessor requiring compliance by such lessor with all aspects of the Cell Site Standards and the Transmission Tower Standards, (ii) if operated or maintained by the Entities, are so operated or
maintained, as the case may be, in compliance with the Cell Site Standards, the Transmission Tower Standards and all municipality requirements, and (iii) to the Knowledge of the Company, each
such lessor is in compliance with the Cell Site Standards and the Transmission Tower Standards, except as would not reasonably be expected to be, individually or in the aggregate, material to the
Entities, taken as a whole.
(i) The
Entities do not hold any Permit or Telecommunication License to offer, and do not offer, any material services or material features other than fixed telephony,
fixed broadband, wireless voice and data services and features, and any ancillary services or features related thereto. The Entities do not conduct any business other than the business of marketing,
selling and providing fixed telephony and wireless telecommunication services (including voice and data services), and all services ancillary thereto, in Brazil.
6.15.
Environmental Laws.
The Company and the other Entities have obtained from the
proper federal, state or local Governmental Authorities in Brazil all material environmental Permits and have observed in all material respects the limitations, restrictions, conditions, standards,
prohibitions,
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requirements,
obligations, terms and schedules set forth in the Environmental Laws, except where such default or violation would not reasonably be expected to result, individually or in the aggregate,
in a Seller Material Adverse Effect. All Permits obtained under applicable Law are valid and in full effect with regard to the conduct of the business of the Company and the other Entities as
currently conducted. There are no terms or conditions under any such environmental Permit that will require material changes or limitations on the activities and operations of the Company and the
other Entities. All applications as necessary for renewal have been timely filed, and, to the Knowledge of the Company, there is no act, fact or reason that might compromise such registrations,
enrollments, and authorizations. Except as would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect, (a) the Company and the other
Entities have not violated any Environmental Law; (b) the Company and the other Entities do not own, nor do they operate on or with, any property that is contaminated or suspected of
contamination with any substance or waste that could reasonably be expected to require remediation pursuant to any Environmental Laws; (c) the Company and the other Entities are not liable
under any Environmental Law for any contamination of,
or disposal of waste on, land owned by third parties; (d) the Company and the other Entities are not subject to any Claim or Legal Proceeding related to Environmental Law, and, to the Knowledge
of the Company, there is no investigation in course that might lead to any such Claim or Legal Proceeding; (e) to the Knowledge of the Company, there is no environmental problem or risk that
affects or could materially affect, in any way, the Company and the other Entities' businesses or any of them; and (f) the Company and the other Entities have not assumed by Contract any
liabilities or obligations pursuant to Environmental Law.
6.16.
Broker's or Finder's Fee.
None of NIIH nor any of the Entities has any
liability or obligation to pay any fees or commissions to any broker, finder or other agent with respect to the transactions contemplated by this Agreement for which Purchaser or any of its Affiliates
(including, after Closing, the Entities) could become liable or obligated.
6.17.
Insurance.
Section 6.17 of the Company Disclosure Schedule sets forth all
insurance policies owned or held by any Entity on the date of this Agreement and that cover the corresponding Entity, its assets, properties or personnel with respect to risks arising in connection
with the operation or conduct of its business (collectively, the "
Insurance Policies
"), and all judicial guarantees and ANATEL's
mandatory performance bonds covering any Entity. The Insurance Policies and such judicial guarantees and performance bonds, as applicable, are in full force and effect in accordance with their terms
and conditions, and/or are renewable in the Ordinary Course of Business, except as would not reasonably be expected to result, individually or in the aggregate, in a Seller Material Adverse Effect.
All premiums that have become due and payable under the Insurance Policies have been paid, all claims of loss under any such Insurance Policies have been timely delivered and no Entity has received
any notice in writing, or, to the Knowledge of the Company, orally, of cancellation of any such policies. The Insurance Policies that are maintained by Parent or its Affiliates (other than any Entity)
for the benefit of any Entity will be discontinued as of the Closing.
6.18.
Sufficiency of Assets.
The property and assets owned by the Entities,
together with their respective rights under existing Contracts that survive the Closing constitute all the assets, properties and rights (a) necessary to conduct the business of Nextel Brazil
and its Subsidiaries in all material respects as presently conducted and (b) used to generate the results of the Entities set forth in the Financial Statements. All of the wireless
telecommunication services business of Parent and its Affiliates in Brazil is operated by the Entities.
6.19.
Subscribers; Transmission Towers.
(a) Section 6.19(a) of the Company Disclosure Schedule sets
forth as of the Balance Sheet Date (i) the total number of Subscribers, (ii) the total
number of Postpay Subscribers, and (iii) the total number of Prepaid Subscribers.
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(b) Section
6.19(b) of the Company Disclosure Schedule lists, as of the date of this Agreement, each transmission tower and tower structure on which transmitters used in the
network of Nextel Brazil's and its Subsidiaries' business are located, whether owned or leased by Nextel Brazil or any of its Subsidiaries and its location by street address and global positioning
service coordinates, and with respect to owned towers, whether there are any other operators or co-location tenants on such towers.
6.20.
Absence of Certain Changes.
(a) Between
December 31, 2017 and the date of this Agreement, the Entities have conducted their respective businesses only in, and have not engaged in any material
transaction other than in accordance with, the Ordinary Course of Business, except as disclosed in the Parent SEC Reports.
(b) Between
December 31, 2017 and the date of this Agreement, no Seller Material Adverse Effect has occurred, and there has not been any Effect that would reasonably
be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.
(c) Between
the Balance Sheet Date and the date of this Agreement, (i) the Entities have conducted their respective businesses only in, and have not engaged in any
material transaction other than in accordance with, the Ordinary Course of Business, except as disclosed in the Parent SEC Reports, and (ii) none of Parent, the Seller or any Entity has taken
any action which, if taken after the date hereof, would require Purchaser's consent pursuant to
Section 8.2(b)(v)
,
(vi)
,
(viii)
,
(x)
,
(xii)
,
(xiii
),
(xiv)
,
(xv)
,
(xvi)
,
(xviii)
,
(xx)
,
(xxii)
,
(xxiii)
or, to the extent relating to the
foregoing,
Section 8.2(b)(xxvii)
.
6.21.
Related Party Contracts.
Section 6.21 of the Company Disclosure Schedule contains a list of all
Contracts between any Entity, on the one hand, and Seller, AI Brazil or any Related Person
(other than another Entity) of any Entity, Seller or AI Brazil, on the other hand, except for Employee Plans and the Nextel Holding Share Transfer Agreement (any Contract set forth on such Schedule,
or required to be set forth on such Schedule, a "
Related Party Contract
"). None of Seller, AI Brazil or any of their respective Related Persons (other
than an Entity) owns any assets, properties or rights, tangible or intangible, used in the business of the Entities, or has any present claim or, to the Knowledge of the Company, has any basis for any
future claim against any Entity (other than under any Employee Plan).
6.22.
Holding Companies.
(a) The Company is a newly-formed entity formed solely for the purpose of
holding the Company Shares and engaging in the transactions contemplated by this
Agreement and, prior to and as of the Closing, will have engaged in no other business activities or operations, will not have any assets of any kind other than equity interests in Nextel Holdings and
sufficient cash to pay out-of-pocket expenses resulting from the transactions set forth herein, and will have incurred no liabilities or obligations of any kind other than as expressly contemplated by
this Agreement.
(b) Each
of the Holding Companies is a holding company formed for the sole purpose of holding (i) a direct or indirect equity interest in Nextel Brazil or
(ii) Intercompany Obligations solely between such Holding Company and another Entity.
(c) No
Holding Company (i) has directly or indirectly engaged in any of the business activities conducted by Nextel Brazil or any other business activities, or
(ii) has any assets or liabilities of any kind other than an equity interest in one or more Entities or Intercompany Obligations that will be settled at or prior to the Closing pursuant to
Section 8.15
.
6.23.
Anti-Corruption and Anti-Money Laundering.
None of the Company or its Subsidiaries or, to the
Knowledge of the Company, any director, officer, employee, or other Representative of the Company or any of its
Subsidiaries, in each case, acting on behalf of the Company or any of its Subsidiaries, has, directly or indirectly, (a) used any funds of the Company or any of its Subsidiaries for
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unlawful
contributions, unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity; (b) authorized, made or promised to make any unlawful payment in cash
or valuable item to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns using funds of the Company or any of its Subsidiaries;
(c) violated or is in violation of any Anti-Corruption and Anti-Money Laundering Laws; (d) established or maintained any unlawful fund of monies or other assets of the Company or any of
its Subsidiaries; (e) made, promised or authorized any fraudulent entry on the books or records of the Company or any of its Subsidiaries; or (f) made any unlawful bribe, unlawful
kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business to or obtain special
concessions for the Company or any of its Subsidiaries; in each case other than as would not be material to the Entities, taken as a whole. There are no Claims pending (or threatened, to the Knowledge
of the Company) involving any alleged violations of any Anti-Corruption or Anti-Money Laundering Laws by Seller, AI Brazil, the Entities and their respective Subsidiaries and/or Representatives.
6.24.
Powers of Attorney.
Section 6.24 of the Company Disclosure Schedule contains a list of written
instruments of general and special powers of attorney in effect executed by or on
behalf of any of the Entities outstanding as of the date of this Agreement.
6.25.
Solvency.
Each of the Entities is Solvent and, immediately after giving effect to all of the
transactions contemplated by this Agreement, including payment of any and all
fees and expenses relating to the transactions contemplated by this Agreement, each of the Entities will be Solvent. Neither Parent nor NIIH is entering into this Agreement with the intent to hinder,
delay or defraud either present or future creditors of any Entity.
6.26.
Information in Proxy Statement.
The Proxy Statement relating to the Parent Stockholders Meeting
will not, at the date it is first mailed to the Parent Stockholders and at the time of the Parent
Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
6.27.
Voting.
The Parent Stockholder Approval is the only vote of the holders of any class or series
of the capital stock of Parent necessary (under the certificate of
incorporation and by-laws of Parent, other applicable Laws or otherwise) to approve and authorize the transactions contemplated by this Agreement and the Ancillary Agreements.
6.28.
Intercompany Notes.
Section 8.15 of the Company Disclosure Schedule sets forth, with
respect to each Intercompany Note, the principal amount, issuance date, holder, interest
rate, interest payment dates and maturity date of such Intercompany Note. No amendment has been made to any term of any of the Intercompany Notes since December 31, 2017. No amounts are due and
payable under any of the Intercompany Notes. Seller has made available to Purchaser true, correct and complete copies of each of the Intercompany Notes and all amendments, exhibits, annexes and
schedules thereto and each of the Intercompany Notes, as amended, is in full force and effect and is a legal, valid and binding obligation of the Entity party thereto, enforceable against such Entity
in accordance with its terms. None of the Entities is in breach or violation of, or default under, any Intercompany Notes.
6.29.
No Other Representations or Warranties; Schedules.
Except for the representations and
warranties contained in
ARTICLES 4
and
6
(as modified by the Company Disclosure Schedule), neither Parent nor Seller makes any other express or implied
representation or warranty with respect
to the Entities, the Entities' businesses, the Acquired Equity Interests, the AI Brazil Shares, or the transactions contemplated by this Agreement, and each of Parent and Seller disclaims any other
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representations
or warranties, whether made by Parent, Seller, AI Brazil or any Affiliate of Parent, Seller or AI Brazil, or any of Parent's, Seller's or AI Brazil's or their Affiliates' respective
officers, directors, employees, agents or other Representatives. Neither Parent or Seller make any representations or warranties to Purchaser regarding the probable success or profitability of the
Entities. Except for the representations and warranties contained in
ARTICLES 4
and
6
(as modified by
the Company Disclosure Schedule), each of Parent and Seller (a) expressly disclaims and negates any representation or warranty, expressed or implied, at law, by statute, or otherwise, relating
to the condition of the Acquired Equity Interests and (b) disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made,
communicated, or furnished (orally or in writing) to Purchaser or its Affiliates or Representatives (including any opinion, information, projection, or advice that may have been or may be provided to
Purchaser by any director, officer, employee, agent, consultant, or other Representative of Parent, Seller, AI Brazil or any of their Affiliates). The disclosure of any matter or item in any schedule
hereto will not be deemed to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter would reasonably be expected to result, individually or in
the aggregate, in a Seller Material Adverse Effect. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, nothing in this Agreement shall relieve Parent or Seller or
their Affiliates of any liability for actual fraud.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and AI Brazil, as of the date of this Agreement and as of the Closing Date, that:
7.1.
Organization.
Purchaser is an entity duly organized, validly existing and in good standing under
the Laws of the state of its incorporation and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on its business as now conducted.
7.2.
Authorization of Agreement.
Purchaser has the requisite corporate power and authority to execute
and deliver this Agreement and each Ancillary Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized
by all requisite corporate action on the part of Purchaser. This Agreement and each Ancillary Agreement has been duly and validly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other Parties hereto) this Agreement and each Ancillary Agreement constitute legal, valid and binding obligations of Purchaser enforceable against
Purchaser in accordance with its respective terms.
7.3.
Conflicts; Consents of Third Parties.
(a) The execution and delivery by Purchaser of this
Agreement and each Ancillary Agreement, the consummation of the transactions contemplated hereby and thereby,
or compliance by Purchaser with any of the provisions hereof or thereof do not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under any provision of (i) the certificate of incorporation and by-laws or comparable organizational documents of Purchaser, (ii) any
Contract or Permit to which Purchaser is a party or by which any of the properties or assets of Purchaser are bound, (iii) any Order of any Governmental Authority applicable to Purchaser or any
of the properties or assets of Purchaser, or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations
or cancellations that would not reasonably be expected to result, individually or in the aggregate, in a Purchaser Material Adverse Effect.
(b) No
consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Authority is required on
the part of Purchaser in connection with the execution and delivery of this Agreement and each other
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agreement,
document or instrument contemplated hereby or thereby to which Purchaser is a party, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the
transactions contemplated hereby or thereby, or the taking by Purchaser of any other action contemplated hereby or thereby, except for (i) the Regulatory Approval, (ii) the Antitrust
Approval, and (iii) such other consents, waivers, approvals, Orders, Permits, authorizations, declarations, filings and notifications, the failure of which to obtain or make would not
reasonably be expected to result, individually or in the aggregate, in a Purchaser Material Adverse Effect.
7.4.
Litigation.
As of the date hereof, there are no Legal Proceedings pending or, to the knowledge
of Purchaser, threatened against Purchaser, or to which Purchaser is otherwise
a party before any Governmental Authority, which, if adversely determined, would reasonably be expected to result, individually or in the aggregate, in a Purchaser Material Adverse Effect. As of the
date hereof, Purchaser is not subject to any Order of any Governmental Authority except to the extent the same would not reasonably be expected to result, individually or in the aggregate, in a
Purchaser Material Adverse Effect.
7.5.
Broker's or Finder's Fee.
Purchaser has no liability or obligation to pay any fees or
commissions to any broker, finder or other agent with respect to the transactions contemplated by this
Agreement for which Seller, AI Brazil or any of their respective Affiliates could become liable or obligated.
7.6.
Financial Capability.
Purchaser has and will have at the Closing sufficient funds available to
pay the Purchase Price and any expenses incurred by Purchaser in connection with the
transactions contemplated by this Agreement. Purchaser's obligations to complete the transactions contemplated hereby are not dependent upon or conditioned on receipt of financing.
7.7.
Information Supplied.
None of the information supplied or to be supplied by Purchaser expressly
for inclusion in the Proxy Statement will, at the date it is first mailed to the Parent
Stockholders and at the time of the Parent Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they are made, not misleading.
7.8.
Investigation.
Purchaser acknowledges and agrees that it (a) has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning the Entities, the Acquired Equity Interests, the AI Brazil Shares, the business and the assets and liabilities of the Entities, the transactions contemplated by this Agreement and any other
rights or obligations to be transferred, directly or indirectly, pursuant to this Agreement, and (b) has been furnished with, or given adequate access to, such projections, forecasts,
estimates, appraisals, statements, promises, advice, data or information about Seller, AI Brazil, the Entities, the Acquired Equity Interests, the AI Brazil Shares, the business and the assets and
liabilities of the Entities, and any other rights or obligations to be transferred, directly or indirectly, pursuant to this Agreement, as Purchaser has requested. Purchaser further acknowledges and
agrees that (i) the only representations and warranties made by Seller or any of its Affiliates are the representations and warranties expressly set forth in
ARTICLE
4
and
6
, and the only representations and warranties made by AI Brazil or any of its Affiliates are the representations and
warranties expressly set forth in
ARTICLE 5
, and Purchaser has not relied upon any other express or implied representations, warranties or other
projections, forecasts, estimates, appraisals, statements, promises, advice, data or information made, communicated or furnished by or on behalf of any Entity, Seller, AI Brazil or any of their
respective Affiliates, any Representatives of any Entity, of Seller, AI Brazil or any of their respective Affiliates or any other Person, including any projections, forecasts, estimates, appraisals,
statements, promises, advice, data or information made, communicated or furnished by or through any Entity's, Seller's or AI Brazil's banking Representatives, or management presentations, data room or
other due diligence information, and that Purchaser will not have any right
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or
remedy arising out of any such representation, warranty or other projections, forecasts, estimates, appraisals, statements, promises, advice, data or information and (ii) any claims that
Purchaser may have for breach of any representation or warranty will be based solely on the representations and warranties expressly set forth in
ARTICLE
4
,
5
and
6
. Purchaser acknowledges that, except for the representations and
warranties expressly set forth in
ARTICLE 4
,
5
and
6
,
the assets and businesses of the Entities, as a result of the purchase and sale of the Acquired Equity Interests, are being transferred on a "where is" and, as to condition, "as is" basis.
ARTICLE 8. COVENANTS
8.1.
Access to Information.
(a) From the date of this Agreement until the Closing Date or earlier
termination of this Agreement, Purchaser will be entitled, through its officers, employees
and other Representatives (including its legal advisors and accountants), to make such investigation of the properties, businesses and operations of the Entities and such examination of the books and
records of the Entities as it reasonably requests and to make extracts and copies of such books and records. Any such investigation or examination, and all communications with any Entity and their
respective Representatives pursuant to this
Section 8.1
, will be coordinated through representatives designated by Seller. NIIH will cause the officers,
employees, consultants, agents, accountants, attorneys and other Representatives of the Entities to cooperate with the reasonable requests of Purchaser and its Representatives in connection with such
investigation and examination, and Purchaser and its Representatives will cooperate with the Entities and their respective Representatives and will use its reasonable efforts to minimize any
disruption to the Entities' business. No such investigation or examination will be permitted to the extent that it would require any Entity to disclose information regarding any bids, the identity of
any bidder, confidentiality or non-disclosure agreements, letters of intent, expressions of interest or other proposals received, in each case prior to the date of this Agreement, in connection with
transactions comparable to those contemplated by this Agreement or any information or analysis relating to any such communications. Notwithstanding anything to the contrary in this
Section 8.1
,
(i) any such investigation and examination will be conducted upon reasonable notice and under reasonable circumstances during
regular business hours and will be subject to restrictions under applicable Law and (ii) none of Parent, Seller, AI Brazil or any Entity will be required to permit any inspection, or to
disclose any information, that in the reasonable judgment of Parent, Seller, AI Brazil or the Entities, as applicable, would (A) waive the protection of an attorney-client privilege or
(B) would violate any confidentiality obligations to which Parent, Seller, AI Brazil or any Entity is bound;
provided
that Parent, Seller, the
applicable Entity or, to the extent related to AI Brazil's interest in the Entities, AI Brazil, shall use commercially reasonable efforts to permit such inspection or provide such information in a
manner that would not result in the waiver of such privilege or violate such confidentiality obligations, including, in the case of clause (B), by obtaining the consent of such third party if
so requested by Purchaser. Nothing contained herein is intended to modify or terminate the Confidentiality Agreements, which will remain in full force and effect and applicable to Evaluation Material
(as defined in the Confidentiality Agreements) provided to Purchaser and its Representatives hereunder or in connection herewith.
(b) Parent
shall cause the Brazil Entities to prepare and deliver to Purchaser true, complete and correct (i) unaudited consolidated financial statements for the
Brazil Entities for each calendar quarter ending after the date hereof promptly after each calendar quarter (and in any event within 40 days of the end of such calendar quarter) and
(ii) monthly management reports in a form consistent with the example set forth in Section 8.1(b) of the Company Disclosure Schedule ("
Monthly Management
Reports
") within 20 days after the end of each month ending after the date hereof. Together with each of the unaudited consolidated financial statements and Monthly
Management Reports, Parent shall also deliver a reconciliation of such statements to the 2019 Transaction Budget (or the 2020 Transaction Budget, if applicable), and meet with Representatives of
Purchaser, upon written request of Purchaser, during normal business hours, to discuss any
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questions
they may have regarding such statements and such reconciliation. Parent shall deliver to AI Brazil all documents, reports and other information provided to Purchaser or its Affiliates
pursuant to this
Section 8.1
simultaneously with (or, if not practicable, promptly following) the delivery of such documents, reports and other
information to Purchaser or its Affiliates.
8.2.
Conduct of the Business Pending the Closing.
(a) From the date of this Agreement until the
Closing Date or earlier termination of this Agreement, except (w) as required by applicable Law or any
Governmental Authority, (x) as expressly required by this Agreement or (y) with the prior written consent of Purchaser, Seller shall cause each Entity to (and shall provide necessary
funding to permit such Entity to):
(i) conduct
its business in the Ordinary Course of Business;
(ii) use
its reasonable best efforts to operate its business in accordance with the 2019 Transaction Budget (and, if applicable, the 2020 Transaction Budget); and
(iii) use
its commercially reasonable efforts to preserve its present business operations, organization and goodwill and maintain existing relations with Governmental
Authorities, customers, suppliers and other persons with whom they have material commercial relationships and keep available the services of their employees, in each case, in all material respects.
The 2020 Transaction Budget, if applicable, shall be prepared by Parent in good faith, shall be consistent with the 2019 Transaction Budget (to the extent applicable) and shall be delivered to
Purchaser not less than 15 Business Days prior to December 31, 2019.
(b) From
the date of this Agreement until the Closing Date or earlier termination of this Agreement, except (w) as set forth on Section 8.2(b) of the Company
Disclosure Schedule, (x) as required by applicable Law or any Governmental Authority, (y) as expressly required by
Section 8.2(c)
and
Section 8.15
or (z) with the prior written consent of Purchaser, Seller shall cause each Entity not to, and, with respect to
clauses (v) and (vi) below, Parent shall not:
(i) (A)
declare, set aside, make or pay any dividend or other distribution in respect of shares, quotas or other securities of, or other ownership interests in, any Entity
(B) repurchase, redeem or otherwise
acquire any outstanding shares, quotas or other securities of, or other ownership interests in, any Entity or (C) make any payment to or for the benefit of (or transfer assets to or assume,
indemnify or incur Liabilities for the benefit of) Seller, AI Brazil or any of their respective Affiliates other than another Entity (including with respect to any share capital or other securities of
any Entity);
(ii) directly
or indirectly transfer, issue, sell, encumber or dispose of any shares, quotas or other securities of any Entity or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares, quotas or other securities of any Entity;
(iii) effect
any recapitalization, reclassification or like change in its capitalization or voluntarily adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of any Entity;
(iv) amend
its certificate of incorporation, by-laws or articles of association, as applicable;
(v) except
as required by the terms of any Company Employee Plan or Parent Employee Plan, in each case, as in effect on the date hereof or by applicable Law from time to
time in effect: (A) increase the compensation or benefits of any current or former employee of any Entity or (B) grant or pay, or commit to grant or pay, any bonus or other incentive
compensation, benefit or other compensation to any current employee of any Entity;
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(vi) except
as required by the terms of any Company Employee Plan or Parent Employee Plan, in each case, as in effect on the date hereof or by applicable Law from time to
time in effect: (A) enter into, adopt, establish, modify, amend or terminate, or commence any off-cycle enrollment period under, any Company Employee Plan or, as it relates to any current or
former employee of any Entity, any Parent Employee Plan, (B) fund any rabbi trust or similar arrangement or otherwise accelerate the time of funding, vesting or payment of any payments or
benefits due to any current or former employee of any Entity, (C) enter into, modify, amend or terminate any labor or collective bargaining agreement that covers any current or former employee
of any Entity, (D) without prejudice to
Sections 3.2(a)(iii)
and
3.2(b)(iii)
, hire (other than to
replace any vacancy existing on the date of this Agreement or resulting from a permitted termination under this Agreement or a termination initiated by an employee, in each case where filling such
vacancy is essential, as reasonably determined by the Company, to the operation of the business) or terminate (other than for cause, as determined by the Company in good faith) any officer of the
Entities or employees who are the direct reports of the Chief Executive Officer of Nextel Brazil, or (E) transfer any employee of Parent or any of its Subsidiaries into or out of the Entities;
(vii) subject
any of its properties or assets (whether tangible or intangible) to a Lien, except for Permitted Liens in the Ordinary Course of Business;
(viii) (A)
acquire any material properties, rights, spectrum or other assets, other than supplies and inventory in the Ordinary Course of Business or (B) sell,
assign, license, transfer, lease or otherwise dispose of (including by abandoning, cancelling, allowing to lapse or failing to renew or continue to prosecute or defend any Intellectual Property) or
encumber any of its material properties, rights, Telecommunication Licenses or assets (except sales of inventory to customers in the Ordinary Course of Business or sales of obsolete or worthless
inventory);
(ix) other
than in the Ordinary Course of Business, cancel or compromise any material Indebtedness or claim or waive or release any material right or economic benefit of any
Entity;
(x) enter
into or agree to enter into any merger, consolidation, joint venture or strategic partnership;
(xi) other
than short-term financial investments in marketable securities made in the Ordinary Course of Business, acquire the securities of any other Person;
(xii) change
the accounting methods, practices or procedures applicable to the Entities, except as required by U.S. GAAP, Brazilian GAAP or applicable Law;
(xiii) enter
into, amend, modify or grant a waiver under any Related Party Contract;
(xiv) (A)
terminate, renew, amend or otherwise modify in any material respect, or waive any material right under, any Material Contract or (B) other than in the
Ordinary Course of Business, enter into any Contract that would constitute a Material Contract if in effect as of the date hereof;
(xv) (A)
enter into any line of business in any geographic area other than the current lines of business of the Entities and products and services reasonably ancillary
thereto, (B) except as currently conducted, engage in the conduct of any business in any state that would require the receipt of a new or transfer of an existing Company Telecommunication
License, or (C) conduct any business operations outside of Brazil (excluding pursuant to customary roaming arrangements and procurement of services from Persons outside of Brazil);
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(xvi) fail
to maintain, allow to lapse, or abandon, including by failure to pay any required fees or expenses of any kind, any Telecommunication License or other license or
Permit material to the business or operation of the Entities;
(xvii) make
any loans, advances, guarantees or capital contributions to or investments in any Person, other than (A) to the Entities or (B) advances to
employees in the Ordinary Course of Business and not in excess of R$10,000 in the aggregate to any single Person;
(xviii) incur
any Indebtedness for borrowed money other than third party Indebtedness in an aggregate amount less than R$10,000,000, only to the extent that (A) such
Indebtedness is repayable at the option of the borrower without penalty or premium and (B) Seller has provided Purchaser with prior notice specifying the intended use of proceeds;
(xix) become
legally committed to make capital expenditures not included in the 2019 Transaction Budget or, if applicable, the 2020 Transaction Budget that, to the extent
unpaid as of Closing, will not be specifically reflected as a liability in the calculation of Closing Net Working Capital, Closing BRL Indebtedness or Closing USD Indebtedness and taken into account
in determining the Final Purchase Price;
(xx) except
as provided on Section 8.2(b)(xx) of the Company Disclosure Schedule, enter into any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, for which liabilities thereunder are required to be classified and accounted for under U.S. GAAP as capital leases;
(xxi) (A)
delay or postpone the payment of accounts payable or accrued expenses, or accelerate the collection of accounts receivable, in each case outside the Ordinary
Course of Business, (B) change cash management policies, or (C) engage in any discounts or price reductions or alter the extension of credit terms to any customer, in each case outside
of the Ordinary Course of Business;
(xxii) settle
any Action, other than settlements in the Ordinary Course of Business that impose solely monetary obligations not in excess of R$10,000,000 (it being
understood that this clause (xxii) shall not apply to settlement of any Transaction Litigation, which is governed by
Section 8.8
);
(xxiii) make
or change any material Tax election, change any method of Tax accounting, consent to any extension or waiver of the statute of limitations period applicable to
any Taxes, agree to any material adjustment of any Tax attribute or use any Tax attribute outside of the Ordinary Course of Business, amend any Tax Return, settle or otherwise finally resolve any
dispute with respect to a material amount of Tax or file a claim for any refund of Tax outside the Ordinary Course of Business for claiming such refunds;
(xxiv) settle,
enter into any amnesty, installment or equivalent agreement or program with respect to, or assign by any means, any Tax credits or rights of any of the
Entities to or with any public or private party and/or Governmental Authority;
(xxv) use,
offset or assign by any means any PIS/COFINS credits or rights resulting from any PIS/COFINS Credits Claim, except solely for the purposes and in accordance with
the conditions
described in
Section 8.15
(
provided
that, for the avoidance of doubt, the Entities may use or offset by
any means, in the Ordinary Course of Business, any PIS/COFINS credits or rights not resulting from PIS/COFINS Credits Claims);
(xxvi) amend,
cancel, terminate, extinguish, grant any waiver under, forgive or otherwise modify the terms of the Intercompany Notes (any of the actions described in this
clause (xxvi), an "
Intercompany Notes Modification
"); or
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(c) From
the date of this Agreement until the Closing Date or, if earlier, the termination of this Agreement, Seller will, and Parent will cause Seller to,
(i) contribute or cause to be contributed cash in Dollars to Nextel Holdings, which shall in turn contribute such cash to Brazil Parent and its Subsidiaries in amounts sufficient for Brazil
Parent and its Subsidiaries to conduct their business in the Ordinary Course of Business and in accordance with this Agreement and (ii) will cause Brazil Parent and its Subsidiaries to maintain
at least $20,000,000, in cash, in all Brazil-based company cash accounts on the last day of each month. For purposes of the contributions described in clause (i) of the preceding sentence,
(A) all such contributions shall be made solely by the existing equity holder or equity holders of the applicable Entity and no other Person, and (B) all new equity interests issued in
exchange for such contributions shall be common equity in the form of ordinary shares or quotas, as applicable, of the same type and class as the existing outstanding equity interests of the
applicable Entity, without any preferential terms. In no event shall the Entities obtain equity financing or incur any Indebtedness (including Indebtedness between or among the Entities) of any kind
prior to the Closing, other than the equity financing described in this
Section 8.2(c)
or the incurrence of Indebtedness expressly permitted by
Section 8.2(b)(xviii)
. Any contributions by Seller to Nextel Holdings described in this
Section
8.2(c)
may be accompanied by equity contributions from AI Brazil,
provided
that such equity contributions by AI Brazil are made
solely in accordance with the terms required by this
Section 8.2(c)
.
(d) From
the date of this Agreement until the Closing Date or earlier termination of this Agreement, neither Seller nor AI Brazil shall directly or indirectly transfer,
sell, encumber or dispose of any shares, quotas or other securities of any Entity.
8.3.
Consents
.
(a) (i)
Purchaser, Parent and Seller will use (and Seller will cause the Entities to use) their respective reasonable best efforts (and AI Brazil will use its reasonable
best efforts to cooperate with reasonable requests of Purchaser, Parent and Seller) to obtain at the earliest practicable date all consents and approvals required to consummate the transactions
contemplated by this Agreement, including the consents and approvals referred to in Sections 4.3(b) and 6.3 of the Company Disclosure Schedule, and (ii) AI Brazil will use its reasonable best
efforts to obtain at the earliest practicable date all consents and approvals required on the part of AI Brazil to consummate the transactions contemplated by this Agreement, including any consents
and approvals referred to in Section 5.3(b) of the AI Brazil Disclosure Schedule;
provided
,
however
, that (A) this
Section
8.3
shall not
apply to the Regulatory Approval and the Antitrust Approval, which are governed by the terms of
Section 8.4
and
Section
8.5
, respectively and (B) none of the Parties, the Company or any of its Subsidiaries will be required to, or (without the prior written consent of Purchaser) shall
agree to, pay any amounts, fees, penalties or other consideration or make any other concessions to any third party in order to obtain any third party consents contemplated by this
Section
8.3
.
(b) Purchaser
will (and, following the Closing, will cause the Company and any other Entities to) use reasonable best efforts to secure, and will cooperate with Parent to
secure, the unconditional release of Parent and its Affiliates (other than the Entities) from all obligations under the ATC Guaranty from and after the Closing Date by (i) securing the
termination of the ATC Guaranty pursuant to its terms or (ii) providing guarantees or other credit support on terms substantially similar to those under the ATC Guaranty and causing Purchaser
or one of its Affiliates to be substituted in all respects for Parent or its Affiliates (other than the Entities), so that Purchaser or its applicable Affiliate (including, after the Closing, any of
the Entities) shall be solely responsible for the obligations of Parent and its Affiliates under the ATC Guaranty;
provided
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that,
for the avoidance of doubt, such replacement guaranty shall only apply to matters accruing from and after the Closing Date.
8.4.
Regulatory Approval.
(a) Following the date hereof, according to the terms and subject to the
conditions set forth in this Agreement, each of the Parties will use their respective
reasonable best efforts to (and Seller will cause the Entities to) (i) make or cause to be made all filings or applications required of each of them or their respective Affiliates to obtain the
Regulatory Approval (excluding the Antitrust Approval, which is subject to the terms of
Section 8.5
) and (ii) cooperate with each other in
connection with any such filings or applications (including, to the extent permitted by applicable Law, providing copies of all such documents to the non-filing or non-applying Parties before filing
or submitting an application and considering all reasonable additions, deletions or changes suggested in connection therewith) and in connection with resolving any investigation or other inquiry of
any relevant Governmental Authority with respect to any such filing or application;
provided
that, to the extent a relevant Governmental Authority
requests information of AI Brazil or its Affiliates that is more burdensome than the information of AI Brazil or its Affiliates provided in connection with AI Brazil's investment in Nextel Holdings,
the Parties shall reasonably cooperate to limit the scope of such information request such that AI Brazil and its Affiliates are not required to provide more information than they were required to
provide in connection with AI Brazil's investment in Nextel Holdings;
provided
,
further
, that if the
Parties are unable to limit the scope of such information request in a timely manner, AI Brazil and its Affiliates shall use reasonable best efforts to provide such information in respect of their
interests in the Entities as is required to obtain the Regulatory Approval. Purchaser will promptly inform Parent (on behalf of Parent and AI Brazil), and Parent (on behalf of Seller and AI Brazil)
will promptly inform Purchaser, of any material oral communication with, and provide copies of material written communications with, any Governmental Authority regarding any such filings or
applications. Neither Purchaser, on the one hand, nor any of Parent, Seller or AI Brazil, on the other hand, will participate, or permit any of its Affiliates or advisors to participate, in any formal
meeting with any Governmental Authority in respect of any filings, applications, investigation (including any proposed investigation), litigation or other inquiry related to the transactions
contemplated by this Agreement, unless it consults with Parent (in the case of Purchaser's participation in any such meeting) or Purchaser (in the case of Parent's, Seller's or AI Brazil's
participation) in advance and, to the extent permitted by such Governmental Authority, gives such other Party or Parties the opportunity to attend and participate in such meeting. Each Party may, as
each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other Parties under this
Section 8.4
as "outside counsel only." Such materials and the
information contained therein will be given only to the outside legal counsel of
the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient, unless express written permission is obtained in advance from the source of the
materials.
(b) Each
of Purchaser, Parent, Seller and AI Brazil will use its reasonable best efforts to take such action as may be required to obtain the Regulatory Approval (excluding
the Antitrust Approval, which is subject to the terms of
Section 8.5
), including using their reasonable best efforts to finalize, prior to the Closing,
any Condition to a Governmental Authority's granting of the Regulatory Approval, as promptly as reasonably practicable after the execution of this Agreement, and to avoid the entry of, or to effect
the dissolution of, any Order in any Legal Proceeding that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by this Agreement;
provided
that nothing in this
Section 8.4
or any other provision of this Agreement shall require, or be
construed to require, Purchaser or AI Brazil, or any of their respective Affiliates or any of the Entities to (and Parent, Seller and AI Brazil shall not, and Parent and Seller shall cause the
Entities not to, without the prior written consent of Purchaser, or AI Brazil in the case of any such limitations applicable to it or its Affiliates), (i) propose, negotiate, offer to commit,
effect or accept, by consent decree, hold separate Order or otherwise, (A) the license, sale, divestiture, disposition or transfer of any portion of its capital
A-56
stock,
assets, spectrum, licenses, customers, properties or businesses, (B) the discontinuation or expansion of, or requirement of new offerings with respect to, any product or service
offering, (C) the termination of existing relationships, contractual rights or obligations, (D) the licensing or otherwise making available to any Person any technology, software or
other intellectual property, (E) any obligation or commitment (to any Governmental Authority or otherwise) regarding its future operations or investments or (F) the imposition of any
other limitation on, or prohibition of, its and its Affiliates' ability to conduct their respective businesses or own any capital stock or assets or license any spectrum, or to acquire, hold, operate
or exercise full rights of ownership of any businesses or assets, including those to be acquired pursuant to this Agreement, in the case of this clause (i), to the extent any Condition
described in the foregoing sub-clauses (A) through (F) would constitute a Burdensome Condition, (ii) pay any amounts in connection with seeking or obtaining any required actions,
approvals or waivers from any Governmental Authority in order to consummate the transactions contemplated by this Agreement (excluding any mandatory filing fees and costs and expenses of counsel and
other advisors), or (iii) litigate or participate in the litigation of any Legal Proceeding, whether judicial or administrative, with any Governmental Authority to contest, avoid entry of, or
to have vacated, lifted, reversed or overturned any Order that would prohibit, prevent or restrict the consummation of the transactions contemplated by this Agreement.
(c) Without
limiting the foregoing including the proviso thereto, the Parties agree that Purchaser shall have the unilateral right to determine whether or not the Parties
(other than AI Brazil) litigate with any Governmental Authority to contest or resist any Legal Proceeding challenging any transaction contemplated by this Agreement, or to have vacated, lifted,
reversed or overturned any Order that would prohibit, prevent or restrict the consummation of the transactions contemplated by this Agreement.
(d) The
Parties agree that Purchaser, on behalf of the Parties, will control and lead all communications, strategy and litigation matters relating to, and the process of
obtaining, the Regulatory Approval;
provided
, that (i) Purchaser will allow Parent reasonable time to review and comment on, and will take into
account any reasonable comments from Parent with respect to, any submissions or material communications required in connection with the process of obtaining the Regulatory Approval, (ii) to the
extent that any such submissions or material communications include information relating to AI Brazil or its Affiliates, Purchaser will provide AI Brazil reasonable time to review and comment on, and
will take into account any reasonable comments from AI Brazil with respect to, such information relating to AI Brazil or its Affiliates in any such submissions or material communications and
(iii) this
Section 8.4(d)
shall not prohibit Parent, Seller or AI Brazil from complying with applicable Law.
(e) Purchaser,
on the one hand, and Parent, on the other hand, will each pay 50% of any filing or administrative fees related to the Regulatory Approval.
8.5.
Antitrust Approval.
(a) Purchaser, Parent and Seller will make or cause to be made all filings
required of each of them or any of their respective Affiliates under the Antitrust
Statutes with respect to the transactions contemplated hereby (including, as required, the submission of this Agreement, the Ancillary Agreements, or any other document related to the transactions
contemplated hereby to the Brazilian Antitrust Authority) as promptly as practicable after the date of this Agreement. Purchaser, Parent and Seller will (i) comply at the earliest practicable
date with any request under any Antitrust Statutes for additional information, documents or other materials received by each of them or any of their respective Subsidiaries from the Brazilian
Antitrust Authority or any other Governmental Authority in respect of such filings or the transactions contemplated by this Agreement, (ii) cooperate with each other in connection with any such
filing and in connection with resolving any investigation or other inquiry of the Brazilian Antitrust Authority or other Governmental Authority under any Antitrust Statutes with respect to any such
filing or any such transaction and (iii) use their respective reasonable
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best
efforts to furnish all information required for any application or other filing to be made pursuant to any applicable Law in connection with the transactions contemplated by this Agreement. AI
Brazil will use reasonable best efforts to cooperate with the reasonable requests of Parent and Seller, at the sole cost and expense of such requesting Party, to provide such information regarding AI
Brazil as shall be required for any application or other filing to be made pursuant to any applicable Law in connection with the transactions contemplated by this Agreement;
provided
that, to the extent
a relevant Governmental Authority requests information of AI Brazil or its Affiliates that is more burdensome than the
information of AI Brazil or its Affiliates provided in connection with AI Brazil's investment in Nextel Holdings, the Parties shall reasonably cooperate to limit the scope of such information request
such that AI Brazil and its Affiliates are not required to provide more information than they were required to provide in connection with AI Brazil's investment in Nextel Holdings;
provided
,
further
, that if the Parties are unable to limit the scope of such information request in a
timely manner, AI Brazil and its Affiliates shall use commercially reasonable efforts to provide such information in respect of their interest in the Entities, as is required to obtain the Antitrust
Approval. Purchaser will promptly inform Parent, and Parent, Seller and AI Brazil will promptly inform Purchaser, of any material oral communication with, and provide copies of material written
communications with, any Governmental Authority regarding any such filing or application. Neither Purchaser, on the one hand, nor any of Parent, Seller or AI Brazil, on the other hand, will
independently participate, or permit any of its Affiliates or advisors to participate, in any formal meeting with any Governmental Authority in respect of any such filings, investigation, or other
inquiry without giving Parent (in the case of Purchaser's participation in any such meeting) or Purchaser (in the case of Parent's, Seller's or AI Brazil's participation) prior notice of the meeting
and, to the extent permitted by such Governmental Authority, the opportunity to attend and participate. Subject to applicable Law and
Section 8.5(b)
, the Parties will consult and cooperate with one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party relating to proceedings under the Antitrust Statutes.
Each Party may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other Parties under this
Section
8.5
as "outside counsel only." Such materials and the information contained therein will be given only to the outside legal counsel of the recipient and will not be disclosed
by such outside counsel to employees, officers or directors of the recipient, unless express written permission is obtained in advance from the source of the materials.
(b) The
Parties agree that Purchaser, on behalf of the Parties, will control and lead all communications, strategy and litigation matters relating to, and the process of
obtaining, the Antitrust Approval, and accordingly will be responsible for (i) leading any interaction with the Brazilian Antitrust Authority, (ii) controlling the filing of the
Agreement and any other document before the Brazilian Antitrust Authority regarding the Antitrust Approval, and the filling and submission of any other document or information required by the
Brazilian Antitrust Authority, and (iii) preparing all drafts of any submissions or material communications with the competent Governmental Authority in connection with the Antitrust Statutes;
provided
that (A) Purchaser will provide such drafts to Parent in a timely manner, will allow Parent reasonable time to review and comment on
such drafts, and will take into account any reasonable comments from Parent in connection with any such submissions or material communications and (B) to the extent that any such drafts include
information relating to AI Brazil or its Affiliates, Purchaser will provide such drafts to AI Brazil in a timely manner to allow AI Brazil reasonable time to review and comment on, and will take into
account any reasonable comments from AI Brazil with respect to, such information relating to AI Brazil or its Affiliates in any such submissions or material communications.
(c) Each
of Purchaser, Parent and Seller will use reasonable best efforts to resolve (and AI Brazil will reasonably cooperate with such efforts to resolve) such objections,
if any, as may be
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asserted
by the Brazilian Antitrust Authority or any other Governmental Authority under any Antitrust Statutes with respect to the transactions contemplated by this Agreement, to finalize, prior to
the Closing, any Condition to any Governmental Authority's approval of the transactions contemplated by this Agreement under the Antitrust Statutes, and to take promptly any and all steps necessary to
avoid or eliminate each and every impediment under any Antitrust Statute that may be asserted by any Governmental Authority so as to enable the Parties to close the transactions contemplated by this
Agreement as expeditiously as possible;
provided
that nothing in this
Section 8.5
or any other provision
of this Agreement shall require, or be construed to require, Purchaser or AI Brazil, or any of their respective Affiliates or any of the Entities to (and Parent, Seller and AI Brazil shall not, and
Parent and Seller shall cause the Entities not to, without the prior written consent of Purchaser, or AI Brazil in the case of any such limitations applicable to it or its Affiliates),
(i) propose, negotiate, offer to commit, effect or accept, by consent decree, hold separate Order or otherwise, (A) the license, sale, divestiture, disposition or transfer of any portion
of its capital stock, assets, spectrum, licenses,
customers, properties or businesses, (B) the discontinuation of any product or service offering, (C) the termination of existing relationships, contractual rights or obligations,
(D) the licensing or otherwise making available to any Person any technology, software or other intellectual property, (E) any obligation or commitment (to any Governmental Authority or
otherwise) regarding its future operations or investments or (F) the imposition of any other limitation on, or prohibition of, its and its Affiliates' ability to conduct their respective
businesses or own any capital stock or assets or license any spectrum, or to acquire, hold, operate or exercise full rights of ownership of any businesses or assets, including those to be acquired
pursuant to this Agreement, in the case of this clause (i), to the extent any Condition described in the foregoing sub-clauses (A) through (F) would constitute a Burdensome
Condition, (ii) pay any amounts in connection with seeking or obtaining any required actions, approvals or waivers from any Governmental Authority in order to consummate the transactions
contemplated by this Agreement (excluding any mandatory filing fees and costs and expenses of counsel and other advisors), or (iii) litigate or participate in the litigation of any Legal
Proceeding, whether judicial or administrative, with any Governmental Authority to contest, avoid entry of, or to have vacated, lifted, reversed or overturned any Order that would prohibit, prevent or
restrict the consummation of the transactions contemplated by this Agreement. The Parties agree that Purchaser shall have the unilateral right to determine whether or not Parent, Seller and Purchaser
litigate with any Governmental Authority to contest or resist any Legal Proceeding challenging any transaction contemplated by this Agreement, or to have vacated, lifted, reversed or overturned any
Order that would prohibit, prevent or restrict the consummation of the transactions contemplated by this Agreement.
(d) Purchaser,
on the one hand, and Parent, on the other hand, will each pay 50% of all filing or administrative fees related to the Antitrust Approval.
8.6.
Regulatory Compliance.
Without limiting
Section 8.2(b)
, during the period from the date of this Agreement until the Closing Date or
earlier termination of this Agreement, Parent and Seller shall (and AI Brazil shall reasonably cooperate with Parent's and Seller's efforts), and Parent and Seller shall cause each of the Entities to,
(a) refrain from taking any action that would reasonably be expected to give any Governmental Authority with jurisdiction over Parent, Seller, AI Brazil or any of the Entities reasonable
grounds to suspend, revoke or modify any Telecommunication License of the Entities in any adverse manner (other than in any
de minimis
respect) and
(b) use reasonable best efforts to renew the material Permits, Telecommunications Licenses of the Entities, including preparing and filing with the applicable Governmental Authority all
necessary applications in connection therewith as soon as reasonably practicable after the commencement of the period during which such applications may be made;
provided
that none of the Entities will
apply for any Permit or Telecommunications License (other than renewals or replacements of the existing
Telecommunication Licenses of the Entities) the receipt of which would, individually or in the aggregate, reasonably be expected to prevent, materially impair or materially delay consummation of the
transactions contemplated by this Agreement.
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8.7.
Further Assurances.
(a) Subject to (and without limiting) the other provisions of this Agreement
and any provisos or qualifications therein, each Party will use its reasonable best
efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) to the extent reasonably within the control of such Party,
cause the fulfillment at the earliest practicable date of all of the conditions to its respective obligations to consummate the transactions contemplated by this Agreement.
(b) Purchaser
will, and will cause the Company and any other Entities to, following the Closing Date, as the case may be, make all fillings, submissions and registries
before any and all Governmental Authorities, including the relevant Board of Trade, RFB or BACEN, as required by applicable Law, in order to reflect the sale and assignment of the Acquired Equity
Interests, and change of management of the Entities. Purchaser will ensure that initial filings and submissions are carried out within 10 Business Days from the Closing Date. Evidence of all such
fillings, submissions, replacements, and registration will be presented to Seller and AI Brazil promptly after conclusion thereof.
8.8.
Notices of Certain Events; Transaction Litigation
.
(a) Parent
shall notify Purchaser and AI Brazil as promptly as reasonably practicable of (i) any notice or other communication from any Person to Parent, NIIH or the
Entities alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement, (ii) any notice or other material communication to
Parent, Seller, AI Brazil or the Entities from any Governmental Authority in connection with the transactions contemplated by this Agreement, (iii) any
Action commenced or, to the Knowledge of the Company, threatened against Parent or its directors or officers that is related to this Agreement or the transactions contemplated by this Agreement (any
such Action, "
Transaction Litigation
"), and (iv) if it becomes aware of any event, change or effect following the date of this Agreement which
has resulted or is reasonably likely to result in the failure of any of the conditions set forth in
Sections 9.1(a)
through
9.1(e)
. In no event shall the
delivery of any notice by a party pursuant to this
Section 8.8
limit or
otherwise affect the respective rights, obligations, representations, warranties, covenants or agreements of the Parties or the conditions to the obligations of the parties under this Agreement.
(b) Parent
shall keep Purchaser and AI Brazil reasonably informed regarding any Transaction Litigation. Parent shall give Purchaser and AI Brazil the opportunity to
participate, subject to Purchaser or AI Brazil, as applicable, entering into a customary joint defense agreement with Parent, in the defense, settlement, or entry into any other agreement with respect
to such Transaction Litigation, including the opportunity to review and comment on all filings or responses to be made in connection with any Transaction Litigation and Parent shall consider any such
comments in good faith. Each of Purchaser, AI Brazil and Parent will cooperate and consult with one another in connection with any Transaction Litigation.
8.9.
Publicity.
The initial press release concerning this Agreement and the transactions contemplated
hereby will be in substantially the form previously agreed by the Parties.
None of the Parties will issue any press release concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other Parties, which approval
will not be unreasonably withheld or delayed, unless disclosure or filing are otherwise required by applicable Law,
provided
,
however
, that the Party
intending to make such release uses its reasonable best efforts consistent with such applicable Law requirement to consult in
advance with the other Parties with respect to the text thereof.
8.10.
Preservation of Records.
Seller and Purchaser agree that each of them will preserve and keep
the records held by it or their Affiliates relating to the Entities and their business for a
period of at least seven years from the Closing Date (except as provided below) and will make, upon reasonable
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notice
and during regular business hours, such records and personnel available to the other and AI Brazil as may be reasonably required by such Party in connection with any insurance claims by, Legal
Proceedings or Tax audits against or governmental investigations of Seller or Purchaser or any of their Affiliates or in order to enable AI Brazil, Seller or Purchaser to prepare its financial
statements and tax reporting or to comply with applicable Law or their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby;
provided
,
however
, that (a) the
access to such records will not unreasonably interfere with the business or operations of Purchaser or Seller, as applicable, or any of their Affiliates, (b) the access to such records will not
be permitted to the extent that it would require Purchaser or Seller, as applicable, or any of their Affiliates, to (i) disclose information subject to attorney-client privilege or
(ii) violate any confidentiality obligations to which Purchaser, Seller or AI Brazil, as applicable, or any of their Affiliates, is bound if the applicable Person shall have used commercially
reasonable efforts to obtain the consent of the applicable third party to grant access to such records, and (c) Seller or Purchaser, as applicable, will reimburse the other Party or Parties and
their Affiliates for any reasonable and documented out-of-pocket expenses incurred in connection with such access. If Seller or Purchaser, as the case may be, wishes to destroy such records before the
end of such seven-year period, such Party will first give 60 days prior written notice to the other and AI Brazil and such other Party or Parties will have the right at its or their option and
expense, upon prior written notice given to such Party within such 60-day period, to take possession of the records within 90 days after the date of such notice.
8.11.
Trademark License Agreement.
Prior to Closing, Parent and Nextel Brazil will amend the
Trademark Sublicense Agreement to expressly include a sublicense from Parent to Nextel Brazil under the
following trademark applications in Brazil owned by the Trademark Licensor: Application Nos. 914688316, 914688340, 914688391, 914688405. For a period of at least 12 months after the
Closing Date, Parent and NIIH will (a) maintain the Trademark License Agreement in full force and effect, (b) not amend, modify or otherwise waive any provision of the Trademark License
Agreement in any manner that would adversely affect the rights of the Entities under the Trademark Sublicense Agreement and (c) otherwise permit the Entities to continue to use the trademarks
licensed pursuant to the Trademark Sublicense Agreement under the terms thereof during such 12-month period. Neither Purchaser nor any of the Entities shall have any obligation to pay any royalties,
fees, expenses or any other amounts to Parent or any other Person for use of such trademarks during such 12-month period.
8.12.
Preparation of Proxy Statement; Stockholders Meeting.
(a) As promptly as reasonably practicable
(and in any event no later than 30 days) following the date of this Agreement, Parent will prepare and cause to
be filed with the SEC in preliminary form a proxy statement to be sent to the Parent Stockholders in connection with the Parent Stockholders Meeting (as amended or supplemented, the
"
Proxy Statement
"). Purchaser and Parent will cooperate with each other in the preparation of the Proxy Statement. Without limiting the generality of
the foregoing, (i) Parent will provide Purchaser and AI Brazil with a reasonable opportunity to review and comment (in the case of AI Brazil, with respect to information relating to AI Brazil)
on the Proxy Statement and (ii) upon Parent's request, Purchaser and AI Brazil will promptly furnish to Parent the information relating to it required by the Exchange Act to be set forth in the
Proxy Statement. Parent will cause the Proxy Statement to comply as to form with the applicable requirements of (A) the Exchange Act and (B) the rules and regulations of The NASDAQ Stock
Market.
(b) Each
of Parent, NIIH, AI Brazil and Purchaser agree to correct any information provided by it for use in the Proxy Statement if and to the extent such information shall
have become false or misleading. Parent will promptly notify Purchaser and AI Brazil of the receipt of any comments from or other correspondence with the SEC or its staff with respect to the Proxy
Statement and any request by the SEC or its staff for any amendment to the Proxy Statement or for additional information (and
promptly deliver a copy of such comments, correspondence or request to Purchaser and AI Brazil). Parent will respond as promptly as reasonably practicable to any such
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comments
from the SEC or its staff and shall use its reasonable best efforts to cause the Proxy Statement to be cleared by the SEC as promptly as reasonably practicable.
(c) Parent
shall, as promptly as reasonably practicable (and in any event within 10 Business Days following the date on which the Proxy Statement is cleared by the SEC),
(i) establish a record date for and give notice of a meeting of its stockholders for the purpose of authorizing this Agreement and the transactions contemplated hereby (the
"
Parent Stockholders Meeting
"), and (ii) mail the Proxy Statement to the holders of Parent Common Stock as of the record date established for the
Parent Stockholders Meeting. As promptly as reasonably practicable following the record date established for the Parent Stockholders Meeting, Parent, acting through the Parent Board, and in accordance
with applicable Law, shall (A) duly call, convene and hold the Parent Stockholders Meeting and (B) (1) subject to
Section 8.13
, include in
the Proxy Statement the Parent Board Recommendation and (2) use its reasonable best efforts to obtain the necessary approval of the transactions contemplated by this Agreement by the Parent
Stockholders. Without limiting the generality of the foregoing, subject to termination of this Agreement by Parent pursuant to
Section 3.4(i)
, Parent
agrees that its obligations pursuant to clause (A) of the foregoing sentence of this
Section 8.12(c)
will not be affected by the commencement,
public proposal, public disclosure or communication to Seller, AI Brazil or any other Person of any Acquisition Proposal or the occurrence of any Adverse Recommendation Change.
(d) Without
the prior written consent of Purchaser, Parent may only adjourn or postpone the Parent Stockholders Meeting if and to the extent the Parent Board or a duly
authorized committee thereof determines, in good faith and after consultation with outside legal counsel, that (i) Parent is required to postpone the meeting to ensure that any required
supplement or amendment to the Proxy Statement is provided to the Parent Stockholders within a reasonable amount of time in advance of the Parent Stockholders Meeting, (ii) there are
insufficient shares of Parent common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Stockholders Meeting, (iii) it is
necessary to solicit additional proxies to obtain the Parent Stockholder Approval or (iv) such adjournment or postponement if required to comply with applicable statutory Law;
provided
that Parent
may only postpone the meeting only once, and for a period of not more than an aggregate of 15 Business Days.
(e) Except
as set forth on Section 8.12(e) of the Company Disclosure Schedule, the adoption of this Agreement will be the only matter (other than matters of procedure and
matters required by applicable
Law to be voted on by the Parent Stockholders in connection with the adoption of this Agreement) that Parent will propose to be acted on by the Parent Stockholders at the Parent Stockholders meeting.
8.13.
No Solicitation.
(a) Except as expressly permitted by this
Section
8.13
, from the date of this Agreement until the Closing Date or
earlier termination of this Agreement, Parent and AI Brazil shall not, nor shall they authorize or permit any of their Subsidiaries to, and shall use their reasonable best efforts to cause their and
their respective Representatives not to, directly or indirectly (i) initiate, solicit or knowingly encourage or facilitate the making of any Acquisition Proposal or any inquiry, proposal or
request for information that may reasonably be expected to lead to an Acquisition Proposal, (ii) engage in negotiations or discussions with, or furnish any information concerning any of the
Entities, NIIH or Parent to, any third party relating to an Acquisition Proposal or any inquiry, proposal or request for information that may reasonably be expected to lead to an Acquisition Proposal
(other than informing third parties of the existence of the provisions contained in this
Section 8.13
), (iii) enter into any agreement or
understanding with respect to an Acquisition Proposal, (iv) accept, approve, endorse or recommend, or submit to the Parent Stockholders, any Acquisition Proposal, (v) take any action to
exempt any Person (other than Purchaser and its Affiliates) from the provisions of Section 203 of the DGCL or any other state takeover statute or (vi) resolve or agree to do any of the
foregoing. Parent and AI Brazil shall, and shall cause their Affiliates and their and their Affiliates' respective
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Representatives
to (A) immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal, or
any inquiry or proposal that may reasonably be expected to lead to an Acquisition Proposal and (B) promptly cause to be returned or destroyed all confidential information provided by or on
behalf of Parent or AI Brazil or any of their Affiliates to any such Person.
(b) Notwithstanding
Section 8.13(a)
, at any time prior to the date that the Parent Stockholder Approval is obtained at the
Parent Stockholders Meeting, in the event that Parent receives an unsolicited written Acquisition Proposal from a third party (which Acquisition Proposal was made after the date of this Agreement and
did not result from a breach of this
Section 8.13
), and if the board of directors of Parent determines in good faith, after consultation with Parent's
legal and financial advisors, that such Acquisition Proposal constitutes, or is reasonably likely to result in, a Superior Proposal, then Parent, AI Brazil and their respective Representatives may,
subject to compliance with this
Section 8.13
, (i) furnish, pursuant to an Acceptable Confidentiality Agreement, information (including non-public
information) with respect to Parent and its Subsidiaries to the Person or group of Persons who has made such Acquisition Proposal (
provided
that any
non-public information concerning Parent or any of its Subsidiaries that is provided to any Person given such access was previously provided, or is substantially concurrently provided, to Purchaser or
its Representatives) and (ii) engage in or otherwise participate in discussions or negotiations with the Person or group of Persons making such Acquisition Proposal and with AI Brazil and
Parent (as applicable);
provided
that Parent shall give written notice to Purchaser and AI Brazil after any such determination by the Parent board of
directors and prior to
taking any of the actions described in this
Section 8.13(b)
and shall comply with the provisions of
Sections
8.13(c)
and
8.13(f)
. Other than in connection with the termination of this Agreement pursuant to
Section
3.4(i)
or as required by applicable statutory Law, Parent shall not publicly announce the receipt of any Acquisition Proposal or any negotiations or discussions in connection
with any Acquisition Proposal or otherwise publicly comment on any Acquisition Proposal (other than to publicly reaffirm the Parent Board Recommendation or to recommend against any such Acquisition
Proposal, in each case in accordance with
Section 8.13(c)
).
(c) Except
as otherwise provided by
Section 8.13(d)
or
Section 8.13(e)
,
neither the Parent Board nor any committee thereof will (i) (A) withdraw (or qualify or modify in any manner adverse to Purchaser), or publicly propose to withdraw (or so qualify or modify),
the Parent Board Recommendation, (B) fail to include the Parent Board Recommendation in the Proxy Statement, (C) take any action to exempt any Person (other than Purchaser and its
Affiliates) from the provisions of Section 203 of the DGCL or any other state takeover statute, (D) with respect to any publicly announced Acquisition Proposal, fail to publicly reaffirm
the Parent Board Recommendation within three Business Days after Purchaser so requests in writing, (E) if a tender or exchange offer for shares of Parent Common Stock is commenced, fail to
recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against any such tender or exchange offer subject to Regulation 14D under the Exchange Act within three Business
Days after commencement of such tender or exchange offer, (F) approve, adopt or recommend any Acquisition Proposal or Alternative Acquisition Agreement, or propose publicly to approve, adopt or
recommend, any Acquisition Proposal or Alternative Acquisition Agreement or (G) publicly announce that an Acquisition Proposal constitutes a Superior Proposal (any action described in the
foregoing clauses (A) through (G) being referred to as an "
Adverse Recommendation Change
") or (ii) allow Parent or any of its
Subsidiaries to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other Contract (other than an Acceptable
Confidentiality Agreement pursuant to
Section 8.13(b)
) with any third party constituting or relating to, or that is intended to or would reasonably be
expected to lead to, any Acquisition Proposal, or requiring, or reasonably expected to cause, Parent, Seller or AI Brazil to abandon, terminate, delay or fail to consummate, or that would
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otherwise
impede, interfere with or be inconsistent with, the transactions contemplated by this Agreement, or requiring, or reasonably expected to cause, Parent to fail to comply with this Agreement
(an "
Alternative Acquisition Agreement
").
(d) Notwithstanding
the foregoing, at any time after the date hereof and prior to receipt of the Parent Stockholder Approval, in response to an unsolicited written
Acquisition Proposal that was made after the date of this Agreement and that did not result from any breach of this
Section 8.13
, the Parent
Board may terminate this Agreement pursuant to
Section 3.4(i)
(including payment of the Company
Break-Up Fee pursuant to
Section 3.6(b
)) and cause Parent or any of its Subsidiaries to enter into a definitive agreement with respect to any Superior
Proposal if the Parent Board has determined in good faith, after consultation with its financial and legal advisors, that (i) the failure to do so would be a breach of the Parent Board's
fiduciary duties under applicable Law and (ii) such Acquisition Proposal constitutes a Superior Proposal;
provided
,
however
, that (A) Parent has
given Purchaser and AI Brazil at least five Business Days' prior written notice that the Parent Board is prepared to
accept a Superior Proposal, which notice must specify the material terms and conditions of such Superior Proposal (including the identity of the Person making the proposal) and contemporaneously
furnish a copy of the relevant acquisition agreement or other relevant transaction documents, (B) Parent has negotiated, and has caused its Representatives to negotiate, in good faith with
Purchaser during such notice period, to the extent Purchaser wishes to negotiate, to enable Purchaser to propose revisions to the terms of this Agreement such that it would cause such Superior
Proposal to no longer constitute a Superior Proposal, (C) Parent Board has met to consider any revised proposal by Purchaser and (D) prior to the expiration of such five-Business Day
period, Purchaser does not make a proposal to adjust the terms and conditions of this Agreement that the Parent Board determines in good faith (after consultation with its financial advisors and legal
counsel) to be at least as favorable as the Superior Proposal after giving effect to, among other things, the payment of the Company Break-Up Fee pursuant to
Section
3.6(b)
. Any material change to the terms, facts and circumstances relating to the Superior Proposal will be deemed to be a new Superior Proposal for purposes of this
Section 8.13(d)
;
provided
that the time periods referred to in the foregoing clauses (A)
through (C) shall be three Business Days instead of five Business Days.
(e) Notwithstanding
anything in this Agreement to the contrary, other than in connection with a Superior Proposal (which shall be subject to
Section
8.13(d)
and shall not be subject to this
Section 8.13(e)
), prior to obtaining the Parent Stockholder Approval, the Parent Board
may, in response to or as a result of an Intervening Event, take any action described in clause (A) or (B) of the definition of Adverse Recommendation Change, if (i) the Parent
Board determines in good faith, after consultation with its outside legal counsel, that the failure to take such action would be a breach of its fiduciary duties under applicable Law,
(ii) Parent has notified Purchaser and AI Brazil in writing that it intends to effect such an Adverse Recommendation Change pursuant to this
Section
8.13(e)
(which notice shall specify the facts and circumstances providing the basis of the Company Intervening Event in reasonable detail), (iii) for a period of five
Business Days following the notice delivered pursuant to the foregoing clause (ii), Parent and Parent's relevant Representatives shall have discussed and negotiated in good faith (to the extent
Purchaser desires to negotiate) with Purchaser and Purchaser's relevant Representatives any proposed modifications to the terms and conditions of this Agreement, and (iv) no earlier than the
end of such five Business Day period, the Parent Board shall have determined in good faith, after consultation with outside legal counsel, and after taking into account any proposal by Purchaser to
amend or modify the terms of this Agreement offered by Parent in writing, that the failure to take such action would still be a breach of its fiduciary duties under applicable Law.
(f) Parent
shall promptly (and in any event, within 48 hours) advise Purchaser orally and in writing of the receipt of any Acquisition Proposal, any request to engage
in discussions or
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negotiations
with respect to an Acquisition Proposal or any request for information that would reasonably be expected to relate to an Acquisition Proposal, and in connection with such notice, provide
to Purchaser the material terms and conditions of any such Acquisition Proposal (including the identity of the third party making any such Acquisition Proposal) and of any changes thereto. Parent
shall promptly advise Purchaser orally and in writing of the commencement of any discussions with any third party or its Representatives regarding any Acquisition Proposal by such third party. Parent
shall keep Purchaser informed (orally and in writing) in all material respects on a timely basis of the status and details (including, within 48 hours after the occurrence of any amendment,
modification, material development or negotiation) of any such Acquisition Proposal or request, including promptly furnishing to Purchaser copies of any written Acquisition Proposal, any other written
materials that describe any such Acquisition Proposal, any material correspondence relating thereto, and draft documentation with respect to such Acquisition Proposal.
(g) Nothing
contained in this
Section 8.13
or in
Section 8.9
or
Section 8.12
will prohibit Parent or the Parent Board
from taking and disclosing to Parent Stockholders a position contemplated by Rule 14e-2(a)
or Rule 14d-9 promulgated under the Exchange Act or from making any other disclosure to Parent Stockholders if, in the good faith judgment of the Parent Board after consultation with legal
counsel, the failure so to disclose would be a breach of its obligations under applicable Law;
provided, however,
that in no event will this
Section 8.13(g)
modify, or be construed to modify, the definition of Adverse Recommendation Change or otherwise affect the obligations of Seller or
Parent specified in
Sections 8.13(d)
and
8.13(f)
;
provided,
further
, that any such disclosure (other than a "stop, look and listen" communication or similar communication of the type contemplated by Section 14d-9(f) under the
Exchange Act) will be deemed to be an Adverse Recommendation Change unless the Parent Board expressly reaffirms, upon written request of Purchaser, the Parent Board Recommendation to the Parent
Stockholders not less than three Business Days after such request, and in any event at least two Business Days prior to the Parent Stockholders Meeting.
(h) Parent
and Seller agree that any violations of the restrictions set forth in this
Section 8.13
by their respective
Affiliates or by any of their or their Affiliates' Representatives, shall be deemed to be a breach of this Agreement (including this
Section 8.13
) by
Parent and Seller.
8.14.
[INTENTIONALLY OMITTED]
.
8.15.
Intercompany Notes.
Prior to the Closing, Parent shall not, and shall cause its applicable
Subsidiaries not to, repay, capitalize or discharge any of the Intercompany Obligations
described on Section 8.15 of the Company Disclosure Schedule (the "
Intercompany Notes
") and shall take any actions required to maintain the Intercompany
Notes outstanding pursuant to the existing terms of such Intercompany Notes in effect as of the date of this Agreement. Notwithstanding the foregoing sentence, (a) prior to Closing, Parent
shall consider in good faith any request by Purchaser, delivered in writing to Parent, to modify the terms of the Intercompany Notes (including by way of a capitalization of the principal and/or
discharge of interest of any such Intercompany Notes) (a "
Requested Notes Modification
") and (b) in the event that Parent so agrees to modify any
such Intercompany Notes as requested by Purchaser, (i) Parent shall, and shall cause its applicable Subsidiary to, use its reasonable best efforts to effect such requested changes and, in case
of a discharge of interest, (A) the amount of taxable revenues for corporate income tax purposes (IRPJ and CSLL) shall be offset against its tax losses of the current tax period, including but
not limited to the amount of deductible tax losses of foreign exchange variation resulting from any previous or simultaneous capitalization of principal of the Intercompany Notes, and (B) the
amount of PIS/COFINS credits obtained as a result of a Discharge Tax Decision shall be used by the applicable Brazilian Entity to offset PIS/COFINS due as a result of the discharge of interest, and
the excess of PIS/COFINS credits shall not be used by such Brazilian Entity for any other purposes until Closing; and (ii) Purchaser shall assume, and shall indemnify the
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Entities
from, any and all Taxes arising from such Requested Notes Modification including with respect to any and all PIS/COFINS due in respect of any requested discharge of any such Intercompany
Notes);
provided
that, for the avoidance of doubt, the use of credits by the relevant Subsidiary for the offset of taxable revenues as described in
items (A) and (B) of the preceding clause (i) above shall not be considered Taxes for purposes hereof;
provided
,
further
, that in the event
that Parent implements a Requested Notes Modification that directly results in (x) a reduction in Cash or
(y) an increase in current liabilities for Taxes payable that have not been satisfied prior to the Adjustment Time, then (x) the calculation of the Closing Indebtedness Adjustment will
be reduced by an amount corresponding to such reduction in Cash or (y) the calculation of Closing Net Working Capital shall be increased by an amount corresponding to such increase in Tax
liability. From the date of this Agreement until the Closing Date, Parent and Seller will use their respective reasonable best efforts to (and Seller will cause the Entities to) obtain as promptly as
reasonably practicable a final and non-appealable Order from a Governmental Authority of competent jurisdiction recognizing that the applicable borrowers under the Intercompany Notes are entitled to
the PIS/COFINS credits arising from the PIS/COFINS Credits Claim (the "
Discharge Tax Decision
"). Parent shall cooperate with any reasonable requests of
Purchaser with respect to information or actions related to the PIS/COFINS Credits Claim, Discharge Tax Decision and any other act described in this
Section 8.15
. Except for the specific
obligations set forth in this
Section 8.15
and in
ARTICLE 10
, Parent, Seller and each of their Subsidiaries shall have no other obligations with
respect to the Intercompany Notes.
8.16.
Termination of Related Party Contracts.
Prior to or simultaneously with the Closing, Parent,
Seller and AI Brazil shall, and shall cause their applicable Subsidiaries to, terminate all Related Party
Contracts and extinguish all Intercompany Obligations owed by any Entity to Seller or AI Brazil or any of their respective Affiliates (other than the Entities) (for the avoidance of doubt, other than
(i) the Intercompany Notes, the settlement of which shall be governed by
Section 8.15
and (ii) the Trademark Sublicense Agreement, which
shall be governed by
Section 8.11
), without any further force or effect or survival of any provision thereunder, and without any cost, expense or
Liability to any Entity or any of their post-Closing Affiliates other than the payment of cash amounts taken into account in the calculation of Estimated Unpaid Transaction Expenses or otherwise paid
at or prior to Closing.
8.17.
Union Actions.
Prior to the Closing Date, Seller shall, and shall cause the applicable Entities
to, fulfill all consultation, bargaining and notification requirements to any
union, works councils or other similar labor organization if required in connection with the negotiation and consummation of the transactions contemplated by this Agreement.
8.18.
Employee Communications.
Except as is expressly required by the terms of this Agreement, from
and after the date of this Agreement and until the Closing Date, none of Parent, any of its
Affiliates or any of their respective Representatives shall, without prior consultation with the Purchaser, send, distribute or otherwise make available written communications or other material
communications regarding the transactions contemplated by this Agreement, to any current or former employee of any Entity (other than the Chief Executive Officer of Nextel Brazil and his direct
reports or directors and officers of any other Entity) or other independent consultant employed by any Entity, including any post-Closing employment, compensation or benefits, except for
communications that contain substantially the same information as contained in prior public communications made by one or more parties to this Agreement in compliance with this Agreement.
8.19.
Pay-Off Cooperation.
Seller shall, and shall cause each of the Entities to, (a) provide
copies of the Pay-Off Letters at least 20 Business Days prior to Closing and
(b) if requested by Purchaser in writing, use commercially reasonable efforts to take any actions and provide any cooperation reasonably requested by Purchaser in connection with the payment of
the Pay-Off Amount or obtaining each of the Pay-Off Letters.
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8.20.
Parent Convertible Notes
.
(a) The
Parties expressly acknowledge and agree that none of Parent's obligations under the Parent Convertible Notes will be assumed or guaranteed by Purchaser, the Entities
or any Affiliate thereof. Parent may, in its reasonable discretion, take actions to amend the Indenture prior to the Closing to eliminate the obligations contemplated under Article 11 of the
Indenture (and, in Parent's reasonable discretion, to delete or modify other provisions of the Indenture in a manner not adverse to Purchaser or the Entities or that would not impede or delay the
Closing). Parent shall keep Purchaser informed with respect to the status of the actions taken pursuant to the foregoing.
(b) In
the event that the Indenture has not been amended in accordance with
Section 8.20(a)
, Parent shall elect to
satisfy its obligations under Section 11.01(a) of the Indenture by causing an amount in cash equal to the Convertible Notes Escrow Amount to be deposited into an escrow account pursuant to
Section 11.04 of the Indenture (an "
Escrow Election
"), and shall deliver written notice of such Escrow Election to the trustee no later than
fifteen business days prior to the anticipated Closing Date. In the event of an Escrow Election, (i) Parent shall negotiate in good faith, and enter into, an escrow agreement with the trustee
and an escrow agent as promptly as reasonably practicable and in any event prior to the Closing Date, which escrow agreement shall (A) establish an escrow account to receive an amount in cash
equal to the Convertible Notes Escrow Amount and (B) grant the trustee, for the benefit of the holders of the Parent Convertible Notes, the trustee and the escrow agent, a first priority
security interest in the funds in the escrow account to secure Parent's obligations under the Indenture, (ii) unless Parent has previously caused an amount in cash equal to the Convertible
Notes Escrow Amount to be deposited into the escrow account pursuant to Section 11.04 of the Indenture, Purchaser will deduct an amount in cash equal to the Convertible Notes Escrow Amount from
the amount payable to NIIH pursuant to
Section 2.3(a)
and deposit such amount with the escrow agent pursuant to the escrow agreement contemplated
in this
Section 8.20(b)
, and (iii) Parent shall otherwise comply with Section 11.04 and the other terms of Article 11 of the
Indenture with respect to such Escrow Election and the transactions contemplated by this Agreement.
8.21.
Right of First Refusal.
By its execution and delivery of this Agreement, and without prejudice
to any rights it may have following any termination of this Agreement, and subject to the
proviso below, AI Brazil, on behalf of itself and its Affiliates, hereby waives any and all rights of first refusal under Section 2.5 or Section 2.6 of the Nextel Holdings SHA in
connection with this Agreement and the consummation of the transactions contemplated hereby;
provided
,
however
, that if (i) Purchaser, Seller and
Parent amend or modify this Agreement pursuant to
Section
13.5(b)
in any material respect after the date hereof and AI Brazil is not a party to such amendment or modification or (ii) Parent or Seller provides notice that it
intends to accept a Superior Proposal, AI Brazil may revoke the foregoing waiver.
8.22.
AI Brazil Cooperation.
AI Brazil expressly acknowledges and agrees that it shall not exercise
any rights or privileges in connection with its ownership of the AI Brazil Shares,
including its rights under the Nextel Holdings SHA, in a manner that would be inconsistent with AI Brazil's obligations under this Agreement to consummate the transactions contemplated by this
Agreement. For the avoidance of doubt, nothing in this
Section 8.22
shall be deemed to restrict AI Brazil from exercising its rights with respect
to any transaction, occurrence or event, including with respect to an NII Internal Reorganization, Intercompany Notes Modification, Tax Claim or change in Tax reporting position, to the extent such
exercise is not inconsistent with AI Brazil's obligations under
Sections 2.1
,
3.2
(as to the
deliveries of the items thereunder),
8.1(a)
,
8.2(d)
,
8.3
,
8.4
,
8.5
,
8.6
,
8.7(a)
(as to actions that, to the knowledge of AI Brazil, AI Brazil is required to undertake
pursuant thereto),
8.12
,
8.13
,
8.16
and
8.23
of this
Agreement to consummate the transactions contemplated by this Agreement.
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8.23.
Confidentiality.
From and after the Closing, Seller, AI Brazil and Parent shall not, and shall
cause their Affiliates not to, directly or indirectly, disclose, reveal, divulge, or
communicate to any Person (other than authorized officers, directors, employees, and other Representatives of Purchaser or its Subsidiaries), or use or otherwise exploit for their own benefit or for
the benefit of anyone other than Purchaser or its Subsidiaries, any confidential or proprietary information of the Entities;
provided
,
however
, that Parent,
Seller and AI Brazil may disclose any such information to their Representatives who have a need to know such information and who
have agreed to be bound by confidentiality obligations with respect to such information that are no less restrictive than those contained in this Agreement. Parent, Seller, AI Brazil and their
Affiliates will not have any obligation to keep confidential any confidential information if and to the extent disclosure thereof is required by applicable Law or any Governmental Authority;
provided
that in the event disclosure is required by applicable Law or Governmental Authority, Seller and AI Brazil will provide Purchaser with prompt
notice of such requirement prior to making any disclosure and cooperate with Purchaser so that Purchaser may, at its own cost and expense, seek to limit such disclosure or obtain an appropriate
protective order.
ARTICLE 9. CONDITIONS TO CLOSING
9.1.
Conditions Precedent to Obligations of Purchaser.
The obligation of Purchaser to consummate the
transactions contemplated by this Agreement is subject to the fulfillment, on or before to the Closing Date, of each
of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):
(a) (i)
the Seller Fundamental Representations and the representation and warranty set forth in
Section 6.20(b)
shall be true
and correct in all respects as of the date of this Agreement and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date (except for any such representation and
warranty expressly made as of a specified date, in which case such representation and warranty shall be true and correct in all respects as of such date), and (ii) the representations and
warranties of Parent and Seller contained in
ARTICLE 4
and
ARTICLE 6
(other than the representations and
warranties described in the foregoing clause (i)) shall be true and correct (without giving effect to any qualification as to materiality or "Seller Material Adverse Effect" set forth therein)
as of the date of this Agreement and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date (except for any such representation and warranty expressly made as
of a specified date, in which case such representation and warranty shall be true and correct as of such date), except, in the case of this clause (ii) where the failure to be so true and
correct would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, and Purchaser shall have received a certificate signed by an executive officer of
Parent, dated as of the Closing Date, to the foregoing effect;
(b) (i)
the AI Brazil Fundamental Representations shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date (except for any such representation and warranty expressly made as of a specified date, in which case such representation and warranty shall be true
and correct in all respects as of such date), and (ii) the representations and warranties of AI Brazil contained in
ARTICLE 5
(other than the
representations and warranties described in the foregoing clause (i)) shall be true and correct (without giving effect to any qualification as to materiality or "Seller Material Adverse Effect"
set forth therein) as of the date of this Agreement and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date (except for any such representation and warranty
expressly made as of a specified date, in which case such representation and warranty shall be true and correct as of such date), except, in the case of this clause (ii) where the failure to be
so true and correct would not reasonably be expected to have,
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individually
or in the aggregate, a Seller Material Adverse Effect, and Purchaser shall have received a certificate signed by an authorized officer of AI Brazil, dated as of the Closing Date, to the
foregoing effect;
(c) Parent
and Seller shall have (i) performed and complied in all respects with their obligations under
Section 8.2(b)(xxvi)
on or before the Closing Date and (ii) performed and complied in all
material respects with all other obligations and
agreements required by this Agreement to be performed or complied with by Parent or Seller, on or before the Closing Date, and Purchaser shall have received a certificate signed by an executive
officer of Parent, dated as of the Closing Date, to the foregoing effect;
(d) AI
Brazil shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by
AI Brazil, on or before the Closing Date, and Purchaser shall have received a certificate signed by an authorized officer of AI Brazil, dated as of the Closing, to the foregoing effect;
(e) since
the date of this Agreement, there shall not have occurred any Effect that, individually on in the aggregate, has had or is reasonably expected to have a Seller
Material Adverse Effect, and Purchaser shall have received a certificate signed by an executive officer of Parent, dated as of the Closing Date, to the foregoing effect;
(f) the
closing deliveries set forth in
Section 3.2
shall have been delivered to Purchaser and the Nextel Holdings
Transaction shall have been consummated prior to or concurrently with the Closing;
(g) Purchaser
shall have received (i) evidence satisfactory to Purchaser that the Indenture has been amended in accordance with
Section
8.20(a)
to eliminate the obligations contemplated under Article 11 of the Indenture and any similar successor obligor provisions, or (ii) from Parent and the
Indenture trustee an executed escrow agreement in accordance with Article 11 of the Indenture providing for a deposit of the Convertible Notes Escrow Amount at Closing pursuant to
Section 11.04 of the Indenture; and
(h) (i)
no Governmental Authority of competent jurisdiction shall have enacted, issued, entered or enforced any Law or Order, or commenced any Legal Proceeding, which is
then pending or in effect
that constitutes, imposes or seeks to impose any Burdensome Condition and (ii) the Regulatory Approval and the Antitrust Approval shall each have been obtained without the imposition of any
Burdensome Condition.
9.2.
Conditions Precedent to Obligations of Seller and AI Brazil.
The obligations of Seller and AI
Brazil to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or before the Closing
Date, of each of the following conditions (any or all of which may be waived by Seller in whole or in part to the extent permitted by applicable Law):
(a) the
representations and warranties of Purchaser contained in
ARTICLE 7
shall be true and correct (without giving effect
to any qualification as to materiality or "Purchaser Material Adverse Effect" set forth therein) as of the date hereof and as the Closing Date, with the same force and effect as if made on and as of
the Closing Date (except for any representation and warranty expressly made as of a specified date, in which case such representation and warranty shall be true and correct as of such date), except
where the failure to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect, and Seller and AI Brazil shall have
received a certificate signed by an authorized officer of Purchaser, dated as of the Closing Date, to the foregoing effect;
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(b) Purchaser
shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by
Purchaser on or before the Closing Date, and Seller and AI Brazil shall have received a certificate signed by an authorized officer of Purchaser dated as of the Closing Date, to the foregoing effect;
and
(c) the
closing deliveries set forth in
Section 3.3
shall have been delivered to Seller and AI Brazil.
9.3.
Conditions Precedent to Obligations of Purchaser, Seller and AI Brazil.
The respective
obligations of Purchaser, Seller and AI Brazil to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or
before the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser, Seller or AI Brazil in whole or in part to the extent permitted by applicable Law):
(a) no
Governmental Authority of competent jurisdiction shall have enacted, issued, entered or enforced any Law or Order, or commenced any Legal Proceeding, which is then
pending or in effect that seeks to restrain, enjoin or otherwise prohibit, or has the effect of restraining, enjoining or otherwise prohibiting, the consummation of the transactions contemplated
hereby;
(b) the
Regulatory Approval shall have been obtained;
(c) the
Antitrust Approval shall have been obtained; and
(d) the
Parent Stockholder Approval shall have been obtained.
9.4.
Frustration of Closing Conditions.
None of Purchaser, Seller or AI Brazil may rely on the
failure of any condition set forth in
Section 9.1
,
Section 9.2
or
Section 9.3
to be satisfied if such
Party's material breach of this Agreement was the
direct and primary cause of the failure of any such condition to be satisfied.
ARTICLE 10. PARENT INDEMNIFICATION
10.1.
Survival
.
(a) The
representations and warranties contained in
ARTICLE 4
and
ARTICLE 6
(together with any right to assert any claim with respect thereto) will survive the Closing and will remain in full force and effect until 5:00 p.m., New York City time, on the date that is the
18-month anniversary of the Closing Date, at which time they will terminate, except that the Seller Fundamental Representations will survive the Closing (together with any right to assert any claim
with respect thereto) and remain in full force and effect indefinitely. The covenants and agreements contained in this Agreement that are to be performed in full on or prior to the Closing will
survive the Closing (together with any right to assert any claim with respect thereto) and will thereafter terminate at 5:00 p.m., New York City time, on the date that is the 18-month
anniversary of the Closing Date. The covenants and agreements that are to be performed in whole or in part after the Closing will survive the Closing (together with any right to assert any claim with
respect thereto) until performed in accordance with their terms.
(b) Notwithstanding
Section 10.1(a)
, if Parent voluntarily adopts, enters into or becomes subject to any plan of complete
liquidation or dissolution, or involuntarily becomes subject to an order of liquidation, dissolution or winding up (any such event, a "
Parent Liquidation
Event
"), then the representations, warranties, covenants and agreements set forth in
ARTICLE 4
and
ARTICLE 6
of this Agreement
will terminate on the earlier of (a) the survival date for such representation, warranty, covenant or
agreement provided in
Section 10.1(a)
and (b) the expiration of the period during which Persons having a claim against Parent may notify Parent
of such claims in connection with such Parent Liquidation Event (which Parent acknowledges and agrees shall in no event be earlier than the 18-month anniversary of the Closing Date). Parent shall
provide
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express
written notice to Purchaser of the date of such expiration described in clause (b) of the foregoing sentence not later than 180 days prior to its occurrence. The last day on
which a representation and warranty, covenant or agreement survives pursuant to this
Section 10.1
is referred to herein as the
"
Limitation Date
" with respect to such representation and warranty, covenant or agreement. No claim for indemnification pursuant to this
ARTICLE 10
may be
brought following the applicable Limitation Date;
provided
,
however
, that if a Third Party Claim Notice or a Direct Claim Notice has been given to the
Indemnifying Party on or prior to the applicable Limitation
Date, the applicable claim or claims set forth in such notice will survive until satisfaction or other resolution thereof, and may be amended after the date of such notice (including, for the
avoidance of doubt, after the applicable Limitation Date) to allow for adjusted Damages based on the facts and circumstances giving rise to such claim. In the event that (A) a Parent
Liquidation Event has occurred and (B) an executive officer of Parent certifies to Purchaser in writing that the effective date for such Parent Liquidation Event will occur within six months of
the delivery of such certificate, the Parties agree to submit any unresolved claims for indemnification under this
ARTICLE 10
to arbitration in
accordance with
Section 13.2
.
10.2.
Indemnification by Parent.
Subject to the limitations set forth in this
ARTICLE 10
and elsewhere in this Agreement, from and after the
Closing, Parent will indemnify, defend and hold harmless Purchaser and its Affiliates (including the Entities) and their respective officers and directors (collectively, the
"
Purchaser Indemnitees
") from and against any and all demands, claims, actions or causes of action, assessments, losses, diminution in value, damages
(including consequential damages, to the extent reasonably foreseeable), liabilities, Taxes, costs and expenses, including interest, penalties and attorneys' fees and expenses
("
Damages
") that a Purchaser Indemnitee actually suffers resulting from, arising out of or incurred in connection with: (a) any failure of any
representation or warranty in
ARTICLE 4
or
ARTICLE 6
to be true and correct as of the date of this
Agreement or as of the Closing Date as if given as of such date (except to the extent that such representation and warranty speaks only as of a particular date, in which case, as of such date),
(b) any nonfulfillment, violation or breach of any covenant or agreement made by Seller or Parent in this Agreement, (c) the NII Internal Reorganization, (d) any Intercompany
Notes Modification,
provided
that this clause (d) shall not apply with respect to Taxes that arise out of or are incurred in connection with
actions taken by Parent or its applicable Subsidiary at the express written request of Purchaser in accordance with
Section 8.15
or
(e) any nonfulfillment, violation or breach of Parent or any of its Affiliates of the Indenture. For the purposes of this
ARTICLE 10
, with
respect to any representation or warranty that is limited or qualified by any materiality or Seller Material Adverse Effect qualification or any similar qualification, the occurrence of any failure of
such representation or warranty to be true and correct, and the amount of Damages subject to indemnification hereunder, will be determined as if any such qualifications were not contained therein;
provided
,
however
, that this sentence will not apply to (i) any such qualifications contained in
the definition of any defined term used herein, or (ii) the representation and warranty set forth in
Section 6.20(b)
.
10.3.
Tax Indemnification.
From and after the Closing, Seller and Parent shall indemnify, defend and
hold harmless Purchaser Indemnitees from and against any and all Damages (including
Taxes) resulting from, arising out of or incurred in connection with:
(a) any
Pre-Closing Taxes;
(b) any
Tax liability imposed on an Entity as a result of such Entity having been a member of a consolidated, joint, unitary or combined group for any U.S. or non-U.S. Tax
purpose (other than such group the common parent of which was the Company); and
(c) Seller's
share of any Transfer Taxes pursuant to
Section 12.7
.
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10.4.
Indemnification Procedures.
(a) If
a Purchaser Indemnitee desires to assert any claim for indemnification provided for under this
ARTICLE 10
in respect
of, arising out of or involving a claim or demand made by any Person (other than a Party or Affiliate thereof) against the Purchaser Indemnitee (a "
Third Party
Claim
"), such Purchaser Indemnitee will notify Parent (the "
Indemnifying Party
"), in writing of such Third Party Claim
specifying in reasonable detail (to the extent known) the nature and basis for each such claim or demand, and the amount or the estimated amount of Damages sought thereunder to the extent then
ascertainable (which estimate will not be conclusive of the final amount of such Third Party Claim) (a "
Third Party Claim Notice
") promptly after
receipt by such Purchaser Indemnitee of written notice of the Third Party Claim;
provided
,
however
, that
the failure to timely give such notice will not reduce the Damages for which the Indemnifying Party is obligated to indemnify the Purchaser Indemnitee under this
ARTICLE
10
except to the extent actually prejudiced by such failure. The Purchaser Indemnitee will deliver to the Indemnifying Party, promptly after the Purchaser Indemnitee's receipt
thereof, copies of all notices and documents (including court papers) received by the Purchaser Indemnitee relating to the Third Party Claim;
provided
,
however
, that failure to provide any such copies will not affect the indemnification obligations provided hereunder except to the extent of any Damages
resulting from the prejudice of any claim or defense available to the Indemnifying Party as a result of such failure.
(b) If
a Third Party Claim is made against a Purchaser Indemnitee, the Indemnifying Party will be entitled to participate in the defense thereof and, within 30 days
of receiving a Third Party Claim Notice with respect to such Third Party Claim, may assume the defense thereof and select counsel to act in such defense (which counsel will be reasonably satisfactory
to the Purchaser Indemnitee). Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Purchaser Indemnitee for legal
expenses subsequently incurred by the Purchaser Indemnitee in connection with the defense thereof, unless, in the reasonable opinion of counsel to the Purchaser Indemnitee, counsel for the
Indemnifying Party could not adequately represent the interests of the Purchaser Indemnitee because the interests of the Indemnifying Party are in conflict with those of the Purchaser Indemnitee. If
the Indemnifying Party assumes such defense, the Purchaser Indemnitee will have the right to participate in the defense thereof and to employ counsel, at its own expense (except as provided in the
immediately preceding sentence), separate from the counsel employed by the Indemnifying Party. The Indemnifying Party will be liable for reasonable fees and expenses of outside counsel employed by the
Purchaser Indemnitee for any period during which the Indemnifying Party has not assumed the defense thereof and as otherwise contemplated by the two immediately preceding sentences. If the
Indemnifying Party chooses to defend any Third Party Claim, the Purchaser Indemnitee will cooperate in the defense or prosecution thereof.
(c) If
the Indemnifying Party, within 30 days after written notice of any such Third Party Claim (or sooner if the nature of the Third Party Claim so requires)
(i) does not assume control of the defense or (ii) after assuming control of the defense, fails or ceases to diligently defend such Third Party Claim, which failure or cessation is not
cured within 15 days after written notice thereof from the Purchaser Indemnitee, then the Purchaser Indemnitee will have the right to undertake the defense of such Third Party Claim, and
(iii) the reasonable and documented fees and expenses of outside counsel to the Purchaser Indemnitee in connection therewith will be considered "Damages" for purposes of this Agreement;
provided
,
however
, that in no event will the fees and expenses of more than one outside counsel (in
addition to one local counsel in each jurisdiction that is reasonably necessary) for the Purchaser Indemnitee with respect to a single Third Party Claim or a series of related Third Party Claims be
considered "Damages" for purposes of this Agreement.
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(d) The
Indemnifying Party may pay, settle or compromise a Third Party Claim without the Purchaser Indemnitee's prior written consent, so long as the Indemnifying Party
assumes full responsibility for the payment of any amounts due with respect to such Third Party Claim, and any such payment, settlement or compromise (i) includes an immediate and unconditional
release of the Purchaser Indemnitee and its Affiliates, officers and directors from all Liability in respect of such Third Party Claim, (ii) does not subject the Purchaser Indemnitee or any of
its Affiliates, officers or directors to any injunctive relief or provide for any other non-monetary remedy, (iii) does not include a statement or admission of fault, culpability or failure to
act by or on behalf of any Purchaser Indemnitee, and (iv) simultaneously with the effectiveness of such settlement, payment or compromise, the Indemnifying Party pays in full any obligation
imposed on the Purchaser Indemnitee by such settlement, compromise or consent or such obligation is paid in full from the Escrow Account.
(e) The
Parties will act in good faith in responding to, defending against, settling or otherwise dealing with any Third Party Claims, and cooperate in any such defense and
give each other reasonable access during normal business hours and upon reasonable advance notice to all information relevant thereto. Without limiting the generality of this
Section 10.4(e)
, the Party
controlling the defense of any Third Party Claim will deliver, or cause to be delivered, to the other party copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements relating to or submitted in connection with the defense of the Third Party Claim, and timely notices of, and the right
to participate in any hearing or other court proceeding, meeting or negotiation relating to the Third Party Claim.
(f) If
a Purchaser Indemnitee desires to assert any claim for indemnification provided for under this
ARTICLE 10
other than a
claim in respect of, arising out of or involving a Third Party Claim (a "
Direct Claim
"), such Purchaser Indemnitee will notify the Indemnifying Party in
writing of such Direct Claim, specifying in reasonable detail (to the extent known) the nature and basis for each such claim and the amount or the estimated amount of Damages sought thereunder to the
extent then ascertainable (which estimate will not be conclusive of the final amount of such Direct Claim), and, to the extent practicable, any other material details pertaining thereto (a
"
Direct Claim Notice
");
provided
,
however
, that the
failure to timely give such notice will not reduce the Damages for which the Indemnifying Party is obligated to indemnify the Purchaser Indemnitee under this
ARTICLE
10
except to the extent of such Damages resulting from the Indemnifying Party being prejudiced by such failure.
10.5.
Limitations on Indemnification.
(a) Parent
will have no liability for any claim for indemnification pursuant to
Section 10.2(a)
(i) in respect of any
individual item, or group of related items, where the amount of Damages relating thereto is less than $50,000 in the aggregate (the "
De Minimis
")
(
provided
that Parent shall be liable for all claims of $50,000 or greater from the first Dollar of damages incurred (subject to the Basket Amount)) and
(ii) unless and until the aggregate amount of Damages for which it would be responsible for claims hereunder exceeds an amount equal to $7,000,000 (the "
Basket
Amount
"), in which case Parent will, subject to the other limitations hereunder, be liable for all Damages from the first Dollar of Damages incurred. Notwithstanding the
foregoing, the limitations set forth in this
Section 10.5(a)
will not apply to any claim for indemnification in respect of a breach or inaccuracy of the
Seller Fundamental Representations.
(b) The
maximum aggregate amount of indemnifiable Damages payable by Parent in respect of claims pursuant to
Section 10.2(a)
(other than in respect of a breach or inaccuracy of the Seller Fundamental Representations) or
Section 10.3(a)
(any such claim described in the
foregoing, a "
General Claim
") will not exceed the Escrow Amount.
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(c) Subject
to the requirements of
Section 10.6(b)
(to the extent applicable), no party hereto will be obligated to indemnify
any other Person with respect to any Damages to the extent the amount of such Damages was included in the calculation of the adjustments reflected in the Final Purchase Price pursuant to
Section 2.4
(to
the extent so included).
(d) The
Parties agree and acknowledge that, for any amounts finally determined to be payable by Parent in respect of General Claims, such amounts will be paid solely from
funds then available in the Escrow Account and Parent will not be obligated to pay any such amounts remaining unpaid after the funds in the Escrow Account have been exhausted;
provided
,
however
, that, if funds remaining in the Escrow Account are not sufficient to pay any General
Claim as a result of funds having been released previously for claims pursuant to
Section 10.2
or
Section 10.3
(in each case, other than General
Claims), then Parent will be obligated to pay in full any such deficiency, up to the amount of
funds from the Escrow Account that were released to a Purchaser Indemnitee in respect of claims pursuant to
Section 10.2
or
Section 10.3
(in each case,
other than General Claims). The Parties agree and acknowledge that, for any amounts finally determined to be payable
by Parent in respect of claims pursuant to
Section 10.2
or
Section 10.3
(in each case,
other than General Claims), in each case, such amounts will be paid first from funds then available in the Escrow Account only to the extent Purchaser elects, by written notice to Parent, to have such
amounts paid from the Escrow Account and Parent will be obligated to pay any such amounts not paid from the Escrow Account.
(e) Notwithstanding
anything to the contrary in this Agreement, in no event will the Indemnifying Party have any liability to any Purchaser Indemnitee for any exemplary or
punitive damages, except to the extent payable to a third party in connection with a Third Party Claim.
10.6.
Indemnity Payments.
(a) Subject
to
Section 10.5(e)
and
Section 10.6(b)
, (i) the
Indemnifying Party will pay all amounts payable pursuant to this
ARTICLE 10
, by wire transfer of immediately available cash funds in Dollars, promptly
following receipt from a Purchaser Indemnitee of a bill for Damages that are the subject of indemnification hereunder, unless the Indemnifying Party in good faith reasonably disputes the Damages, in
which event it will promptly notify the Purchaser Indemnitee, and (ii) in any event, the Indemnifying Party will pay to the Purchaser Indemnitee, by wire transfer in immediately available cash
funds in Dollars, the amount of any Damages for which it is liable hereunder no later than three days following any determination of such Damages and the Indemnifying Party's liability therefor. A
"determination" will exist when (A) the parties to the dispute have agreed on a resolution to the dispute, (B) a court of competent jurisdiction will have entered a final order or
judgment, or (C) an
arbitration or like panel will have rendered a final determination with respect to disputes the parties have agreed to submit thereto.
(b) The
amount of Damages recoverable by a Purchaser Indemnitee pursuant to this
ARTICLE 10
with respect to an indemnity
claim shall be reduced by (i) the amount of insurance proceeds or other amounts actually recovered by such Purchaser Indemnitee with respect to the Damages to which such indemnity claim
relates, net of any retention, deductible or collection costs and expenses in connection therewith or increases in premiums payable as a result thereof; (ii) the amount of any available
judicial deposits directly relating to such indemnity claim to the extent actually recovered by such Purchaser Indemnitee and (iii) the amount of any accrual or reserve to the extent
specifically identified as relating to the subject of such indemnity claim and expressly included as a current liability in the calculation of Closing Net Working Capital and taken into account in the
calculation of the Final Purchase Price. A Purchaser Indemnitee will use its commercially reasonable best efforts to obtain the release of available judicial deposits directly related to any Damages
claims prior to seeking indemnification under this Agreement. If an insurance recovery is made by the Purchaser Indemnitee or any of its Affiliates (including recovery
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of
any judicial deposits) with respect to any Damages for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery (net of any retention,
deductible or collection costs and expenses in connection therewith or increases in premiums payable as a result thereof) shall be made promptly to Parent.
10.7.
Exclusivity of Indemnity.
Except in the case of actual fraud (as to which none of the
limitations set forth in this
ARTICLE 10
will apply),
and subject to
Section 13.2
, from and after the Closing, the rights of any Purchaser Indemnitee under this
ARTICLE
10
or
ARTICLE 11
will be the sole and exclusive remedy of such Purchaser Indemnitee for monetary damages with respect to claims
for breach or inaccuracy of any of the representations, or warranties, or breach of any of the covenants and agreements, in each case, that are indemnifiable under this
ARTICLE
10
or
ARTICLE 11
;
provided
,
however
, that the provisions of this
Section 10.7
shall not prevent or limit the rights of the Parties
with respect to
Section 2.4
.
10.8.
Successors.
The obligations of Parent under this
ARTICLE
10
are intended to be, and will be, binding upon (a) any
successors or assigns of Parent or Seller, (b) any trustee, examiner, receiver, or other representative of Parent's or Seller's estate and (c) any other Person vested or revested with
any right, title or interest in or to a material portion of, or claiming any rights in or control over a material portion of, Parent's or Seller's assets as if such Person were Parent hereunder.
Parent shall not take, nor shall it permit any of its Affiliates or its or their respective Representatives, to directly or indirectly take any action that is intended or designed to circumvent or
avoid Parent's obligations under this
ARTICLE 10
and
ARTICLE 2
.
10.9.
Effect of Indemnification Payments.
Unless otherwise required by applicable law, all amounts
paid pursuant to this
ARTICLE 10
,
ARTICLE 11
and
ARTICLE 12
shall be treated by such parties as an
adjustment to the Purchase Price. In
the event that such amounts are not considered as an adjustment to the Purchase Price, the amount of Damages shall be increased to offset the estimated amount of any Taxes payable by the relevant
Purchaser Indemnitee as a result of the receipt of the relevant indemnification payments.
ARTICLE 11. AI BRAZIL INDEMNIFICATION
11.1.
Survival.
The representations and warranties contained in
ARTICLE
5
of this Agreement (together with any right to assert any
claim with respect thereto) will survive the Closing and will remain in full force and effect until 5:00 p.m., New York City time, on the date that is the 18-month anniversary of the Closing
Date, at which time they will terminate, except that the AI Brazil Fundamental Representations will survive the Closing (together with any right to assert any claim with respect thereto) and remain in
full force and effect indefinitely. The covenants and agreements contained in this Agreement that are to be performed by AI Brazil in full on or prior to the Closing will not survive the Closing,
except that such covenants and agreements that are related to the actions and deliveries of AI Brazil at Closing pursuant to
Section 3.2(b)(i)
shall survive the Closing (together with any right to assert any claim with respect thereto) and will thereafter terminate at 5:00 p.m., New York City time, on the date that is the 18-month
anniversary of the Closing Date. The covenants and agreements that are to be performed by AI Brazil in whole or in part after the Closing will survive the Closing (together with any right to assert
any claim with respect thereto) until performed in accordance with their terms.
11.2.
Indemnification by AI Brazil.
Subject to the limitations set forth in this
ARTICLE 11
and elsewhere in this Agreement, from and after the
Closing, AI Brazil will indemnify, defend and hold harmless the Purchaser Indemnitees from and against any and all Damages that a Purchaser Indemnitee actually suffers exclusively resulting from,
arising out of or incurred in connection with (a) any failure of any representation or warranty made by AI Brazil in
ARTICLE 5
to be true and
correct as of the date of this Agreement or as of the Closing Date as if given as of such date (except to
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the
extent that such representation and warranty speaks only as of a particular date, in which case, as of such date); and (b) any nonfulfillment, violation or breach of any covenant or
agreement made by AI Brazil in this Agreement. For the avoidance of doubt, AI Brazil shall not have any other obligation to indemnify the Purchaser Indemnitees for any Damages under this Agreement,
except as set forth in this
ARTICLE 11
.
11.3.
Indemnification Provisions.
Sections 10.4
,
10.5(a)
(
provided
that, solely for purposes of this
Section 11.3
, $2,100,000 shall replace $7,000,000 in
the definition of Basket Amount),
10.5(e)
,
10.6
,
10.7
and
10.8
shall apply to this
ARTICLE 11
,
mutatis
mutandis
.
11.4.
Additional Limitations.
The maximum aggregate amount of indemnifiable Damages payable by AI
Brazil in respect of claims pursuant to
(i)
Section 11.2(a)
(other than in respect of a breach or inaccuracy of the AI Brazil Fundamental Representations) will not exceed
$9,000,000 and (ii) this
ARTICLE 11
shall not exceed the Final AI Brazil Payment.
ARTICLE 12. TAX MATTERS
12.1.
Tax Returns.
(a)
Pre-Closing Tax Returns
. Seller shall prepare and file, or shall cause to be prepared and filed, all Tax
Returns required by applicable law to be filed by any Entity for any Pre-Closing Tax Period (other than a Straddle Period) on a timely basis (taking into account any extensions received from the
relevant Tax Authorities). Such Tax Returns shall be true, correct and complete in all material respects. Seller shall prepare such Tax Returns on a basis consistent with those prepared for prior
taxable periods unless a different treatment of any item is required by applicable Law, including an intervening change in Law. Purchaser may elect to receive a copy of such Tax Return by submitting
written notice of such election, in which case Seller shall deliver a copy of such Tax Return to Purchaser within five Business Days of receiving notice of Purchaser's election. Seller shall pay or
cause to be paid all Taxes indicated as due and payable on such Tax Returns, except to the extent the amount of such Taxes has already been specifically reflected as a liability in the calculation of
Closing Net Working Capital and taken into account in determining the Final Purchase Price.
(b)
Post-Closing Tax Returns That Include Pre-Closing Taxes
. Purchaser shall be responsible for preparing and
filing all other Tax Returns with respect to the Company or any Entity that are required to be filed (including for a Straddle Period) by the Company or such Entity. Such Tax Returns shall be true,
correct and complete in all material respects. Purchaser shall prepare such Tax Returns on a basis consistent with those prepared for prior taxable periods unless a different treatment of any item is
required by applicable Law, including an intervening change in Law. To the extent any such Tax Return includes Pre-Closing Taxes for which Seller or Parent may be liable under this Agreement (after
taking into account any reasonably available exemption, deduction, credit or other item arising from Pre-Closing Taxes to reduce the amount of Pre-Closing Taxes), Seller may elect to receive a copy of
such Tax Return by submitting written notice of such election, in which case Purchaser shall deliver a copy of such Tax Return to Seller within five Business Days of receiving notice of Seller's
election.
12.2.
Apportionment.
For purposes of this Agreement, in order to apportion appropriately any Taxes
relating to a Straddle Period, the Parties hereto shall, to the extent permitted or
required under applicable Law, treat the Closing Date (as of the close of business) as the last day of the taxable year or period of the Entities for all Tax purposes. In any case where applicable Law
does not permit any Entity to treat the Closing Date as the last day of the taxable year or period, the portion of any Taxes that are allocable to the Pre-Closing Straddle Period shall be
(x) in the case of Taxes that are imposed on a periodic basis, the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis (such as real
property taxes), the amount of such Taxes for the
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immediately
preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the Straddle Period ending on (and including) the Closing Date (as of the close of
business) and the denominator of which is the number of calendar days in the entire relevant Straddle Period; and (y) in the case of Taxes not described in (x), the amount that would be payable
if the taxable year or period ended on the Closing Date (as of the close of business) based on an interim closing of the books (and for such purpose, the taxable period of any entity in which an
Entity holds a beneficial interest will be deemed to terminate at such time). For purposes of clause (y) of the preceding sentence, any exemption, deduction, credit or other item that is
calculated on an annual basis shall be allocated to the portion of the Straddle Period ending on the Closing Date on a
pro rata
basis, determined by
multiplying the entire amount of such item allocated to the Straddle Period by a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period. In the case of any Tax based upon or measured by capital (including net worth or long-term debt)
or intangibles, any amount thereof required to be allocated under this
Section 12.2
shall be computed by reference to the level of such items on the
Closing Date.
12.3.
Reimbursement.
If either Purchaser or Seller (the "
Paying
Party
") pays a Tax for which the other (the
"
Non-Paying Party
") is liable in accordance with
Section 10.3
, including any Pre-Closing Taxes paid in
connection with a Tax Return described in
Section 12.1(b)
(but only to the extent the amount of such Taxes has not already been specifically
reflected as a liability in the calculation of Closing Net Working Capital and taken into account in determining the Final Purchase Price), the Paying Party shall be entitled to reimbursement from the
Non-Paying Party in accordance with this
Section 12.3
. Upon payment of any such Tax, the Paying Party shall present a statement to the Non-Paying Party
setting forth the amount of reimbursement to which the Paying Party is entitled, together with such supporting evidence as is reasonably necessary to calculate the amount to be reimbursed. The
Non-Paying Party shall make such reimbursement promptly, in immediately available funds, but in no event later than five Business Days after the presentation of such statement.
12.4.
Tax Contests.
(a) If
a written notice of deficiency, proposed adjustment, adjustment, assessment, audit, examination or other administrative or court proceeding, suit, dispute or other
claim relating to Taxes (a "
Tax Claim
") is delivered or sent to or commenced or initiated against any of the Entities by any Tax Authority with respect
to Taxes or Tax Returns of any of an Entity for which Purchaser or its Affiliates may reasonably be entitled to indemnification pursuant to
Section
10.3
, Purchaser or its Affiliates will promptly notify Seller in writing of the Tax Claim;
provided
,
however
, that the failure to
timely give such notice will not limit and reduce Purchaser's right to indemnification hereunder except to the extent that
the Indemnifying Party is prejudiced thereby.
(b) With
respect to Tax Claims of or relating solely to Taxes of an Entity for any Pre-Closing Period for which Parent and Seller may be liable under
Section 10.3
, Parent may, upon written notice to Purchaser,
assume and control the defense of such Tax Claim at its own cost and expense and with its
own counsel,
provided
that Parent and Seller first acknowledge their obligation to indemnify Purchaser for the asserted liability. Purchaser may retain
separate co-counsel at its sole cost and expense and participate in the defense of the Tax Claim (including participation in any relevant meetings and conference calls). Parent or Seller (as
applicable) will not enter into any settlement with respect to any such Tax Claim without Purchaser's prior written consent, which consent will not be unreasonably withheld, conditioned or delayed,
and will keep Purchaser informed of all developments and events relating to all Tax Claims the defense of which is controlled by Parent or Seller, as applicable (including promptly forwarding copies
to Purchaser of any related correspondence).
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(c) With
respect to Tax Claims of or relating to Taxes of any Entity for a Straddle Period, Purchaser will control the contest of any such Tax Claim at its own cost and
expense. To the extent any such contest relates to Taxes for which Parent and Seller might be liable under
Section 10.3
or this
ARTICLE 12
, Parent may
retain separate co-counsel at their sole cost and expense and participate in the defense of the Tax Claim (including
participation in any relevant meetings and conference calls). Purchaser will not enter into any settlement with respect to any such Tax Claim without Parent's prior written consent, which will not be
unreasonably withheld, conditioned or delayed, and Purchaser will keep Parent informed of all developments and events relating to such Tax Claim (including promptly forwarding copies to Parent of any
related correspondence).
(d) With
respect to Tax Claims of or relating solely to Taxes of an Entity for any Post-Closing Period, Purchaser will control the defense of such Tax Claim at its own cost
and expense and with its own counsel.
12.5.
Cooperation.
After the Closing, each of Purchaser and Parent will (and will cause their
respective Affiliates, which in the case of Parent includes Seller, to):
(a) assist the other party in preparing and filing any Tax Returns which such other party is responsible for preparing and filing in accordance with this
ARTICLE
12
; (b) reasonably cooperate with the other party in preparing for any audits of, or disputes with Governmental Authorities regarding, any Tax Returns which such other
party is responsible for preparing and filing in accordance with this
ARTICLE 12
; (c) make available to the other party and to any Governmental
Authority as reasonably requested all information, records and documents relating to Taxes of the Entities; (d) provide timely notice to the other Party (except for AI Brazil) in writing of any
pending or threatened Tax audits or assessments of the Entities for taxable periods for which the other Party may have a Liability under
Section 10.3
or
this
ARTICLE 12
; (e) furnish the other Party with copies of all correspondence received from any Governmental Authority in connection with any
Tax audit or information request with respect to any taxable period for which the other Party may have any liability under
Section 10.3
or
this
ARTICLE 12
; and timely sign and deliver such certificates or forms as may be necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to, Taxes resulting from the transactions contemplated by this Agreement, and timely provide the other party with powers of attorney or
similar authorizations necessary to carry out the purposes of this
ARTICLE 12
.
12.6.
Tax Sharing Agreements.
All tax sharing agreements, arrangements, policies and guidelines,
formal or informal, express or implied, to which any Entity may be a party or subject, and all
rights and obligations thereunder shall terminate as of the Closing Date, and no Entity shall have any liability thereunder for any and all amounts due in respect of periods prior to the Closing Date.
12.7.
Transfer Taxes.
Any Transfer Taxes imposed as a result of the transactions contemplated by this
Agreement will be borne 50% by Purchaser and 50% by Seller. The Party so required
by applicable Law will file all necessary Tax Returns and other documentation with respect to all Transfer Taxes, except that any such filings required to be made by AI Brazil shall be made by Parent
or Seller, and, if required by the applicable Law, the other Party will, and will cause its Affiliates to join in the execution of any such Tax Returns and other documentation. If a Party is required
under
Section 10.3
to indemnify the other Party in respect of any Transfer Taxes, the amount of the indemnification will be an amount equal to the
amount by which the other Party has paid or is obligated to pay exceeds 50% of the total amount of such Transfer Taxes.
12.8.
Tax Matters Dispute.
If, after negotiating in good faith, the Parties (except for AI Brazil)
are unable to reach an agreement relating to any Tax matter under this
ARTICLE 12
within 30 days of receipt by a Party of written notice of such disagreement, the firm of the Independent Accountant
shall select an
independent and impartial partner from such firm with significant experience related to tax disputes (the individual so selected, the "
Independent Tax
Professional
") to resolve the dispute. The
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determination
of the Independent Tax Professional shall be final and binding on Parent, Seller and Purchaser.
12.9.
Purchaser Tax Acts.
Purchaser shall not (a) amend any Tax Return for a Pre-Closing Tax
Period or (b) make any Tax election with retroactive effect to any Pre-Closing
Tax Period, in each case to the extent such amendment or election could reasonably be expected to increase the Liability of Seller or any of its Affiliates for Taxes (including any obligation to
indemnify in respect of Taxes pursuant to this Agreement), without Seller's or Parent's prior written consent, which consent will not be unreasonably withheld, conditioned or delayed.
ARTICLE 13. MISCELLANEOUS
13.1.
Expenses.
Except as otherwise provided in this Agreement, whether or not the transactions contemplated
hereby are consummated, all costs and expenses (including any
finder's or investment banker's fees and attorneys' and accountants' fees) incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument
contemplated hereby and the consummation of the transactions contemplated hereby and thereby will be paid by the Party incurring the expense.
13.2.
Remedies.
(a)
Injunctive Relief.
Damages at law may be an inadequate remedy for the breach of any of the covenants,
promises and agreements contained in this Agreement, and, accordingly, each Party will be entitled to injunctive relief with respect to any such breach, including specific performance of such
covenants or an order enjoining a Party from any threatened, or from the continuation of any actual,
breach of the covenants contained in this Agreement. The rights set forth in this
Section 13.2
will be in addition to any other rights that a Party may
have at law or in equity.
(b)
Arbitration.
When Parent determines, in good faith, that it will make its final liquidity distribution
within six months, it shall deliver to Purchaser an officer's certificate so stating (the date of such certificate, which shall not be prior to the second anniversary of the Closing Date, the
"
Liquidation Certificate Date
"). If the Liquidation Certificate Date occurs on or before any time at which any claims for indemnification under
ARTICLE 10
have been made but not yet resolved, then Parent and Purchaser shall, as promptly as reasonably practicable, submit all pending and
unresolved indemnification claims to be finally settled by binding arbitration administered by the International Chamber of Commerce (the "
ICC
") in
accordance with the Rules of Arbitration of the ICC then in effect (the "
ICC Rules
"), except as modified herein. The arbitrators shall be instructed to
determine the amount of damages that would reasonably be expected to arise from such unresolved claims, which amount, when determined by the arbitrators, shall be immediately payable by Seller and
Parent to Purchaser in satisfaction of such unresolved claims. The Parties agree that there shall be a tribunal of three arbitrators, one of whom shall be appointed by Parent and one of whom shall be
appointed by Purchaser, in each case, within 15 days of the date of notice of arbitration from either Party, and the third arbitrator, who shall chair the arbitral tribunal, shall be appointed
by the party-appointed arbitrators within 15 days of the appointment of the second arbitrator. Any arbitrator not timely appointed as provided herein shall, upon request of any party, be
promptly appointed by the ICC in accordance with the ICC Rules. The decision of the arbitral tribunal shall be determined by a majority of the tribunal. The tribunal's award shall be made as promptly
as practicable, and in any event within 90 days after the appointment of the arbitral tribunal,
provided
that failure to adhere to this time
limit shall not be a basis for challenging the award or a defense or objection to its confirmation or enforcement. The arbitral tribunal shall have the authority to grant monetary damages only, which
may include the release of any amounts remaining in the Escrow Account, and shall have no jurisdiction to vary the express terms of this Agreement. The award shall be in writing and shall state the
reasons for the
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award.
The arbitration shall be conducted in the English language and the seat and place of arbitration shall be in New York County, New York.
13.3.
Governing Law; Submission to Jurisdiction.
This Agreement will be governed by and construed in
accordance with the Laws of the State of New York applicable to Contracts made and performed in such State. In
connection with the resolution of any claim or dispute arising out of or in connection with this Agreement or the transactions contemplated hereby, subject to
Section
13.2(b)
, the Parties agree to unconditionally and irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the Southern District of
New York sitting in New York County or the Commercial Division, Civil Branch of the Supreme Court of the State of New York sitting in New York County and any appellate court thereof or (ii) the
Chancery Court of the State of Delaware and any state appellate court thereof within the State of Delaware, or in the event that such court declines to accept jurisdiction over a particular matter, in
any state or federal court located within the State of Delaware. The Parties irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to
the laying of venue of any such dispute brought in any such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
13.4.
Waiver of Jury Trial.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED,
EACH PARTY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 13.4
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
13.5.
Entire Agreement; Amendments and Waivers.
(a) This Agreement (including the Schedules and
Exhibits to this Agreement) represents the entire understanding and agreement between the Parties with respect to
the subject matter of this Agreement.
(b) This
Agreement may be amended, supplemented or changed, and any provision of this Agreement may be waived, only by written instrument making specific reference to this
Agreement signed by (i) all Parties, in the case of any amendment, supplement or modification or (ii) the Party against whom enforcement of any such waiver is sought, in the case of any
waiver.
(c) No
action taken pursuant to this Agreement, including any investigation by or on behalf of a Party will be deemed to constitute a waiver by the Party taking such action
of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any Party of a breach of any provision of this Agreement will not operate or be construed as a
further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to
exercise, and no delay in exercising, any right, power or remedy hereunder will operate as a waiver thereof, nor will any single or partial exercise of such right, power or remedy by such Party
preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
13.6.
Notices.
All notices and other communications under this Agreement will be in writing and will
be deemed given (a) when delivered personally by hand (with written
confirmation of receipt), (b) when sent by facsimile (with written confirmation of transmission) or email, or (c) one Business Day following the day sent by overnight courier (with
written confirmation of receipt), in each case at
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the
following addresses and facsimile numbers (or to such other address or facsimile number as a Party may have specified by notice given to the other Party pursuant to this provision):
If
to Parent or NIIH, to:
NII
Holdings, Inc.
12110 Sunset Hills Road, Suite 600
Reston, VA 20190
Attention: Shana C. Smith, General Counsel
Facsimile No.: 703-390-5191
Email: Shana.Smith@nii.com
With
a copy (which will not constitute notice) to:
Jones
Day
250 Vesey Street
New York, New York 10281
Attention: S. Wade Angus
Facsimile No.: 212-755-7306
Email: swangus@jonesday.com
If
to AI Brazil, to:
AI Brazil Holdings B.V.
c/o: Access Industries
6th Floor, Marble Arch House
66 Seymour Street
London, W1H 5BT
Attention: Edward McCarthy and Lowri Westry
Facsimile No.: +44 207569 0079
Email: emccarthy@accind.com; legalnotices@accind.com
With a copy (which will not constitute notice) to:
Sidley
Austin LLP
1999 Avenue of the Stars, 17th Floor
Los Angeles, California
Attention: Matthew Thompson; Geoffrey Levin
Facsimile No.: 310-595-9501 Email: mthompson@sidley.com; glevin@sidley.com
If
to Purchaser, to:
América Móvil, S.A.B. de C.V.
Lago Zurich 245, Edificio Telcel, Piso 16
Colonia Granada Ampliación
México, D.F. 11529
Attention: Alejandro Cantú Jiménez, General Counsel
Email: acantu@americamovil.com
With a copy (which will not constitute notice) to:
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
Attention: Neil Whoriskey
Facsimile No.: 212-225-3999
Email: nwhoriskey@cgsh.com
A-81
13.7.
Severability.
If any term or other provision of this Agreement is invalid, illegal, or
incapable of being enforced by any Law or public policy, all other terms or provisions of
this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to
any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties will negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
13.8.
Binding Effect; Assignment.
This Agreement will be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns. Nothing in this Agreement will
create or be deemed to create any third party beneficiary rights in any Person not a party to this Agreement. No assignment of this Agreement or of any rights or obligations hereunder may be made by
any Party, directly or indirectly (by operation of Law or otherwise), without the prior written consent of the other Parties and any attempted assignment without the required consents will be void. No
assignment will relieve the assigning Party of any obligation. Upon any permitted assignment, the references in this Agreement to the assigning Party will also apply to any such assignee unless the
context otherwise requires.
13.9.
Non-Recourse.
No past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of a Party, nor
any present or future director of Nextel Holdings, will have any liability for any obligations or liabilities of such Party or of Nextel Holdings (as applicable) under this Agreement or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby. On the Closing Date, Purchaser shall (or shall cause its applicable Affiliate to) adopt the shareholder resolutions
contemplated by
Section 3.2(a)(iv)
, acknowledging the resignation of the current managers of Nextel Holdings or the Company (as applicable) with
effect upon the Closing and granting such managers provisional discharge in respect of the performance of their duties as managers of Nextel Holdings or the Company (as applicable). After the Closing,
to the extent applicable after the Closing, Purchaser shall (or shall cause its applicable Affiliate to) confirm such discharge at the next two annual general meetings of the shareholders of Nextel
Holdings and the Company, in connection with approval of the financial statements for the years 2018 and 2019 at the time of approval of Nextel Holdings' and the Company's financial statements for the
years 2018 and 2019, such discharge to then be a full and unconditional manager discharge for performance of their duties as managers.
13.10.
Legal Representation.
Purchaser acknowledges and agrees that Jones Day has acted as counsel for
NIIH and Parent, and that, in the event of any post-Closing disputes between the
Parties, NIIH and Parent reasonably anticipate that Jones Day will represent them in such matters. Accordingly, Purchaser expressly consents to Jones Day's representation of one or more of NIIH and
Purchaser in any post-Closing matter in which the interests of Purchaser on the one hand and any of NIIH and Parent, on the other hand, are adverse, whether or not such matter is one in which Jones
Day may have previously advised any of NIIH, Parent or their respective Affiliates, and consents to the disclosure by Jones Day to any of NIIH, Parent or their respective Affiliates of any information
learned by Jones Day in the course of its representation of NIIH and Parent, whether or not such information is subject to attorney-client privilege or Jones Day's duty of confidentiality.
13.11.
Parent Guarantee.
In connection with the transactions contemplated by this Agreement, Parent
hereby irrevocably, absolutely and unconditionally guarantees the due, punctual and
complete performance and payment (and not merely collection) in full of all obligations and liabilities of the Entities, NIIH and its Affiliates under this Agreement and the Company Share Transfer
Agreement, and all obligations and liabilities of the Company under the Nextel Holdings Share Transfer Agreement, as and when due and payable or required to be performed pursuant to any provisions of
this Agreement, the Nextel Holdings Share Transfer Agreement and the Company Share Transfer
A-82
Agreement,
subject to the terms and conditions hereof and thereof (the "
Guaranteed Obligations
") and agrees that Purchaser and AI Brazil shall be
entitled to enforce directly against Parent any of the Guaranteed Obligations. To the fullest extent permitted by applicable Law, Parent waives presentment to, demand of payment from and protest to
any other Person of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. The obligations of Parent hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations, or otherwise. In the event that Parent or any of
its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) other
than as contemplated by this Agreement, transfers or conveys all or substantially all of its properties and other assets to any Person, then, and in each such case, Parent shall cause proper provision
to be made so that such successor or assign shall expressly assume the obligations set forth in this
Section 13.11
.
13.12.
Release.
Effective as of the Closing, Seller and AI Brazil, for itself and on behalf of each
of its Affiliates and each of its and their respective past and present
predecessors, successors and assigns (collectively, the "
Seller Releasing Persons
"), hereby absolutely, unconditionally and irrevocably releases,
discharges and covenants not to sue, to the fullest extent permitted under applicable Law, Purchaser and each of its Subsidiaries (including, for the avoidance of doubt, the Entities) and each of its
and their respective past and present directors, officers, employees, members, managers, partners, shareholders, Affiliates, agents and representatives (collectively, the
"
Purchaser Released Persons
") from any and all rights, claims, demands, actions, causes of action, judgments, obligations, contracts, agreements, debts
and liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity (including any right, whether arising at law or in equity, to seek indemnification,
contribution, cost recovery, damages or any other recourse or remedy, including as may arise under common law) that any Seller Releasing Person or any Person claiming through or under a Seller
Releasing Person now has, has ever had or may hereafter have against the Purchaser Released Persons or any of them from any transaction, event, occurrence, action or inaction with respect to periods
at or prior to the Closing arising out of or relating in any way to (a) any Seller Releasing Person's relationship as a direct or indirect shareholder, member or manager of any of the Entities
at or prior to the Closing, (b) the organization, management or operation of the Entities at or prior to the Closing, (c) any claim that the amounts payable to Seller or AI Brazil as set
forth on the Payout Schedule are incomplete or inaccurate or that Seller or AI Brazil was entitled to receive payment of any different amount (subject to actual payment of the amounts set forth in the
Payout Schedule to Seller or AI Brazil, as the case may be) and (d) that certain letter agreement entered into by and among Parent, NIIH and AI Brazil, and acknowledged by the Company, dated as
of the date of this Agreement;
provided
,
however
, that this
Section
13.12
shall not be deemed to include the release of any Claims against a Purchaser Released Person arising under this Agreement or any Ancillary Agreement (for the avoidance of
doubt, other than the letter agreement referenced in clause (d) above) in accordance with the terms hereof or thereof.
13.13.
Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
[
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]
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IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its officers thereunto duly authorized, as of the date first written above.
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AMÉRICA MÓVIL, S.A.B. DE C.V.
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By:
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/s/ ALEJANDRO CANTÚ JIMÉNEZ
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Name:
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Alejandro Cantú Jiménez
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Title:
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General Counsel
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NII INTERNATIONAL HOLDINGS S.À R.L.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Class B Manager
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AI BRAZIL HOLDINGS B.V.
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By:
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/s/ EDWARD MCCARTHY
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Name:
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Edward McCarthy
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Title:
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Director
Signed pursuant to power of attorney
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NII HOLDINGS, INC.
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By:
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/s/ DANIEL E. FREIMAN
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Name:
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Daniel E. Freiman
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Title:
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CFO
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Annex B
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
This AMENDMENT NO. 1 (this "
Amendment
"), dated as of April 17, 2019, to the Purchase
Agreement, dated as of March 18, 2019 (the "
Purchase Agreement
"), is entered into by and among América
Móvil, S.A.B. de C.V., a corporation (
sociedad anónima bursátil de capital variable
) existing under
the Laws of Mexico ("
Purchaser
"), NII International Holdings S.à r.l., a private limited liability company
(
société à responsabilité limitée
) organized under the Laws of the Grand
Duchy of Luxembourg having its registered office at 6, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade and Companies Register
under the number B 149229 ("
Seller
"), AI Brazil Holdings B.V., a corporation existing under the Laws of The Netherlands
("
AI
Brazil
") and NII Holdings, Inc., a Delaware corporation ("
Parent
"). All capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement. Purchaser, Seller, AI Brazil and Parent are referred to herein collectively as the
"
Parties
".
WHEREAS,
the Parties previously entered into the Purchase Agreement, which provides for, among other things, the sale by Seller to Purchaser of all of the Acquired Equity Interests, all
upon the terms and conditions set forth in the Purchase Agreement;
WHEREAS,
the Parties desire to amend and restate Exhibit A to the Purchase Agreement in order to include therein (a) the final description of the accounting policies used
by Parent in the preparation of its audited consolidated financial statements for the annual period ended December 31, 2018 and (b) an illustrative calculation of the Purchase Price;
WHEREAS,
pursuant to Section 8.12(a) of the Purchase Agreement, the Parties agreed that Parent would prepare and cause to be filed with the SEC in preliminary form of the Proxy
Statement no later than 30 days following the date of the Purchase Agreement;
WHEREAS,
the Parties desire to extend by five Business Days the time period to file the Proxy Statement in preliminary form; and
WHEREAS,
in furtherance of the foregoing, and in accordance with Section 13.5 of the Purchase Agreement, the Parties desire to enter into this Amendment.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in this Amendment and in the Purchase Agreement and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:
1.
Amendment to Exhibit A.
Exhibit A to the Purchase Agreement is hereby replaced in its entirety
by
Exhibit A
attached to this Amendment.
2.
Proxy Statement Extension.
The Parties agree that the time period for filing the preliminary form of the
Proxy Statement with the SEC, as contemplated by Section 8.12(a) of the Purchase Agreement, is hereby extended to April 24, 2019.
3.
References.
Each reference in the Purchase Agreement to "this Agreement," "hereof," "hereunder," "herein,"
"hereby" or words of like import referring to the Purchase Agreement shall mean and be a
reference to the Purchase Agreement as amended by this Amendment. Notwithstanding the foregoing, all references in the Purchase Agreement, the Company Disclosure Schedule and the AI Brazil Disclosure
Schedule to "the date hereof" or "the date of this Agreement" shall refer to March 18, 2019.
B-1
4.
Effect of Amendment.
This Amendment shall not constitute an amendment or waiver of any provision of the
Purchase Agreement not expressly amended or waived herein and shall not be construed as an amendment, waiver or consent to any action that would require an amendment, waiver or consent except as
expressly stated herein. The Purchase Agreement, as amended by this Amendment, is and shall continue to be in full force and effect and is in all respects ratified and confirmed hereby.
5.
Miscellaneous.
The provisions of Article 13 (Miscellaneous) of the Purchase Agreement shall apply
mutatis mutandis
to this Amendment.
[
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]
B-2
IN
WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered as of the date first above written.
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AMÉRICA MÓVIL, S.A.B. DE C.V.
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By:
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/s/ ALEJANDRO CANTÚ JIMÉNEZ
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Name:
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Alejandro Cantú Jiménez
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Title:
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General Counsel
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NII INTERNATIONAL HOLDINGS S.À R.L.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Class B Manager
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AI BRAZIL HOLDINGS B.V.
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By:
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/s/ R. ROSENBOOM
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Name:
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R. Rosenboom
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Title:
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Managing Director
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NII HOLDINGS, INC.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Vice President, General Counsel and Corporate Secretary
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[
Signature Page to Amendment No. 1 to the Purchase Agreement
]
B-3
Annex C
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General Counsel
NII Holdings, Inc.
12110 Sunset Hills Road
Suite 600
Reston, VA 20190
Office: 703 390 7286
Email: shana.smith@nii.com
www.nii.com
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CONFIDENTIAL
AI
Brazil Holdings B.V.
Prins Bernhardplein 200
1097 JD Amsterd
The Netherlands
Attention: Edward
McCarthy
VIA
EMAIL
March 18,
2019
Re: Nextel Holdings S.à r.l.
Dear
Edward,
We
refer to the Shareholders Agreement (the "
Shareholders Agreement
") in relation to Nextel Holdings S.à r.l. (the
"
Nextel Holdings
"), dated June 5, 2017, among the Company, Ice Group Brazil Holdings BV (formerly known as AINMT Brazil
Holdings B.V.), NII International Telecom ("
NII Telecom
"), NII Brazil Holdings S.à r.l. (the
"
Company
") and NII Holdings, Inc. ("
NII Parent
").
Also,
we refer to the Purchase Agreement (the "
Purchase Agreement
"), dated March 18, 2019, among América
Móvil, S.A.B. de C.V. ("
Purchaser
"), NII International Holdings S.à r.l.
("
NIIH
"), AI Brazil Holdings B.V. (formerly known as Ice Group Brazil Holdings BV, hereinafter
"
AI Brazil
" and, collectively with its Affiliates, "
Access
,"
"
you
" and "
your
") and NII Parent. NII Parent, NIIH and AI Brazil are sometimes
referred to herein, collectively, as the "
Parties
," and each as a "
Party
". Capitalized terms used but
not defined in this letter have the meaning given to them in the Shareholders Agreement or Purchase Agreement, as applicable.
The
Parties wish to document certain understandings in respect of the transfer by (i) NIIH of all of the issued and outstanding equity interests of the Company and
(ii) AI Brazil of the AI Brazil Shares indirectly to Purchaser pursuant to the Purchase Agreement and the application of the Shareholders Agreement to such transfer.
In
consideration of the mutual agreements, provisions and covenants contained in this letter (this "
Letter Agreement
") and the Purchase
Agreement, the Parties hereby agree as follows:
-
1.
-
NII Parent
represents and warrants to Access that it has provided to Access all material information related to NII Parent's sale of its interest in
Nextel Holdings pursuant to the Purchase Agreement and the estimated return to NII Parent's stockholders relating to such sale and the anticipated winding up and dissolution of NII Parent. NII Parent
will provide to Access true and correct copies of all material written information provided to any stockholders of NII Parent in connection with soliciting or obtaining the Parent Stockholder
Approval. Further, NII Parent confirms that, except for the Purchase Agreement, there are no agreements between NII Parent, NIIH and any of the Entities, on the one hand, and the Purchaser or its
Affiliates relating to the transactions contemplated under the Purchase
Agreement,
on the other hand, and that neither NII Parent, nor any of its Affiliates, will enter into any such agreements between signing and closing under the Purchase Agreement without the consent
of Access (such consent not to be unreasonably withheld or delayed).
-
2.
-
NII
Parent shall promptly (and in any event, within 48 hours) advise Access orally and in writing (which may be by email) of the receipt by NII Parent or any
of its Affiliates or Representatives of any Acquisition Proposal, any request to engage in discussions or negotiations with respect to an Acquisition Proposal or any request for information that would
reasonably be expected to relate to an Acquisition Proposal, and in connection with such notice, provide to Access the material terms and conditions of any such Acquisition Proposal (including the
identity of the third party making any such Acquisition Proposal) and of any changes thereto. NII Parent shall promptly advise Access orally and in writing (which may be by email) of the commencement
of any discussions with any third party or its Representatives regarding any Acquisition Proposal by such third party. NII Parent shall keep Access informed (orally and in writing) in all material
respects on a timely basis of the status and details (including, within 48 hours after the occurrence of any amendment, modification, material development or negotiation) of any such
Acquisition Proposal or request, including promptly furnishing to Access copies of any written Acquisition Proposal, any other written materials that describe any such Acquisition Proposal, any
material correspondence relating thereto, and draft documentation with respect to such Acquisition Proposal.
-
3.
-
In
the event that the Parent Board has determined that an Acquisition Proposal constitutes a Superior Proposal, NII Parent shall, not less than seven
(7) Business Days prior to accepting such Superior Proposal, notify Access orally and in writing (which may be by email) that it believes that such Acquisition Proposal constitutes a Superior
Proposal and such written notice (which may be by email) shall specify the material terms and conditions of such Superior Proposal (including the identity of the Person making the proposal) and
contemporaneously furnish to Access a copy of the relevant acquisition agreement or other relevant transaction documents. In the event that NII Parent determines to accept the aforementioned
Acquisition Proposal, NII Parent further undertakes to (a) prior to terminating the Purchase Agreement, reasonably cooperate and consult with Access with respect to such Superior Proposal,
including by providing Access a reasonable opportunity to participate in discussions with respect to the acquisition of the AI Brazil Shares with the Person making the Superior Proposal so that
Access may ensure that such Person will acquire the AI Brazil Shares (directly or indirectly) on terms acceptable to Access, and (b) assume all liability for any action brought by
Purchaser arising from or relating to (i) the termination of the Purchase Agreement by NII Parent or by Purchaser as a result of a breach by NII Parent or the Company, or (ii) NII
Parent's failure to pay the Company Break-Up Fee in accordance with Section 3.4 of the Purchase Agreement. For the avoidance of doubt, in the event that Parent terminates the Purchase Agreement
to enter into a definitive agreement for a Superior Proposal, (A) NII Parent will pay the Company Break-Up Fee in accordance with the terms of Section 3.4 of the Purchase Agreement,
(B) to the extent NII Parent is not reimbursed (directly or indirectly) for the amount of the Company Break-Up Fee, then (i) the first $25,000,000 of the purchase price under such
Superior Proposal shall be paid to NII Parent as reimbursement for NII Parent's payment of the Company Break-Up Fee, and (ii) Access shall not have any right to any reimbursement or payment
(directly or indirectly) of any portion of the Company Break-Up Fee by a Person making such Superior Proposal.
-
4.
-
If
NIIH or NII Parent terminates the Purchase Agreement in order to accept a Superior Proposal, prior to accepting such Superior Proposal, NII Parent, NII Telecom and
the Company and each of their respective Affiliates will comply with the terms of the Shareholders Agreement, including with the provisions of Section 2.5 or 2.6 thereof; provided,
C-2
C-3
this
Letter Agreement or any Superior Proposal. The Parties acknowledge and agree that NII Parent's indemnification obligation hereunder shall terminate and be of no further force or effect if no
claim or threat is brought by an NII Parent stockholder or bondholder or a third party prior to the date that is 120 days immediately following the closing date of the Purchase Agreement or
Superior Proposal, as applicable.
-
8.
-
NII
Parent shall indemnify, defend and hold harmless AI Brazil from and against any and all Damages that AI Brazil actually suffers resulting from,
arising out of or incurred in connection with:
-
(a)
-
any
and all Unpaid Transaction Expenses;
-
(b)
-
a
reduction in the portion of the Purchase Price payable to AI Brazil pursuant to Article 2 of the Purchase Agreement as a result of, or claims by
Purchaser under the Purchase Agreement arising out of or related to: (i) any Accrued Tax Contingencies or any contingent Tax liabilities reflected in Section 6.6 of the Company
Disclosure Schedule or Attachment D to Section 6.13 of the Company Disclosure Schedule; (ii) any Taxes imposed on NII Parent or any of its Affiliates other than the Entities;
(iii) the portion of Pre-Closing Taxes in excess of the AI Brazil Percentage of such Pre-Closing Taxes that are directly related to the operations of the Entities in the Ordinary Course
and are properly included as current liabilities in the calculation of Net Working Capital in accordance with the Accounting Principles; or (iv) any Taxes included in the calculation of Net
Working Capital that were incurred outside of the Ordinary Course or that were improperly included in the calculation of Net Working Capital pursuant to the Accounting Principles;
-
(c)
-
any
Liabilities or reduction in Purchase Price associated with any Intercompany Notes Modification or Requested Notes Modification; and
-
(d)
-
any
amounts payable under the Retention Plan, whether or not the transactions contemplated by the Purchase Agreement are consummated.
-
9.
-
NII
Parent represents and warrants to Access that no Transaction Expenses have been paid by Nextel Holdings or any of the Entities. From the date of the Purchase
Agreement until the Closing or the earlier termination of the Purchase Agreement, NII Parent will not, and NII Parent will cause the Entities not to, amend, change, waive or otherwise modify the
Intercompany Notes or agree to a Requested Notes Modification without the prior written consent of Access (which may be withheld, conditioned or delayed in Access's sole discretion, for any reason or
for no reason, and without liability).
-
10.
-
At
least five (5) Business Days prior to NII Parent delivering the Estimated Closing Statement or Payout Schedule to Purchaser pursuant to
Section 2.2(c) of the Purchase Agreement, NII Parent will prepare and deliver to Access for its review and approval, a draft of the Estimated Closing Statement and Payout Schedule showing the
elements thereof specified in the Purchase Agreement, including the Estimated AI Brazil Amount. NII Parent and Access will work together in good faith to agree the contents of the Estimated
Closing Statement and Payout Schedule and NII Parent shall not submit the Estimated Closing Statement or Payout Schedule to Purchaser or agree any changes to the form or content thereof, without the
prior written consent of Access (such consent not to be unreasonably withheld, conditioned or delayed). The Parties agree that the terms herein shall apply mutatis mutandis in respect of any Superior
Proposal.
At
least five (5) Business Days prior to delivering the 2020 Transaction Budget to Purchaser, NII Parent will prepare and deliver to Access for its review and approval, a draft of the
2020 Transaction Budget, including the amount of proposed capital expenditures to be
C-4
included
therein. NII Parent and Access will work together in good faith to agree the contents of the 2020 Transaction Budget and NII Parent shall not submit the 2020 Transaction Budget
to Purchaser or agree any changes to the form or content thereof, without the prior written consent of Access (such consent not to be unreasonably withheld, conditioned or delayed).
-
11.
-
NII
Parent will provide information to, and reasonably consult and cooperate with, Access in respect of any of the undertakings or actions of NII Parent in relation
to the calculation and determination of the Final Purchase Price pursuant to Section 2.4 of the Purchase Agreement, including by facilitating such access, during regular business hours, to the
books and records of the Seller and the Entities and the employees and other service providers (including accountants and other advisors) to the Entities as Access may reasonably request; provided
that neither Parent nor Seller will be required to permit any inspection, or to disclose any information, that in the reasonable judgment of Parent or Seller, as applicable, would (a) waive the
protection of an attorney-client privilege or (b) would violate any confidentiality obligations to which Parent or Seller is bound; provided, further, that Parent or Seller, as applicable,
shall use commercially reasonable efforts to permit such inspection or provide such information in a manner that would not result in the waiver of such privilege or violate such confidentiality
obligations, including, in the case of clause (b), by obtaining the consent of such third party if so requested by Access. Without limiting the generality of the foregoing, NII Parent shall
promptly (and in any event, within 48 hours) advise Access orally and in writing (which may be by email) of the receipt by NII Parent or any of its Affiliates or representatives of the Closing
Statement or any communication from Purchaser in respect of the calculation of the Final Purchase Price, which notice shall include a copy of the Closing Statement or such other communication (if in
writing). NII Parent and Access will work together in good faith to agree the contents of any Closing Statement Dispute Notice and NII Parent shall not agree to the Closing Statement the Final
Purchase Price, or any element thereof, or submit any Closing Statement Dispute Notice to Purchaser, without the prior written consent of Access (such consent not to be unreasonably withheld or
conditioned). If NII Parent delivers a Closing Statement Dispute Notice, then NII Parent and Access will work together in good faith to resolve the Disputed Items with Purchaser during the Resolution
Period. NII Parent shall keep Access fully informed of all proposals, negotiations and communications in respect of the attempt to resolve any Disputed Items or the submission of any Unresolved Items
to the Independent Accountant (including by providing Access with copies of all related support and backup materials) and shall not agree to any compromise, settlement or resolution of any such
Disputed Item or any payment in respect thereof, without the prior written consent of Access (such consent not to be unreasonably withheld, conditioned or delayed).
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12.
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NII
Parent will use its reasonable best efforts to notify Access prior to exercising any of its termination rights under Section 3.4 of the Purchase Agreement
and shall, to the extent practicable, consult with Access prior to exercising such rights. In addition, NII Parent shall provide to Access, as promptly as practicable, copies of any notices delivered
by NII Parent (or received by NII Parent) pursuant to Sections 3.4, 3.5 or 3.6 of the Purchase Agreement.
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13.
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To
the extent NII Parent is provided the opportunity to review and comment on any submission or communication required in connection with the process of obtaining
the Regulatory Approval or Antitrust Approval, NII shall provide Access as much time as reasonably practicable to review and comment on, and will take into account and reflect any reasonable comments
from Access with respect to, any such submissions or communications.
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14.
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NII
Parent undertakes to Access that it will procure that the Company and its Subsidiaries will conduct business in the ordinary course (in accordance with the
business plan, past practice and Section 8.2 of the Purchase Agreement) (the "
Ordinary Course
") during the period
C-5
between
signing and closing of the Purchase Agreement. Further NII Parent undertakes not to operate the business of the Entities, or permit the business of any of the Entities to be operated, in a
manner that is outside of the Ordinary Course or that would intentionally result in a negative impact on the purchase price adjustment under the Purchase Agreement.
-
15.
-
The
Parties acknowledge that between signing and closing of the Purchase Agreement or any Superior Proposal, Nextel Holdings shall require equity funding. The
Parties hereby agree to procure that Nextel Holdings shall undertake such equity capital raising at a valuation equal to that established by the price mechanism under the Purchase Agreement or any
Superior Proposal. In addition, any equity capital raising will be undertaken pursuant to the terms and conditions set out in the Shareholders Agreement.
-
16.
-
Subject
to the terms and conditions set forth in this Paragraph 16, without prejudice to the rights and obligations of the relevant parties under the
Investment Agreement (as defined in the Shareholders Agreement) and the undertaking agreement entered into on October 15, 2018, by among NII Parent and AI Brazil (the
"
Undertaking Letter
") in respect of the proceeds of an escrow established pursuant to the Escrow Agreement, dated January 26, 2015, among NIU
Holdings LLC ("
NIU
"), Citibank, N.A. and AT&T Mobility Holdings B.V. (as permitted assignee) (the "
Mexico
Escrow
"), the Parties hereby agree in connection with the transactions contemplated under the Purchase Agreement and subject to Rule 408 of the Federal Rules of Evidence
that:
-
(a)
-
Until
Closing of the Purchase Agreement or Superior Proposal,
-
(i)
-
to
the extent payment is made from the Mexico Escrow to NIU (the "
Released Amount
"), NII Parent will procure that NIU
transfers the Released Amount into a separate bank account (the "
Escrow Bank Account
") designated to hold only the Released Amount and shall not use
such monies for any reason other than those set out herein or pursuant to the Undertaking Letter; and
-
(ii)
-
the
Parties otherwise agree that the terms of the Undertaking Letter are hereby suspended until Closing (of the Purchase Agreement or Superior Proposal) and upon
Closing of the Purchase Agreement (or Superior Proposal) shall terminate.
-
(b)
-
Upon
Closing of the Purchase Agreement or a Superior Proposal, as applicable, and thereafter, within five (5) Business Days of receipt of a Released Amount,
NII Parent will cause NIU to pay to Access the first $10,000,000 of the Released Amount (the "
Initial Release
") from the applicable escrow account at
Citibank N.A. and an amount equal to 6% of all additional proceeds released from the Mexico Escrow after the Initial Release (the "
Escrow Arrangement
").
-
(c)
-
If
the Purchase Agreement is terminated, the foregoing Escrow Arrangement shall no longer apply, and the terms and conditions of the Undertaking Letter shall be
reinstated and be in full force and effect.
-
17.
-
The
Parties hereby further agree that, whether or not expressly referenced herein, the terms of this Letter Agreement shall apply mutatis mutandis in respect of any
Acquisition Proposal or Superior Proposal (including any proposal which in substance is an Acquisition Proposal or Superior Proposal but is made following acceptance and in respect of a Superior
Proposal) except in the case of the AI Brazil consent right in paragraph 9, which shall not be unreasonably withheld, delayed or conditioned in respect of any other Acquisition Proposal
or Superior Proposal.
Clauses 13.2,
13.3, 13.4, 13.5, 13.6, 13.7, 13.8 and 13.13 of the Purchase Agreement shall apply to and are hereby incorporated into the terms of this Letter Agreement,
mutatis mutandis.
The Parties
C-6
hereby
acknowledge and agree that the execution of the Purchase Agreement by the parties thereto will in no way be deemed or constitute a breach by any Party of the Shareholders Agreement, provided,
that the Parties agree to exercise their respective rights in accordance with the Shareholders Agreement.
If
the above reflects our understanding and agreement with respect to the foregoing matters correctly, please so confirm by signing the enclosed copy of this Letter Agreement.
[SIGNATURES
ON FOLLOWING PAGE]
C-7
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Sincerely,
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NII Holdings, Inc.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Vice President, General Counsel and Corporate Secretary
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cc:
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Jones Day
250 Vesey Street
New York, NY 10281
Attention: S. Wade Angus
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ACCEPTED AND AGREED TO
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As of this 18th day of March 2019.
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NII BRAZIL HOLDINGS S.À R.L.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Class B Manager
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ACCEPTED AND AGREED TO
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As of this 18th day of March 2019.
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NII INTERNATIONAL HOLDINGS S.À R.L.
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By:
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/s/ SHANA C. SMITH
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Name:
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Shana C. Smith
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Title:
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Class B Manager
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ACCEPTED AND AGREED TO
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As of this 18th day of March 2019.
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AI BRAZIL HOLDINGS B.V.
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By:
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/s/ EDWARD MCCARTHY
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Name:
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Edward McCarthy
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Title:
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Director
Signed pursuant to power of attorney
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[
Signature Page to Side Letter
]
Annex D
NII HOLDINGS, INC.
PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION
This Plan of Complete Liquidation and Dissolution (the "Plan") is intended to describe and govern the implementation of the complete
liquidation, dissolution and winding up of NII Holdings, Inc., a Delaware corporation (the "Company"), and the distribution of all of its assets available for distribution to its stockholders
under the Delaware General Corporation Law (the "DGCL"), in accordance with Section 275 and other applicable provisions of the DGCL and Sections 331 and 336 of the
Internal Revenue Code of 1986, as amended.
1. Approval and Adoption of Plan
. The board of directors of the Company (the "Board") has deemed it advisable
that the Company be dissolved, has adopted a resolution authorizing the dissolution of the Company, and has approved and adopted this Plan. If this Plan is adopted by the requisite action of the
Company's stockholders, this Plan shall constitute the adopted Plan of the Company.
2. Certificate of Dissolution and Effective Time
. Following authorization of the complete liquidation and
dissolution of the Company by the Company's stockholders and completion of the transactions contemplated by that certain Stock Purchase Agreement, dated March 18, 2019, by and among
América Móvil, S.A.B. de C.V., NII International Holdings S.à r.l., AI Brazil Holdings B.V. and the Company, and at such time as the Board
deems appropriate, the Company shall execute, acknowledge and file with the Secretary of State of the State of Delaware a certificate of dissolution in accordance with the DGCL and ensure that all
taxes (including franchise taxes) and fees required by the State of Delaware are tendered to the appropriate office or agency of the State of Delaware. The Company shall be dissolved at the time (the
"Effective Time") that the certificate of dissolution is filed with the Office of the Secretary of State of the State of Delaware or such later time as may be stated in the certificate of dissolution.
3. Survival Period
. For three years after the Effective Time (or such longer period as the Delaware Court of
Chancery may direct) (the "Survival Period"), the Company shall be continued as a body corporate for the purpose of prosecuting and defending lawsuits (civil, criminal or administrative) by or against
the Company; settling and closing its business; disposing of and conveying its property; discharging its liabilities; and distributing its remaining assets to its stockholders. However, after the
Effective Time, the Company shall not engage in any business activities except to the extent necessary to preserve the value of its assets, wind up its business affairs and distribute its assets in
accordance with this Plan.
4. Safe Harbor Liquidation, Winding Up and Distribution Process
. From and after the Effective Time, the Company
shall proceed, in a timely manner, to liquidate the Company in accordance with the procedures set forth in Sections 280 and 281(a) of the DGCL (sometimes referred to as "safe harbor
procedures"). These procedures include, without limitation, the following:
(a) giving
notice of the Company's dissolution to all claimants and publishing that notice, in such manner and containing such information as required by the DGCL, including
a requirement that any claimant (other than parties to existing lawsuits) must present a claim in writing to the Company;
(b) accepting
or rejecting all or any part of the claim made in writing and informing any claimant making a rejected claim that if the claimant does not commence an action,
suit or proceeding with respect to the claim within the time period described by the DGCL, the claim will be barred;
D-1
(c) offering
security or compensation to claimants under contracts if any claim is contingent, conditional or unmatured;
(d) petitioning
the Delaware Court of Chancery to determine the amount and form of security (i) that will be reasonably likely to be sufficient to provide
compensation for any claim that is the subject of a pending action, suit or proceeding, (ii) that will be sufficient to provide compensation to any claimant under a contract who has rejected
the Company's offer for security and (iii) that will be reasonably likely to be sufficient to provide compensation for claims that have not been made known or have not arisen, but are likely to
arise based on facts known to the Company within the time periods described by the DGCL; and
(e) (i)
pay the claims made and not rejected in accordance with Section 280(a) of the DGCL, post the security offered and not rejected pursuant to those procedures;
(ii) post any security ordered by the Delaware Court of Chancery in any proceeding under those procedures; and (iii) pay or make provision for all other claims that are mature, known and
uncontested or that have been finally determined to be owing by the Company, all in accordance with the requirements of the DGCL. Any remaining assets shall be distributed to the Company's
stockholders; provided, however, that after the Effective Time, no distribution may be made to the Company's stockholders until 150 days after the date of the last notice of rejection given by
the Company pursuant to those procedures.
5. Alternative Liquidation, Winding Up and Distribution Process
. If for any reason the Board deems it
inadvisable or impracticable to comply with the safe harbor procedures described in Section 4 of this Plan, then the Board, without further stockholder action, may seek to comply with the
general procedures set forth in Section 281(b) of the DGCL. The Company may commence compliance with the safe harbor procedures described in Section 4 of this Plan and then, based on the
Board's decision, abandon compliance with those procedures at any time.
6. Continuing Employees and Consultants
. During the Survival Period, the Company may select, retain, hire,
employ or contract with such employees, consultants, agents, trustees, independent professional advisors (including legal counsel, accountants and financial advisors) and others, as the Board may
determine, from time to time, to be necessary or advisable to effect the liquidation, winding up and distribution of assets described in this Plan. The Company may, in the absolute discretion of the
Board, pay the Company's officers, directors, employees, consultants, agents and other representatives, or any of them, compensation or additional compensation above their regular compensation,
including pursuant to severance and retention agreements, in money or other property, in recognition of the extraordinary efforts they, or any of them, will be required to undertake, or actually
undertake, in connection with the implementation of this Plan.
7. Costs and Expenses
. Generally, during the Survival Period, the Company shall pay all costs and expenses that
the Board may determine from time to time to be necessary or advisable to effect the Company's liquidation and winding up in accordance with this Plan and as may be necessary or advisable to continue
the Company's existence and operations. These costs and expenses may include, without limitation, brokerage, agency, professional, consulting and other fees and expenses of persons rendering services
to the Company in connection with the matters described in this Plan and costs incurred to comply with contracts to which the Company is a party.
8. Indemnification
. The Company shall continue to indemnify its officers, directors, employees and agents in
accordance with, and to the extent required or permitted by, the DGCL, the Company's certificate of incorporation, the Company's bylaws and any contractual arrangements, whether these arrangements
existed before the dissolution or were entered into after the dissolution. During the Survival Period, acts and omissions of any indemnified or insured person in connection with the implementation of
this Plan shall be covered to the same extent that they were covered before the
D-2
Effective
Time. The Board is authorized to obtain and maintain insurance as may be necessary to cover the Company's indemnification obligations.
9. Stockholder Consent
. Authorization of the Company's complete liquidation and dissolution by the holders of a
majority of the outstanding common stock of the Company shall constitute approval of all matters described in this Plan. Without limiting the foregoing sentence, authorization of the Company's
complete liquidation and dissolution by the holders of a majority of the outstanding common stock of the Company shall constitute the authorization of the sale, exchange or other disposition in
liquidation of all of the remaining property and assets of the Company after the Effective Time, whether the sale, exchange or other disposition occurs in one transaction or a series of transactions,
and shall constitute ratification of any and all contracts for sale, exchange or other disposition that are conditioned on stockholder approval.
10. Subsidiaries
. As part of its liquidation and winding up, the Company may take any and all actions with
respect to each of its direct and indirect subsidiaries, based on the advice and counsel of its legal and other advisors and in accordance with the requirements of the laws and charter documents
governing each subsidiary, to liquidate, dissolve and wind up each such subsidiary.
11. Legal Claims
. The Company shall defend any claims against it, its officers or directors or its subsidiaries,
whether a claim exists before the Effective Time or is brought during the Survival Period, based on advice and counsel of its legal and other advisors and in such manner, at such time and with such
costs and expenses as the Board may approve from time to time. During the Survival Period, the Company may continue to prosecute any claims that it had against others before the Effective Time and may
institute any new claims against any person as the Board may determine necessary or advisable to protect the Company and its assets and rights or to implement this Plan. At the Board's discretion, the
Company may defend, prosecute or settle any lawsuits, as applicable.
12. Stock of the Company
. From and after the close of business on the date of the Effective Time, and subject to
applicable law, each holder of shares of the Company's common stock shall cease to have any rights in respect of that stock, except the right to receive distributions, if any, pursuant to and in
accordance with this Plan and the DGCL. After the Effective Time, the Company's stock transfer records shall be closed, and the Company will not record or recognize any transfer of the Company's
common stock occurring after the close of business on the date of the Effective Time, except, in the Company's sole discretion, such transfers occurring by will, intestate succession or operation of
law as to which the Company has received adequate written notice. As a condition to receipt of any distribution to any holder of the Company's common stock represented by a certificate, the Board may
require the holder to surrender all certificates evidencing shares of common stock to the Company or furnish the Company with evidence satisfactory to the Board of the loss, theft or destruction of
any certificate, together with such surety bond or other security or indemnity as may be required by and satisfactory to the Board. As a condition to receipt of any distribution to any holder of the
Company's common stock that is not represented by a certificate, the Board may require the holder to provide such evidence of ownership of the stock as the Company may require. No stockholder shall
have any appraisal rights in connection with the Company's liquidation, dissolution and winding up.
13. Unclaimed Distributions
. If any distribution to a stockholder cannot be made, whether because the
stockholder cannot be located, has not surrendered a certificate evidencing the Company's common stock or provided other evidence of ownership as required in this Plan or by the Board or for any other
reason, the distribution to which the stockholder is otherwise entitled shall be transferred, at such time as the final liquidating distribution is made by the Company, or as soon as practicable after
that distribution, to the official of such state or other jurisdiction authorized by applicable law to receive the proceeds of the distribution. The proceeds of the distribution will thereafter be
held solely for the benefit of and for ultimate distribution to the stockholder as the sole equitable owner of the distribution and shall be treated as abandoned property and escheat to the applicable
state or other
D-3
jurisdiction
in accordance with applicable law. The proceeds of any such distribution will not revert to or become the property of the Company or any other stockholder.
14. Liquidating Trust
. If deemed necessary, appropriate or desirable by the Board in furtherance of this Plan,
and based on advice of the Company's legal, tax and accounting advisors, the Company may transfer to one or more liquidating trustees, for the benefit of the Company's stockholders under a liquidating
trust, all or a portion of the assets of the Company. If assets are so transferred, each holder of the Company's common stock may receive an interest in the trust pro rata to its, his or her interest
in the assets of the Company. All distributions from the trust will be made pro rata in accordance with the interests of the stockholders in the common stock held by them. The interests in the trust
will not be transferrable except by operation of law or on death of the recipient. The Board is authorized to appoint one or more individuals, corporations, partnerships or other persons, or any
combination, to act as a trustee or trustees for the benefit of the Company's stockholders and to receive assets of the Company. Any past or current officer, director, employee, agent or
representative of the Company may act as a trustee. Any trustee appointed will succeed to all right, title and interest of the Company of any kind or character with respect to the transferred assets
and, to the extent of the assets so transferred and solely in the capacity as a trustee, shall assume all of the liabilities and obligations of the Company relating to those assets, including without
limitation any unsatisfied claims and
unascertained or contingent liabilities. Any conveyance of assets to a trustee shall be deemed to be a distribution of property and assets by the Company to the Company's stockholders. Any conveyance
by the Company to a trustee shall be in trust for the Company's stockholders. The Company, as authorized by the Board, may enter in to a liquidating trust agreement with one or more trustees, on such
terms and conditions as the Board may deem necessary, appropriate or desirable.
15. Abandonment, Exceptions, Modifications, Clarifications and Amendments
. Notwithstanding authorization of the
complete liquidation and dissolution of the Company by its stockholders, at any time before the Effective Time the Board may abandon the dissolution of the Company without further action by the
stockholders of the Company and terminate this Plan. Without further action by the Company's stockholders, at any time before or after the Effective Time, the Board may waive, modify or amend any
aspect of this Plan to the extent permitted by the DGCL and may provide for exceptions to or clarifications of the terms of this Plan. The Board (and any other person or body authorized by the Board)
shall also have the power and authority to interpret this Plan and to make any and all determinations necessary or advisable to apply this Plan to any event, fact or circumstance.
16. Authorization
. The Board is hereby authorized, without further action by the Company's stockholders, to do
and perform, or cause the officers, employees, agents and representatives of the Company, subject to approval by the Board, to do and perform, any and all acts, to make, execute, deliver and adopt any
and all agreements, resolutions, conveyances, certificates and other documents of every kind, and to seek any exemption, exception, waiver or other relief with respect to any laws or regulations
applicable to the Company, that are deemed necessary, appropriate or desirable to implement this Plan and the transactions contemplated by this Plan, including without limitation all filings or acts
required by any local, state, federal or foreign law or regulation, to liquidate and wind up the affairs of the Company, and to distribute the Company's remaining assets to its stockholders.
D-4
Annex E
Sections 275 - 283 of the Delaware General Corporation Law
§ 275 Dissolution generally; procedure.
(a) If
it should be deemed advisable in the judgment of the board of directors of any corporation that it should be dissolved, the board, after the adoption of a resolution
to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice of the adoption of the resolution and of a meeting of stockholders to take action upon the
resolution to be mailed to each stockholder entitled to vote thereon as of the record date for determining the stockholders entitled to notice of the meeting.
(b) At
the meeting a vote shall be taken upon the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon shall vote for the
proposed dissolution, a certification of dissolution shall be filed with the Secretary of State pursuant to subsection (d) of this section.
(c) Dissolution
of a corporation may also be authorized without action of the directors if all the stockholders entitled to vote thereon shall consent in writing and a
certificate of dissolution shall be filed with the Secretary of State pursuant to subsection (d) of this section.
(d) If
dissolution is authorized in accordance with this section, a certificate of dissolution shall be executed, acknowledged and filed, and shall become effective, in
accordance with § 103 of this title. Such certificate of dissolution shall set forth:
(1) The
name of the corporation;
(2) The
date dissolution was authorized;
(3) That
the dissolution has been authorized by the board of directors and stockholders of the corporation, in accordance with subsections (a) and (b) of this
section, or that the dissolution has been authorized by all of the stockholders of the corporation entitled to vote on a dissolution, in accordance with subsection (c) of this section;
(4) The
names and addresses of the directors and officers of the corporation; and
(5) The
date of filing of the corporation's original certificate of incorporation with the Secretary of State.
(e) The
resolution authorizing a proposed dissolution may provide that notwithstanding authorization or consent to the proposed dissolution by the stockholders, or the
members of a nonstock corporation pursuant to § 276 of this title, the board of directors or governing body may abandon such proposed dissolution without further action by the
stockholders or members.
(f) Upon
a certificate of dissolution becoming effective in accordance with § 103 of this title, the corporation shall be dissolved.
8
Del. C. 1953, § 275; 56 Del. Laws, c. 50; 57 Del. Laws, c. 148, §§ 31, 32; 59 Del. Laws, c. 106, § 14; 66
Del. Laws, c. 136, § 34; 77 Del. Laws, c. 14, § 14; 77 Del. Laws, c. 290, § 25.;
§ 276 Dissolution of nonstock corporation; procedure.
(a) Whenever
it shall be desired to dissolve any nonstock corporation, the governing body shall perform all the acts necessary for dissolution which are required by
§ 275 of this title to be performed by the board of directors of a corporation having capital stock. If any members of a nonstock corporation are entitled to vote for the election
of members of its governing body or are entitled to vote for dissolution under the certificate of incorporation or the bylaws of such corporation, such
E-1
members
shall perform all the acts necessary for dissolution which are contemplated by § 275 of this title to be performed by the stockholders of a corporation having capital stock,
including dissolution without action of the members of the governing body if all the members of the corporation entitled to vote thereon shall consent in writing and a certificate of dissolution shall
be filed with the Secretary of State pursuant to § 275(d) of this title. If there is no member entitled to vote thereon, the dissolution of the corporation shall be authorized at a
meeting of the governing body, upon the adoption of a resolution to dissolve by the vote of a majority of members of its governing body then in office. In all other respects, the method and
proceedings for the dissolution of a nonstock corporation shall conform as nearly as may be to the proceedings prescribed by § 275 of this title for the dissolution of corporations
having capital stock.
(b) If
a nonstock corporation has not commenced the business for which the corporation was organized, a majority of the governing body or, if none, a majority of the
incorporators may surrender all of the corporation rights and franchises by filing in the office of the Secretary of State a certificate, executed and acknowledged by a majority of the incorporators
or governing body, conforming as nearly as may be to the certificate prescribed by § 274 of this title.
8
Del. C. 1953, § 276; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 35; 77 Del. Laws, c. 253, § 60.;
§ 277 Payment of franchise taxes before dissolution, merger, transfer or conversion.
No corporation shall be dissolved, merged, transferred (without continuing its existence as a corporation of this State) or converted under this
chapter until:
(1) All
franchise taxes due to or assessable by the State including all franchise taxes due or which would be due or assessable for the entire calendar month during which
such dissolution, merger, transfer or conversion becomes effective have been paid by the corporation; and
(2) All
annual franchise tax reports including a final annual franchise tax report for the year in which such dissolution, merger, transfer or conversion becomes effective
have been filed by the corporation;
notwithstanding
the foregoing, if the Secretary of State certifies that an instrument to effect a dissolution, merger, transfer or conversion has been filed in the Secretary of State's office, such
corporation shall be dissolved, merged, transferred or converted at the effective time of such instrument.
8
Del. C. 1953, § 277; 56 Del. Laws, c. 50; 70 Del. Laws, c. 79, § 17; 71 Del. Laws, c. 120, § 16; 78 Del. Laws,
c. 96, §§ 8, 9.;
§ 278 Continuation of corporation after dissolution for purposes of suit and winding
up affairs.
All corporations, whether they expire by their own limitation or are otherwise dissolved, shall nevertheless be continued, for the term of
3 years from such expiration or dissolution or for such longer period as the Court of Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and defending
suits, whether civil, criminal or administrative, by or against them, and of enabling them gradually to settle and close their business, to dispose of and convey their property, to discharge their
liabilities and to distribute to their stockholders any remaining assets, but not for the purpose of continuing the business for which the corporation was organized. With respect to any action, suit
or proceeding begun by or against the corporation either prior to or within 3 years after the date of its expiration or dissolution, the action shall not abate by reason of the dissolution of
the corporation; the corporation shall, solely for the purpose of such action, suit or proceeding, be continued as a body corporate beyond the 3-year period and until any judgments, orders or decrees
therein shall be fully executed, without the necessity for any special direction to that effect by the Court of Chancery.
E-2
Sections 279
through 282 of this title shall apply to any corporation that has expired by its own limitation, and when so applied, all references in those sections to a dissolved
corporation or dissolution shall include a corporation that has expired by its own limitation and to such expiration, respectively.
8
Del. C. 1953, § 278; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 36; 77 Del. Laws, c. 290, § 26.;
§ 279 Trustees or receivers for dissolved corporations; appointment; powers; duties.
When any corporation organized under this chapter shall be dissolved in any manner whatever, the Court of Chancery, on application of any
creditor, stockholder or director of the corporation, or any other person who shows good cause therefor, at any time, may either appoint 1 or more of the directors of the corporation to be trustees,
or appoint 1 or more persons to be receivers, of and for the corporation, to take charge of the corporation's property, and to collect the debts and
property due and belonging to the corporation, with power to prosecute and defend, in the name of the corporation, or otherwise, all such suits as may be necessary or proper for the purposes
aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by the corporation, if in being, that may be necessary for the final settlement of the unfinished
business of the corporation. The powers of the trustees or receivers may be continued as long as the Court of Chancery shall think necessary for the purposes aforesaid.
8
Del. C. 1953, § 279; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 37.;
§ 280 Notice to claimants; filing of claims.
(a)(1) After
a corporation has been dissolved in accordance with the procedures set forth in this chapter, the corporation or any successor entity may give notice of the
dissolution, requiring all persons having a claim against the corporation other than a claim against the corporation in a pending action, suit or proceeding to which the corporation is a party to
present their claims against the corporation in accordance with such notice. Such notice shall state:
a. That
all such claims must be presented in writing and must contain sufficient information reasonably to inform the corporation or successor entity of the identity of the
claimant and the substance of the claim;
b. The
mailing address to which such a claim must be sent;
c. The
date by which such a claim must be received by the corporation or successor entity, which date shall be no earlier than 60 days from the date thereof; and
d. That
such claim will be barred if not received by the date referred to in paragraph (a)(1)c. of this section; and
e. That
the corporation or a successor entity may make distributions to other claimants and the corporation's stockholders or persons interested as having been such without
further notice to the claimant; and
f. The
aggregate amount, on an annual basis, of all distributions made by the corporation to its stockholders for each of the 3 years prior to the date the
corporation dissolved.
Such
notice shall also be published at least once a week for 2 consecutive weeks in a newspaper of general circulation in the county in which the office of the corporation's last registered agent in
this State is located and in the corporation's principal place of business and, in the case of a corporation having $10,000,000 or more in total assets at the time of its dissolution, at least once in
all editions of a daily newspaper with a national circulation. On or before the date of the first
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publication
of such notice, the corporation or successor entity shall mail a copy of such notice by certified or registered mail, return receipt requested, to each known claimant of the corporation
including persons with claims asserted against the corporation in a pending action, suit or proceeding to which the corporation is a party.
(2) Any
claim against the corporation required to be presented pursuant to this subsection is barred if a claimant who was given actual notice under this subsection does not
present the claim to the dissolved corporation or successor entity by the date referred to in paragraph (a)(1)c. of this section.
(3) A
corporation or successor entity may reject, in whole or in part, any claim made by a claimant pursuant to this subsection by mailing notice of such rejection by
certified or registered mail, return receipt requested, to the claimant within 90 days after receipt of such claim and, in all events, at least 150 days before the expiration of the
period described in § 278 of this title; provided however, that in the case of a claim filed pursuant to § 295 of this title against a corporation or successor
entity for which a receiver or trustee has been appointed by the Court of Chancery the time period shall be as provided in § 296 of this title, and the 30-day appeal period provided
for in § 296 of this title shall be applicable. A notice sent by a corporation or successor entity pursuant to this subsection shall state that any claim rejected therein will be
barred if an action, suit or proceeding with respect to the claim is not commenced within 120 days of the date thereof, and shall be accompanied by a copy of
§§ 278-283 of this title and, in the case of a notice sent by a court-appointed receiver or trustee and as to which a claim has been filed pursuant to
§ 295 of this title, copies of §§ 295 and 296 of this title.
(4) A
claim against a corporation is barred if a claimant whose claim is rejected pursuant to paragraph (a)(3) of this section does not commence an action, suit or
proceeding with respect to the claim no later than 120 days after the mailing of the rejection notice.
(b)(1) A
corporation or successor entity electing to follow the procedures described in subsection (a) of this section shall also give notice of the dissolution of
the corporation to persons with contractual claims contingent upon the occurrence or nonoccurrence of future events or otherwise conditional or unmatured, and request that such persons present such
claims in accordance with the terms of such notice. Provided however, that as used in this section and in § 281 of this title, the term "contractual claims" shall not include any
implied warranty as to any product manufactured, sold, distributed or handled by the dissolved corporation. Such notice shall be in substantially the form, and sent and published in the same manner,
as described in paragraph (a)(1) of this section.
(2) The
corporation or successor entity shall offer any claimant on a contract whose claim is contingent, conditional or unmatured such security as the corporation or
successor entity determines is sufficient to provide compensation to the claimant if the claim matures. The corporation or successor entity shall mail such offer to the claimant by certified or
registered mail, return receipt requested, within 90 days of receipt of such claim and, in all events, at least 150 days before the expiration of the period described in
§ 278 of this title. If the claimant offered such security does not deliver in writing to the corporation or successor entity a notice rejecting the offer within 120 days
after receipt of such offer for security, the claimant shall be deemed to have accepted such security as the sole source from which to satisfy the claim against the corporation.
(c)(1)
A corporation or successor entity which has given notice in accordance with subsection (a) of this section shall petition the Court of Chancery to determine the amount and
form of security that will be reasonably likely to be sufficient to provide compensation for any claim against the corporation which is the subject of a pending action, suit or proceeding to which the
corporation is a party other than a claim barred pursuant to subsection (a) of this section.
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(2) A
corporation or successor entity which has given notice in accordance with subsections (a) and (b) of this section shall petition the Court of Chancery to
determine the amount and form of security that will be sufficient to provide compensation to any claimant who has rejected the offer for security made pursuant to paragraph (b)(2) of this
section.
(3) A
corporation or successor entity which has given notice in accordance with subsection (a) of this section shall petition the Court of Chancery to determine the
amount and form of security which will
be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the corporation or that have not arisen but that, based on facts known to the corporation or
successor entity, are likely to arise or to become known to the corporation or successor entity within 5 years after the date of dissolution or such longer period of time as the Court of
Chancery may determine not to exceed 10 years after the date of dissolution. The Court of Chancery may appoint a guardian ad litem in respect of any such proceeding brought under this
subsection. The reasonable fees and expenses of such guardian, including all reasonable expert witness fees, shall be paid by the petitioner in such proceeding.
(d) The
giving of any notice or making of any offer pursuant to this section shall not revive any claim then barred or constitute acknowledgment by the corporation or
successor entity that any person to whom such notice is sent is a proper claimant and shall not operate as a waiver of any defense or counterclaim in respect of any claim asserted by any person to
whom such notice is sent.
(e) As
used in this section, the term "successor entity" shall include any trust, receivership or other legal entity governed by the laws of this State to which the
remaining assets and liabilities of a dissolved corporation are transferred and which exists solely for the purposes of prosecuting and defending suits, by or against the dissolved corporation,
enabling the dissolved corporation to settle and close the business of the dissolved corporation, to dispose of and convey the property of the dissolved corporation, to discharge the liabilities of
the dissolved corporation and to distribute to the dissolved corporation's stockholders any remaining assets, but not for the purpose of continuing the business for which the dissolved corporation was
organized.
(f) The
time periods and notice requirements of this section shall, in the case of a corporation or successor entity for which a receiver or trustee has been appointed by
the Court of Chancery, be subject to variation by, or in the manner provided in, the Rules of the Court of Chancery.
(g) In
the case of a nonstock corporation, any notice referred to in the last sentence of paragraph (a)(3) of this section shall include a copy of
§ 114 of this title. In the case of a nonprofit nonstock corporation, provisions of this section regarding distributions to members shall not apply to the extent that those
provisions conflict with any other applicable law or with that corporation's certificate of incorporation or bylaws.
8
Del. C. 1953, § 280; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 38; 67 Del. Laws, c. 376, §§ 21-25; 69
Del. Laws, c. 266, §§ 1-17; 70 Del. Laws, c. 186, § 1; 77 Del. Laws, c. 253, § 61.;
§ 281 Payment and distribution to claimants and stockholders.
(a) A
dissolved corporation or successor entity which has followed the procedures described in § 280 of this title:
(1) Shall
pay the claims made and not rejected in accordance with § 280(a) of this title,
(2) Shall
post the security offered and not rejected pursuant to § 280(b)(2) of this title,
(3) Shall
post any security ordered by the Court of Chancery in any proceeding under § 280(c) of this title, and
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(4) Shall
pay or make provision for all other claims that are mature, known and uncontested or that have been finally determined to be owing by the corporation or such
successor entity.
Such
claims or obligations shall be paid in full and any such provision for payment shall be made in full if there are sufficient assets. If there are insufficient assets, such claims
and obligations shall be paid or provided for according to their priority, and, among claims of equal priority, ratably to the extent of assets legally available therefor. Any remaining assets shall
be distributed to the stockholders of the dissolved corporation; provided, however, that such distribution shall not be made before the expiration of 150 days from the date of the last notice
of rejections given pursuant to § 280(a)(3) of this title. In the absence of actual fraud, the judgment of the directors of the dissolved corporation or the governing persons of
such successor entity as to the provision made for the payment of all obligations under paragraph (a)(4) of this section shall be conclusive.
(b) A
dissolved corporation or successor entity which has not followed the procedures described in § 280 of this title shall, prior to the expiration of
the period described in § 278 of this title, adopt a plan of distribution pursuant to which the dissolved corporation or successor entity (i) shall pay or make reasonable
provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims known to the corporation or such successor entity, (ii) shall make such
provision as will be reasonably likely to be sufficient to provide compensation for any claim against the corporation which is the subject of a pending action, suit or proceeding to which the
corporation is a party and (iii) shall make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the corporation or
that have not arisen but that, based on facts known to the corporation or successor entity, are likely to arise or to become known to the corporation or successor entity within 10 years after
the date of dissolution. The plan of distribution shall provide that such claims shall be paid in full and any such provision for payment made shall be made in full if there are sufficient assets. If
there are insufficient assets, such plan shall provide that such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the
extent of assets legally available therefor. Any remaining assets shall be distributed to the stockholders of the dissolved corporation.
(c) Directors
of a dissolved corporation or governing persons of a successor entity which has complied with subsection (a) or (b) of this section shall not be
personally liable to the claimants of the dissolved corporation.
(d) As
used in this section, the term "successor entity" has the meaning set forth in § 280(e) of this title.
(e) The
term "priority," as used in this section, does not refer either to the order of payments set forth in paragraph (a)(1)-(4) of this section or to the relative
times at which any claims mature or are reduced to judgment.
(f) In
the case of a nonprofit nonstock corporation, provisions of this section regarding distributions to members shall not apply to the extent that those provisions
conflict with any other applicable law or with that corporation's certificate of incorporation or bylaws.
8
Del. C. 1953, § 281; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 39; 67 Del. Laws, c. 376, §§ 26-28; 68
Del. Laws, c. 163, § 1; 69 Del. Laws, c. 266, §§ 18-21; 70 Del. Laws, c. 299, § 4; 71 Del. Laws,
c. 120, §§ 17, 18; 77 Del. Laws, c. 253, § 62.;
§ 282 Liability of stockholders of dissolved corporations.
(a) A
stockholder of a dissolved corporation the assets of which were distributed pursuant to § 281(a) or (b) of this title shall not be liable for
any claim against the corporation in an amount in excess of such stockholder's pro rata share of the claim or the amount so distributed to such stockholder, whichever is less.
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(b) A
stockholder of a dissolved corporation the assets of which were distributed pursuant to § 281(a) of this title shall not be liable for any claim
against the corporation on which an action, suit or proceeding is not begun prior to the expiration of the period described in § 278 of this title.
(c) The
aggregate liability of any stockholder of a dissolved corporation for claims against the dissolved corporation shall not exceed the amount distributed to such
stockholder in dissolution.
8
Del. C. 1953, § 282; 56 Del. Laws, c. 50; 66 Del. Laws, c. 136, § 40; 71 Del. Laws, c. 339, §§ 57, 58.;
§ 283 Jurisdiction.
The Court of Chancery shall have jurisdiction of any application prescribed in this subchapter and of all questions arising in the proceedings
thereon, and may make such orders and decrees and issue injunctions therein as justice and equity shall require.
66
Del. Laws, c. 136, § 41.;
E-7
Annex F
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March 17, 2019
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Board
of Directors
NII Holdings, Inc.
12110 Sunset Hills Road, Suite 600
Reston, Virginia 20190
Members of the Board of Directors:
We
understand that NII Holdings, Inc. ("Parent") and its wholly-owned subsidiary, NII International Holdings S.à r.l. ("NIIH"), as well as AI Brazil
Holdings B.V. ("AI Brazil") propose to enter into a Purchase Agreement (the "Agreement") with América Móvil, S.A.B. de C.V. ("Purchaser"), pursuant to which
(i) NIIH will sell all of the issued and outstanding shares of NII Brazil Holdings S.à r.l. (the "Company") to Purchaser and (ii) concurrent to, and as a condition
of consummation of sale of the shares of the Company to Purchaser, AI Brazil will sell all of its shares in Nextel Holdings S.à r.l. ("Nextel Holdings") not held by the Company
to the Company, such that Purchaser will indirectly own all of the issued and outstanding interests in Nextel Telecomunicações Ltda. ("Nextel Brazil") (such
transactions, collectively, the "Transaction") for $905 million in cash (the "Cash Consideration"). The terms and conditions of the Transaction are more fully set forth in the Agreement, which
terms and conditions provide that the Cash Consideration is subject to adjustment (including to reflect capital expenditures, net working capital, outstanding indebtedness, cash and their equivalents
and transaction expenses) and a portion of NIIH's Cash Consideration will be funded into escrow, in each case, as set forth in the Agreement, although we have not taken into account such adjustments
or escrow arrangements in connection with our opinion set forth herein. We understand that Purchaser will be indirectly assuming capital lease obligations of the Company carried at December 31,
2018 at a value of approximately $69 million in the aggregate (such value, as indirect, further consideration deemed payable in the Transaction for purposes of this opinion, together with the
Cash Consideration, the "Consideration") and that such value will not be deducted from the Cash Consideration.
The
board of directors of Parent (the "Board") has requested our opinion as to whether the Consideration payable in the Transaction pursuant to the Agreement is fair, from a financial
point of view, to Parent.
In
arriving at our opinion set forth below, we have, among other things: (i) reviewed a draft of the Agreement dated March 16, 2019; (ii) reviewed certain publicly
available business and financial information that we deemed to be generally relevant concerning the Company and the industry in which it operates; (iii) compared the proposed financial terms of
the Transaction with the publicly available financial terms of certain transactions involving companies we deemed generally relevant and the consideration received in such transactions;
(iv) compared the financial and operating performance of the Company with publicly available information concerning certain other public companies we deemed generally relevant, including data
related to public market trading levels and implied trading multiples; (v) reviewed certain internal financial and operating information with respect to the business,
operations and prospects of the Company, including certain financial forecasts relating to the Company prepared by the management of Parent and Nextel Brazil (the "Forecasts"); and
(vi) performed such other financial studies and analyses and considered such other information as we deemed appropriate for the purposes of this opinion. In addition, we have held discussions
with certain members of the management of Parent and Nextel Brazil regarding the Transaction, the past and current business
F-1
operations
and financial condition and prospects of the Company, the Forecasts and certain other matters we believed necessary or appropriate to our inquiry.
In
arriving at our opinion, we have, with your consent, relied upon and assumed, without independent verification, the accuracy and completeness of all information that was publicly
available or was furnished or made available to us by Parent, Nextel Brazil and their associates, affiliates and advisors, or otherwise reviewed by or for us, and we have not assumed any
responsibility or liability therefor. We have not conducted any valuation or appraisal of any assets or liabilities of the Company (including, without limitation, real property owned by the Company or
to which the Company holds a leasehold interest), nor have any such valuations or appraisals been provided to us, and we do not express any opinion as to the value of such assets or liabilities. We
have not evaluated the solvency or fair value of Parent, NIIH, the Company, Nextel Holdings, Nextel Brazil, AI Brazil or Purchaser under any state, federal or other laws relating to bankruptcy,
insolvency or similar matters, and we are not expressing any view or opinion as to the impact of the Transaction on the solvency or the viability of the Parent or its ability to pay its obligations
when they come due. We have not performed a liquidation analysis with respect to the assets of Parent. In addition, we have not assumed any obligation to conduct any physical inspection of the
properties or the facilities of the Company. At the direction of the management of Parent, we have used and relied upon the Forecasts for purposes of our opinion. In relying on the Forecasts, we have
assumed, at the direction of Parent, that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by the management of Parent and Nextel
Brazil as to the expected future results of operations and financial condition of the Company and that the financial results reflected in such Forecasts will be achieved at the times and in the
amounts projected. We express no view as to the reasonableness of the Forecasts and the assumptions on which they are based.
We
have assumed that the transactions contemplated by the Agreement will be consummated as contemplated in the Agreement without any waiver or amendment of any terms or conditions,
including, among other things, that the parties will comply with all material terms of the Agreement and that in connection with the receipt of all necessary governmental, regulatory or other
approvals and consents required for the Transaction, no material delays, limitations, conditions or restrictions will be imposed. We have assumed that there will not be any payments by Parent, NIIH,
AI Brazil or any of their affiliates (directly or indirectly) pursuant to any indemnification obligations under the Agreement. For purposes of rendering this opinion, we have assumed that there has
not occurred any material change in the assets, financial condition, results of operations, business or prospects of the Company since the date of the most recent financial statements and other
information, financial or otherwise, relating to the Company made available to us, and that there is no information or any facts that would
make any of the information reviewed by us incomplete or misleading. We do not express any opinion as to any tax or other consequences that may result from the Transaction, nor does our opinion
address any legal, tax, regulatory or accounting matters. We have relied as to all legal, tax and regulatory matters relevant to rendering our opinion upon the assessments made by Parent and its other
advisors with respect to such issues. In arriving at our opinion, we have not taken into account any litigation, regulatory or other proceeding that is pending or may be brought against the Company or
any of its affiliates. In addition, we have relied upon and assumed, without independent verification, that the final form of the Agreement will not differ in any material respect from the draft of
the Agreement reviewed by us.
Our
opinion is necessarily based on securities markets, economic, monetary, financial and other general business and financial conditions as they exist and can be evaluated on, and the
information made available to us as of, the date hereof and the conditions and prospects, financial and otherwise, of the Company as they were reflected in the information provided to us and as they
were represented to us in discussions with the management of Parent and Nextel Brazil, including with respect to exchange rates. We have assumed that such exchange rates are reasonable for purposes of
our analyses
F-2
and
that any currency or exchange rate fluctuations will not be meaningful in any respect to our analyses or opinion. We are expressing no opinion herein as to the price at which the common stock of
Parent will trade at any future time. Our opinion is limited to the fairness, from a financial point of view, to Parent of the Consideration payable in the Transaction pursuant to the Agreement, and
we express no opinion as to any underlying decisions which Parent may make to engage in the Transaction or any alternative transaction. We do not express any opinion, nor have we been asked by the
Board to express any opinion, as to the relative merits of the Transaction as compared to any alternative transaction. We have not been asked to, nor do we, offer any opinion as to the terms, other
than the Consideration to the extent expressly set forth herein, of the Transaction, the Agreement or any other agreement entered into in connection with the Transaction.
We
and our affiliates are engaged in a wide range of financial advisory and investment banking activities. In addition, in the ordinary course of their asset management, merchant banking
and other business activities, our affiliates may trade in the securities of Parent, AI Brazil and Purchaser and any of their respective affiliates, for their own accounts or for the accounts of their
affiliates and customers, and may at any time hold a long or short position in such securities. We are acting as financial advisor to Parent with respect to the Transaction and will receive a fee from
Parent for our services, a portion of which is payable upon delivery of this opinion and the remaining portion of which is contingent upon the consummation of the Transaction. In addition, Parent has
agreed to reimburse certain of our expenses and indemnify us against certain liabilities that may arise out of our engagement. We and our affiliates may in the future provide financial services to
Parent, AI Brazil, Purchaser and/or their respective affiliates in the ordinary course of our businesses from time to time and may receive fees for the rendering of such services. In 2017, we acted as
financial advisor to Parent in connection with a prior investment in the Company by AI Brazil and received a fee for our services.
This
opinion is provided for the benefit of the Board in connection with and for the purpose of its evaluation of the Transaction. This opinion should not be construed as creating any
fiduciary duty on our part to any party. This opinion does not constitute a recommendation to the Board as to whether to approve the Transaction or a recommendation as to whether or not any holder of
common stock of Parent should vote or otherwise act with respect to the Transaction or any other matter. In addition, the Board has not asked us to address, and this opinion does not address,
(i) the fairness to, or any other consideration of, the holders of any class of securities (other than Parent and then only to the extent expressly set forth herein) or creditors or other
constituencies of Parent, (ii) the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, NIIH, Nextel
Holdings, Parent or AI Brazil, or any class of such persons, whether relative to the Consideration pursuant to the Agreement or otherwise or (iii) the fairness of the allocation of the
Consideration as between NIIH and AI Brazil (on a relative basis or otherwise).
This
opinion is given and speaks only as of the date hereof. It should be understood that subsequent developments may affect this opinion and the assumptions used in preparing it, and we
do not have any obligation to update, revise, or reaffirm this opinion. This opinion has been approved by the Global Advisory Commitment Committee of Rothschild & Co US Inc.
On
the basis of and subject to the foregoing, it is our opinion that, as of the date hereof, the Consideration payable in the Transaction pursuant to the Agreement is fair, from a
financial point of view, to Parent.
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Very truly yours,
/s/ Rothschild & Co US Inc.
ROTHSCHILD & CO US INC.
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F-3
Annex G
CONFIDENTIAL
March 17, 2019
Board of Directors
NII Holdings, Inc.
12110 Sunset Hills Road, Suite 600
Reston, VA 20190
Members of the Board of Directors:
We
understand that NII Holdings, Inc. ("Parent") and its wholly-owned subsidiary, NII International Holdings S.à r.l. ("NIIH"), as well as AI Brazil
Holdings B.V. ("AI Brazil") propose to enter into a Purchase Agreement (the "Purchase Agreement") with América Móvil, S.A.B. de C.V. ("Purchaser"), pursuant
to which (i) NIIH will sell all of the issued and outstanding shares of NII Brazil Holdings S.à r.l. (the "Company") to Purchaser and (ii) concurrent to, and as a
condition of consummation of sale of
the shares of the Company to Purchaser, AI Brazil will sell all of its shares in Nextel Holdings S.à r.l. ("Nextel Holdings") not held by the Company to the Company, such that Purchaser
will indirectly own all of the issued and outstanding interests in Nextel Telecomunicações Ltda. ("Nextel Brazil") (such transactions, collectively, the
"Transaction") for $905 million in cash (the "Cash Consideration"). The terms and conditions of the Transaction are more fully set forth in the Purchase Agreement, which terms and conditions
provide that the Cash Consideration is subject to adjustments (including to reflect capital expenditures, net working capital, outstanding indebtedness, cash and their equivalents and transaction
expenses) and a portion of NIIH's Cash Consideration will be funded into escrow, in each case, as set forth in the Purchase Agreement, although in connection with our opinion set forth herein we have
not taken into account such adjustments or escrow arrangements. We also understand that Purchaser will be indirectly assuming capital lease obligations of the Company carried at December 31,
2018 at a value of approximately $69 million in the aggregate (such value, as indirect, further consideration deemed payable in the Transaction for purposes of this opinion, together with the
Cash Consideration, the "Consideration") and that such value will not be deducted from the Cash Consideration.
You
have asked for our opinion as to whether, as of the date hereof, the Consideration payable in the Transaction pursuant to the Purchase Agreement is fair, from a financial point of
view, to Parent. We have not been requested to opine as to, and our opinion does not in any manner address, the underlying business decision to proceed with or effect the Transaction, or the relative
merits of the Transaction as compared to other potential strategies or transactions that may be available to Parent.
For
purposes of the opinion set forth herein, we have:
-
1.
-
reviewed
the draft of the Purchase Agreement dated March 16, 2019 and certain related documents;
-
2.
-
reviewed
certain publicly available business and financial information relating to the Company;
-
3.
-
reviewed
certain information, including financial forecasts and other financial and operating data, concerning the Company supplied to or discussed with us by the
management of Parent and Nextel Brazil, including financial forecasts relating to the Company prepared by the management of the Parent and Nextel Brazil and approved for our use by Parent (the
"Forecasts");
-
4.
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discussed
the past and present operations and financial condition and the prospects of the Company with senior executives of Parent and Nextel Brazil;
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5.
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compared
the Consideration with values derived based on the financial terms, to the extent publicly available, of certain transactions that we deemed relevant;
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6.
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compared
the Consideration with values derived based on certain financial information and trading valuations of certain publicly traded companies that we deemed
relevant;
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7.
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compared
the Consideration to present values derived by discounting future cash flows and a terminal value for the Company at discount rates we deemed appropriate;
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8.
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participated
in discussions and negotiations among representatives of Parent and Nextel Brazil and their legal and financial advisors and representatives of Purchaser
and its legal and financial advisors;
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9.
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considered
that Parent publicly announced that it would explore strategic alternatives and the results of efforts on behalf of Parent to solicit, at the direction of
Parent, expressions of interests from other parties with respect to a possible sale of the Company or its subsidiaries; and
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10.
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performed
such other analyses and considered such other factors as we deemed appropriate.
We
have assumed and relied upon, without independent verification, the accuracy and completeness of the information and data publicly available, supplied or otherwise made available to,
or reviewed by or
discussed with, us. With respect to the Forecasts, we have assumed that they were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the
management of Parent and Nextel Brazil, and we have relied upon the Forecasts in arriving at our opinion. We express no opinion with respect to the Forecasts or the assumptions upon which they are
based. We have not made any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company, nor have we been furnished with any such evaluation or appraisal.
We have assumed that the Transaction will be consummated in accordance with the terms set forth in the final, executed Purchase Agreement, which we have further assumed will be identical in all
material respects to the latest draft thereof we have reviewed, and without waiver or modification of any terms or conditions the effect of which would be in any way meaningful to our analysis. We
have further assumed that all governmental, regulatory and other consents and approvals necessary for the consummation of the Transaction will be obtained without any effect on the Company or the
Transaction in any way meaningful to our analysis. We have assumed that there will not be any payments by Parent, NIIH, AI Brazil or any of their affiliates (directly or indirectly) pursuant to any
indemnification obligations under the Purchase Agreement. We are not legal, regulatory, accounting or tax experts and have relied on the assessments made by Parent, AI Brazil and Purchaser and their
respective advisors with respect to such issues. Our opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of,
the date hereof, including with respect to exchange rates. We have assumed that such exchange rates are reasonable for purposes of our analyses and that any currency or exchange rate fluctuations will
not be meaningful in any respect to our analyses or opinion. It should be understood that subsequent developments may affect this opinion, and we do not have any obligation to update, revise, or
reaffirm this opinion.
We
have assumed that the terms of the Transaction are the most beneficial terms from the Company's perspective that could under the circumstances be negotiated among the parties to the
Transaction, and no opinion is expressed as to whether any alternative transaction might produce consideration for Parent in an amount in excess of the Consideration.
We
have acted as financial advisor to the Board of Directors of Parent (in its capacity as such) (the "Board") in connection with the Transaction and will receive a fee for rendering
this opinion, which is in addition to our advisory fee that is contingent on the consummation of the Transaction. In addition, Parent has agreed to indemnify us for certain liabilities arising out of
our engagement. As
G-2
Parent
has been advised, during the two years preceding the date of this opinion we have not been engaged by, performed any services for or received any compensation from Parent, AI Brazil, Purchaser
or their respective affiliates (other than any amounts that were paid to us under the letter agreement pursuant to which we were retained as a financial advisor to the Board in connection with the
Transaction).
It
is understood that this letter is for the information of the Board and is rendered to the Board in connection with its consideration of the Transaction and except as provided in our
engagement letter with the Company may not be used for any other purpose without our prior written consent. This opinion addresses only the fairness from a financial point of view to Parent, as of the
date hereof, of the Consideration payable in the Transaction pursuant to the Purchase Agreement. We are not expressing any view or opinion as to any other terms or aspect of the Purchase Agreement or
the Transaction or any agreement or instrument contemplated by the Purchase Agreement or entered into or amended in connection with the Transaction, including as to the fairness of the Transaction to,
or any consideration to be received directly or indirectly in connection with the Transaction by, holders of any class of securities, any creditors or any other constituencies of Parent. We are also
not expressing any view or opinion as to the impact of the Transaction on the solvency or the viability of Parent, AI Brazil or Purchaser or their ability to pay their respective obligations when they
come due. We have not performed a liquidation analysis with respect to the assets of Parent. We express no view or opinion with respect to the amount or nature of any compensation to any officers,
directors or employees of Parent, or any class of such persons relative to the Consideration pursuant to the Purchase Agreement in the Transaction or with respect to the fairness of any such
compensation. In addition, the Board has not asked us to address, and this opinion does not address, the fairness of the allocation of the consideration as between the Company and AI Brazil. We also
express no view or opinion regarding matters that require legal, regulatory, accounting, insurance, tax, environmental, executive compensation or other similar professional advice, and we assume that
opinions, counsel and interpretations regarding such matters have been or will be obtained from the appropriate professional sources. This opinion has been approved by our fairness committee. This
opinion is not intended to be and does not constitute a recommendation to the members of the Board as to whether they should approve the Transaction or the Purchase Agreement or take any other action
in connection therewith, nor does it constitute a recommendation as to how any stockholder of Parent should vote or otherwise act with respect to the Transaction.
Based
on and subject to the foregoing, including the limitations and assumptions set forth herein, we are of the opinion that as of the date hereof the Consideration payable in the
Transaction pursuant to the Purchase Agreement is fair, from a financial point of view, to Parent.
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Very best regards,
GREENHILL & CO., LLC
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By:
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/s/ Nick Melton
Nick Melton
Managing Director
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G-3
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. NII HOLDINGS, INC. 12110 SUNSET HILLS ROAD SUITE 600 RESTON, VA 20190 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: !x E80426-S85825 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. NII HOLDINGS, INC. The Board of Directors recommends you vote FOR proposals 1, 2, 3 and 4: For Against Abstain ! ! ! 1. To approve the sale of substantially all of the assets of NII Holdings, through a sale of NII Brazil Holdings S.à r.l. to América Móvil, S.A.B. de C.V. on the terms and conditions of the Purchase Agreement among NII Holdings, NII International Holdings S.à r.l., América Móvil and AI Brazil Holdings B.V., dated March 18, 2019. At the closing of the Sale, América Móvil will own NII Holdings wireless operations in Brazil, which represents all of the remaining operating assets of NII Holdings. ! ! ! ! ! ! ! ! ! 2. To approve the liquidation and dissolution of NII Holdings and the Plan of Complete Liquidation and Dissolution, which, if approved, will authorize the Board to liquidate and dissolve NII Holdings in accordance with the Plan of Dissolution. 3. To provide an advisory vote on the compensation of our directors and named executive officers based on or that otherwise relates to the Sale. 4. To approve any adjournment of the Special Meeting to another date, time or place if necessary or appropriate, for the purpose of soliciting additional proxies for the proposals to be acted upon at the Special Meeting in the event that there are insufficient votes at the time of the Special Meeting or any adjournment thereof to approve the Sale Proposal. ! For address changes and/or comments, please check this box and write them on the back where indicated. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Notice of the Special Meeting and the Proxy Statement is available at www.proxyvote.com. E80427-S85825 NII HOLDINGS, INC. Special Meeting of Stockholders June 27, 2019 10:00 a.m. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The stockholder(s) hereby appoint(s) Shana C. Smith and Daniel E. Freiman, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of NII HOLDINGS, INC. that the stockholder(s) is/are entitled to vote at the Special Meeting of Stockholders to be held at 10:00 a.m. Eastern Time on June 27, 2019 at the Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20190, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address Changes/Comments: